Saturday, February 18, 2012

Keep the Doors To A Protest Closed

There is no question that protests are dramatically on the rise. Outside of the data, one only need look at the Government Accountability Office (GAO) decisions to see it. I subscribe to this daily alert of decisions from GAO, always on the look out for protests that get sustained. Although the levels are actually falling as protest rise, I have to just shake my head at protests that get sustained as a result of an all too often fatal mistake by procurement oficials: improper discussions.

A recent GAO decision sustaining a protest illustrates this issue and procedural violations that should not occur. According to the Digest:

…Protest that agency engaged in discussions with the awardee, but not the protester, is sustained where record shows that awardee was permitted to make material changes to its quote that had the effect of rendering its original, technically unacceptable quote acceptable, but the agency did not afford protester an opportunity to revise its quote…

What basically happened here is that the General Services Administration (GSA) made the decision that discussions with this one offeror were simply clarifications, and thus did not warrant communications with all offerors. This decision regretfully happens with regularity, as contracting officers are trying to work through the process and not delay it.

Further, discussions can create significant more work for both the contracting officer and the evaluation team. The problem with these decisions is that clarifications are often not treated as the basic changes they should be. In fact, the intent may have been to correct basic errors, but they evolve into more material changes.

Certainly contracting officers are not acting in bad faith, but a cutting corner exercise nonetheless that opens protest doors needlessly.

Simply put, government officials should be very careful in communicating with some and not all offerors. Although offerors should be instructed in the solicitation that discussion items area at the government’s discretion (and to submit your best and final proposal), discussions under a “best value” Federal Acquisition Regulation (FAR) Part 15 process are normally perfunctory due to poorly written requirements, a poorly submitted proposal, or as usually is the case, both.

Best Practices for Government 

Ensure that FAR Subpart 15.306 is being followed regarding communications with offerors. Discussions will occur when an agency indicates to an offeror the significant weaknesses, deficiencies, and other aspects of its proposal that could be altered or explained to materially enhance the proposal.

In other words, the “acid test” for deciding whether discussions have been held is when an offeror has been provided the opportunity to modify its proposal, and improve the chances of contract award. Keep this in mind with communications.

Further, do not pick and choose the types of weaknesses and deficiencies that are communicated with the offeror. This is another fatal flaw that I have seen with alarming frequency. Just because you do not think it is important does not mean it should not be communicated, as I can assure you that the offeror will think it is important.

This “non-important” deficiency or weakness could be the one differentiator that the offeror needs to be selected for an award. Protests can be put soundly in the “sour grapes” category and never be sustained through following processes to the letter, ensuring the contract award is properly documented, and proactive communications to provide transparency and confidence in the contract award decision.

Best Practices for Industry 

Do not be satisfied with the “no phone calls or emails” attitude of some procurement officials. Transparency needs to be demanded, especially when it is not forthcoming.

GSA’s defense in the protest decision is common, not to mention alarming. How many times are clarifications actually discussions, but never discovered?

Companies need to be diligent and keep an eye on the contract award process to ensure competitors are not being given an upper hand unfairly. That does not mean harass extremely busy contracting personnel, but again, don’t be satisfied if you encounter a “closed door” policy.

Friday, February 3, 2012

Contract Management 101: A FFP contract is not T&M

One thing that I have seen a lot of is the misapplication of performance-based contracting tenets, especially when it comes to requirements. Basically, some requirement offices slap “Performance Work Statement” as the title, delete “Statement of Work,” and maybe add some metrics and measures. Voila, a “performance-based contract” is born.

However, the contract line item numbers (CLINs) is really where I see performance-based acquisition (PBA) fall off the tracks. This text is straight out of a recent solicitation for a services contract on Federal Business Opportunities, commonly referred to as “fedbizopps” or FBO:
The Offeror shall provide their proposed firm-fixed price for this project by completing the CLIN Listing, in its entirety, as provided in the RFP. Additionally, the Offeror shall also provide a basis for the price, identifying all prospective labor categories, showing labor rates for all labor categories and discounts offered. (The Offerors shall also show profit, and any overhead costs if not included in the labor rate). Lack of detail may result in a rating of a higher risk by the Selection Authority in the selection process. 
Significant discounts are considered highly desirable. Discounts offered must be explicit. (There is no page limit for this factor, however Offerors are encouraged to only provide that cost and pricing data mandatory to a comprehensive review and that data which would allow the evaluation team to determine price reasonableness.)
Certainly great material to include in my classes when I teach PBA, Contracting Officer Representative (COR), or FAC P/PM courses on how not to structure CLINS under a PBA, or for a Firm Fixed Price (FFP) contract.

For starters, why do you care about this information? You shouldn’t. As a project manager (PM) or COR, you care about performance. Period. The other contract management efforts that will be expended on managing labor rates, labor categories, expenditures, etc. is inappropriate for this contract type, it adds extra administration and complexity into the contract management function, and takes the focus away on what you really care about; performance.

Further, the main objective of a FFP contract is to transfer risk to industry, with the assumption on a FFP contract type that the requirements are clearly defined and baselined. This model wants to eliminate that risk premium, and further drive prices down by threatening to add risk if these factors, which you shouldn’t care about, are not deemed “reasonable?” Protest anyone?

This model is creating a culture of “buying in,” deemed an improper business practice per FAR Subpart 3.5, but now a necessity as a result of budget cuts and the pressure to cut contracts.

PBA is about performance, and incentivizing industry to exceed requirements through a strategic partnership of trust and communication for both parties to excel. Let’s focus on that, and leave the administrative burdens where they belong.