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Sunday, February 26, 2012

Competition taken to task (order)

First a bit of nomenclature: MATOCs are "Multiple Award Task Order-based Contracts", and is a method of source selection used in the US federal contracting procedures.

Deltek: As feds turn to task order-based contracts, companies without spots will run behind, By Kevin Plexico
MATOCs allow agencies to set up a master contract through which individual task orders can be made. Agencies typically limit the number of contract holders, which limits competition for each task order to a pre-qualified set of vendors. Task orders can be issued and awarded within a matter of weeks — a far cry from the traditional months-long government solicitation process for the same type of work.

Winning a position on a MATOC doesn’t guarantee success; it means a company has won the right to bid again for each task order. There are many examples of companies that have won a seat, but actually received less than $100,000 as their competitors pulled in millions.

To succeed on a MATOC, companies must cast aside the established business development paradigm. In a traditional acquisition for a modestly complex procurement, companies have months to determine whether to bid, put together a team and develop a lengthy proposal. Of more than 11,000 task orders issued across 18 MATOCs that Deltek recently examined, over half required a proposal submission in 14 or fewer days.

MATOCs are tough on contractors, as winning a place generally requires a large investment and plenty of patience. Companies lacking the broad capabilities needed for a MATOC program may find themselves effectively locked out of competing for an agency’s work.

Wednesday, February 22, 2012

Fostering competition fosters savings

City saves on sewer plant engineering
Burgess & Niple of Akron will serve as the engineering firm for the Phase I improvements to the city wastewater treatment plant, with the cost considerably less than what was originally estimated.

The city Utilities Commission agreed Tuesday to accept the company's proposal for a fee totaling 11.5 percent of the project cost, per the negotiated agreement reached with Utilities Department administrators.

The original estimate for engineering was set at 20 percent of the estimated construction cost of $2,319,000, or $472,600. Utilities Superintendent Don Weingart said that equates to a savings of at least $200,000 from the original budget.

Utilities Commission Chairman Geoff Goll thanked the staff for the hard work they did to secure an engineering firm, saying the results of that effort are "a tremendous savings on the project."

They were able to get competitive interest, commission member Bob Hodgson said. The department followed Ohio Revised Code and sent out 41 requests for engineering statement of qualifications from potential engineering firms and received nine statements of qualifications.

It is definitely "hard work", as the Commission Chairman said, to, as the ABA Model Procurement Code compels us, "foster competition". But with savings like these, it has its rewards.

There was another interesting item in that news article. Unfortunately, not enough information was provided to know more about it, but it does illustrate a point often made that, in procurement as most other exacting things, definitions count.

In this case, the article kept using the term "bid", and not, it seems without cause. Nevertheless, the story reports how, of the many "bids" solicited, the top 5 qualifying bidders were selected, and asked to price bids. That process is more akin to a request for proposal process under Guam law: if you rank bidders, you choose only the best and first negotiate with that one to try to attain a "fair and reasonable" price (or compensation).

Here's how it went after that:
Before the bids could be opened, a letter was received from the American Council of Engineering Companies of Ohio, protesting the procurement process set out in the solicitation of bids. The organization claimed the solicitation of bids was in violation of Ohio Revised Code, which requires the department to negotiate a contract with the firm ranked as most qualified to perform the services.

Weingart said they sought an opinion from city Law Director Brooke Zellers, who suggested they not open the bids, but they could keep the process moving by reviewing the bid of the top-ranked firm and negotiating with them for a "fair and reasonable compensation."

According to Weingart, the law on these type of contracts changed in August 2011 and including the word bidding, with his department interpreting that to mean that bidding was allowed. They followed the advice of Zellers and did not open the other bids.

Tuesday, February 7, 2012

Acquisition malpractice

If we are to consider that procurement staff should be identified as a profession, and certificated as such, then we must accept the concept of "acquisition malpractice". Still, this article is the first I've seen that uses the term (not that I've been around long enough or experienced the field wide enough to have had a significant exposure to the field).

Procurement chief knocks early F-35 production
“Putting the F-35 into production years before the first test flight was acquisition malpractice,” said acting Pentagon procurement chief Frank Kendall, speaking at a Monday event hosted by the Center for Strategic and International Studies in Washington. “It should not have been done.”

Kendall said that the Pentagon had made “optimistic” predictions about the capabilities of design tools, simulations and modeling to build a fighter that would breeze through test flights without problems.

“We didn’t model everything as precisely as we thought,” Kendall said. “Now we’re paying the price for being wrong.”

Transitioning from development to production is traditionally been one of the most difficult challenges for any program.

Kendall said there is a tendency to start production too early, adding that the F-35 is an “extreme example.”

Barry Watts, an analyst at the Center for Strategic and Budgetary Assessments in Washington, D.C., agreed with Kendall’s assessment. But with then-Defense Secretary Robert Gates terminating the F-22 Raptor program, the Pentagon “has put all of its eggs in the JSF basket,” he said.

“My understanding is the amount of concurrency on this program is as great as or greater than any past program,” he said.

Watts, who has been to Lockheed’s Fort Worth, Texas, plant, described long lines of F-35s already being built. The F-35 is an extremely complicated engineering challenge with its many missions and three variants, Watts said.

“Most of those, if they’re going to be operational airplanes eventually, are going to have to go back and have a bunch of changes made to them,” he said. “That drives up cost and delays things.”

Watts said that the Pentagon should have insisted on more flight tests before starting low rate initial production.

Saturday, February 4, 2012

Procurement controversies -- The Philippines

Among other factors, the emphasis on best value in government contracting, and its high reliance on proven past performance, is driven by bureaucratic survival techniques such as risk aversion and inertia. Too much risk aversion impacts adversely on fostering competition, and creates an atmosphere of perceived if not actual favoritism and "old boy networking", a bad image for any government any where.

Of course, it is not always risk aversion or inertia that leads to old boy networks. The following story poses the possibility of other factors at work, perhaps more pernicious, though that may be debatable if the result is the same in either event.

Corruption in procurement process of firefighting equipment exposed
After failing to get satisfactory answers and actions from both the Bureau of Fire Protection (BFP) and the Department of Interior and Local Government (DILG) officials, Bayan Muna lawmaker Teddy Casiño now wants Congress to investigate what he said as the “dubious termination” of a government contract amounting to P243 million ($5.65 million) for fire fighting equipment allegedly to favor some regular suppliers of the BFP.

“It’s highly irregular for Perez to have delayed the awarding of the contract; and it’s more dubious still for him to have arbitrarily declared a failure of bidding on technical grounds belatedly raised in mere letters to him by two losing bidders who happen to be regular suppliers of the BFP,” he said.

In October 2010, the BFP opened for bidding various fire-fighting gears, namely helmets, coats and trousers, gloves and boots. On February 11, 2011, the BFP informed Kolonwel Trading that it won the bidding, having submitted the lowest calculated bid of P242,806,753.00. This was the first time the company participated and won in a BFP bidding.

Kolonwel Trading was then asked to submit various post-qualification papers. The company complied, but on April 20, 2011, the BFP again asked for additional documents. A month later, an additional request for test results on the quality and safety of their products was made. After submitting the pertinent documents, the Bids and Awards Committee (BAC) of the BFP finally came out with a resolution on October 17, 2011 and signed by DILG secretary
Jesse Robredo awarding the procurement of said Personal Protective Equipment (PPE) to Kolonwel Trading.

Two losing bidders, Panpisco Technologies, Inc. and 911 Alarm, both long-time suppliers of the BFP then wrote Perez, and soon after he withheld the awarding of the contract to Kolonwel Trading. He later on declared a failure of bidding, but this was two months after the BFP BAC issued its resolution in favor of Kolonwel.

According to Casiño, the said suppliers did not avail of the prescribed protest mechanism as prescribed by the Procurement Law (RA 9184) but raised their concerns through mere letters to BFP Officer in Charge Samuel Perez.

That last statement resonates with me. In a still unresolved controversy I have been involved with, the low bidder's award was also delayed during an interim in which the incumbent higher bidder, rather than protesting, after bid opening sent unsubstantiated, "confidential" communications to the procurement officer intending specifically to undermine the low bid's responsiveness to specifications.

Had the matter been duly raised by protest, it could have been shown that, first, the bid specifications did not require that substantiating material be provided with the bid therefore it was not error for the low bid to not provide it, and, second, that the incumbent's claims were unfounded since third party add-ons, to be provided by the low bidder, rectified any alleged shortfalls.

Protestations to the agency and administrative review authority that such unfair and ex-party communications should not be considered went unheeded. In the result, the claims, never properly brought therefore improperly considered, tainted and poisoned the protest.

Thursday, February 2, 2012

Massachusetts Town Procurement Officer turfs it out with Public Schools

CAVEAT: Be sure to read the FOLLOW UP added below 10 Feb. 2012 (Guam time).


Cast of characters:

Town Manager, Francis T. Crimmins, Jr
Acting Chief Procurement Officer, Lindsay Pope
Superintendent of Schools Dr. Marguerite Rizzi

Procurement Divides Town and School Department
Town Manager, Francis T. Crimmins, Jr, who serves as chief procurement officer for the town, has sought to tighten procurement policies and centralize purchasing for all departments in town, the schools included.

As stated in a memo Crimmins sent to all department heads, boards and committees on December 7, 2011:
Section C4-2(H) of the Town Charter states that the powers of the Town Manager are “To purchase all supplies for every department of the Town, except books for the schools or the public library. He may delegate the responsibility to purchase supplies to an authorized representative and may revoke such delegation at his will.”
According to a memo issued by Acting Chief Procurement Officer Lindsay Pope:
Awards for bids, proposal openings, and request for quotes must only be given by the Chief Procurement Officer (CPO) designated through the Inspector General’s Office by the Town in order for that procurement to be valid. If a procurement is not valid that procurement cannot be paid for or acquired in any way using public funds.
The schools have not complied with these efforts, town officials say, and therefore are in violation of state law. Pope points to multiple violations, the most recent being a bid opening for a $400,000 to $600,000 roof at the Jones School.

But the schools say this simply isn’t the case.

“The School Committee has particular rights,” Superintendent of Schools Dr. Marguerite Rizzi told reporters during a recess at Tuesday’s Board of Selectmen meeting.

“The Town Manager wants to take over the entire process…it’s unnecessary, unfortunate, [and] in the end he’s not going to prevail.”

The School Department has had procurement powers since 1990, Dr. Rizzi said.

“The charter does say [the Town Manager] can revoke procurement,” Dr. Rizzi said. “There was no need to do that. He didn’t need to get the Procurement Officer involved, but he did.”

Crimmins, in separate documents dated December 6, 2011—the day prior to issuing the aforementioned memo—delegated procurement powers to Pope and to town accountant William Rowe. On December 6, Crimmins also revoked the procurement powers of the Superintendent of Schools and the Deputy Fire Chief. The following day, Crimmins delegated limited procurement powers to Dr. Rizzi.

Pope wrote: “This is a problem that has now elevated to knowingly breaking the law and must be solved immediately.”

“The Superintendent of Schools is under the impression the laws don’t apply to her,” Crimmins said. “Don’t blame Lindsay Pope, she’s trying to make it right.”

Dr. Rizzi took exception to these claims: “I somewhat take umbrage at the implication that anyone in the School Department does not respect the trust that has been given to us. There are no improprieties.”

Since beginning this blog and taking note of stories like the above, I have been amazed that Guam can get its procurement law so much more right than many on the Mainland. Sure, it is followed more in the breach than the execution, but that is changing.

Under Guam's centralized procurement regime (5 GCA §§ 5120, 5125), modeled after the ABA Model Procurement Code, the Department of Education and other agencies must rely on the Chief Procurement Officer to conduct procurement of supplies and services, and on the Director of the Department of Public Works to procure construction.

The CPO has authority, as apparently does the Town Manager here, to delegate and revoke or condition and limit procurement authority.

Unfortunately, the actual autonomy and authority of Guam's agencies, like the School Department in the story, has been shrouded in lore and practice, in violation of the law. That, again, is changing, particularly since the successful seminar sponsored by the Guam Chamber of Commerce, Judiciary and Bar Association last fall. See the program outline here.

It has also been painful for the agencies who have been forced to give up some of their unearned turf, and more painful for some who have ignored the procurement law to their peril. Guam has a "ENFORCEMENT OF PROPER GOVERNMENT SPENDING" Act, which allows a resident taxpayer to enjoin or seek personal damages against any official, including the Governor, "from expending money without proper appropriation, without proper authority, illegally, or contrary to law" (5 GCA § 7103).

There are cases pending.


FOLLOW UP:
In any government contracting controversy, the first point of call should be, does the controversial agency have the legal authority to engage in the particular type of acquisition in question? For instance, a critical exam of Guam's procurement authorities reveals a crazy-quilt of authorities, with some agencies having no direct authority to procure anything, some able to procure supplies but not services, and others supplies and services but not construction.

The case described in the story above seemed to suggest that the school board had no authority to procure the construction work in question there; that the Town procurement officer had that authority. There are new stories emerging that suggest that may not actually be the case; that the school no longer has that authority, but at the time it was exercised it did. Either way, the purpose of this blog is to treat reported stories more as hypothetical case studies than actual factual situations, and for a student of procurement, case studies, factual or fanciful, are ideal way to issue spot and analyze.

Stoughton school board chairwoman wants apology over bidding battle
The drama between school and town officials continued this week when the school board chairwoman said she wants a public apology after town officials acknowledged the School Department was within its rights to award a bid for the Jones School roof project.

The project was filed before the town adopted a design selection policy in March 2011, so is grand-fathered.

Read more: http://www.enterprisenews.com/topstories/x50589969/Stoughton-school-board-chairwoman-wants-apology-over-bidding-battle#ixzz1lu7iD5k1
For those needing more factual details of the school roof controversy, see SNYDER’S STOUGHTON: Schools look for apology

Wednesday, February 1, 2012

Federal government contracting: how to get in with the in crowd

I'm in with the in crowd
I go where the in crowd goes
I'm in with the in crowd
And I know what the in crowd knows

Anytime of the year
Don't you hear
Dressin' fine, makin' time

We breeze up an down the street
We get respect
From the people we meet
They make way day or night
They know the in crowd is out of sight

We make every minute count, yeah!
Our share is always the biggest amount
Other guys imitate us
But the original's still the greatest

Got our own way a walkin'
We got our own way of talkin', yeah!

Anytime of the year, don't you hear
Spendin' cash, talkin' trash

Girl, I'll show you a real good time
Come on with me and leave your troubles behind
I don't care where you've been
You ain't been no where
'Till you've been in

With the in crowd, yeah!
(Billy Page, sung by Dobie Gray --)
Lyrics from elyrics.net

The following article concerns US federal procurement and the same type of bureaucratic thinking that brought us Catch 22.

How to Overcome Past Performance Issues When You Lack Government Contracting Experience

Past performance in the federal government can be tricky. Like any business, the government requires contractors to have past-performance (or prior government experience). But for business owners new to government contracting, how are they supposed to earn past performance?

According to a report by the Government Accounting Office (GAO), most agencies continue to award contracts to businesses with past performances, making prior experience the second most important selection criteria after price. So how do novice business owners overcome this obstacle?
The author goes on to suggest six different strategies for racking up "past performance" credits. Frankly, it is a conundrum brought on by whack-a-mole mentality, risk avoidance run amuck, the "old boy" network by default if not design. Someone ought to be informed "past performance is no guarantee of success", and look for a way that is more equitable, rational and that expands the pool of vendors.

Anyway, here are his six ideas, and you should read his post to get more detail:

1. Consider relevant commercial experience to boost your proposal

2. Look for micro-purchases or credit card purchases to gain past performance in a timely fashion

3. Obtain subcontracts and acquire experience

4. Team up with a more experienced company to get your foot in the door

5. Look for awarded contracts on www.fbo.com within your specific field and location

6. Research the Small Business Administration website to find out if your business is eligible for any Small Business Certifications, such as the 8(a) and Hub-Zone programs