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Tuesday, March 25, 2014

Cost plus a percentage of cost contracts

Generally speaking, the government can enter into any kind of contract it wants, with the proviso here that I refer to the types of price incentives the government desires to incorporate into a contract. And I add that there may be conditions placed on many types of such incentives. But the one type of price incentive contract that seems to extract uniform rejection in US procurement law is a cost-plus-percentage-of-cost contact.

I was reminded of this when I read a story about a contract the Government of Guam is proposing, considering or playing hot-potato with. (Actually, it remains a political mystery whether the government is proposing it or not; let's just say it is on some kind of agenda of someone somewhere and involves the highest levels of the Guam executive and legislative concerns as well as those of the Guam Federal District Court, but that's another story.)

Here's the story with the critical part pertinent to this post:

‘GRRP plan too expensive’
The 214-page draft agreement negotiated between GRRP and the Guam Economic Development Authority would contract GRRP to build a waste-to-energy plant and manage the island’s solid waste, if implemented. Though it is dated Dec. 13, 2013, it only came to light last week.

“Waste-to-energy, when done properly, is another way to make the landfill last longer. However, waste-to-energy will not be inexpensive if GovGuam goes down this road. To suggest it will actually reduce the cost of the system and the rates of solid waste customers is either badly mistaken or intentionally misleading,” said David Manning, the federal receiver's representative.

Under the agreement, GRRP would receive at least $125 million in bond money from bonds authorized by GovGuam to build a waste-to-energy plant. Under a cost-plus provision of the agreement, GRRP would be entitled to a 15 percent fee on the cost of the construction. This amounts to $18.75 million on construction costs of $125 million.
The pertinent part, obviously, is the suggestion that this contract proposes "a cost-plus provision", where the "plus" is "a 15 percent fee on the cost of construction."

The federal government regulations discuss contract types and their selection in FAR Part 16. Cost reimbursement contracts are covered in Part 16.3. Incentive contracts are covered generally in FAR Part 16.4. "The cost-plus-a-percentage-of-cost system of contracting shall not be used" (FAR Part 16.102(c)).

Guam law, based in the ABA Model Procurement Code, is much less descriptive or as complicated as the FAR. It simply says,
"Subject to the limitations of this Section, any type of contract which will promote the best interest of the Territory may be used; provided that the use of cost-plus-a-percentage-of-cost contract is prohibited. A cost-reimbursement contract may be used only when a determination is made in writing that such contract is likely to be less costly to the Territory than any other type or that it is impracticable to obtain the supplies, services or construction required except under such contract." (5 GCA Section 5235.)
The genesis of the aversion to cost plus a percentage of cost pricing appears to have taken form in the days before Pearl Harbor when the US was anticipating war, but was informed by circumstances from the First World War, as mentioned in a US Supreme Court case, MUSCHANY ET AL. v. UNITED STATES 324 US 49, 1945, an interesting case.

The case involved the condemnation of land by the US by eminent domain, and the contract with an agent to obtain options in contemplation of condemnation. The agent's fee was a 5% commission to be withheld from the proceeds due the landowners. As the opinion described,
"There were a large number of landowners in the required area. Options were obtained from 270, including the petitioners, and with one exception the options were accepted by the Government at the optioned price. Almost half of the contracts were closed by acceptance of deeds and payment of the price. Criticism of the prices and manner of purchase developed and the War Department repudiated the remaining contracts and turned to condemnation. The repudiation followed upon the conclusion among other things that the contracts violated the statutory provision against the cost-plus-a-percentage-of-cost system of contracting, and were contrary to public policy because of the contingent interest of McDowell, which was antagonistic to the Government."
The Court then discussed the law:
"Prior to the present war emergency the Secretary of War had broad powers to acquire land for military purposes by purchase at prices deemed reasonable by him or by condemnation. There were no restrictions as to the manner in which he should exercise this power to purchase, but his power to contract for construction work was sharply limited by statute. These restrictions, if continued, would have seriously impeded the War Department's preparation for war. Thereupon Congress passed the act of July 2, 1940, which removed certain of these prior statutory restrictions. The act did, however, restrict the broad powers conferred therein by prohibiting the use of cost-plus-a-percentage-of-cost contracts; use of cost-plus-a-fixed-fee contracts was expressly approved by the act. The question is raised as to whether the prohibition of cost-plus-a-percentage-of-cost contracts applies to the War Department's purchase of these lands with appropriations for the fiscal year 1941.

We are of the opinion that the first section of the act of July 2, 1940 indicates that the purchase of land by the War Department is subject to the provisions of that section; therefore, the proviso in the section which prohibits use of the cost-plus-a-percentage-of-cost system of contracting must be taken to apply to purchases of land.

Our next inquiry is as to whether the contract with the vendors violates this prohibition against cost-plus-a-percentage-of-cost contracts. Evidently the proviso was inserted to avoid the abuses which were prevalent before and during the first World War from the Government's guarantee of cost plus a profit to contractors.

The purpose of Congress was to protect the Government against the sort of exploitation so easily accomplished under cost-plus-a-percentage-of-cost contracts under which the Government contracts and is bound to pay costs, undetermined at the time the contract is made and to be incurred in the future, plus a commission based on a percentage of these future costs. The evil of such contracts is that the profit of the other party to the contract increases in proportion to that other party's costs expended in the performance. The danger guarded against by the Congressional prohibition was the incentive to a government contractor who already had a binding contract with the Government for payment of undetermined future costs to pay liberally for reimbursable items because higher costs meant a higher fee to him, his profit being determined by a percentage of cost."






Monday, March 24, 2014

Critical national security assets protested. Another day in the office.

Seems like every protest on Guam, and perhaps where you live, is a crisis of some critical government operation, requiring great wringing of hands, headlines and calls for emergency procurement or political interference.

Here are three articles from today's Google News dealing with protests, but no histrionics.

U.S. Army delays decision on General Dynamics vehicle protest

(Reuters) - The U.S. Army said on Monday that it would delay until April 4 making a ruling on a protest filed by General Dynamics Corp about a new competition for armored vehicles.

General Dynamics filed a protest with the Army on Feb. 14, arguing that the Army's rules for a competition to replace nearly 2,900 Vietnam-era M113 infantry carriers were skewed to favor BAE Systems Plc's Bradley Fighting Vehicle. The company is also pressing U.S. lawmakers to intervene in the Army's Armed Multi-purpose Vehicle (AMPV) competition and to mandate that a mixed fleet includes a version of both BAE's Bradleys and General Dynamics' wheeled Stryker vehicles.

Keating said General Dynamics was evaluating its options in case the Army rejected the protest. If that happens, the company would have 10 days to lodge a protest with the congressional Government Accountability Office, which rules on contract disputes. The company could also take its case to federal court.

BAE Systems argues that the Army cannot afford further delays since the existing M113 infantry vehicles are not suited to protect U.S. soldiers against direct fire attacks by today's more powerful rocket-propelled grenades and other threats. Mark Signorelli, vice president and general manager of combat vehicles for BAE, said the Army had been very open and transparent about its requirements for the new vehicles, and had already extended the development program to five years.

"They've been very conscious of and attentive to industry needs," he said, noting that the Army issued its final request for proposal after roughly two years of dialogue with industry representatives.

General Dynamics contends it would not have enough time or data to develop a Bradley-like vehicle on the Army's schedule, and has even suggested a teaming arrangement with BAE - although BAE declined.
Ingalls Protesting US Coast Guard Cutter Contract
Huntington Ingalls Industries (HII) is protesting the US Coast Guard’s Feb. 11 award of design contracts for the Offshore Patrol Cutter (OPC) program, reportedly citing questions about the grading criteria.

The new cutters were originally part of the Deepwater program, a sprawling effort spread over two decades to upgrade and replace most of the Coast Guard’s ships, aircraft and systems. The program, originally ministered by Northrop Grumman — previous owner of HII — and Lockheed Martin, was broken up after Congress demanded more oversight from the service, and the Coast Guard now directly manages its acquisition programs.

“Ingalls Shipbuilding recently received a debriefing of the offshore patrol cutter evaluation and we have decided to protest the Coast Guard’s decision,” said Beci Brenton, a company spokeswoman here. “Ingalls Shipbuilding offered the Coast Guard a strong, fully compliant proposal to provide a very capable, cost-effective offshore patrol cutter design and [we] believe our protest has merit.”

The Coast Guard awarded contracts to three firms — General Dynamics (GD) Bath Iron Works, Bollinger Shipyards and Eastern Shipbuilding — to produce preliminary and contract designs for the OPC, a program that envisions up to 25 ships worth approximately $10.5 billion. Each of the Feb. 11 awards was for about $22 million.

A bevy of shipyards have been vying for the OPC award, one of the biggest new US government surface ship construction efforts envisioned this decade.

HII’s protest was filed with the Government Accountability Office on Feb. 25. Based on the standard 100-day period for the GAO to review the protest and issue a ruling, a decision is expected in early June. Until then, under government rules work under the contract awards is suspended.
Feds deny Pantex contractor's latest bid protest
The Government Accountability Office on Thursday denied a bid protest filed by Nuclear Production Partners LLC that challenged the National Nuclear Security Administration’s decision last year to award a multibillion-dollar contract to Consolidated Nuclear Security LLC to manage and operate Pantex Plant.

Babcock and Wilcox Technical Services Group Inc. established Nuclear Production Partners to pursue a $22 billion-plus contract that includes Pantex and a Tennessee nuclear weapons facility.

“Today’s decision resolves NPP’s protest of the agency’s corrective action taken in response to our earlier decision,” the GAO said in a statement. “GAO concluded that the agency’s corrective action was consistent with the requirements of the Federal Acquisition Regulation and properly limited to address the specific defects in the prior source selection process. In addition, our decision rejected NPP’s various complaints about the substance of the agency’s evaluation and the source selection decision.”

NNSA spokeswoman Keri Fulton said in a written statement that the agency expects to begin transitioning to the new contractor shortly.

“We are glad that GAO dismissed the protest and will begin the contract transition at Y-12 and Pantex as soon as possible. The men and women at each site have done their jobs admirably despite the distractions the contract process brought with it, and we are moving forward with our work to keep the American people safe,” she said.

NNSA has twice awarded the massive contract to Consolidated Nuclear Security, a contractor group headed by Bechtel National, but Nuclear Production Partners has protested the contract award three times.
One theme running through these three articles is the length of time the solicitation, protest and award can take, especially when big money is involved. It seems a lot of time is allowed and even planned for as part of the process. 

I do not believe that the review process is even considered let alone factored into any timeline when a solicitation is commenced on Guam. They usually aren't even planned, just thrown into motion ad hoc.  Hopefully, this will change.

Sunday, March 23, 2014

First, get rid of the policitians and politics

In procurement, as in any competitive race, there are winners and there are losers. A fair race is run and won by the competitors, not the judges. Racers continue to race, even against the same known competitors, when the race is not fixed by the judges.

It sometimes is the case that fixing races is not only bad for the racers and the watchers; it can be bad for the judges, as well.

When politicians are allowed, or given the task, to pick winners, extraneous matters beyond the rules of the race cannot help but get interjected in the race.  It serves no one's interest but the lawyers and lobbyists and those who back them. In empowers all the wrong players.

Miami-Dade commissioners frustrated with refereeing bid disputes
Miami-Dade commissioners delivered a scolding Tuesday to the administration of Mayor Carlos Gimenez, complaining of a procurement process that constantly brings well-funded lobbyist bid fights to their meetings.

With Gimenez absent from the all-day proceedings, commissioners demanded his aides find a way to ease a stream of bid protests for commissioners to referee.

“The same system we’ve been using again and again and again is obviously not working,” Commissioner Audrey Edmonson said as the discussion moved to a disputed vending-machine contract, the third bid protest of the day. “Because here we have another protest. Something needs to change.”

Gimenez aides, led by procurement chief Lester Sola, acknowledged some missteps in contract negotiations and solicitations under review and pledged to move as quickly as possible to get the deals approved. Privately, a top Gimenez aide noted the mayor inherited a procurement system that gives losing bidders an avenue to find fault with the process, then hire lobbyists to press an appeal before the commission.
Yes, something needs to change here, but that something is not to protest the protestors. 

The protest system is intended to outsource the policing of procurement decision-making and process to the most critical judges available: the competitors themselves. 

Moves to limit protests for the sake of minimizing protests miss the mark. Such moves simply facilitate the continued misadventures of the procurement processors.

A bid for reform (editorial)
There’s something quite refreshing about Miami-Dade County commissioners expressing dissatisfaction with the county government’s procurement process. Time was, commissioners relished these quests for lucrative deals that employed a host of lobbyists, many of whom were once staffers for county mayors or commissioners. Commissioners knew that lobbyists and bidders would contribute to their reelection campaigns and even their pet causes to curry favor.

Now, though, while some of that still goes on, the increasing frequency of contract disputes, where losing bidders challenge the winner of the selection process, seems to have taken the fun out of the game for some commissioners. Good. Maybe all that grumbling from the dais at County Hall will result in improvements in the overall procurement process. We can only hope.

Allowing losing bidders to formally challenge the winner in an appeal of a county decision long predates Mr. Gimenez. And over the years, improvements have been made to the procurement process itself. A cone of silence bans communications between the county deciders and bidders and their lobbyists after bid presentations are made. Selection committees consist of people with expertise in the service being sought by the county. Commissioners are supposed to be out of the decision loop while committees judge bids before making recommendations to them and the mayor.

Still, there are reputable firms that won’t seek county business because they find Miami-Dade’s procurement process too politicized and lobby-centric. So the county may not always be able to choose the best services and best prices because some would-be bidders opt out of the game.

The mother of all bid disputes is between CH2M Hill and AECOM Technical Services over a whopping $1.6 billion contract to oversee the county’s massive sewage-system overhaul. When CH2M Hill won the bid last year, AECOM challenged it. Mayor Gimenez assembled a new selection committee and gave the dueling bidders another chance. But when the committee chose AECOM in the second go-round, CH2M Hill challenged it in February. Meantime, the county’s crumbling sewers continue to rot.

There has to be a better way to do this. Bring yet more transparency to the selection process — a clear A-to-Z record of how a committee goes about choosing the top bidder so that fewer losers have grounds to appeal, for instance. The mayor should empanel a group of people with procurement experience to examine the current grounds for a bid challenge and find ways to reduce them while maintaining fairness for all bidders. That’s no slam dunk, but it’s doable.

Friday, March 21, 2014

Professionalizing procurement -- Jamaica

Gov't moves to improve procurement process
Minister with responsibility for Public Service in the Ministry of Finance and Planning Horace Dalley who made the announcement Wednesday, said the move is intended to ensure that only professionals of the highest level have responsibility for public procurement. The minister said that in the process there will be extensive training as well as certification of procurement officers, noting that memoranda of understanding have already been signed with some agencies and institutions to undertake this process.

In the meantime, Minister of Transport, Works and Housing Dr Omar Davies said the training of a specialised cadre of professionals is critical to improving the public procurement process. Dr Davies said there was a need to have specifically trained persons in procurement rules and guidelines to handle these matters within each ministry, and not, for example, the personnel officer or office manager, who have merely been asked to carry out this task.

"Oftentimes you are dealing with multi-million dollar contracts and somebody is just assigned this task without the full recognition of the importance (of the procurement process) and having a trained professional dealing with the matter is a critical element of making the system more efficient, in terms of the procurement guidelines," the minister said.

"We set out two years ago to fix public procurement and to take the pressure off public officers and this cloud of corruption that people tend to heap on public officers because simple errors were made. But at the same time, public procurement officers must improve their skills in public procurement and at the same time, the system must be improved," he said.

Dalley noted that as part of this improvement, a new public procurement law will come on stream soon, and there will be a comprehensive revision of the handbook of public sector procurement procedures and the standard bidding documents.

In addition, improvements are expected to be made in the procurement contract process and steps are also being taken to implement a fair and robust contractor performance assessment system.

Friday, March 14, 2014

Private partners succeed where transparency fails the public

Government accused of deliberate attempt to cover up fraudulent, incompetent and embarrassing outsourcing contracts
The Government is today condemned by MPs of all parties for hiding behind a “veil of secrecy” over the award of contracts worth nearly £100 billion a year to huge private companies. Problems are particularly acute at the Department for Work and Pensions, which is on the “verge of meltdown” over the privately-run operation of welfare reforms and employment programmes, they say.

The PAC calls today for Freedom of Information legislation to be extended to cover government deals with private firms, for contractors to be obliged to “open their books up” and for the National Audit Office to be given greater authority to scrutinise contracts. It also said suppliers should be required to have policies on whistleblowing in place.

“Too often the government has used commercial confidentiality as an excuse to withhold information, often in response to Freedom of Information requests from the public or MPs,” the committee says.

Conservative and Labour governments alike have turned to private companies over the last 30 years. The Government spends around £187 billion a year on goods and services, about half of which is estimated to be spent on contracting out to private and voluntary providers. Contractors are now responsible for vast areas of public services from managing offices, providing computer equipment and paying pensions to running prisons and immigration removal schemes, assessing benefit claimants and even maintaining nuclear weapons.

Coalition ministers are stepping up the process with the part-privatisation of the probation service and by handing responsibility to welfare-to-work programme to private companies. Ministers argue that the practice saves cash for the public purse because large companies can achieve economies of scale.

In a scathing verdict on the Coalition’s drive to contract out public services, the Commons public accounts committee (PAC) accused ministers of trying to cover up mistakes by refusing to divulge details of contracts. It said the Government was failing to get best value for money and lacked the expertise to ensure “privately-owned public monopolies” provided quality services.

The committee’s chair, Margaret Hodge, said: “If it’s not sorted out it will become the biggest ad for re-nationalising public services.” Protesting that contracts were too often “shrouded in a veil of secrecy”, she claimed: “We are in danger of creating a shadow state that is neither transparent nor accountable to Parliament or the public.”

The committee demanded that contracts with private companies are put into the public arena. It said four major firms it quizzed – Atos, Capita, G4S and Serco –were prepared to agree to the move, adding that it appears that “the main barriers to greater transparency lie within Government itself”.

Mrs Hodge said: “An absence of real competition has led to the evolution of privately-owned public monopolies which have become too big to fail.

TUC’s general secretary Frances O’Grady said: “It is time to end the default assumption that anything done by the public sector is better done by private contractors.

“The truth is that there has been a growing tide of outsourcing scandals, fraud and service failure. Some of this is down to government incompetence in contracting out, but much is an inevitable result of replacing the public sector ethos with the profit motive and cost-cutting.”
MoJ singled out in damning review of government contracting
The Public Accounts Committee’s 47th report, on contracting out public services to the private sector, cites several examples of contract mishandling by the MoJ.

Noting that the Cabinet Office admits that Whitehall 'has a long way to go before it has the skills required to manage contracts properly' it comments: 'This is a concern, given the speed at which some departments - such as the MoJ - are going ahead with outsourcing, despite a poor track record.’

Probation and offender rehabilitation are two significant areas the MoJ intends to outsource in the near future.

The report says it was ‘shocking’ that it took the ministry eight years to spot overcharging by G4S and Serco for the tagging of prisoners.

It also said fines of ‘a mere £2,200’ to Capita over its inadequate supply of interpreters to the court service did ‘not come close to taking into account the cost to the criminal justice system and to individuals caused by their failure to deliver’.

The report calls for the extension of the Freedom of Information Act to include public contracts with private providers to tackle the lack of openness around government contracts.

Wednesday, March 12, 2014

The pot vs. the kettle

One in five businesses think public procurement skills are getting worse
More than 60 per cent of businesses have not seen an improvement in commercial skills in public procurement in the past year, and one in five believes capability has deteriorated.

That’s the results of a survey of CBI members, in which respondents also said improving the public sector’s commercial skills is essential to transforming the procurement process.

CBI added inconsistency across government departments and a short-term approach to commercial contracts are also key concerns amongst businesses.
Sometime last year, I gave a brief presentation to one of the Rotary Clubs on Guam on procurement matters in general. The Rotarians included some of the leaders of the business community, many with more than passing involvement in selling to the government.

I asked for a show of hands to grade Guam's government procurement capability, starting with 'A' down to 'F'.  Overwhelmingly, they rated Guam's government contracting effectiveness an 'F'.

I then asked for a show of hands to grade the private sector's effectiveness with the government contracting system.  The question seemed to unsettle the crowd a bit, and the show of hands going up didn't get much support until down to 'C' and 'D' (but no 'F'). I admired my colleagues for their critical self-examination.

All contracts require (at least) two parties. Failure of the contract formation process, and contract administration, is bound to deteriorate if either or both parties fail to understand their role in that process, whether it is private or public contracting.

Even the government (on Guam and likely elsewhere) seems to recognize that government handling of its contracting does not always go well, let alone ideally. It is also important that the private sector appreciate that they have a role to play in facilitating that process, however.

There are thousands of protests every year in the federal system, as any search of the GAO website will reveal. Far and away, the bulk of them fail to gain traction. Those that succeed reveal flaws in the government's handling of the solicitation. Those that don't often suggest if not reveal a failure on the part of the private sector participants to understand that government contracting is very much unlike private contracting due to the governance strictures associated with expenditure of public funds. 

There are unyielding standards, disclosure requirements, timelines and limited discretion authorities that make government contracting a whole different ball game than the cut and thrust of private contracting.  Contractors should be aware of the difference and the different approaches required for each.

I have been working with Guam Community College to create a Basic Training procurement program. It consists of 4 "modules", each with 18 hours of class time teaching. 

Module 1 is an introduction to procurement, including its nature, principles, fundamentals, and statutory authority and structure. 

Module 2 is an examination of the methods of source selection, including an understanding of principles applicable to specifications, determinations of responsiveness and responsibility and the like; it is very code and regulation focused. 

Module 3 covers the administrative and judicial review processes of the controversies cognizable under Guam procurement law: solicitations and awards, suspensions and debarments, and contract disputes. 

Module 4 deals with the management aspects of government acquisition, from needs assessment and market research to creating audit trails and contract administration and enforcement. At the end, the students have had 72 hours of fairly rigorous exposure to the nuts and bolts of Guam procurement.

I'm told there has been in excess of 150 students have already gone through at least one of the three modules.  Almost all of them have been government employees (albeit with a modicum of legislative incentive).  This program will eventually raise the bar of the government's handling of Guam procurement.

Government contracting would improve significantly more if the private sector took the same interest. It takes two to tango, and practice to keep off the other's toes.

Thumbnail view of federal protest process

Having written a lengthy "primer" on the Guam procurement process (see right side bar), I am awe struck by the simple description of the federal process provided in the article below by "Channel Voices" blogger Steve Charles on the CRN website.   

 Steve Charles is co-founder and executive vice president of immixGroup, which helps technology companies do business with the government. He is a frequent speaker and lecturer on technology and the federal procurement process. He can be reached at Steve_Charles@immixGroup.com. The information he presents was adapted and digested from the book “The Inside Guide to the Federal IT Market,” published by Management Concepts Press. For more information, visit www.insideguidetofederalit.com/.

I've extracted and pasted, as usual, so read the whole article, especially if you want to get a bead on the federal system.  I've tried to extract those parts of the piece that are very similar to, if not identical with, the Guam process: the venues and timelines do differ, but the substance is practically the same.



Lost a Federal Contract Bid? How the Protest Process Works
There are three main types of protests:
* A protest that some aspect of the solicitation itself is prejudicial to your company.
* A protest that exclusion from competitive range or other aspect of the negotiated stage of a procurement was unfairly done.
* A protest that the final selection process was flawed.
These are pre-bid, pre-award, and post-award protests, respectively.

Pre-bid and pre-award protests often get imprecisely lumped together as pre-award protests, since a pre-bid protest does occur before contract award. But the two are significantly different; protests made after government receipt of a proposal or quote have far more in common than protests made before the date bids are due.

The simplest are pre-bid protests against unduly restrictive solicitation, improper requirements bundling, ambiguous language, or unreasonable evaluation criteria.

Filing a protest with an agency or with the GAO typically causes the agency to suspend further execution of the procurement, whether the protest is filed before or after a contract award. At the Court of Federal Claims, you can ask for a temporary restraining order or a preliminary injunction against the agency.

For better or worse, agency-level protests are relatively rare, since most protest experts doubt agencies' ability to fairly evaluate themselves. Agency-level protests also lack the kind of document disclosure process that the GAO facilitates. Keep an eye on GAO deadlines for filing a protest.

Only "interested parties" can file a protest, and for the most part it's pretty clear who is one. The legal definition of an interested party accepted by the GAO and the Court of Federal Claims is “an actual or prospective bidder or offer or whose direct economic interest would be affected by the award of the contract or by failure to award the contract.” Post-award, that means an offeror. Pre-award, that means companies considering participation in the competition. Subcontractors, or potential subcontractors, are not considered an interested party.

It is possible to resolve a problem with a solicitation's requirements or evaluation criteria without having to file a protest. During some solicitations, there is a period before the response deadline during which companies can ask for clarifications, and those requests for clarification often result in ameliorative amendments to the solicitation language.

The 10-day period for filing with the GAO starts ticking when the agency delivers an “adverse action” against your protest.

More:

For a larger icon view of the subject, consider Fox Rothschild's Federal Government Contracts & Procurement Blog's Government Accountability Office ("GAO") bid protest series. The third part of the series is available here, with links there to the first 2 parts.
In the first two installments, we covered who may file a GAO protest (Part 1) and what other parties can (and will) participate in the process (Part 2). Today, in Part 3, we'll discuss What May Be Protested.

Sunday, March 2, 2014

Irrelavance is not specification

It is generally common ground that procurement specifications should not be "unduly" restrictive. See, for instance, ABA Model Procurement Code §4-205d: "All specifications shall seek to promote overall economy for the purposes intended and encourage competition in satisfying the State's needs, and shall not be unduly restrictive."

To me this means that irrelevant procurement requirements are not just "unduly" restrictive, they are by definition totally restrictive; they are not, indeed, what is meant by a "specification". If a specification has nothing whatsoever to do with the functional or performance criteria of that which is being acquired, it is not a proper specification at all. See, for instance, the definition of "specification" in Model Code §4-101: "Specification means any description of the physical or functional characteristics, or of the nature of a supply, service or construction item."

On that basis, I have a hard time justifying the procurement decision rendered in the following story, assuming, of course, that the story is accurate and complete in its material facts. Your should read the whole story at the link.

Computer firm claims Hillsborough changed rules to aid vendor
Michael Banks, president of Form 10 Group Inc., said ... the county eliminated his company from the competition to install and replace computers in county offices.

The county had this requirement: bidders must be authorized to re-sell Hewlett Packard computers. “There is no technical support called for under this contract,” Banks said.

Form 10 was not an HP re-seller; the winning incumbent company, accomtec, was. Form 10 was the lower bid, but the award went to the incumbent.

Banks maintains that the county’s requirement that vendors be HP re-sellers is unnecessary. He said his company has installed and replaced thousands of HP computers for the Florida Department of Highway Safety and Motor Vehicles and for the Hillsborough County Tax Collector.

After Form 10 lost its bid protest, it still had the option to appeal to an independent hearing master. But Banks decided not to exercise that option before the protest period ended Thursday.

“The legal costs,” he said in an email, “far outweigh our chances for any positive outcome on the contract.”
Banks was not the only loser.

Though Guam follows the Model Code provisions mentioned above, Guam procurement law includes a provision (5 GCA § 5268(c)) which would seem to clearly preclude the kind of decision-making in this case: "Purchase descriptions shall describe the salient ... performance characteristics of ... service to be procured without including restrictions which do not significantly affect ... performance characteristics".