Resource: George Washington Universtiy Law Library list of procurement (and other) blogs

The George Washington University Law Library keeps a number of lists of legal blogs (blawgs) covering a variety of topics, including Government Contracts blogs. You may find this to be a helpful resource. The link to this resource is here.

George Washington University essentially created and leads the field of academic government contracting education. As it says of its Government Procurement Law Program,

"Established in 1960, the Government Procurement Law Program is the only one of its kind in the United States. Established by Professors Emeritus Ralph C. Nash, Jr. and John Cibinic, Jr., the program offers unparalleled faculty resources, course offerings, and professional development opportunities. The program's full-time faculty –Professors Joshua Schwartz, Steven Schooner, Christopher Yukins, and William Kovacic – offer students years of experience in the federal government and the private sector. In addition to its classes, the McKenna Long & Aldridge "Gilbert A. Cuneo" Government Contracts Moot Court Competition, and the Public Contract Law Journal, the Government Procurement Law Program also offers colloquia and symposia addressing evolving issues and presenting esteemed speakers from academia, government, and private practice."

It offers an LL.M. in Government Procurement Law, an LL.M. in Government Procurement and Environmental Law as well as an M.S. in Government Contracts (but see this blogger's disenchantment with the M.S. program, even though his blog site is also mention in the list of Government Contracts blogs).

Bundling (and The Government Contracts Law Report -- a new link to other resources)

I was doing some research into the restrictive effects of "bundling" in contract solicitations, and came across this illuminating article (which I've chopped and paraphrased) by Pat Wittie (once?) of the law firm Kilcullen, Wilson & Kilcullen:

 What is a “Bundled” Procurement? And When is It Improper?

Regardless of how the term is defined, bundling’s effect is to group a variety of segregable requirements into a single solicitation, so that all bidders/offerors must be able to satisfy all of the requirements. Offerors that can provide only some are excluded from the competition.

The backdrop for this discussion is the Competition in Contracting Act, which requires full and open competition and states clearly that solicitations may contain restrictive provisions and conditions only to the extent necessary to satisfy the needs of the agency, or as authorized by law. 10 U.S.C. § 2305(a)(1)(B)(ii); 41 U.S.C. § 253a(a)(2)(B). Over the years, GAO has evaluated bundled procurements in a variety of contexts, and with a few important exceptions, it has come down squarely on the side of competition and against bundling.

[After discussing cases declaring this general principle, the article continues:] Bundling, then, is strongly discouraged, carefully scrutinized, and seldom upheld in a protest. There are, however, a few situations in which bundling has been adequately justified, at least in GAO’s view. Most of those situations fit into one of three categories:

(i) Design integrity/interoperability: the requirements to be bundled all relate to a single integrated system, where design integrity and interoperability are critical.


(ii) Overwhelming administrative burden: the agency’s administrative burden will be truly overwhelming if the work is not bundled. (Although agencies often defend solicitations that involve bundled requirements on grounds of administrative efficiency, they seldom win. GAO’s threshold for administrative convenience is low, and its tolerance for inconvenience to the agency is high, at least when balanced against the statutory requirement for competition.)

(iii) National security: the agency can provide a well-documented justification based on national security or military readiness considerations.

IDIQ Contracts Are Governed By Slightly Different Considerations. Historically, the “bundling” issue has arisen in garden-variety supply, service, or construction contracts, but more recently the concept has spilled over into IDIQ and task order contracts. In fact, amendments to the Competition in Contracting Act (CICA) that were passed in 1994 as part of the Federal Acquisition Streamlining Act created: (i) a scheme for “multiple awards” under IDIQ procurements, which is effectively a statutory preference in favor of unbundling, and (ii) a requirement for unbundling on task order contracts for advisory and assistance services where the amount is expected to exceed $10 million over 3 years. Legislative history clearly focuses on the benefits of constant, head-to-head competition among multiple awardees as tasks or delivery orders are identified and released.

These statutory provisions have been implemented through the FAR at 16.500 et seq. FAR 16.504(c)(1) establishes the general preference for multiple awards on IDIQ contracts, but identifies six situations in which multiple awards “should not” be made. With IDIQ contracts, bundling into a single award is likely to be permitted when an agency can demonstrate that only one contractor can provide the requirement, or if administrative costs of multiple awards are overwhelming, or if design integrity or interoperability are critical, or if “more favorable terms and conditions” will prevail with a single award.

The analysis does not stop there, however, since GAO has grafted a “void for vagueness” standard onto IDIQ solicitations. In fact, in connection with a protest that it dismissed as untimely last year, GAO took the extraordinary step of writing a letter to the Air Force and the Army, chastising those agencies for violation of CICA and FAR 16.504 even though it did not address the protest on the merits. (Letters to the Air Force and Army Concerning Valenzuela Engineering, Inc., B-277979, Dec. 9, 1997, Jan. 26, 1998, 98-1 CPD ¶ 51.) GAO reviewed the statement of work in this IDIQ solicitation and concluded that it was so broad that it did not “reasonably describe the scope of services needed,” thus failing to provide potential offerors notice of the work that would be within the scope of the resulting contract. GAO took pains to point out that:

inclusion of broad categories of work in one statement of work constitutes a form of bundling, since different kinds of work (or tasks in different geographical or technical areas) are combined into one procurement, and an overly broad statement of work can unjustifiably diminish competition, just as bundling does, by deterring businesses, particularly small businesses, from competing for a contract, notwithstanding their ability to perform some of the work at issue.

Thus a solicitation with a broad, vague, undifferentiated statement of work can constitute a prohibited form of bundling, at least in connection with IDIQ contracts. GAO has not addressed whether this would be true even if the agency could make persuasive arguments in favor of a single, bundled award on grounds of quality, design integrity, or national security.

[And then there are] amendments to the Small Business Act passed in 1997 [which] are driving the SBA’s proposed regulation. The approach taken by Congress in the statute and by SBA in the proposed regulations, however, shows only passing interest in competition as a principle. Instead, the primary consideration - the principal focus - is on process, i.e., maximizing small business access to federal procurements. Toward this end, the proposed regulations impose a strict quantitative analysis requirement. The exercise of judgment and discretion by an agency-to which GAO typically defers-is far more tightly circumscribed than it has been in the typical GAO decisions. Under the proposed regulation, the effect of bundling must be quantified and its justification must involve “measurably substantial benefits.”

Impressed by the comprehensiveness of the paper (even if dated), I looked around for its source, and discovered this new procurement resource link, actually more of a link of links:

The Government Contracts Law Report

Sometimes even an old link can prove to be a rich vein to mine.

Comparative procurement law resource

The Law Business Research Limited organisation, in association with Global Competition Review, provides useful comparative data on many fields of business law, and in particular from time to time publishes and updates a Public Procurement synopsis. It describes its resource:

Getting the Deal Through is a database of law and regulation in 56 practice areas and more than 150 jurisdictions containing concise explanations to the most important legal and regulatory matters that arise in business deals and disputes worldwide.

And it can be accessed at http://gettingthedealthrough.com/.

It has just released a new procurement review, Public Procurement 2013.   I'm not sure if you need to register to have access to the document's data online; I have been a registered user for a few years, and it is easy to do and free to inhouse counsel.  If you can access it, it provides a handy query facility to zero in on particular issues across any or all of the 37 countries included in its review.

The book is available for purchase here. 

This is a handy resource for global practitioners and the book would be a valuable addition to any library.

More than the solicitation process

People outside procurement (government contracting) tend to think that it is nothing more than the solicitation process. We don't read stories about much other than bid protests or other procurement train wrecks. Those inside know better, of course.

Spend Matters is a private/public purchasing website that a lot of procurement insiders from around the world go to. It can be an insightful resource for practitioners and students of contracting, both government and private. This post began with a piece from that site.

The Public Sector and the Cost of Resisting Change, a guest post from Mark Digman.

I know I occasionally fall into the trap that organizations must be on-board with what we so clearly see as necessary (if not obvious.) But then I read about the recent procurement struggles of a great American city like New Orleans, and I snap back into reality and the hard truths of the world: change is hard. As it stands, the Office of the Inspector General in New Orleans is making recommendations – what amounts to a slap on the wrist – but it’s easy to envision a scenario where failure to turn it around will result in very unfavorable results.

In fact, we’re starting to see increasingly strict regulations placed on state and federal organizations – regulations with real teeth that go much farther than the recommendations of the Inspector General in the case of New Orleans. Illinois, for example, recently enacted into law a procurement reform bill. As a result of that legislation, much tighter controls have been put into place in regards to vendor restrictions, subcontractor requirements, and transparency provisions. The state has, in essence, legislated procurement accountability.

I'll leave it to you to read the rest of his piece at the link, and here turn to his link to the situation in New Orleans.

IG finds problems remain with city purchasing, payment procedures

The Office of Inspector General issued an audit report in May on the city’s internal controls related to budgeting, bids, purchasing, contracts, disbursements and wire-transfer processes and found several issues with those procedures.

Controls put in place to separate ordering and receiving processes were not functioning since 84 percent of the purchases the OIG tested only had one person placing and receiving the order. City policy requires more than one person within a department to participate in the ordering and payment process.

OIG suggested that the city put in place a process to determine if vendors were delinquent in paying city taxes before they were paid for services.

The initial OIG report also found that vendors who registered with the city did not go through a verification process to determine if they were valid vendors or that their tax ID number was valid.

The OIG suggested that the city create a policy to manage the vendor master file by determining the company’s existence through the Secretary of State’s Office and obtaining federal tax ID numbers from the IRS.

While the OIG found that the city’s financial system did not provide an adequate audit trail for auditors, the city did find a way to make that possible. The city also began to amend contracts only after it reviewed if changes would not be better than rebidding the contract. And while the city previously was not required to verify that vendors were current on tax payments, the city implemented corrective actions and got tax compliance certificates for all contracts, including amended contracts.

It is nice to say that procurement should be accountable and transparent and maximize the public dollar. But principles become pap unless given effect. And that requires effort. But it comes with a pay-out to the taxpayers.

Program materials for Guam 2012 Summer Procurement Conference

The Guam Chamber of Commerce links to the Program Materials for Prof. Danielle M. Conway's presentations at the Guam Summer 2012 Procurement Conference are below:

Procurement Planning and Needs Assessment

Market Research & Translating Needs and Research into Effective Specifications

Contract Administration Best Practices

Infrastructure Source Selection: The ABA PIP Model

She also stressed this publication:

GAO COst Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs

The Guam Chamber of Commerce also hosts my 2011 Program Materials for the presentation on the Guam Centralized Procurement Regime:

The Mythconceptions of Procurement Autonomy

Recent history of US Federal Procurement

Federal News Radio has put together a short timeline of events in the recent evolution of the US Federal Government's acquisition system. It's a great service to the procurement community, and I recommend all students and practitioners to have a look at it. Here are some quick highlights, as a teaser not a comprehensive canvas.

Timeline: Congress crafts acquisition policy

Competition in Contracting Act (1984)

"You can look at the Competition in Contracting Act as the Constitution of federal procurement," said Roger Waldron, president of The Coaltion for Government Procurement. "It laid the foundational rules with regard to how the federal procurement system was going to operate with a focus on a full and open competition to the maximum extent practicle. … It is the landmark legislation in enshrining competition in the statutes."

Federal Acquisition Streamlining Act (1994)

FASA sought to improve acquisition in three broad areas, according to Tim DiNapoli, acting director at GAO's acquisition and sourcing management office. First, it aimed to reduce unique purchasing requirements. Second, it sought to increase the use of simplified acquisition procedures for low-income procurement. Third, it sought to obtain goods and services faster in order to reduce the in- house cost of doing business.

Rather than the federal agencies describing in specific detail what they needed, the drafters of the act sought to encourage the agencies to focus instead on what their outcomes were. "Use a more performance-based contracting as opposed to the use of a specific requirement," DiNapoli said.

To facilitate this, Congress raised the threshold from $25,000 to $100,000, so that procurements under $100,000 could be acquired more simply, with fewer rules and regulations.

"They also authorized the use of a government purchase card for very small-dollar procurement," DiNapoli said. "If they're under $2,500, for example, federal agencies could use the purchase card to acquire that. It makes for much more of a commercial approach."

FASA also established a preference for multiple-award contracting.

Clinger-Cohen Act (1996)

the Clinger-Cohen Act eliminated the exclusive authority of the General Services Administration to acquire technology and allowed individual federal agencies to assume that role.

"The big change that Clinger-Cohen made to the acquisition system was getting rid of the GSA Board of Contract Appeal."

That board was a special bid protest body that had been set up originally in the Brooks Act to hear complaints from disappointed bidders on contracts, specifically in the IT area.

"It was very, let's call it, 'pro-protester and anti-government decision,'" Kelman said. "It second-guessed government decisions a lot and almost all major IT contracts were protested through that GSA Board of Contract Appeal and they had a much more lenient standard for upholding a protest than the GAO does."

Clinger-Cohen introduced the use of Governmentwide Acquisition Contracts, which allow agencies, once they have specific needs, to place orders against those contracts to streamline the process.

Federal Acquisition and Reform (1996)

One of the key elements of FARA regarded the competitive range determination, which allowed contracting officers to limit the number of bids they were going to actively evaluate. Contracting officers could then focus on the bids that had a chance of winning the contract as opposed to considering each and every bid that might be submitted.

HUBZone Empowerment Act (1998)

"The procurement system over many, many years — not just the mid-'90s, but well prior to that and since — has vacillated back and forth between a number of competing themes," said William Woods, director of acquisition and sourcing management at the Government Accountability Office. "One theme is efficiency, that we need to do things to get the best value for the taxpayer and do it quickly. But another theme is fairness, that Congress believes that we ought to use the procurement system to promote certain socio-economic goals."

Congress passed the HUBZone Empowerment Act in order to give a boost to small business located in Historically Underutilized Business Zones in bidding on contracts.

Services Acquisition Reform Act (2003)

"The GSA Schedules, probably in the early '90s, maybe 60 or 70 percent, maybe even a little bit higher, were product-based acquisitions," Walrdon said. Waldron said 55 to 65 percent of acquisitions are services today.

"Services, I think, are a bit harder to acquire. It's harder to write requirements around them. It's harder to evaluate them, what access to the commercial market, so I think the Services Acquistion Reform Act was an effort to address that in part," he said.

First, it created a civilian acquisition officer in each agency to oversee the procurement process. Second, it encouraged incentives for using performance-based contracts for services.

"It also helped agencies to establish a more capable workforce with regards to establishing a workforce training fund, with some of the intent being to improve how contracting officers could improve their skills and capabilities in buying goods and services," DiNapoli said.

SARA also established the Acquistion Advisory Panel, made up of 13 people from the government and private sector, who reported to Congress and the Office of Management and Budget on the procurement system.

Weapons System Acquisition Reform Act (2009)

This came about because the Government Accountability Office had found many of the major weapons systems DoD had contracted for had come in over cost and behind schedule and were not performing as promised.

"It focused on some upfront cost assessments and made sure there was a framework in place at the Department of Defense to honest and reliable cost estimates before the department committed to specific program," said William Woods, director of acquisition and sourcing management at the Government Accountability Office.

"Before the department and Congress committed significant funds to major systems, we had to be sure that the technology was mature and reliable," Woods said. "We're no longer relying on just contractor estimates."

Federal News Radio provides another great short overview of US Federal acquisition in its series, Inside the World's Biggest Buyer

One of the items in this series that resonates with me is this one:

Acquisition workforce strategy is the answer to DoD's problems

Of the eight findings, three of them concern the acquisition workforce, a large group of dedicated public servants who work diligently, but ultimately struggle within a broken system that is focused on avoiding mistakes rather than producing more, in less time, at less cost.

Our task force found that the skills of the acquisition work force, as a whole, have atrophied and that DoD needs to significantly reinvest in human capital. This reinvestment should be directed at three specific problems:

First, the military acquisition workforce, through no fault of their own, has become detached from the operating forces and lacks key perspective and experience. Second, acquisition workforce management practices, in part causing the aforementioned problem, also contribute to military members being put at a disadvantage with their peers in the operating forces. Third, the department lacks sufficient systems engineering capability that is necessary for inherently governmental functions necessary for timely decisions and tradeoff relative to technical feasibility and cost.

DoD recognizes the need to reinvest in human capital, improving the quality and training of the workforce. One of the major problems is that acquisition personnel do not have an appropriate understanding of operational needs. The acquisition system is so complex that its specialists usually work exclusively within that field. Mid-career military officers attend schools that train them to become acquisition specialists and once they gain the additional occupational training, they stay within the acquisition system for the remainder of their careers. Civilian employees in acquisition do not have sufficient access to the education and assignments that would prepare them for increased responsibilities.

Acquisition personnel have not been served well by existing management practices, particularly the military members. Civilians dominate the acquisition workforce, unlike the services or the combatant commands. There are 136,000 civilians and 16,000 military. The civilians manage uniformed members who work within the acquisition system, not the parent armed service. This puts military personnel at a disadvantage compared to their counterparts for career opportunities and promotions.

The current approach does not provide military officers with the requisite experience, skills, and qualifications needed for positions of increasing responsibility in the acquisition field. The Service Chiefs, in collaboration with senior acquisition leaders, should be accountable for the career path management, training, education and particularly promotions and equal promotion rates of military acquisition personnel.

The department also lacks the organic system engineering capability that is essential to the inherently governmental evaluation and decisions. The shortfall in system engineering hinders the department's ability to assess technical, cost, schedule and viable alternatives.

DoD needs to establish a human capital strategy for developing qualified system engineers capable of effective oversight and decision-making, prioritize near term needs and reassign system engineers to meet them, and increase the quality and capability of military and civilian engineers in the acquisition process and increase the sharing of resources across commands.

I think that is all a bit paradoxical in the actions of the recent era to outsource more and more of the back-office work of government, procurement and other government functions, to more civilian contractors.

The advantage of short timeline studies such as this is that it isolates the milestones against the noise of the issues of the day, and the outcomes which describe the milestones give a better perspective on which elements in the debate prevailed. In other words, which political philosophies or interest groups got their way.

The real work of procurement is always going to be political at some level, and the more that process intercedes, the less effective procurement will ultimately become regardless of which high mount it started from. Meddling begets more of the same. Things not broken get fixed, things broken get put into operation. It is not a dispassionate business.

One last golden service provided by Federal Radio News proves the point:

Acquisition bill tracker

Go there and see what I mean.

Adding StanHinton.com to other links

Ran across another useful and helpful resource. It is useful because it appears to be a concise and comprehensive research tool for procurement students and practitioners, including links to other resources. It is helpful because, unlike some others, it is free.

See the Government Contracts Resources home page of Stan Hinton. Its concise utility is illustrated by its page of "Recent Court of Federal Claims Bid Protests", which makes a neat and relevant and short statement of the case.

Compare, for instance, its description of this case:

Virgin Islands Paving, Inc. v. United States, No. 11-687 C (Jan. 31, 2012) (successful protest; after having initially analyzed bids and concluding there were no mistakes in eventual awardee's bid, agency lacked rational basis, after award, to reverse its position)

with the description of the same case on this fee-based site:

VIRGIN ISLANDS PAVING, INC. v. THE UNITED STATES, COFC No. 11-687C, January 31, 2012. Post-award bid protest of a sealed bid FAR Part 14 Federal Highway Administration(“FHA”) contract for road construction in the Virgin Islands. FHA did the procurement under a Memorandum of Agreement(“MOA ”) with the Virgin Islands Department of Public Works (“VIDPW”). The MOA required FHA was to “request written comments and/or concurrence“ of the VIDPW. Protestor was the low bidder. FHA sent a concurrence letter to VIDPW recommending the contract be awarded to VIP. “[A] a member of the VIDPW Commissioner’s staff advised the FHWA that the VIDPW still was ‘concerned’ that VIP ‘ha[d] not been performing on other VI DPW projects’ and was ‘getting political pressure’ not to concur in the award. Nevertheless, [latter that same day], the VIDPW Commissioner concurred in the award to VIP.” An hour after concurring, VIDPW requested a conference call to express concerns about award to protestor. FWA requested protestor to verify its bid, which it did the next day. On the next day, FWA made award to the other bidder relying on FAR 14.407-3(g)(5) to make award to the second bidder.
Judge Braden permanently enjoins the award. She finds that FHA’s decision was arbitrary, capricious and contrary to law. She notes “In addition, the Administrative Record does not evidence why the FHWA began to question whether VIP made a mistake. The only written account is of a September 20, 2011 meeting, where the agency was planning to reverse its decision, because ‘the VI Governor want[ed] assurance that [VIP] would complete the work.’ The idea that VIP’s bid was rejected as a mistake, pursuant to FAR 14.407-3(g)(5), and that conclusion was not supported by any written analysis from agency engineers, accountants, or the Contracting Officer, but from agency counsel who suggested it as ‘a way [FHWA] could award to other offer [sic] besides using responsibility/performance’ (AR 645 (emphasis added)), ipso facto was not rational. See Savantage Fin. Servs., 595 F.3d at 1286-87 (requiring the agency to provide a coherent and reasonable explanation of its exercise of discretion). Moreover, nothing in the Administrative Record evidences that any agency official qualified to opine on VIP’s pricing changed his mind at the September 20, 2011 meeting or discussed any particular mistakes that VIP might have made that directly justified the agency’s ultimate decision.”

Though, it must be said, the latter site does seem to freely offer access to its page of US Court of Federal Claims, too.

Competition produces huge cost reductions

There's a bit of a goldrush mentality on Guam these days, especially heated by expectations far outpacing realities and practicalities, brought about by the global realignment of US military posturing and the emphasis on the Western Pacific region in particular as we begin the New Pacific Century.

It's the biggest thing since Magellan. Once again, the world, and the US, discovers the unique geographic significance of this Marianas Islands chain across the top of Micronesia, at the Heart of the Lei of the Lands that form the curtain between East and West Pacific. Guam is the Crossroads of the East and West, North and South Pacific.

Although the buildup may be seen to be driving up some costs for scarce local resources, the competition for scarce dollars in an economy-challenged world is driving down the anticipated cost of the buildup:

Military Construction Costs on Guam Drop Up to 30% Amidst Fierce Bidding for Contracts

Guam Contractors Association President James Martinez says costs are falling because of fierce competition for the construction jobs that are out there, as well as improvements in cost saving technology which have resulted in lower bids from construction companies.

With bids on many federal jobs coming in at 25% to 30% under the originally estimated cost, that is translating into huge savings for the Federal Government on the multimillion-dollar buildup projects DoD is offering.

If you are a contractor and want to follow the construction and other buildup news, an excellent one-stop shop is the Guam Buildup News site.

One bid received vs one bid solicited

I came across this useful site for those wanting to track who got what from government contracts, at least large contracts of $5 million and up:

http://www.defense.gov/contracts/

It's a day-by-day list of Defense contracts let. I didn't have time to "play" with it, but two things popped out at me. First, it also seems to be a handy portal and search facility to other sources of contracting news and information.

Second, the number of "One bid was solicited with one bid received" contracts let seems predominant, at least on June 15, 2011.

On that last point, I had a post last year about the dilemma of one bid received. The "one bid solicited one bid received contract" is not the same thing; this latter appellation is otherwise known as "sole source". The dilemma of one bid received comes about in a competitive solicitation, and sole source is obviously not a competitive bid.

Congress.org reported earlier this year on the magnitude of single bid contracts:

Pentagon contracts: No bid required

The lack of competitive bidding in Pentagon contracts is notorious. But the problem extends well beyond the highly publicized cases that stem from a cozy or even possibly corrupt relationship between Pentagon officials and contractors. It includes cases, such as the roller deal, where the Pentagon gets locked into a single supplier because of the terms of the contract. It includes one-bid deals, in which a competition is structured in a way that draws only a single company. And it is exacerbated by a consolidation in the industry, meaning fewer big players available to go after Pentagon business.

The result, according to newly available Defense Department data, is that more than half the Pentagon’s total budget obligations for contracting last year were spent without effective competition or with no competition at all. That comes to about $188 billion, according to numbers provided by the Pentagon.

But the lack of competition is simply how the Pentagon normally does business. As a result, it gets locked into inflexible contracts, guaranteeing lucrative long-term deals for favored contractors and probably costing the government billions of extra dollars each year.

No-bid, or sole-source, contracts accounted for $140 billion of the overall $366 billion defense contracting budget in fiscal 2010, the Defense Department said in response to a query. The one-bid contracts totaled $48 billion.

As lawmakers begin to comb through the federal budget looking for ways to slash government spending without harming the military’s combat capabilities, these contracting practices are likely to receive new scrutiny.

Indeed they have. Just a couple of months ago, the Director of Defense Procurement and Acquisition Policy in the Office of the Under Secretary of Defense issued this directive and reiterated a slightly earlier one:

SUBJECT: Improving Competition in Defense Procurements - Amplifying Guidance

The focus of my [prior] memorandum was on maximizing competition in situations where only one offer is received in a procurement utilizing competitive procedures. The purpose of this memorandum is to amplify that guidance in response to questions that have been raised.

[T]he use of [referenced] exceptions does not mitigate the need for competition nor the requirement for a determination that the price is fair and reasonable.
Unless an exception applies or a waiver is granted, the following procedures apply:
• If the solicitation was advertised for fewer than 30 days and only one offer is received, then the contracting officer shall cancel and resolicit for an additional period of at least 30 days; or
• If a solicitation allowed at least 30 days for receipt of offers and only one offer was received, then the contracting officer shall not depend on the standard at FAR 15.403-1(c)(ii) in determining the price to be fair and reasonable. Rather, the contracting officer shall use price or cost analysis in accordance with FAR 15.404-1 to make that determination. If the contracting officer believes that it is necessary to enter into negotiations with an offeror, the basis for these negotiations shall be either certified cost or pricing data or data other than certified cost or pricing data, as appropriate, in accordance with FAR 15.403-l(c), DFARS 215-403-l(c) and FAR 15.403-3(b). The negotiated price should not exceed the offered price.

I recognize that implementation of this policy may have the unintended consequence of increasing the contracting community's workload, but given today's scarcity of resources we need to ensure effective competition to the maximum extent possible. Every dollar saved through effective competition benefits the warfighter and the taxpayers.

In this context, a GAO report to Congress in 2010 is also instructive:

Opportunities Exist to Increase Competition and Assess Reasons When Only One Offer Is Received

Scratching around in the web, I also found this forum which discussed one other economic aspect of the double-edged sword that comes from maximizing low price in search of competition. The forum consists of contractors and players in the school bus industry, and this particular thread was kicked off by this article:

Schools try to attract more bus contract bidders

According to school district officials, one is indeed a lonely number.

That’s how many vendors bid on the department’s bus contract during the past few bidding periods, eliminating any chance for the district to find any cost savings through market competition.

Part of the problem is the higher cost for vendors to do business. Rising fuel prices and more government-mandated safety features in school buses have limited the field of candidates equipped to provide services to a large district like Framingham.

In addition, many towns have had to cut back on busing to save money in their school budgets. Framingham reduced its fleet by 10 buses last year.

As the district bears down for another difficult budget season this year, officials are pulling out all the stops to attract more bids, and possibly find a better deal than the five-year contract they have with their current vendor, First Student, which expires in June.

Unlike in past bidding years, this year’s RFP will give more options to potential bidders, officials said. Vendors can either submit a bid to provide buses only or a full busing service with drivers included. New this year, there is also an option for bids for buses of varying sizes.

“We’re certainly willing to do anything that makes sense,” said school business director Edward Gotgart. “We wanted to see if there was anything we could do to … entice more vendors to participate in our bid.”

The problem with only having one bid is that the district has no way to know if it’s being overcharged.

Comments from the forum include these:

~~ One is the only number when districts wipeout the competition through low-balling. This story seems to me more a propaganda release than reality. The competition has been wiped out by years of low-ball bidding that districts attached to like investment parasites. Now that the competition is gone some of these districts are whining about no competitive bids?

~~ Although others have the capability to fulfill a busing contract for school district, they don't have the capability to secure bids, whether on price or on the ability to get on the school district's radar, so to speak.

~~ States like Mass have laws that basically discourage and prohibit certain contractors from bidding. Having three year contracts when the cost of equipment and providing good operations is rising is just foolish. We look to bid in states and areas where customers want good service, good equipment and long term partnerships to work through the issues we all face today. Longer term agreements with good specifications and tough requirements are whats needed.

~~ Bottom line is this industry needs an enema. This industry has nothing to do with children anymore!

Aston Carter, undersecretary of defense for acquisition, technology and logistics, ran a short opinion piece in the Wall Street Journal not long ago addressing some of these issues and others facing an economically challenged federal defense department:

The Pentagon Is Serious About Saving Money

Last year, we identified savings in the defense budget by cancelling unnecessary programs. Now we must find savings within programs and activities we do need.

Last year, the Pentagon awarded $55 billion in contracts that were supposed to be competitive but for which only one bid was received, usually from an incumbent contractor. Yet simple changes in how we structure evaluations and work with industry have been shown to reduce by 50% the incidence of single bids by incumbents. Competition is not always available, but the evidence is clear that the government is not availing itself of all possible competitive situations.

My plan covers five major areas.

First, ... we will establish affordability requirements that have the same force as high-priority performance requirements. We will also insist that our acquisition professionals and suppliers plan according to what programs should cost, not according to self-fulfilling historical estimates of what they will cost, as if nothing can be changed in how we do business.

Second, to incentivize productivity and innovation in industry, we must strengthen the connection between profit and performance in our business practices. Among other things, we are exploring ways... to reward contractors who control their costs and demonstrate exemplary performance.

Third, we must remove obstacles to effective competition. That means we should stop deluding ourselves with the idea that "directed buys" from two designated suppliers represent real competition.

Fourth, we will more aggressively manage the more than $200 billion we spend annually on services such as information technology services, weapons-systems maintenance and transportation. When most people think of the defense budget, they think of ships and planes. But more than 50% of our contract spending is for services. Believe it or not, our practices for buying such services are even less effective than for buying weapons systems.

Fifth, to reduce unproductive processes and bureaucracy, we are sifting through the mass of reports that we produce year after year and eliminating those that add no value. Even more worthy of scrutiny are the reports that the Pentagon requires from contractors, who dutifully write them and then bill the taxpayer for their busy-work.

UPDATE ALERT July 2019 FAR Council Introduces Limits on the Single-Offer Adequate Price Competition Exception (The firm Crowell & Moring LLP have issued the article cited and linked.)

On June 12, 2019, the FAR Council issued a final rule amending the FAR to address an exception from certified cost or purchasing data requirements when price is based on adequate competition. In particular, the final rule amends the definition of “adequate price competition” in FAR 15.403-1(c) for submission of certified cost or pricing data to DoD, NASA, and the Coast Guard so that the adequate price competition exception now applies only when “two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement.”

This means that if only one offer is received, even if submitted with the expectation of competition, the exception no longer applies. For all other agencies, the exception still applies even when only one offer is received, provided there is a reasonable expectation that two or more responsible offerors would submit offers, or price analysis demonstrates that the proposed price is reasonable.

Though this rule represents a change to the FAR, we note that a similar rule has existed in the Defense Federal Acquisition Regulation Supplement at 215.371-3 for a number of years.

Search links - World Bank country procurement reports

From time to time I look at web statistics to see if and how posts to this blawg turn up in related, or unrelated, web search queries. It often leads to very interesting new threads of thought and information.

For instance, one such search included a link to a World Bank Operational Procurement Report for Tonga. Looking further, I found a huge index of such World Bank reports for other countries and entities around the world. That link may prove useful to your own studies, so here it is.

Some government contracting blogs

I've run out of room in my links section to add any further references, so you can look for additional sources by clicking on the "Other procurement links" label above.

Here are a couple of government contracting blogs I've run across today:

Government Contracts Law Blog by law firm Sheppard Mullin (USA)

Interesting recent post on contract modifications as improper sole source procurements: Let Bygones Be Bygones - Except When It Comes To "Out of Scope" Modifications

ContractsProf (Government Contracts) Blog (USA)

Interesting recent posts on oral change orders:

"No oral modification" clause dooms claim under public contract

Feldman on oral change orders

Oral change orders and the NOM clause, part III

Also this post on recent decisions regarding whether personal service government contractors can be treated as "employees": More claims by "contract employees" against Feds

As always, if you know of a good resource for public procurement law and advice, let me know by email or comment.

The procurement portal of the Republic of the Philippines

For those interested in the procurement processes or issues in the Philippines, this Government website may be a useful start:

Philippine Government Procurement

Bridging gaps and breaking walls for a better understanding of procurement reforms

A United Kingdom approach to procurement

I have happened upon the UK's official procurement website, or so it appears. It is the web home of the Office of Government Commerce (OGC). The Home Page is here.

It appears to offer a treasure trove of procurement advice and resource, not only restricted to the unique requirements of the United Kingdom and the European Union, but also framed in more universally recognized statements of procurement theory and principle.

For instance, it describes the procurement process in the manner I consider most appropriate to obtain effective procurement outcomes:

The procurement process spans the whole life cycle, from the identification of the need to purchase, through supplier selection and contracting, to the delivery of the required goods or services and (where relevant) the underlying policy outcome through to the disposal of the asset(s) or service closure or recompetition exercise. Its success can only be ultimately judged or measured when the product has been disposed of, or sold on, or when the service contract has been delivered in full.

Its Introduction to Public Procurement also details one of the cornerstones of effective procurement practice:

Pre-Procurement Planning

It is essential effective planning is carried out prior to a procurement. This planning should include :

> consultation with stakeholders about what is needed and the budget that is available to fulfil the need

> engagement with the market to understand the solutions that may be available and to get feedback on how the requirement may be best met

> establishment of effective governance arrangements and resourcing plans

> if necessary because the department does not have the necessary expertise, appointing advisers to help ensure novel or difficult projects are established on a sound footing

Developing Specifications

It is important to provide sufficient detail to allow the market to respond to requirements, whilst leaving room for innovation where appropriate.

Output- or outcome-based specifications should normally be used. These focus on what authorities want to achieve, not how a supplier is to provide it. This challenges suppliers and gives them the scope to develop innovative solutions.

In certain circumstances it will be essential to specify exactly what is required in detail (e.g. for specialised laboratory equipment).

Specifying an accepted industry standard for a technical solution is also good practice; specifying non-standard or ‘gold-plated’ solutions will always lead to higher costs.

While the website appears to be under re-construction, it nevertheless contains links and articles and other material that is sure, at some point, to offer valuable insight to any student or procurement practitioner, regardless of your particular procurement framework.

I encourage you to have a "sticky beak" (a look around).

United Nations Procurement Capacity Development Centre

I seem to have run out of room to post any additional links for procurement resources, but I do want to make note of this one, the United Nations Procurement Capacity Development Centre.

It contains information about and links to many procurement issues and focus areas, with particular but not exclusive focus on developing economies. It has references to online resources as well as institutions and courses of procurement instruction.

For instance, I have had numerous occasions lately to remark on issues of local social preference provisions, and the PCDC resources includes this pertinent study from the US: STATE AND LOCAL PROCUREMENT PREFERENCES: A SURVEY.

The site should proof useful to any student of procurement or those who want new ideas about how to reshape or improve their own procurement philosophy, practice or regulatory scheme.