Best Practices in Government Contracting with DHS & DOD

Best Practices in Contracting
for DHS & DoD
Briefing for the Government Technology and
Services Coalition (GTSC)
Thomas W. Essig, TWE LLC
21 February 2014

Title slide template by SlideShop.com

Agenda
1. Things you need to know about the ―Big A‖
Acquisition Process

2. Key Government Procurement Personnel
3. Things to consider during the contracting
process
• What you should be doing
• Evaluation Factors
• Things to pay particular attention to/watch out for

• Recommendations for proposal writing

4. How Things Go Wrong
2

1. Things you need to know about
the ―Big A‖ Acquisition Process
Cost Overruns in the Spotlight

3

―Big A‖ Acquisition Process
Related Major Decision Processes
Budgeting

Requirements

Calendar Driven

Need Driven
O ve ra rc hing P olic y
N S S /N M S /J oint vis ion

J oint C onc e pt of O pe ra tions

F unc tiona l
A re a
A na lys is

F unc tiona l A re a
F u n c tion al C on c e pt
In te gr ate d A rc h itec tu re
F e e dba c k

D

MS B

O
T
M

- M a teriel Pr oc e s s

L

A na lys is of
M a te riel
A pproa c he s

MS C

CDD
MS A

P
F

D O T L PF
Pr oc e s s

JR O C

D AB

CPD

Ao A
IC D

CD

T e c hno lo g y
D e ve lo p m e nt

C o nc e p t
R e fine m e nt

D AB

JR O C

JR O C

D AB

Incre m e nt 1

D em o

MS C

MS B
D em o

Incre m e nt 2

MS B
D em o



B

A
T e c h n o lo g y
D e v e lo p m e n t

(P ro g ra m
In itia tio n )

E n tra n c e c riteria m e t b e fo re e n terin g p h a s e



Concept
R e fin e m e n t

P ro c e ss e n try a t M ile s to n e s A , B , o r C



User Needs &
T e c h n o lo g y O p p o rtu n itie s

E v o lu tio n a ry A c q u is itio n o r S in g le S te p to F u ll
C a p a b ility

C

S ys te m D e v e lo p m e n t
& D e m o n s tra tio n

IO C
P ro d u c tio n &
D e p lo ym e n t

C o nc e p t
D e c is io n

D e s ig n
R e a d ine s s
R e vie w

P re -S ys te m s A c q u is itio n

S ys te m s A c q u is itio n

L R IP /IO T & E

MS C
Incre m e nt 3

FOC
O p e ra tio n s &
S u p p o rt

FR P
D e c is io n
R e vie w

S u s ta in m e n t

Acquisition
Event Driven
4

DoN Acquisition Interfaces
SECDEF
&
DEPSECDEF

USD(AT&L)
Defense
Acquisition
Executive

Chairman JCS
&
VCJCS
SECRETARY
of the
NAVY

CNO/CMC

ASN(RD&A)
Navy
Acquisition
Executive

DoD
Comptroller

CNO/CMC

Requirements
Budgets & Oversight

DASNs

Program
Managers
5

OMB

DoN
Comptroller

Acquisition Policy,
Procedures, & Oversight

Program
Executive
Officers

CONGRESS

Direct
Reporting
Program
Managers

Systems
Command
&
Commanders

Program
Managers

Heads of
Contracting
Activities
Principal
Contracting
Officers

Acquisition vs.
Procurement/Contracting
DHS Acquisition Line of Business Directive

• acquisition: The conceptualization, initiation, design,
development, test, contracting, production, deployment,
logistics support, modification, and disposal of systems,
supplies, or services (including construction) to satisfy DHS
needs. Acquisitions result from investment decisions, respond to
approved requirements, align to strategic direction, and are guided
by approved baselines. Acquisition does not include
establishment of agency needs (requirements determination) or
financial management.
• Contracting: For the purposes of this Directive “Contracting”
means purchasing, renting, leasing, or otherwise obtaining
supplies or services. Contracting includes description (but not
determination) of supplies and services required, selection and
solicitation of sources, preparation and award of contracts,
and all phases of contract administration. It does not include
making grants or cooperative agreements. For the purposes of this
Directive, “Contracting” is synonymous with “Procurement”.
6

2. Key Government
Procurement Personnel
Contracting Officer
Contracting Officer’s Representative (COR)

Program Manager

Contracting Officer Authority and
Responsibility
• Enter into and sign contracts on behalf of the Government
• Administer or terminate contracts
• Only person that can change, modify, or waive contract
requirement

• Decision authority for variety of pre-award procurement
decisions/processes, including:
• Control exchanges with offerors on competitive acquisitions
• Make competitive range determinations
• Source Selection Authority, unless another specifically
designated
• Authorize release of Government’s analysis of proposal to
contractor
• Establish price reasonableness
• Decide impact of conflict of interest issues & mitigation
plans
• Determine contractor responsibility prior to award
9

Contracting Officer Authority and
Responsibility (continued)
• Ensure that:
• All requirements of law and regulation are met before
award of contract
• Sufficient funds are available for obligation
• Contractors receive impartial, fair, and equitable
treatment
• Buy-in losses not recovered during contract performance

• Designate Contracting Officer’s
Representative (COR/COTR)
• Limits:
• Contracting officers may bind the Government only to
the extent of the authority delegated to them
• Certain decisions require approval above level of
contracting officer

10

Contracting Officer’s
Representative (COR)
• Assists in the technical monitoring or
administration of a contract
• Primary point of contact with
contractor during contract performance
• Specific authorities and responsibilities
identified in contract provision
• Not authorized to make any
commitments or changes that affect
price, quality, quantity, delivery, or
other terms and conditions of the
contract

11

Program Manager
• Manage the Program
• Establish and obtain approval of Program Baselines to
meet operational user requirements
• Authorize cost/schedule/performance tradeoffs
necessary to satisfy threshold performance requirements
• Accomplish program objectives for development,
production, and sustainment to meet the user's
operational needs
• Provide credible cost, schedule and performance
reporting

• Assist the management of the contract
• Monitor contractor performance
• Provide technical assistance to the contractor required
for contract performance
• Notify contracting officer about any contract
performance problems

12

Factors that May Impact Success
Program Manager

• Decisions outside the PM’s scope of
authority
• Which Requirement?
• Conflicts between the PM and CO
responsibilities
13

PM vs. CO Authority

Integral Part of Internal Controls
During contract performance, program offices are
responsible for monitoring the performance of the
contractor, providing technical assistance to the
contractor that is required for contract
performance, and notifying the contracting officer
about any contract performance problems. Program
offices are not authorized to change contract work,
costs, or completion dates or to enforce [c]ontract
provisions. Only contracting officers have the
authority to do that. This concentration of authority
in the contracting officer is an integral part of
internal control within the contracting process.
(From Civilian Agency Procurement: Improvements Needed in Contracting and Contract
Administration,? GGD-89-109, at 25 (Sept. 1989); Verne Edwards article online)

14

Who do you deal with?
PM, CO, or COR

• All: As specifically identified in contract or RFP
• Contracting Officer
• Pre-procurement action: Identification of capabilities or agency
practices that may negatively impact competition
• Active Source selection: All communications involving selection
underway
• Existing contract: Any request for a change, modification, or waiver or
issue that may impact performance

• COR (Existing Contract Only)
• Primary POC for day to day contract issues
• Provides technical and administrative guidance/assistance (within
scope)

• Program Manager
• Pre-procurement action: marketing; overall program needs
• Active source selection: ongoing contracts only
• Existing contract: Overall program and technical guidance/assistance
(within scope)

15

3. Things to consider during
the contracting process
•What you should be doing
•Evaluation Factors
•Things to pay particular attention to/watch out for

•Recommendations for proposal writing

Things You Should be Doing
Before Contract Award
• Before the procurement is initiated
• Review DoD Source Selection Procedures at
http://www.acq.osd.mil/dpap/policy/policyvault/USA00718310-DPAP.pdf
• Courtesy calls on customer contracting and program personnel
• Explore future/upcoming opportunities
• Websites
• Industry or Small Business Conferences

• Before the RFP is released
• Attend all pre-solicitation conferences and comment on draft
RFPs – especially if they favor competitors

18

Things You Should be Doing
Before Contract Award (cont’d)
• Anytime you can
• Find out about the incumbent, including Government
assessment of its performance

• Before proposal due date or other date specified
• Review the solicitation in detail
• Challenge provisions that either unduly inhibit
competition or favor one source over others
• Request a change to any provision you can’t live with
• Decide whether or not to bid as prime or sub
• Decide whether to bid at all
• Avoid submitting a proposal for a contract you don’t expect
to be able to perform successfully

19

Solicitation Section M
Evaluation Factors for Award

• Sometimes a separate RFP attachment
• Identifies:
•
•
•
•

Basis of Award
Award on initial offers, if contemplated
Key evaluation factors, subfactors, and elements
Relative order of importance of factors and subfactors

• Factors and subfactors are individually
rated/scored
• Proposal should mirror factor, subfactor,
element structure
20

Select Evaluation Factors and
Related Considerations
• Past Performance
• Rated
• Pass/Fail (Acceptable/Unacceptable)

• Cost/Price
• Reasonableness
• Realism
• Buying-In

• Responsibility
21

Low Price Technically Acceptable
(LPTA) Source Selections
• Appropriate when best value is expected to result
from selection of the technically acceptable
proposal with the lowest evaluated price
• Key Rules:
• The evaluation factors and significant subfactors that
establish the requirements of acceptability shall be set
forth in the solicitation.
• Past performance need not be an evaluation factor (but
often is)
• Tradeoffs are not permitted
• Proposals are evaluated for acceptability but not ranked
using the non-cost/price factors
• Exchanges may occur
22

Low Price Technically Acceptable
(LPTA) Source Selections (cont’d)
• Level of effort (LOE) or labor hour tasks
• Single award IDIQ, with most of work awarded in
future task orders
• Potential offerors without past performance (no
past performance = acceptable)
• Making ―acceptable‖ rating difficult to achieve or
based on factors unlikely to impact performance

23

Cost/Price Evaluation

FAR 15.402 Pricing Policy
• Federal Acquisition Streamlining Act (FASA)
• Contracting officers shall—
• (a) Purchase supplies and services from responsible
sources at fair and reasonable prices.

• Fair and Reasonable Price
• Not explicitly defined in FAR
• FAR does provide techniques to assess
• DAU Acquipedia Definition: the price that a prudent
businessperson would pay for an item or service under
competitive market conditions, given a reasonable
knowledge of the marketplace.

24

Fair and Reasonable Price
Determination
• In competitive acquisitions, a ―fair and
reasonable‖ price is usually based on the
existence of adequate price competition
• In sole-source acquisitions, a ―fair and
reasonable‖ price is usually based on detailed
cost and price analysis.

25

Adequate Price Competition
• Two or more responsible offerors, competing
independently, submit priced offers that satisfy
the Government’s expressed requirement and
• Award will be made to the offeror whose proposal
represents the best value where price is a substantial
factor in source selection; and
• There is no finding that the price of the otherwise
successful offeror is unreasonable.

• May exist even if only one offer received

26

Reasonableness vs. Realism
FAR 15.404-1(d)(1)

• Cost realism analysis is the process of
independently reviewing and evaluating specific
elements of each offeror’s proposed cost estimate
to determine whether the estimated proposed
cost elements are:
• Realistic for the work to be performed
• Reflect a clear understanding of the requirements
• Consistent with the unique methods of performance and
materials described in the offeror’s technical proposal

27

Buying-In (FAR 3.501)
• ―Definition: Submitting an offer below anticipated
costs, expecting to—
• Increase the contract amount after award
(e.g., through unnecessary or excessively
priced change orders); or
• Receive follow-on contracts at artificially high
prices to recover losses incurred on the buy-in
contract.
• Policy
• The contracting officer must take appropriate
action to ensure buying-in losses are not
recovered by the contractor through:
• Change orders
• Follow-on contracts not subject to cost analysis.

28

Responsibility
FAR 9.104

• To be determined responsible, a
prospective contractor must—
• Have adequate financial resources
• Have the other resources to be able to meet
the requirement
• Have a satisfactory performance record
• Have a satisfactory record of integrity and
business ethics
• Be otherwise qualified and eligible to receive an
award under applicable laws and regulations

• Determination made by Contracting
Officer

29

Recommendations for Proposal Writing
1. Read the RFP, especially sections L and M
2. Establish your win theme
•

Don’t just demonstrate that you can do the work,
demonstrate why you can do it better than your
competitors

3. Make it easy for the Government to find
the information they're looking for
•

Separate section covering each factor and subfactor

4. Don't simply restate the RFP requirement,
or that "we will meet all contract
requirements"
•

Tell them how you will do that
30

(continued)

5. Don't simply give them a textbook
answer
•
•

Tell them what you will do, but also
Demonstrate that you have established methods and
processes to successfully accomplish the work

6. Prove it
•

Demonstrate that your proposed methods and
processes work

7. Use various methods of conveying the
message, including call-out blocks, tables,
charts, etc.
31

(continued)
8. Identify why teammates were selected
•

What benefits (from the Government’s perspective) do
they bring to the team?

9. Avoid taking any exception to a term or
condition of the solicitation if at all
possible
•

Assumptions can also be risky

32

(continued)

10. Have your proposal drafts reviewed by panels
that can ensure both compliance and content
• Compliance:
• Have you provided all information required by the RFP?
• Is it easy for the evaluator to find information required by
the RFP (especially, Section L proposal instructions)?
• Is it easy for the evaluator to map the proposal to the RFP
evaluation criteria (Section M).
• Have people with source selection experience on panel

• Content
• How well did we understand the customer’s requirement?
• How well did we demonstrate superior methods, processes,
experience, etc?
• Have people with detailed technical knowledge of the work
scope on the panel.
33

Government Caused Problems
• Very lengthy source selection process
• Significant gaps between program phases
• Contract requirement that doesn’t reflect
operational user requirements
• Acquisition strategy (and/or contract type)
that incentivizes something other than
what the Government intended
• Poorly written contract (e.g. significant
ambiguities)
• Significant requirements or budget
changes after award

36

Contractor Caused Problems
• Failure to notify the Government of significant
concerns with anything about the acquisition
during the pre-award process
• Exclusive focus on winning the contract
• Failure to critically assess internal capabilities before
submitting a binding proposal
• Heavy reliance on subcontractors without a proven
subcontractor management process
• Lack of, or failure to use, other proven management
processes for:
• Risk identification and mitigation
• Cost, schedule and technical performance

• Insufficient knowledge of the customer(s)
• Failure to understand and manage customer
expectations

37

When things go VERY wrong
Public Scandals and their Aftermath

• Procurement Integrity Act (41 U.S.C. § 423
and FAR 3.104)
• One of several laws enacted following very
public procurement scandals. It provides:
• A ban on disclosing procurement information
• A ban on obtaining procurement information
• A requirement for procurement officers to
report employment contacts by or with a
competing contractor
• A 1-year ban for certain personnel on
accepting compensation from the contractor.
38

Darlene Druyan

Principal Deputy Undersecretary of the Air Force for Acquisition

• Air Force Acquisition Executive
• Plead guilty to:
•

•
•

•

Inflating price of the contract to
favor her future employer
• Passing information on the
competing offer
Sentenced to nine months in jail for
corruption, plus fines…
Boeing CFO Michael M. Sears
• Fired by Boeing
• Sentenced to 4 months prison
Boeing CEO Phil Condit resigned

• Boeing fined $615 million fine for
their involvement
• CBS News called it "the biggest
Pentagon scandal in 20 years"
39

Waste, Fraud & Abuse
• Coffee brewer: $7,622 (Air Force)

• Pair of pliers: $748 (Air Force)
• Vinyl armrest pad: $670 (Air Force)
• Toilet seat: $640 (Navy)
• Drill set: $599 (Navy)

• Rechargeable flashlight: $181 (Air Force)
• Hammer: $436 (Navy)

40

Vice President Gore’s
Hammer Award
National Partnership for Reinventing Government
(formerly National Performance Review)

41

41

$436 - $600 Hammer
CNET Article

Steve Kelman (former OFPP Administrator)*
• Never was a $600 Hammer
• Bulk purchase of spare parts
• Approved accounting method allowed
allocation of R&D overhead costs to be
applied to each item without regard to item
cost
• “The new moral is that numbers, taken as
self-explanatory truths by the public and
the press, can in fact be the woefully
distorted products of a broken accounting
system.”
Other issues:
• Hammer vs. Uni-directional impact
generator
• Special Tooling & Test Equipment
*As reported in “Government Executive”

42

Improper Business
Practices/Safeguards
• General rule: Avoid even the appearance of a
conflict of interest in Government-contractor
relationships.
• Gratuities offered to or solicited by Government
personnel
• Collusive Pricing (52.203-2 Certificate of
Independent Pricing)
• Unfair competitive advantage from current
contract work

43

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