Thursday, November 29, 2012


In 1996, the Government Accountability Office (GAO), began using a type of alternative dispute resolution (ADR) known as "outcome prediction".  It usually takes place after all the parties have thoroughly briefed the issues raised in the original and supplemental protests, an evidentiary hearing has taken place (which is fairly rare), and all that is left is the GAO decision.  It typically involves a conference call convened by the GAO attorney handling the case.  The purpose is to explain to the parties the likely success or failure of their legal arguments. Although the prediction is not a formal decision, it is vetted up the ladder of authority within GAO before announced to the parties.

The willingness to provide an outcome prediction is generally an indication that the protest is viewed as meritorious such that a reasonable agency inquiry into the protest would show facts disclosing the protester's arguments had merit.  GAO may well tell the parties that the protest will be sustained if the decision actually is written up.  The agency then is left with the option of allowing GAO to issue its decision or the agency may decide to take corrective action.  If the agency concedes and agrees to take corrective action, the case is dismissed by GAO as academic.  In the past, this often left the protester with no real remedy since the corrective action might or might not actually be taken and, of course, result in a further protest.  But GAO is making things better by being more specific on its outcome prediction recommendation.

The new GAO best practice is to make it clear what corrective action it is recommending.  The protester, meanwhile, is still left out in the cold with no control over whether the agency decides to take corrective action and the form it will take.  GAO correctly is not only making its recommendation clear, it also recites the action the agency agrees to take in its dismissal letter.  If GAO is clear in its recommendation and reduces it to writing, there now is a chance the agency will bind itself to actually taking the corrective action recommended.

In the end, however, the protester prevailing in an outcome prediction lacks assurance that the challenged procurement violations will not be repeated.  Hence, protests following corrective action are not uncommon.  But GAO has paved the way to meaningful corrective action by making its outcome predictions contain recommendations that instruct the agency on the proper corrective action.

The problem of an agency announcing corrective action before outcome prediction remains.  If any agency concedes before outcome prediction it can avoid GAO's recommendation and take the action it unilaterally decides to take.  Although this approach is laudable in some cases, it can also lead to mischief and leave the protester without any control over its protest.  The protester can, however, protest anew if the corrective action is flawed.

All in all, we applaud GAO's efforts to dispose of cases by outcome prediction. Although most protesters would prefer GAO issue a written decision sustaining their protests, if GAO is specific enough in its outcome prediction and the agency agrees to do what GAO recommends, the result will be the same.       

Wednesday, November 28, 2012


From Federal Times:
Frank Kendall, the Pentagon’s top acquisition executive, was recently quoted as saying he is looking for ways to creatively transfer the expertise of experienced people leaving the workforce to the new generation and give people the experience they need to develop their skills and careers. The problem with today’s federal procurement workforce is that experienced hands are leaving, leadership is under performing in finding ways to transfer expertise to the new generation, and many younger workers lack the requisite initiative to find and pursue best-practice experiences.
One of the main problems is poor communication between federal procurement staffs and industry.
The Office of Management and Budget’s Office of Federal Procurement Policy (OFPP) has tried to fix the problem. In February 2011 and again in May 2012, OFPP officials issued memos to the federal acquisition community in hopes of prompting a more healthy and engaged dialogue between federal procurement staffs and vendors. These memos were titled, “Myth-busting: Addressing misconceptions to improve communication with industry during the acquisition process.”
The memos encourage “early, frequent and constructive engagement with industry,” especially in cases involving complex, high-risk procurements. In short, the memos say feds need to buy more like it’s done in the commercial world. They need to talk more with industry to find out how it’s done and how commercial products and services can fill government needs. Talking more with industry also helps the feds by encouraging private innovation and by learning how to take advantage of it. But these myth-busting guides languish at many agencies. The word just does not get to the field.
Communication isn’t the only problem. Among the most serious is the emphasis feds place on “lowest price, technically acceptable” procurement actions. When the government overused detailed design specifications, performance specifications were born. Detailed requirements lend themselves to pass or fail technical evaluation and award to the lowest price. But we’re now in the performance specification era where “best value” trade-offs should rule. Performance specifications and lowest price technically acceptable selection are a bad mix. Poor leadership at the top and inexperience at the bottom have created this problem.
There is such a thing as the wisdom of the ages in federal procurement. We’ve learned that fixed prices for ill-defined statements of work are a bad idea. We’ve also flirted with the notion that buying like the commercial world can be a good idea. We’ve also learned that full and open debriefings prevent more protests than they encourage and that cooperation and communication with the contractor not only are legal requirements, they also help assure successful contractor performance. There is a vast storehouse of valuable best-practice information in the memory of the retiring workforce on any number of subjects relevant to today’s procurement activities.
Kendall is looking for “ways to creatively transfer” this book of wisdom to the new generation of acquisition workers. We see a simple solution that will take some hard work. First, OFPP needs to write more memos like the myth-busters memos. It needs to update and expand on its 1994 best practices for contract administration guide.
Senior acquisition executives who receive the OFPP memos need to do a better job of leadership in making sure the word gets to the field. They also need to be held accountable for making sure best practices are in fact practiced in the field. Finally, the new generation needs to find the winners, understand their winning ways and adopt the practices experience has taught will work. In other words, the new generation need to exercise better initiative in finding the wisdom of the ages in procurement.
How do you creatively transfer that expertise? We propose that the retiring generation assist OFPP in writing down best practices for contract formation and administration. Senior acquisition executives need to commit to making sure the word gets to the field. And the new generation needs to exercise initiative in finding the best-practice experience and in following it.
Start with communication. The myth-busting memos are the model. Those best practices have been vetted thoroughly by the most experienced professionals in the business.
It’s not enough to lament the loss of experienced contract people and hope some magical management formula can fill the void. It’s a simple matter of passing on the wisdom of the ages. Rehire the retirees. Ask them to help OFPP put together the best-practice guide. Write it down, push it down and supervise its implementation.
William J. Spriggs is a member of the Spriggs Law Group, a government contracts law firm.

Sunday, November 18, 2012


Frank Kendall has just released his Memorandum for Defense Acquisition Workforce on the subject "Better Buying Power 2.0: Continuing the Pursuit for Greater Efficiency and Productivity in Defense Spending."  We applaud this excellent direction to the government workforce and hope is gets the close attention it deserves.  It covers 36 Department of Defense (DOD) initiatives organized into seven focus areas.  The basic goal remains the same: to "deliver better value to the taxpayer and Warfighter by improving the way the Department does business." Achieving that goal "will require the professionalism and dedication I know I can expect from everyone in the workforce," he says.

This is a preliminary memo to be followed by a more detailed one with more specific goals. We'd like to focus on one of the areas: Incentivize Productivity and Innovation in Industry and Government.

The memo emphasizes the need to employ appropriate contract types.  The original Better Buying Power (BBP) memo pressed for more use of fixed price incentive (FPI) contracts.  Now, DOD refines its guidance to emphasize the use of the appropriate contract vehicle for the product or services being acquired.  One type does not fit all applications.  This initiative will focus "on improving the training of management and contracting personnel in the appropriate use of all contract types." We particularly applaud this effort.  We have commented for years about the need to spend more time and effort on the selection of the right type of contract for the work to be performed.

The memo also seeks to better define value in best value buys.  DOD notes that industry tends to default to a threshold level of performance to control costs and because the government gives unpredictable credit for performance above the minimum.  DOD needs to improve its ability to define value above the minimum level so industry can bid more intelligently.  "This will spur innovation by providing a predicable basis by which companies can bid enhanced performance with the knowledge that any increased costs are within an acceptable range."  Praiseworthy, indeed.

Finally, and perhaps most importantly, the memo admonishes the workforce that when lowest price, technically acceptable (LPTA) selection criteria are used, the government should define technically acceptable to ensure needed quality. "Industry has expressed concerns about the use of Lowest Price, Technically Acceptable (LPTA) selection criteria that essentially default to the lowest price bidder, independent of quality."  Indeed.  This has to be one of industry's major complaints.  We've written often about LPTA abuses.  At least DOD has listened to the criticism.  We think budget issues drive buyers to LPTA so we don't hold out much hope for improvement on this initiative.  We'll see.

The good news is that DOD is listening to industry on the subjects of best value and LPTA source selection criteria.  And we think the preliminary version of BBP 2.0 does an excellent job of setting the goals.  We look forward to the more detailed memo that will outline the specific goals and requirements which is due out in two months.

Saturday, November 17, 2012


The Government Accountability Office (GAO) has just issued a decision sustaining a protest on the grounds that the agency failed to perform a proper technical and price realism proposal evaluation.  The agency did not properly consider the awardee's proposed technical approach and also failed to reasonably consider this technical approach in conducting its price realism assessment.

The evaluation of an offeror's proposal is a matter within the agency's discretion. In reviewing an agency's evaluation of proposals, GAO will determine from the record whether the agency's judgment was reasonable and consistent with the stated evaluation criteria and applicable procurement statutes and regulations. GAO does not substitute its judgment for that of the agency.  But it tests the agency's reasoning and whether the agency has complied with the rules, including the requirement of proper documentation.

We should insert here the importance of keeping up with the opinions and decisions of judicial tribunals, including GAO.  Public procurement is based on detailed statutes and regulations because we taxpayers demand the ability to control how our dollars are spent.  But of equal importance are the pronouncements of the various tribunals hearing protests and disputes.  They also lay down the law. And the great thing about reading these cases is that they take place in real life situations which make it easier to apply the legal principles to practice.  That's why law schools use the case study method of learning.  Read the cases.

In this protest, the successful awardee proposed extensive use of uncleared personnel to perform work which could involve classified material.  After examining the record carefully, GAO concluded "that DIA did not reasonably consider CSC's proposed use of 'large numbers' of uncleared personnel to perform the solicitation requirements in evaluating CSC's proposal, and sustain the protest on this basis." (GAO added in a footnote that it did not give the agency's "post-hoc" argument "any weight".)

On price realism, GAO reiterated the rule that price realism need not necessarily be considered in evaluating proposals for fixed price awards.  However, an agency may alert bidders that the agency will consider whether prices reflect on an understanding of the contract requirements.  "Analyzing whether an offeror's fixed price is so low that it reflects a lack of understanding of solicitation requirements is the crux of a price realism evaluation . . . ."  The record in this case showed the large numbers of uncleared personnel may have been the principle reason for the awardee's much lower price.  GAO sustained the protest on this ground as well.

It's important to study the rules in these factual contexts to see how the various tribunals apply them to actual experiences.   

Tuesday, November 13, 2012


Elliott Branch, President of the National Contract Management Association (NCMA), and one of our best senior acquisition executives, stimulates our thinking by asking some really important questions:
What is a best practice?  How do you know one when you see it?  Who decides whether it is a best practice?  How do you kill it when it ceases to be one?
Excellent questions.  Are they in the eye of the beholder?  By what authority do they become  anointed?  Who suggests them and who promulgates them and how? With what follow up?  How do they get "killed" or erased and how is their effectiveness tracked?

We believe that the job starts with Elliott as the President of NCMA.  NCMA is made up of both industry and government professionals and is composed of chapters across the nation and around the world. Elliott should collect best practice suggestions on a topic of his choosing from NCMA chapters and members.  He should then select a blue ribbon small panel to review and edit them, and send them to Lesley Field and Joanie Newhart at the Office of Procurement Policy (OFPP).  OFPP should then do its vetting and issue them as a guide or in memos (such as myth busters) to senior acquisition executives who should in turn disseminate them to the field and follow up to make sure they are put into practice.

This is not rocket science.  The model is there.  OFPP's myth buster memos provide the guide on how to do this.  And OFPP is now following up with a survey to see how the memos are working and what needs to be done to make them work better (or presumably, kill one or two).

Our experience is in dispute avoidance.  We've seen many bad practices emerge in the course of litigation.  So we suggest open debriefings to avoid protests and scrubbing solicitations carefully to avoid claims, for example.  Our experience is based on over forty years in the litigation trenches.  We know a best practice when we see one based on this experience.  Other senior procurement professionals have seen much more and have really good advice to pass on to the younger generation. Elliott needs to tap that experience.

One final thought for now.  If the Court of Appeals for the Federal Circuit (CAFC) says something, its the law.  For that matter, the lower tribunals (Court of Federal Claims and Boards of Contract Appeals) also tell us the law provided they are not reversed by the CAFC.  It's the law.  If they say the government is supposed to cooperate with, communicate with and enable a contractor to perform, that is a best practice.  One starting point is taking language from the pens of the judges.

In a sense, Elliot's questions are rhetorical.  He is doing what he does so well, stimulating our thought.  A best practice is what our best, most experienced practitioners say it is.  They know it because they've seen it first hand.  They decide. And they pass their wisdom on to the less experienced.  And since they are practitioners, they know when to kill something that is not working.

NCMA needs to collaborate with OFPP.  The myth buster memos are the model to be followed.  Let's work together on this.  We know OFPP applauds this effort.  If you doubt that, just call or write Lesley or Joanie.    

Friday, November 9, 2012


The Civilian Board of Contract Appeals (CBCA) has just released an opinion on a motion to dismiss in which the board reiterates the rule that proving the lack of good faith does not require the claimant contractor to allege and prove bad faith. The contractor alleged that the government breached its implied duty of good faith and fair dealing by refusing to respond to the contractor's many requests for the government to discharge its contractual duties.  The Board denied the motion to dismiss and noted that it was premature for the contractor to claim its attorney fees and costs incurred in responding to the government's motion.

"The covenant of good faith and fair dealing is inherent in every contract," the Board wrote.  Further, "[a] claim that HUD breached the implied covenant of good faith does not require a showing of bad faith."  As we've pointed out before in these articles, a claim that the government breached its duty of good faith and fair dealing is not the same as a claim the government acted in bad faith.  Bad faith involves motivation by malice.

The obligation of good faith and fair dealing is written into every contract by operation of law.  It is implied.  The duty of good faith and fair dealing can be breached, said the CBCA, by lack of diligence, negligence, or a failure to cooperate. As we have often repeated, the government has a duty to cooperate with the contractor or as the Armed Services Board of Contract Appeals (ASBCA) says, the government has a "duty to do whatever is reasonably necessary to enable the contractor to perform."

So the CBCA found that the absence of an allegation of bad faith did not defeat the contractor's claim and it denied the motion to dismiss.

The government often takes far too lightly a number of implied obligations it has in every contract.  It has the duty to provide specifications free from errors, conflicts and omissions which are commercially practicable to perform.  It has the duty to cooperate with the contractor and not interfere in the contractor's performance. It has the duty to communicate with the contractor.  Yes, the duty to communicate. And it has the duty to disclose information it has which is vital to the contractor's performance.  This latter obligation exists even if the parties are equally ignorant of the information but the government is in a better position to know it.

Stonewalling a contractor isn't just a bad business judgment.  It's illegal.  It's a breach of contract.  And damages for breach of contract can in appropriate cases include lost anticipated profits.

These kind of cases should not arise in today's enlightened procurement community.  This may be just another example of the people in the field not getting the message or not caring to follow it.  

Thursday, November 8, 2012


Yesterday, we heard Joanie Newhart address the Prince William Chamber of Commerce Government Contracting Committee during which she eloquently laid out the Office of Procurement Policy's (OFPP) continuing agenda and skillfully handled questions about the importance of OFPP's work.  OFPP does not handle procurements.  But its work may be more important than you think.

OFPP is big on the strategic sourcing initiative because of its emphasis on getting more work to small businesses.  She brushed aside the criticism that the competition for consolidated buys would leave some small business competitors out in the cold.  That's what competition is all about.  Instead, she emphasized that the goal was to award a larger portion of procurement dollars to small businesses through strategic sourcing.  That, after all, is why the word strategic is used.

She also talked about the policy emphasis on commercial buying and how agencies need to be better at finding commercial solutions where appropriate.  Recalling the myth buster memos she helped write, she emphasized that the government must spend more time talking with industry about commercial solutions to government needs.

In one light bulb moment, she reminded government procurement personnel that "if FAR [the Federal Acquisition Regulation] doesn't say you can't do it, do it."

But now to the really important point about OFPP.  During the questioning, Joanie deftly handled criticism that OFPP policies are not being followed in the field. OFPP is doing everything allowed by law to get its messages to the field.  It really got us to thinking.

The problem in the field is not that OFPP got too cute with "myth busting" or that it doesn't send the right messages to the right people. The problem is two fold: 1) agency acquisition leaders are underachieving in their leadership; and 2) contract workers in the field are not finding the winners (meaning the experienced hands), listening to them and implementing their advice on best practices.  It's not enough to lament the loss of experienced contracting people.  The young people in the field who have been tossed into the vacuum need to exercise greater initiative.  Find the experience and follow it.

Yes, OFPP is more important than you think.  It's policy leadership has been stellar through the years and we may even be entering the golden years of policy making. OFPP sends its memos to all senior acquisition officials.  If the message is not getting to the field, it is the responsibility of those senior officials.  We must hold them accountable for their lack of leadership.  But the people in the field also bear a heavy responsibility to listen to OFPP and follow the experienced leaders.

We have our best policy makers in OFPP.  It's high time we all listened to them.

Tuesday, November 6, 2012


Yes, we believe full and open competition also means full and open debriefings. FAR 15.506(d) starts out stating the minimum and goes on to list 6 items to be covered for a minimal debriefing post award.  Note item number 6 requires "[r]easonable responses to relevant questions about whether source selection procedures contained in the solicitation, applicable regulations, and other applicable authorities were followed."  Pretty broad, huh.  "Other applicable authorities" would include Government Accountability Office (GAO) decisions and opinions of the Court of Federal Claims (COFC).  Item number 4 on the list requires, at a minimum, a summary of the "rationale for award".

That brings us to a critical best practice.  We believe debriefings should include release of the source selection evaluation board (SSEB) evaluations and the source selection decision document (SSDD).  Before the debriefing.  A debriefing which should be face to face.  Of course these documents must be expurgated (lawyers prefer the word redacted) to comply with FAR 15.506(e).  But don't go overboard.  A contractor's proprietary markings do not necessarily make it so.  Contractors mark a lot of material that is not protectable when put to the tests required by the regulation.  Government officials are free to scrutinize contractor's claims of trade secrets, confidential data and the like.

Why full and open debriefings?  Because, as Dan Gordon has said, they prevent more protests than they promote.  Simple.  Hard for many to believe, but true. We've been in the protest trenches for decades and we can testify that more contractors file "blind" protests to discover what happened than those who file when they are satisfied they've seen nearly everything.  If a contractor is spoiling for a protest, it is unlikely a closed debriefing will keep it from filing the protest.  Open up the debriefing and you just may avoid the protest.

There is much debate about the adversarial nature of the procurement system, the lack of communication and the almost total absence of "partnering".  To some extent, we believe that is inevitable given our system of strict rules and regulations and the burgeoning competition for less and less work.  However, full and open communication through debriefings is a giant step in the direction of restoring trust and reducing litigation.

One more note.  Many of us rail at the apparently increasing numbers of frivolous protests.  In our opinion, one way to expose and hopefully reduce that population is to conduct full and open debriefings.  Many frivolous protests we've seen are "blind" protests in which wild allegations are made with no factual support from the record.  Reducing this population is a step in the right direction.

Finally, one of the impediments to full and open debriefings is that the government has not have followed "the solicitation, applicable regulations, and other applicable authorities."  Forget the debriefing. Step up to the plate and take corrective action. Right then and there.  Taking corrective action promptly is a best practice to be sure.


When Dan Gordon was Administrator of the Office of Procurement Policy (OFPP), he is reported to have replied to a contracting officer who said she was nervous about communicating with industry representatives because she did not want to get in trouble with her lawyers:  "My answer to her was, if you need to, take five lawyers from your agency with you, but have the meetings.  Lawyers are your friends."  Dan, of course, is extraordinarily enlightened, but he also knows there are a bunch of good lawyers out there.  Lawyers can be obstructionists (just telling you what you cannot do).  Or, the good ones tell you what to do to get the best result.

The first best practice we think of us making sure the solicitation is legally sufficient and written in clear, concise and understandable language.  In our experience, most disputes arise because of the failure to properly vet (evaluate for approval) the solicitation.  We also believe lawyers are indispensable at this stage. Good lawyers who are working with their clients to make sure the best results are achieved.  And we mean on both sides.

To our way of thinking, draft solicitations are a must.  And they always should be reviewed for clarity and legal sufficiency by agency lawyers.  Contractors also should engage counsel to complement the effort.  Contractors should not hesitate to raise questions about unclear language.  If necessary, they also should not shy from protesting promptly to make sure the solicitation gets an independent view. Cliches abound.  An ounce of prevention . . . .  Pay now or more later.

We believe that the most frequent failures of language are in the statement of work and the evaluation factors.  After all, what can be more important than clarity about what is to be done and how the proposed contractor will be evaluated?  Post award claims based on contract interpretation should virtually be eliminated if solicitations are properly vetted and the team of reviewers includes good lawyers.
For those who complain that this vetting process takes too much time, take a look at how much time gets wasted on the back end in the disputes process over what meaning was intended.

Dan Gordon is one of our leaders.  We should listen to him.  We've heard some of our would be leaders scoff at the myth busting memos  he sponsored.  They think the descriptive term is too cute.  Get over yourselves and past the title.  Dispute avoidance and resolution is all about communication.  All true leaders in the government contracts field agree on that.  Proper communication at the solicitation stage is just part of the required communication package which must accompany every procurement.

Monday, November 5, 2012


When the Office of Federal Procurement Policy (OFPP) issued its l994 "A Guide to Best Practices for Contract Administration", it began by saying it was the "first in a series of guidebooks" on best practices.  Disappointingly, there have been no others. We're calling for a collaborative effort to finish the job.  It will take the combined talents of procurement and program officials from executive departments and agencies, and representatives from the private sector.  We think the National Contract Management Association (NCMA) should play a major role in coordinating the effort with OFPP.

To get the ball rolling, here are some salient quotations from OFPP's original work:
Contract Administration involves those activities performed by government officials after a contract has been awarded to determine how well the government and the contractor performed to meet the requirements of the contract.  It encompasses all dealings between the government and the contractor from the time the contract is awarded until the work has been completed and accepted or the contract terminated, payment has been made, and disputes have been resolved.  As such, contract administration constitutes that primary part of the procurement process that assures the government gets what it paid for.
In contract administration, the focus is on obtaining supplies and services, of requisite quality, on time, and within budget.  While the legal requirements of the contract are determinative of the proper course of action of government officials in administering a contract, the exercise of skill and judgment is often required in order to protect effectively the public interest.
Best Practices are defined as techniques that agencies may use to help detect and avoid problems in the acquisition, management, and administration of contracts.  Best practices are practical techniques gained from practical experience that may be used to improve the procurement process.  (Emphasis in the original.)
As in the case of the 1994 Guide, which dealt with the Contracting Officer's Technical Representative (COTR), a team must be established to plan and carry out this project of completing the best practices guide.  The team should conduct interviews with contracting officials and private sector representatives to gather best practices or "tricks-of-the-trade" that could be applicable on a government wide basis.

So we continue our open letter to Elliott Branch, President of NCMA, to establish and lead the team in this effort.  To borrow an admonition from the 1994 Guide: "The primary objective of the contract administration project is to establish best practices that agencies can use to improve contract administration to assure responsiveness to customers and best value to taxpayers."

Sunday, November 4, 2012


Recently, we attended a National Contract Management Association (NCMA) meeting on the subject of "Best Practice Initiatives:  A Call to Arms."  The Office of Federal Procurement Policy (OFPP) published a best practices guide for contract management in 1994 (limited in scope) and it has not updated or added to the guide since then.  Last month, Lesley Field and Joanie Newhart from OFPP said they love the idea of best practices based on practical experience.  The myth busting documents were designed as best practices on communication but OFPP wants to do more guides.

The "Call to Arms" meeting was just that:  A clarion call for assembling a team to prepare various best practices guides most likely organized by subject matter. Examples included, evaluation factors, debriefings, best value source selection, protests, termination procedures, changes and monitoring performance, to name a few.

Best practice guides, well vetted by seasoned practitioners, are long overdue.  This needs to be a collaborative effort between government and industry perhaps best sponsored by NCMA.  OFPP welcomes such an effort and suggests that the project be narrowed to a few key subjects or even organizing the effort by contract types. OFPP wants very specific guidance with samples and templates with on line resources.

Complaints abound, whether justified or not, about the lack of experience at the working level of contract formation and management.  The most experienced contract managers have left the workforce and are not always asked to teach the newcomers.  But learning is best instilled by doing.  And best practices should be the collection of the best practical methods of doing things published and vetted by the most seasoned professionals.

So this is a call to arms to the seniors.  Get involved.  Let's start passing on our collective knowledge of how contract management is best practiced.  Perhaps this also is an open letter to Elliott Branch, a senior level government procurement expert, who also happens to be President of NCMA.  Let's get organized at the grass roots.  NCMA chapter by NCMA chapter, let's put the seasoned professionals to work putting together best practice guides for OFPP to promote.

In the end, of course, the problem always will be making sure the word gets to the right people.  We've heard a lot of comment about how the myth busting memos have not changed practices in the field. That's another problem.  Let's first write the manual, then work the issue of its acceptance.  Frankly, in our opinion, it's all about leadership.  The right leadership will make sure the practices are followed in the field.

Thursday, November 1, 2012


What is price realism, when should it be used and how?  The Government Accountability Office (GAO) recently has sustained a protest involving an improper price realism analysis and in the process reminded us what price realism is and how it is to be employed.  We add the "when".

The protester argued that the agency's evaluation of its proposal and best value tradeoff determination was unreasonable because the evaluators performed a realism analysis of proposed pricing, finding the protester's price to be so low as to call into question its understanding of the solicitation requirements and its ability to perform successfully.  GAO agreed because price realism was not included in the evaluation factors.

The agency argued it did not conduct a price realism analysis because it did not adjust prices to determine probable cost.  GAO says poppycock. The agency misunderstands price realism as it does not involved adjusting prices.  The agency cannot adjust prices for evaluation of award of a fixed price contract.  Rather, of course, a price realism evaluation involves an assessment of an offeror's low fixed price to see whether the low price reflects a lack of understanding of contract requirements or performance risk.  The agency did that.  So what's the problem?

The problem in the protest was that bidders must be given reasonable notice that a business decision to submit low pricing will be considered as reflecting on their understanding of the requirements or the risk associated with their proposals.  (If there are no evaluation criteria on price realism, a low ball price reflects instead on the contractor's ability and capacity to perform, a matter of responsibility.)

In this case, the evaluation factors only referred to "reasonableness" of the pricing which goes to whether it is too high.  "Because below cost prices are not inherently improper, when offerors are competing for award of a fixed-price contract . . . they must be given reasonable notice that their business decision to submit a low-priced proposal can be considered in assessing their understanding or the risk associated with their proposal."  Thus, consideration of price realism must be announced in the evaluation factors.  

Now to the "when".  We believe that price realism should be included in all lowest price, technically acceptable (LPTA) procurements.  There, perhaps more than anywhere else, the government risks awarding to contractors who may not know what they are doing or don't understand the risks.          www.