United States Office of Acquisition January, 1993
Environmental Protection Management
Agency
ACQUISITION TRAINING
FOR PROJECT OFFICERS
»
COURSE TEXT
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This course was developed by the
Office of Acquisition Management
Acquisition Training Service Center
(3802R)
Date Taken
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TABLE OF CONTENTS
ADMINISTRATIVE INFORMATION
CHAPTER 1: OVERVIEW
1.1 What is Unique About the Acquisition Process 1-2
1.2 The Presolicitation Phase 1-3
1-3 Are You Sure You Need a Contract? 1-3
1.4 The Solicitation and Award Phase 1-5
CHAPTER 2: FORECASTING AND PLANNING
2.1 Determination of Need 2-2
2.2 Forecasting Requirements 2-2
2.3 Acquisition Planning 2-3
2.4 Designation of Acquisition Planners 2-4
2.5 Annual Acquisition Plans 2-4
2.6 The Individual Acquisition Plan 2-4
2.7 Contents of the Acquisition Plan 2-4
2.8 Contract Management Plan 2-9
2.9 Procedures for Procurement Schedule 2-10
CHAPTER 3: SOURCES
3.1 Conducting Market Research 3-2
3.2 Set-Asides 3-6
3.3 Small Business Set-Asides 3-6
3.4 Small Disadvantaged Business Concerns 3-6
3.5 Justification for Other Than Full and Open Competition 3-7
3.6 Circumstances Justifying 3-7
3.7 Determine Whether to Exclude Sources 3-12
CHAPTER 4: CONTRACT TYPES
4.1 Analyze Market Data 4-2
4.2 Perform Risk Analysis 4-2
4.3 Estimate Risk Impact on Cost 4-4
4.4 Basic Types of Contracts 4-4
4.5 Fixed Price 4-4
4.6 Cost-Reimbursement Contracts 4-5
4.7 Cost-Plus-Award-Fee Contracts 4-6
4.8 Time and Material Contracts 4-6
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CHAPTER 5: INITIATING THE PROCUREMENT
5.1 Funding Contracts 5-2
5.2 Definition of Funding Terms 5-2
5.3 Types of Funds 5-3
5.4 Mixed Funding 5-4
5.5 What is a Purchase Request? 5-4
5.6 The Procurement Initiation Notice 5-4
5.7 Goals in Preparing a PR 5-4
5.8 What is PALT? 5-4
5.9 Procurement Integrity 5-5
5.10 Reporting Contact 5-5
5.11 Post-Employment Restrictions 5-5
5.12 Disclosure, Protection, and Marking Information 5-6
5.13 Proprietary Information 5-7
CHAPTER 6: STATEMENT OF WORK PREPARATION
6.1 A Statement of Work (SOW) Is 6-2
6.2 Planning and Preparation 6-2
6.3 Analysis of Work to be Done 6-4
6.4 Tips on Terminology 6-5
6.5 Reporting Requirements 6-5
6.6 Getting Feedback 6-6
CHAPTER 7: PERFORMANCE-BASED SERVICE CONTRACTING
7.1 Performance-Based Service Contracting 7-2
7.2 Real World SOWs 7-2
7.3 Defining the Work 7-2
7.4 Identifying the Input, Work, and Output for Each Task 7-3
7.5 Establish Acceptable Performance Indicators 7-3
7.6 Incentives 7-4
7.7 Develop and Publish the Quality Assurance Plan : 7-4
7.8 Further Assistance 7-4
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CHAPTER 8: HOT SPOTS
8.1 Determine if Services are Personal or Nonpersonal 8-2
8.2 Factors That Tend to Characterize Services 8-2
8.3 Determine if Services are Advisory or Assistance 8-6
8.4 Activities and Programs 8-7
8.5 Prohibitions Against the Use 8-8
8.6 Contracting for Advisory and Assistance 8-9
8.7 Conflicts of Interest ! 8-10
8.8 Inherently Governmental Functions 8-11
8.9 Sensitive/Vulnerable Functions 8-13
8.10 Management Controls 8-15
CHAPTER 9: COST ESTIMATING
9.1 What's an IGCE? 9-2
9.2 Uses of IGCEs 9-2
9.3 Who is Responsible for Preparing IGCEs 9-3
9.4 Steps in Developing an IGCE 9-3
9.5 Types of Cost Estimates 9-4
9.6 Parametric or Top Down 9-5
9.7 Engineering or Bottoms Up 9-5
9.8 Identifying Costs 9-6
9.9 Direct Costs 9-6
9.10 Direct Labor 9-6
9.11 Other Direct Costs 9-6
9.12 Indirect Costs 9-7
9.13 Overhead 9-7
9.14 General and Administrative 9-7
9.15 Profit or Fee 9-7
CHAPTER 10: SOURCE SELECTION
10.1 Source Selection 10-2
10.2 Who's on the Team? 10-3
10.3 Organizing and Staffing the TEP 10-4
10.4 Logistical Considerations 10-5
CHAPTER 11: DEVELOPING EVALUATION FACTORS
11.1 General Guidelines 11-2
11.2 Categories of Evaluation Factors 11-3
11.3 Reviewing Your Factors 11-5
11.4 Determining the Relative Importance 11-8
IV
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CHAPTER 12: EVALUATING PROPOSALS
12.1 Guidelines for Evaluating Proposals 12-2
12.2 Interrogatories 12-3
12.3 EPA's Scoring Plan 12-3
12.4 Individual Panel Member Reports 12-4
12.5 The Technical Evauation Report 12-4
12.6 Tips for Proofing the TEPR 12-5
CHAPTER 13: NEGOTIATING AND AWARDING THE CONTRACT
13.1 Preparation of the Business Evaluation Panel Report.. 13-2
13.2 Determination of the Competitive Range 13-2
13.3 Written or Oral Discussions 13-3
13.4 Forbidden Activities 13-4
13.5 Best and Final Offers 13-5
13.6 The Award Decision 13-5
13.7Debriefings 13-5
13.8 Protests 13-6
CHAPTER 14: POST-AWARD ORIENTATION
14.1 Post-Award Orientation 14-1
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ADMINISTRATIVE INFORMATION
1. This course is taught by a contractor. The contract project officer is
located in the Office of Acquisition Management, Acquisition Training
Service Center, 3802R.
2. Students must preregister to attend in this course. At Headquarters,.
registrations are processed through the Acquisition Training Service
Center, 0AM. Local Training Officers process registrations for courses in
RTP, Cincinnati, the regions, and laboratories.
3. Attendance is mandatory.
• A student cannot miss more than 1 hour of instruction and
receive a certificate.
4. The course hours are 9:00 am. to 4:00 p.m.
• Lunch -1 hour
• Breaks (At the discretion of the instructor)
• All students are expected to return to the classroom on time
from lunch and breaks.
5. CLASS DISCUSSION:
• All students have the privilege to debate with discretion on
any topic related to the course. Therefore, each student,
within the bounds of courtesy and propriety, is encouraged
to participate freely in class discussions.
• Statements in class will be treated privileged information not
to be attributed to a specific individual when outside the
class.
6. STUDENT EVALUATION OF COURSE:
Student critiques are used to evaluate and update the course
content and to evaluate the contractor's performance. Evaluations
will be collected at the conclusion of the class. The importance of
the course evaluation, by each student, cannot be
overemphasized.
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ELECTRONIC ACCESS TO ACQUISITION GUIDANCE
Locate and click on... Agency LAN Services
locate and click on.... Information Services
locate and click on Administration/Management
locate and click on ....0AM Procurement Policy Information
At the OFFICE OF ACQUISITION MANAGEMENT page you will find:
O EPA Acquisition Regulation (EPAAR)
O Contracts Management Manual
O Acquisition Handbook
O A Guide to Best Practices for Past Performance
O The Cookbook: How to Get Contracts Awarded in EPA
O Procurement Policy Notices
O A Listing of Acquisition Policy Experts
O and more...
To order EPA forms, contact the National Forms Center, NCEPA, Cincinnati,
Ohio by submitting a completed EPA Form 2360-1 or a written memorandum
stating your name, form number requested, quantity, your complete return
mailing address (including mail code) and telephone number. Your request may
be mailed, telephoned or faxed to the Forms Center.
The mailing address is: NCEPI Telephone Numbers are:
Forms Distribution Office (513) 569-7985 (voice orders)
US EPA-NCEPA (513) 489-86.95 (FAX orders)
P.O. Box42419
Cincinnati, OHIO 45242
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TOP TEN ACQUISITION RELATED INTERNET ADDRESSES
1. http://www.gsa.gov/far
Regulations
Federal Acquisition
2. http://www.gsa.gov/far/FAC/FACs.html
Circulars
Federal Acquisition
3. http://www.gsa.gov/staff/Wtralnlng.htm
Institute
4. http://www.gsa.goV/staff/v/courses.htm
Curriculum
Federal Acquisition
(FAI)
FAI Procurement
5. http://www.arnet.gov
Network
Acquisition Reform
6. http://www.deskbook.osd.mil
Information
Acquisition reform
7. http://www.arnet.gov/discussions/Forum.html Discussion on acquisition
reform
8. http://www.acq.osd.mil/dau
University
Defense Acquisition
9. http://www.gao.gov
10. http://www.gsa.gov
GAO Home Page
GSA Homepage
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Chapter 1
Overview
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Chapter 1
Overview
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Describe the major features of the Federal Acquisition process.
Determine when assistance agreements should be used vice contracts.
Individual:
1. Identify the unique features of the Federal Acquisition process.
2. Identify the purpose of the presolicitation phase.
3. Differentiate between acquisition and assistance.
4. Identify the purpose of the solicitation and award phase.
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1.1 What is Unique About the Federal Acquisition Process?
While it involves the same basic phases and functions as any acquisition process, the
federal acquisition process differs greatly in the details of how those functions are
performed. Such as:
1 *
• The goals of the Federal acquisition process and the environmental
constraints on goal accomplishment.
• The role of the Congress, the President, and the Judiciary in
acquiring supplies and services for the Government.
• The basic statutes and regulations that govern the acquisition
process.
• The key players and participants in the Federal acquisition process
and their respective roles and responsibilities.
These all weigh heavily in determining the steps in performing acquisition functions and
how those steps are performed. The Federal acquisition process, though prescribed
and controlled to a large degree, still requires the exercise of judgement on the part of
the players, particularly the Contracting Officer (CO). The process can, if properly and
competently executed, help satisfy the goals listed below.
Goals of the Federal Acquisition Process
1. Obtain the optimum market response to requirements for supplies and services, in terms of:
• Quality.
• Timeliness
• Price.
While
• Accomplishing socioeconomic objectives.
• Minimizing business and technical risks.
• Maximizing competition.
• Maintaining integrity.
2. Assure that purchased supplies and services are:
• Delivered or performed when and where specified in the contract
• Acceptable, in terms of conforming to the contract's statement of work.
• Furnished in compliance with other terms and conditions of the contract
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This course will cover two phases of the acquisition process:
OThe presolicitation phase, and
©The solicitation and award phase
1.2 The Presolicitation Phase
The purpose of the presolicitation phase is to (1) decide whether to contract for the
requirement and, if that is the decision, (2) lay the groundwork for soliciting and
awarding the contract. Related issues:
• What do we need, and is contracting the best alternative for satisfying the
need?
• How do we initiate an acquisition, in terms of such things as approvals,
funding, and information on the market?
• How can we best specify exactly what we want?
• Whom should we consider for the work, what factors should apply in
making our selection?
1.3 Are you Sure You Need a Contract?
The first step in the presolicitation phase is to determine if contracting is the best
alternative. In some cases an assistance agreement might be the best vehicle for
getting what you need. Acquisition and assistance are different processes involving
various types of legal instruments and relationships between the Government and
recipients.
Assistance agreements may not be used to fund extramural projects except where
permitted by the Federal Grant and Cooperative Agreement Act of 1977 (FGCA). The
FGCA was based on a congressional finding that executive agencies were not
adequately differentiating between acquisition and assistance relationships. Congress
was concerned that agencies were misusing assistance agreements to circumvent
competition and other acquisition rules and also applying unnecessarily burdensome
contract paperwork requirements to nonacquisition transactions.
FGCA states an agency must use a contract if the principal purpose of the agreement
with an eligible entity is to acquire, by purchase, lease, or barter, property or services
for the direct benefit or use of the Federal Government, or if the agency otherwise
determines that use of a procurement contract is appropriate.
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Some examples of activities that must be contracted for include:
• Providing technical, analytical and application review advice for the direct benefit
of EPA offices; or
• Producing specific information that will be incorporated into EPA technical,
policy, or regulatory decisions.
FGCA also states an agency may use an assistance agreement only if the principal
purpose of an agreement is:
• to transfer a thing of value (e.g., money, equipment, services) to an
eligible entity, or
• to accomplish a public purpose of support or stimulation authorized by
statute.
Where an agency will not be substantially involved with the recipient during the
performance of an assistance agreement, then, a grant is appropriate. If substantial
Federal involvement is contemplated, a cooperative agreement is appropriate.
Some examples of activities that EPA funds through assistance agreements include:
•Conducting basic research;
•Constructing local waste water treatment plants;
•State and local government cleanup of hazardous waste sites; and
•Environmental education programs.
Another way of accomplishing our mission is with an Interagency (IAG) Agreement,
which is a legal agreement between Federal agencies for providing goods or services.
lAGs are prepared by the Program Office and reviewed by the Grants Administration
Division at Headquarters; Regional Assistance Administration units (or other
appropriate units designated by the Regional Administrator) review lAG's which
originate in the Region.
If it is unclear in a particular instance whether an assistance agreement would be
permissible under the FGCA, you should contact the Headquarters or Regional Grants
Administration Office. Further guidance on grants and cooperative agreements can
also be found in EPA Order 1000.19 and Chapter 1 of the Agency's Assistance
Administration Manual.
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1.4 The Solicitation and Award Phase
The purpose of the solicitation and award phase is to (1) solicit offers, (2) evaluate
offers, and (3) award the contract. Related issues:
• How do we solicit offers from the contractors in whom we are interested
and under what terms and conditions?
• How do we evaluate the submitted offers and identify that offer which
represents the best value?
• How do we award the contract and handle any complaints from offerers
who were not selected?
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Chapter 2
Forecasting and Planning
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Chapter 2
FORECASTING AND PLANNING
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Explain the need to forecast and plan for acquisition requirements.
Individual:
1. Describe and define:
•Who forecasts needs
•Why forecasting is necessary.
2. Describe and define:
•Acquisition planning
•Why acquisition planning is necessary
•Typical elements of acquisition plans
3. Define annual acquisition plans.
4. List the contents of a contract management plan.
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2.1 Determination of Need
Determination of need is the first function in the entire procurement process. Once a need for
. supplies for services has been established, a decision is made whether to:
• Fulfill the need "in-house," using Agency facilities and personnel, or
• Fulfill the need by contracting.
If a decision is made to fulfill the need by contracting, the procurement process is activated.
For the process to be efficient and effective, it must be activated in accordance with a plan.
2.2 Forecasting Requirements
Each Program Office has the responsibility to forecast its needs for supplies and services.
Forecasting needs helps to ensure that the resulting procurements will:
• Support the mission of each program office in a timely manner,
• Coincide with the preparation of budgets and availability of budgeted
funds,
• Be accomplished in accordance with acquisition laws and regulations,
and
• More fully realize the goals of the acquisition system as described in the
previous chapter.
By being aware of the current and future needs of the various organizations, the Office of
Acquisition Management (OAM) can (1) help program offices develop realistic program plans,
schedules, and budgets, and (2) recommend long-range strategies for reducing the resources
and time required for mission accomplishment. Specifically, the OAM can advise program
offices on such matters as:
• Consolidating needs to attain economic ordering quantities.
• The availability of sources and strategies for enhancing competition.
• Market prices, conditions, and trends.
• Production and delivery lead times.
• The best time to enter the market.
• Costs incurred, milestones, problems, and lessons learned from previous
acquisitions for comparable requirements.
• Strategies for reducing procurement and delivery lead times.
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The CO uses the forecast in the next step - acquisition planning.
2.3 Acquisition Planning
Acquisition planning means:
"The process by which the efforts of all personnel responsible for
an acquisition are coordinated and integrated through a
comprehensive plan for fulfilling the agency need in a timely
manner and at a reasonable cost. It includes developing the
overall strategy for managing the acquisition."
Agencies perform acquisition planning and conduct market surveys for all
acquisitions to:
• Maximize competition.
• Integrate the efforts of all personnel responsible for the acquisition.
• Ensure that needs are met in the most effective, economical, and timely
manner.
Acquisition planning encompasses three components and is applicable at both a system and an
individual contract basis. These components are annual acquisition plans, individual acquisition
plans, and contract management plans. Advance planning is required for each of these
documents.
n The annual acquisition plan identifies, in advance, those acquisitions which will
be initiated and processed over the course of a given fiscal year. This plan
should include acquisitions that are to be submitted in one fiscal year but are not
expected to be awarded until a subsequent fiscal year. An annual acquisition
plan is prepared for each of the two succeeding fiscal years.
a The individual acquisition plan sets milestones and addresses financial,
technical, legal, and management issues to be considered during the contracting
process for a specific contract.
D The contract management plan supplements individual acquisition plans by
discussing how a specific contract, once awarded, will be managed.
Acquisition planning must anticipate and take into account other Agency requirements that may
have a bearing on the planning process. Examples of these requirements are approvals for
Advisory and Assistance Services, Justifications for Other than Full and Open Competition, and
so forth.
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2.4 Designation of Planners
The Senior Resource Official (SRO) in each region or program office is designated as the
acquisition and contract management planner. In this capacity, the SRO is responsible for
coordinating the efforts of the requisite personnel in the performance of acquisition and contract
management planning.
2.5 Annual Acquisition Plans
The annual acquisition plan is designed to assist program and contracting offices in planning
and prioritizing their acquisitions over the course of a given fiscal year. The plan provides a
mechanism for enhancing competition for both new and follow-on acquisitions. It also provides
information on contracting opportunities for small and disadvantaged business concerns.
An annual acquisition plan is required for each of the two succeeding fiscal years. Since the
plan is submitted annually and addresses needs for two fiscal years, each submission will
consist of the following:
(1) an update of information previously provided for the first succeeding fiscal year, and
(2) a list of acquisitions for the second succeeding fiscal year.
The annual acquisition plan provides general information on anticipated actions, any special
contracting needs, available resources, and any potential vulnerabilities. The annual acquisition
plan must be approved by the SRO prior to its submission to the appropriate contracting office.
Chapter 1 of the Contracts Management Manual provides specific guidance on annual
acquisition plans.
2.6 The Individual Acquisition Plan
In accordance with Chapter 1 of the Contracts Management Manual, a formal acquisition plan is
required for all acquisitions whose estimated value is more than $5,000,000. For Superfund
and Information Technology (IT) acquisitions, the threshold is $25,000,000. At EPA the CO
drafts the overa'l acquisition plan; however, much of the information contained in the plan must
be provided by the Project Officer (PO). It is essential that the PO provide the appropriate
information to the CO in order to complete the acquisition plan. In addition to the CO, EPA
acquisition plans must be reviewed and approved by the Chief of the Contracting Office and the
Agency Competition Advocate.
2.7 Contents of the Acquisition Plan
FAR 7.105, which defines the content of written acquisition plans, is reproduced here for your
information. Parenthetical references to Parts and Subpart refer to the FAR.
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(a) Acquisition background and objectives
(1) Statement of need. Introduce the plan by a brief statement of need.
Summarize the technical and contractual history of the acquisition. Discuss
feasible acquisition alternatives and any related in-house effort.
(2) Applicable conditions. State all significant conditions affecting the acquisition,
such as (i) requirements for compatibility with existing or future systems or
programs and (ii) any known cost, schedule, and capability or performance
constraints.
(3) Cost. Set forth the established cost goals for the acquisition and the rationale
supporting them, and discuss related cost concepts to be employed, including,
as appropriate, the following items:
(i) Life-cycle cost. Discuss how life-cycle cost will be considered. If it is
not used, explain why. If appropriate, discuss the cost model used to
develop life-cycle-cost estimates.
(ii) Design-to-cost. Describe the design-to-cost objective(s) and
underlying assumptions, including the rationale for quantity, learning
curve, and economic adjustment factors. Describe how objectives are to
be applied, tracked, and enforced. Indicate specific related solicitation
and contractual requirements to be imposed.
(iii) Application of should-cost. Describe the application of should-cost
analysis to the acquisition (see 15.810).
(4) Capability or performance. Specify the required capabilities or performance
characteristics of the supplies or services being acquired and state how they are
related to the need.
(5) Delivery or performance-period requirements. Describe the basis for
establishing delivery or performance-period requirements (see Subpart 12.1).
Explain and provide reason for any urgency if it results in concurrence of
development and production or constitutes justification for not providing for full
and open competition.
(6) Tradeoffs. Discuss the expected consequences of tradeoffs among various
costs, capability or performance, and schedule goals.
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(7) Risks. Discuss technical, cost, and schedule risks and describe what efforts
are planned or underway to reduce risk and the consequences of failure to
achieve goals. If concurrence of development and production is planned,
discuss its effects on cost and schedule risks.
(8) Acquisition streamlining. If specifically designated by the requiring agency as
a program subject to acquisition streamlining, discuss plans and procedures to
(!) encourage industry participation by using draft solicitations, presolicitation
conferences, and other means of stimulating industry involvement during design
and development in recommending the most appropriate application and tailoring
of contract requirements; (ii) select and tailor only the necessary and cost-
effective requirements; and (iii) state the time frame for identifying which of those
specifications and standards, originally provided for guidance only, shall become
mandatory (see 10.002(c)).
(b) Plan of action.
(1) Sources. Indicate the prospective sources of supplies and/or services that
can meet the need. Consider required sources of supplies and services (see
Part 8). Include consideration of small business, small disadvantaged business,
and labor surplus area concerns (see Parts 19 and 20). If the acquisition or a
part of it is for commercial or commercial-type products (see Part 11), address
the results of market research and analysis and indicate their impact on the
various elements of the plan. If the acquisition or part of it is for other than
commercial or commercial-type products, address the extent and results of the
market survey conducted or the reasons one was not or will not be conducted.
(2) Competition.
(i) Describe how competition will be sought, promoted, and sustained
throughout the course of the acquisition. If full and open competition is
not contemplated, cite the authority in 6.302, discuss the basis for the
application of that authority, identify the source(s), and discuss why full
and open competition cannot be obtained.
(ii) Identify the major components or subsystems. Discuss component
breakout plans relative to these major components or subsystems.
Describe how competition will be sought, promoted, and sustained for
these components or subsystems.
(iii) Describe how competition will be sought, promoted, and sustained for
spares and repair parts. Identify the key logistic milestones, such as
technical data delivery schedules and acquisition method coding
conferences, that effect competition.
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(iv) When effective subcontract competition is both feasible and
desirable, describe how such subcontract competition will be sought,
promoted, and sustained throughout the course of the acquisition.
Identify any known barriers to increasing subcontract competition and
address how to overcome them.
(3) Source-selection procedures. Discuss the source-selection procedures for
the acquisition, including the timing for submission and evaluation of proposals,
and the relationship of evaluation factors to the attainment of the acquisition
objectives (see Subpart 15.6).
(4) Contracting Considerations. For each contract contemplated, discuss
contract type selection (see Part 16); use of multi year contracting, options, or
other special contracting methods (see Part 17); any special clauses, special
solicitation provisions, or FAR deviations required (see Subpart 1.4); whether
equipment will be acquired by lease or purchase (see Subpart 7.4) and why; and
any other contracting considerations.
(5) Budgeting and funding. Describe how budget estimates were derived and
discuss the schedule for obtaining adequate funds at the time when they are
required (see Subpart 32.7).
(6) Product descriptions. In accordance with Part 10, explain the choice of
product description types to be used in the acquisition.
(7) Priorities, allocations, and allotments. When urgency of the requirement
dictates a particularly short delivery or performance schedule, certain priorities
may apply. If so, specify the method for obtaining and using priorities, allocation
and allotments, and the reasons for them (see Subpart 12.3).
(8) Contractor versus Government performance. Address the consideration
given to OMB Circular No. A-76 (see Subpart 7.3).
(9) Inherently governmental functions. Address consideration given to OFPP
Letter 92-1 (see Subpart 7.5).
(10) Management information requirements. Discuss, as appropriate, what
management system will be used by the government to monitor the contractor's
effort.
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(11) Make or buy. Discuss any consideration given to make-or-buy programs
(See Subpart 15.7).
(12) Test and evaluation. To the extent applicable, describe the test program of
the contractor and the Government. Describe the test program for each major
phase of a major system acquisition. If concurrence is planned, discuss the
extent of testing to be accomplished before production release.
(13) Logistics considerations. Describe-
(i) The assumptions determining contractor or agency support, both
initially and over the life of the acquisition, including consideration of
contractor or agency maintenance and servicing (see Subpart 7.3) and
distribution of commercial products (see Part 11);
(ii) The reliability, maintainablitiy, and quality assurance requirements,
including any planned use of warranties (see Part 46); and
(iii) The requirements for contractor data (including repurchase data) and
data rights, their estimated cost, and the use to be made of the data (see
Part 27).
(iv) Standardization concepts, including the necessity to designate, in
accordance with agency procedures, technical equipment as "standard"
so that future purchases of the equipment can be made from the same
manufacturing source.
(14) Government-furnished property. Indicate any property to be furnished
to contractors, including material and facilities, and discuss any
associated considerations, such as its availability or the schedule for its
acquisition (see Part 45).
(15) Government-furnished information. Discuss any Government
information, such as manuals, drawings, and test data, to be provided
to prospective offerers and contractors.
(16) Environmental considerations. Discuss environmental issues associated
with the acquisition, the applicability of an environmental assessment or
environmental impact statement (see 40 CFR 1502), the proposed
resolution of environmental issues, and any environment-related
requirements to be included in solicitations and contracts.
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(17) Security considerations. For acquisitions dealing with classified matters,
discuss how adequate security will be established, maintained, and
monitored (see Subpart 4.4).
(18) Other considerations. Discuss, as applicable, energy conservation
measures, standardization concepts, the industrial readiness program, the
Defense Production Act, the Occupational Safety and Health Act, foreign sales
implications, and any other matters germane to the plan not covered elsewhere.:
(19) Milestones for the acquisition cycle. Address the following steps
and any others appropriate:
Acquisition plan approved.
Statement of work.
Specifications.
Data Requirements.
Completion of acquisition-package preparation.
Purchase request.
Justification and approval for other than full and open competition
where applicable and/or any required D&F approval.
Issuance of synopsis.
Issuance of solicitation.
Evaluating proposals, audits, and field reports.
Beginning and completion of negotiations.
Contract preparation, review and clearance.
Contract award.
(20) Identification of participants in acquisition plan process. List individuals
who participated in preparing the acquisition plan, giving contact information for
each.
2.8 Contract Management Plan
In addition to the FAR requirements, Chapter 1 of the Contracts Management Manual requires
that each individual acquisition plan address specific contract management issues. These
issues include, but are not limited to, areas such as,
• Conflict of Interest;
• Confidential Business Information;
• "Lessons learned" from existing contracts; and
• Roles, responsibilities, and resources for contract management.
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2.9 Procedure for Procurement Scheduling
Once the Procurement package is complete, the Project Officer meets with the Contracting
Officer (or contract specialist) to prepare a procurement schedule. (The FAR requires this only
for procurements of $5 million or more.) The CO will coordinate with the Project Officer to
obtain program office and Office of Acquisition Management approval of the projected contract
award date.
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Chapter 3
Sources
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Chapter 3
SOURCES
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Work with the Contracting Officer to identify potential contractors. Recommend
other than full and open competition, when appropriate.
i
I
Individual:
1. Define market research and list possible techniques
2. Describe the purpose for and types of contract set-asides.
3. List the circumstances when other than full and open competition is permitted.
4. Recognize valid reasons for restricting competition.
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3.1 Conducting Market Research
Market Research is the process used for collecting and analyzing information about the entire
market available to satisfy the Agency's needs.
Suppose you were considering purchasing a new car. Your first question might be, "What is
available out there?" Other questions might be, "Which cars will suit my particular needs? ,"
and "Are those cars in my price range?" To answer these and other questions, you do market
research. Information obtained from that research would help you to identify suitable cars that
are readily available, and affordable.
Market Research is done.to:
O Promote full and open competition.
O Ensure the need is met in a.cost-effective manner.
The kinds of market data needed includes:
O Available products/services to meet Agency needs.
O Current and potential suppliers.
O' Technological changes and trends.
O Technical capability.
O Factors that affect market prices.
O Problems with specifications/statements of work.
O Problems, issues, and recommendations from award and •
administration of previous contracts.
O Trends in Government and commercial sales.
As the technical expert, you may be called upon to assist the Contracting Officer with market
research. The following chart indicates market research techniques your Contracting Officer
may use.
MARKET RESEARCH TECHNIQUES, APPLICATIONS, AND IMPACTS
TECHNIQUE
1 Investigate the market.
Determine current status of
technology, extent of
commercial applications, and
source availability
APPLICATION
Buys where rapid technological
changes influence the way the
requirement is stated.
IMPACT
Market indicators influence the
specifications and the
contracting approach.
\* **
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MARKET RESEARCH TECHNIQUES, APPLICATIONS, AND IMPACTS
TECHNIQUE
APPLICATION
IMPACT
2. Brief industry. Conduct
widely publicized briefings on
future requirements to gain
interest and to solicit comments
on planned approach.
Seek out new companies.
Acquire information that will
affect the specification
development and contracting
approach.
3. Contact potential contractors
to discuss requirementg-and get
recommendations aboi
planned acquisitions.
All buys
Enhanced requirements
definition, solicitation
development, and competition.
4. Visit potential sources.
Target qualified potential
sources who typically do not
respond to solicitations.
Where history suggests that
responses may be insufficient.
Identify and encourage new and
possibly better qualified sources
to submit offers.
5. Attend industry and scientific
conferences.
Key personnel who need to
keep abreast of new
developments, industry trends,
and make contacts.
Knowledge of current
technology and commercial
successes and failures as
applied to Agency requirements.
6. Acquire literature about
commercial products, industry
trends, product availability,
reliability, and prices.
All requirements.
More sources to solicit. Affects
how requirements are stated;
facilitates price analysis;
identifies new products.
7 Analyze procurement history
by examining quality and extent
of competition, prices,
performance, results
All buys.
Revise requirements,
specifications, and contracting
approach based on "lessons
learned."
8. Evaluate and test
commercial items fully, as
appropriate.
Whenever seemingly artificial
barriers to use of commercial
items exist.
Develop data about the
performance of commercial
items. Determine necessary
adaptations and develop cost
estimates.
9. Advertise in trade journals
and other publications to solicit
inquiries
Any buy where competition is
limited and Commerce Business
Daily (CBD) announcements are
not reaching commercial
sources.
More responses from new and
perhaps better sources.
10. Use the CBD, provide
complete data4 and synopsize far
in advance of solicitation.
All Jionexempt procurements
Tflore than $25.000.
More inquiries and responses
Sufficient time to receive
expressions of interest about a
requirement and alert potential
contractors to the release of the
solicitation.
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MARKET RESEARCH TECHNIQUES, APPLICATIONS, AND IMPACTS
TECHNIQUE
1 1 . Determine why selected
contractors do not respond to a
solicitation
12. Examine business and
trade association directories
13 Use Federal Procurement
Data System Information
N
14. Examine Federal Supply 6^
schedute- fe^AygP
15 Contact Agency small
business advisor to assist in
locating qualified small &
disadvantaged suppliers.
APPLICATION
All procurements where
responses are insufficient or
apparently well-qualified
sources do not respond.
All buys
All buys where an insufficient
number of sources are
responding. (E.g., you can
search the FPDS for your
product and obtain a printout of
contractors who have previously
sugpjedjt.)
All requirements that might be
satisfied by commercially
available products or services.
All requirements.
IMPACT
Identify impediments to effective
competition. Document and
publicize "lessons learned "
Identify additional sources to
solicit and acquire basic
information about these
sources.
Identify current Government
contractors, what was
purchased, and if the purchase
was competitive. Information
about past procurements.
Identify products or services on
schedules at favorable price or
terms.
Identify small & disadvantaged
businesses for inclusion in
bidder's list, also for
subcontracting opportunities.
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CASE STUDY
"The Right Technique"
Directions: Read the following scenarios and select techniques by number from the Market
Research Techniques Chart that best fit the requirement. Also, prepare to explain why you
selected each technique. Base your decision on the scenario; do not make any assumptions.
1. Neville Wright received a requirement for 100 modular office buildings. This requirement
was the result of a hurricane in their northeast region. Time is of the essence since the
employees have no office to go to.
2. Neville received a requirement for microfilming their contract files. This requirement comes
up every year. A look at the acquisition histories indicate the same firm has received the '
contract the last three years. The Program Office has indicated their performance is only
marginally satisfactory.
3. Neville received a requirement for forms cabinets unique in design to their office. Only one
source was provided by the Program Office.
4. Neville received a requirement for debt collection services. Until now, the Federal
Government was •prohibited from collecting these services. There is no information on file
regarding this requirement or industry.
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3.2 Set-asides
It is important to have a meaningful participatory role by the Program Offices in supporting
EPA's efforts to increase acquisitions through its socioeconomic utilization programs. Each
Program Office is responsible for establishing its own goals for socioeconomic business
utilization in collaboration with appropriate procurement operations and the Office of Small and
Disadvantaged Business Utilization (OSDBU).
3.3 Small Business Set-Asides
To enhance the opportunity for small business concerns to receive a fair proportion of
Government contracting dollars, Congress established, through the Small Business Act, the
Small Business Set-Aside Program. The rationale for this preferential treatment is that a
healthy small business community is essential for the preservation of the nation's free
enterprise system.
Generally, each acquisition of supplies or services that has an anticipated value exceeding
£j2J?QOi)but not more than $100,000, is automatically reserved exclusively for small business
-o - concerns. .
Determinations to set aside EPA acquisition actions may be initiated unilaterally by the
Contracting Officer, or they may be made jointly by a representative of the Small Business
Administration and the Contracting Officer. Where a set-aside is contemplated, the Project
Officer will be requested to advise and assist procurement personnel in identifying small
business sources and evaluating the technical capabilities of small business.
3.4 Small Disadvantaged Business Concerns-The 8(a) Program
It is EPA's policy to enter into contractsCwlth the SBATso as to assist in the growth of small
disadvantaged business concerns as designated by the SBA. The Office of Small and
Disadvantaged Business Utilization is responsible for implementing this policy and stands ready
to assist all Agency personnel in furtherance of the small and disadvantaged business utilization
program.
Informal Technical Presentation. Contracting Officers in consultation with OSDBU may
invite several 8(a) firms to give presentations on their capability to perform a specific
requirement. For specific procedures governing these presentations, contact your
Contracting Officer.
Competition Requirements. If there is a reasonable expectation that at least two eligible
and responsible 8(a) firms will submit offers and that award can be made at a fair
market price, acquisitions with an anticipated award price which will exceed $5,000,000
(manufacturing) and $3,000,000 (services) shall be awarded on the basis of competition
limited to 8(a) firms. Acquisitions below these thresholds may be awarded to 8(a) firms
on a sole source basis.
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3.5 Justification for Other Than Full and Open Competition (JOFOC)
10 U.S.C 2304 and 41 U.S.C 253 require that Contracting Officers promote and provide for full
and open competition in soliciting offers and awarding contract. However, it is recognized that
one or more of the circumstances which permit other than full and open competition may apply
where it is in the interest of the Government to solicit limited sources or only one source. In
those cases, a written justification for other than full and open competition (JOFOC) that
documents the facts and circumstances substantiating the mfeasibility of full and open
competition must be prepared by the Program Office.
3.6 Circumstances Justifying Other than Full and Open Competition
Other Than Full and Open Competition is permitted in the following seven circumstances:
FAR Reference Circumstance
*5.302=1.3 ^Onlyone responsible source^
6.302-2 IJnusual and compelling urgency
6.302-3 Industrial mobilization
6.302-4 International agreement
6.302-5 Authorized or required by statute
6.302-6 National security
6.302-7 Public interest
Only One Responsible Source
If the purchase request identifies only one responsible source, other than full and open
competition may be authorized when supplies or services required by the Agency are available
only from one responsible source and no other type of supplies or services will satisfy Agency
requirements.
Some situations that may apply to this authorization are:
\XD
Unsolicited research proposals
OUnique supplies/services and/or suppliers)
OLimited data rights, patents, etc.
OUtilities
FOR EXAMPLE:
The Program Office has stated only one manufacturer's vehicles are acceptable for delivery to
a remote location in Alaska. Their justification is based upon the severely limited access to
repair and maintenance services available in that location. The nearest "town" is more than
1 ,000 miles away. The Agency has standardized their fleet in that location for only that
manufacturer's vehicles. Using full and open competition could result in the Program Office
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receiving vehicles that cannot be serviced.
It is much better to justify the "one responsible source" than to cause the Program Office
insurmountable problems after delivery. In this case, only the one responsible source should
be considered.
Unusual and Compelling Urgency
If the purchase request or subsequent documentation specifies that the requirement is
urgently needed, this authority may be used when it can be demonstrated that:
"the agency's need for the supplies is of such an unusual and compelling urgency the
Government would be seriously injured unless the agency is permitted to limit the number of
sources from which it solicits bids or proposals."
Some situations that may apply to this authorization are:
•Earthquake or Flood
•Other natural disasters
•National or world events
FOR EXAMPLE:
The President has issued a state of emergency due to flooding in several states. Your agency
has been authorized to purchase mobile homes for use by emergency workers in those states.
Since the need for the mobile homes would be immediate, lead times necessary for permitting
full and open competition would unduly delay delivery.
In this case, the need for the requirement is so compelling that it is best to-forego the
competitive procedures in order to act timely.
es-NOTE: Neither the pending expiration of funds nor lack of advance planning is a
valid real reason for urgency. If either is the case, this authorization
cannot be cited. (For instance, an agency's supply of items has run out
or a machine needs repair and the warranty period has expired; or the
end of the fiscal year is approaching and the Program Office has money
to "burn.")
This is generally considered the most abused of the seven authorities.
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Industrial Mobilization
Industrial mobilization decisions are made at management levels beyond the Contracting
Officer or Program Office. This authorization may be used when it is necessary to:
(i) "Establish or maintain as essential capability for theoretical analyses,
exploratory studies, or experiments in any field of science or technology;
(ii) Establish or maintain an essential capability for engineering or
developmental work calling for the practical application of investigative
findings and theories or a scientific nature; or
(iii) Contract for supplies or services as are necessary incident to paragraphs
above"
Situations that may apply to this authorization are:
•Strategic Defense Initiative
•Solar energy
•Agency specific procurements
FOR EXAMPLE:
The Program Office limited competition to four sources for night vision image intensifier tubes.
The four sources were selected because of their proven ability to manufacture the tubes
manufactured by any one firm-and would therefore have less assurance of a sustained
manufacturing base.
f
The goal of this authority is to assure a continuous and secure stream of production for
mobilization purposes-not to maximize competition.
International Agreement
The PR must indicate when a procurement is subject to an international agreement and will
provide pertinent information about the agreement. This authorization may be cited when:
"(1) A contemplated acquisition is to be reimbursed by a foreign country that
requires that the product be obtained from a particular firm as specified in
official written direction such as a Letter of Offer and Acceptance; or
(2) When a contemplated acquisition is for services to be performed, or
supplies to be used, in the sovereign territory of another country and the
terms of a treaty or agreement specify or limit the sources to be solicited."
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Situations that may be applicable to this authority include:
- Foreign Military Sales
- Agency specific procurements
FOR EXAMPLE:
Under the terms of an international agreement between the U.S. and Turkey, the foreign
government has specified in writing that competition on the acquisition of equipment, parts, and
services associated with the PEACE II program be restricted to Howard Industries to ensure
single vendor integrity.
The written direction alone takes precedence over full and open competition and is therefore
sufficient justification for restricting competition under this authority.
Just stating this authority on the PR is not sufficient. These
circumstances should be well-documented by the Program Office.
Requests from a foreign country that do not direct you to procure from a
particular source should be accomplished through full and open
competition.
Authorized or Required by Statute
If the PR identifies the source(s) as required by statute (or law), this authorization may be cited
when:
"1 . Statute expressly authorizes or requires that the acquisition be made through
another agency or from a specified source, or
2. The Agency's need is for a brand name commercial item for authorized resale."
It is common practice to acquire certain supplies and/or services off "Schedules" from agencies
such as:
•General Services Administration,
•Defense Logistics Agency,
•Veterans Administration,
•Office of Personnel Management.
In addition, you may be required to acquire specific products or services from "specified
sources" such as:
•Federal Prison Industries, Inc.,
•Qualified Nonprofit Agencies for the Blind or Other Severely Handicapped, and
Government Printing Office,
Sole source awards under the 8(a) Program
^ n .» ,
m. - pro \ ras* 4*sr CU* ACM/**«-
0lY>a*«s .iwtf-oflr*
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The DOD and civilian agencies generally buy brand name commercial products that are
preferred by customers of the selling activity for resale at their respective commissaries and/or
base exchanges.
FOR EXAMPLE:
A requirement for data entry must be procured from the Federal Prisons Industries, Inc.
ra-NOTE: Although these sources have been identified by a statute, you may
obtain a waiver if the source cannot meet the Agency's need (e.g., timely
delivery, economically priced, minimum specifications).
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^"^^^^^^^^"^^^^^^^^^^^^^^^^^^^^^^""^^^^"^^^^^^^^^^^^^^^™
National Security
This authority can be used when it can be clearly demonstrated that:
"Disclosure of the Agency's need would compromise the national security unless the
Agency is permitted to limit the number of sources."
Some situations that may apply to this authorization are:
>Covert operations
>Research and development
>Weapon systems
FOR EXAMPLE:
The requirement is for the "black box system" to enhance missile control. There are only three
sources known from which to solicit who possess top secret clearances and who have
experience in this line of work.
If full and open competition procedures were used, the Government may compromise security
requirements that could have an adverse effect on the nation.
tap NOTE: Do not use this authority merely because access to classified data will be
necessary or the acquisition is classified.
Public Interest
This authority may be used when.'
"The Agency Head determines that it is necessary in the public interest to use other than
full and open competition in the procurement concerned."
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ra-NOTE: This authority is very general and requiresChjgh .leveLyisibilityj If this
authority is used, an individual determination must be approved by the
EPA Administrator with substantial supporting data provided by the
Program Office. In addition, you must prepare written notification for
submission to Congress at least 30 days before contract award.
Although the Program Office .has recommended that competition be restricted, other
than full and open competition cannot be used
» until the Contracting Officer has attempted to locate additional sources, and
» market research (to locate these sources) fully supports the recommendation.
3.7 Determine whether to Exclude Sources
There are three groups of procurements which are authorized as "Full and Open Competition
after the Exclusion of Sources":
1. Alternative sources,
2. Set-asides for small businesses, and
3. 8(a) competition.
For (1) and (2), procedures requiring the use of full and open competition must be followed after
the exclusion of source(s).
Alternative Sources
The Competition in Contracting Act provides that agencies are permitted to exclude particular
sources when it is necessary to establish or maintain alternative sources if the agency
determines that to do so would:
1. Increase or maintain competition and likely result in reduced overall costs;
2. Be in the interest of the national defense for emergency or industrial mobilization; or
3. Be in the interest of national defense to maintain educational/nonprofit research &
development capability.
Small Businesses and 8(a) Competition
To fulfill the statutory requirements relating to small and 8(a) businesses, Contracting Officers
may set-aside solicitations to allow only such business concerns to participate.
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PRACTICAL EXERCISE
Neville Wright received a requirement on August 15,1990 to purchase chemical protective suits
for Marines to be dispatched to Saudi Arabia in support of Operation Desert Shield.
The-RB was fully funded using current year funding at $500 per suit for a total quantity of
S.OOO^suits or $2.9 million.
The suits in the U.S. inventory are obsolete and will not work effectively with the type of
chemicals anticipated during this conflict.
The PR recommended the British Defense Ministry and learned thaCE.OQpJsuits are
immediately available through one company, Chuck & Di, Inc., the only British firm that has an
established production line for these suits.
Neville received a copy of the DOD Industrial Preparedness Planning Program List which
identified a manufacturer that has developed a prototype of the chemical protective suit which
has npt yet been tested nor has a current production line for the item.
Neville's supervisor directed him to proceed with the procurement on an "other than full and
open competition basis."
Neville ruled out exceptions for Industrial Mobilization and Authorized or Required by
Statute.
YOUR JOB IS TO: Help Neville identify the correct exception.
a. Select one exception and provide justification for its use.
b. Give the reason why you did not select the other exceptions.
c. Be prepared to defend your decision in the class discussion.
d. DO NOT MAKE ANY ASSUMPTIONS!
~ \
{\ 1.) Only One Responsible Source
2. Unusual and Compelling
Urgency
3. International Agreement
4. National Security
5. Public Interest
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Chapter 4
Contract Types
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Chapter 4
CONTRACT TYPES
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Assist the Contracting Officer in analyzing the risks inherent in contract
performance, as a basis for a decision on contract type.
Individual:
1. Identify the risk factors to consider when selecting the contract type.
2. List the two categories of contracts.
3. Differentiate between completion and term form cost-reimbursement contracts.
4. List the elements of a cost-plus-award-fee-contract.
5. Identify the drawbacks of cost-plus-award-fee contracts.
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STEPS IN SELECTING THE CONTRACT TYPE
The Contracting Officer determines the proper type of contract for an acquisition. However, it is
important that the Project Officer understand the basic difference between contract types and
their relationship to the Statement of Work.
4.1 Analyze Market Research
Data collected by the Contracting Officer is a valuable resource in selecting the contract type.
The Contracting Officer must determine if this data supports the use of a fixed-price contract.
Normally ajfixed-price contracts used when the following apply:
^ Using commercial specifications or specifications,which firms are experienced in
meeting.
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RISK ANALYSIS
FAR 16.104
FACTOR
Price Competition
Price Analysis
Cost Analysis
Type & Complexity of Requirement
Urgency of Requirement
Penod of Performance
Technical Capability & Financial
Responsibility
Accounting System
Concurrent Contracts
Approvals
Subcontracting
CONTROLLED BY
Market
Government
Government
Government
Government
Government
Contractor
Contractor
Government
Governments
Contractor
ANALYSIS
Effective price competition results in realistic
pricing and a fixed-price contract is in the
Government's interest.
With or without competition may provide a realistic
pricing standard that would result in a fixed-price
contract.
Uncertainties involved in performance and possible
impact upon costs (Labor, matenals, etc ) Must be
identified and evaluated so that a reasonable
degree of cost responsibility upon the contractor
can be negotiated
Unique complex requirements usually result in
greater nsk assumption by the Government
especially when performance uncertainties or the
likelihood of changes make it difficult to estimate
performance costs in advance. When a
requirement recurs, the cost nsk should shift to the
contractor and a fixed price contract should be
considered
If urgency is a factor, the Government may assume
a greater portion of nsk or offer incentives to
ensure timely performance
In times of economic uncertainty, contracts for a
long period of time may require economic price
adjustment terms
Limited experience or need for capability or
financial bonding or financial assistance may
require closer Government surveillance than is
provided by a fixed price contract.
Other than firm fixed price, the contractor's
accounting system should permit timely
development of all necessary cost data Required
for cost reimbursement contracts
If performance under the proposed contract
involves concurrent operations under other
contracts, the impact of those contracts, including
their pncmg arrangements should be considered
If performance under the proposed contract
involves approvals by the Government at vanous
stages (design, quality assurance, first article),
then consider their impact
If extensive subcontracting is proposed, actual
risks to the prime contractor should be selected
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4.3 Estimate Risk Impact on Cost
Having identified those factors which are potentially high risk cost factors, estimate the impact
they will have on the overall total cost of performance and profit margins. If the aggregate
impact is relatively insignificant, a firm fixed price contract should be used. Selection of other
contract types will depend on:
» which factors are uncertain.
» the impact of such uncertainty on overall cost, and
» the cost of contract administration.
Selection of the best contract type will ® provide for a reasonable allocation of risk between
both parties, and ® ensure the contractor has the maximum incentive to reduce costs and also
to comply with the terms of the contract.
4.4 Basic Types of Contracts or Agreements
Contracts types are grouped into two broad categories:
1. FIXED-PRICE
2. COST-REIMBURSEMENT
FAR 16.101(b) states, "The specific contract types range from fixed price, in which the
contractor has full responsibility for the performance costs and resulting profit (or loss), to cost
plus-fixed-fee, in which the contractor has minimal responsibility for the performance costs and
the negotiated fee (profit) is fixed. In between are the various incentive type contracts in which
the contractor's responsibility for the performance costs and the profit or fee incentives offered
are tailored to the uncertainties involved in contract performance."
On the following pages, you'll see contracts which are used at EPA. Not all contract types are
listed. If you are interested in seeing all the available contract types, refer to Part 16 of the
FAR.
4.5 Fixed Price
"If A fixed price contract can be either firm -fixed price or fixed-price subject to certain
/ contingencies that are specified in certain contract clauses.
/ A fixed-price contract is selected when cost estimators are able to forecast the total cost of
performance for the period of performance with a fair degree of accuracy and confidence.
Fixed-price contracts are generally the (most preferred^ they share a common element: the
\ contractor guarantees performance of the contracted work as a condition for being paid by the
(-Government.
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IF...
The fixed price is $20,000
AND . . .
It actually only costs the
contractor $15,000 to perform
If it costs the contractor $22,000
to produce the product or
service
THEN . . .
The contractor nets a $5,000
profit.
The contractor nets a $2,000
loss.
Vx
4
Simplified purchases are generally fixed price.
4.6 Cost-Reimbursement Contracts
Cost-reimbursement is selected when uncertainties involved in contract performance do not
permit costs to be estimated with sufficient accuracy for any type of fixed price contract (e.g.,
the type and/or number of resources necessary to meet the Government's requirements cannot
be predicted with any reasonable degree of confidence). Cost-reimbursement contracts are
typically used for:
^Research,
^Preliminary exploration or study, or
^Development and study.
The Government assumes the risk for costs incurred (up to a preestablished "limitation of cost"
clause). In the cost-reimbursement arena, the contractor is liable for delivering its "best efforts,"
not successful performance.
Cost-reimbursement contracts can be structured in one of two basic forms:
Completion Form
1. The scope of work is a clearly defined task with a definite goal or target expressed and
with a specific end-product required.
2. The contractor must complete and deliver the specified end-product (such as, a final
report) as a condition for payment of the entire fixed fee established for the work and
within the established cost if possible.
Term Form
1. The scope of work is in general terms and obligates the contractor to devote a specified
level of effort (LOE) for a stated period of time.
2. The fixed fee is payable at the end of the agreed period of time upon certification by the
contractor that she or he has exerted the LOE specified in the contract and such
performance is considered satisfactory by the Government.
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The completion form contract, because of differences in obligation assumed by the contractor,
is preferred to the term form.
4.7 Cost-Plus-Award-Fee Contract (CPAF)
The CPAF contract is a cost-reimbursement contract that provides for a fee consisting of:
(1) a base amount fixed at the inception of the contract (may be zero, shall not exceed 3%),
and """
(2) an award amount that the contractor may earn in whole or in part during performance and
that is sufficient to provide motivation for excellence in areas such as quality, timeliness,
ingenuity, and cost effective management.
The contract provides for evaluation at stated intervals during contract performance. (EPA
currently encourages the use of four-month evaluation periods.)
The amount of award fee to be paid is based upon EPA's judgmental evaluation of the
contractor's performance in terms of the criteria stated in the contract. This determination is
made unilaterally by EPA ancho not-oubjoet to the Disputes clauser
Elements of a cost-plus-award-fee contract are:
1. Estimated cost
2. A base fee (does not vary with performance)
3. Award fee
4. A maximum fee (base fee plus award fee pool)
5. Performance criteria
6. A fee payment plan
iss-Note: While CPAF contracts have benefits, there are also drawbacks, including
performance evaluation procedures which can be expensive and time consuming. Chapter 15
of the CMM provides guidance on CPAF contracts and should be consulted if you're thinking of
using one.
4.8 Time-and-Materials Contracts
Select a time-and-materials (T&M) or a labor-hour contract when the type and/or number of
resources necessary per job cannot be predicted with any reasonable degree of confidence.
Generally use such contracts for markets in which price competition typically occurs on the
basis of per hour rates (e.g., repair services). Use labor-hour contracts when materials are not
supplied by the contractor.
The Government assumes all risks except for hourly rates that include wages, overhead,
general and administrative expense and profit. Constant Government surveillance is
necessary: there is no incentive for the contractor to control costs or to manage the labor force
efficiently.
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The example below illustrates one problem associated with T&M or labor-hour contracts.
The contractor is reimbursed at a fixed rate for labor falling within a particular labor category.
Thus, the contractor has a high incentive to use lower-paid/less experienced employees, since
the contractor's profit margin on the lower-paid employee may be substantially higher. Notice
the difference in the contractor's profit below.
Labor
Labor
Indirect Costs (@
100%)
Profit
Total
Category
Average
$15.00
$15.00
$2.40
$32.40
Joe
$14.00
$14.00
$4.40
$32.40
Sue
$16.00
$16.00
$.40
$32.40
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CASE STUDY
Contract Selection
Read the following case and select the most appropriate contract type. Justify your answer.
1. In November you receive the requirement for an integrated system from a single source that
involves both hardware and software.
• Your market survey shows that the hardware is available off-the-shelf, but the software
must be developed from scratch.
• The Deputy Director is watching this procurement action directly because of the
importance to meet the anticipated increase in demand for real time data is critical.
• Few contractors have completed this type of work and it's difficult to fully define all
requirements because of time constraints and the location of users.
• The number of workstations will be implemented gradually over time. At best you can
estimate the user population to be somewhere between 25 and 180 users depending on
several variables that won't be defined until September.
• You have been directed to have a prototype available April 1 and initial implementation
completed by August.
GPAF
(Jn&oJc- P'V
4-8
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Chapter 5
Initiating the Procurement
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Chapter 5
INITIATING THE PROCUREMENT
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Know how to fund procurements. Know procurement data must be controlled.
Individual:
1. Explain the Anti-Deficiency Act.
2. Define funding terms.
3. Define Bona Fide Need.
4. Explain the procedures for using mixed funding.
5. Explain what is required with a Procurement Request.
6. List the information you are prohibited from disclosing.
U-S- EpA Headquarters Li r^. >•
Mail code 3201 '
1200 Pennsylvania Avenue NW
Washington DC 20460
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5.1 Funding Contracts
Funding is a key element in every acquisition-without compensation there is no enforceable
contract. The constitution provides that congressional appropriations are the sole authority for
the expenditure of federal funds. Appropriated funds cover a fiscal year beginning October 1
and ending September 30 of following year. The expenditure of all types of appropriations and
the operation of related accounts are controlled by statutes and regulations.
One of the most important statutes, the Anti-Deficiency Act ofCl905-as amended, states "No \W
officer or employee of the Government may create or authorize an obligation in excess of the'''"
funds available, or in advance of appropriations."
oyln the event of a violation of the Anti-Deficiency Act, an employee of the Government will be
subject to:
6 suspension from duty without pay,
§€ removal from office, or
© a fine up to $5,000 and/or imprisonment up to two years depending on the
severity of the violation.
, Federal law also provides that appropriations will be applied only to the supplies and services
for which the appropriations were made except as otherwise provided by law.
5.2 Definition of Funding Terms
Certification: The Funds Certifying Official "certifies" that funds are
available to cover proposed contracts.
Commitment: A "commitment" is an administrative reservation of funds against a future
obligation on a jxxntiact. At EPA the Contracting Officer commits or
"freezes" funds through the Integrated Financial Management System
(IFMS). While funds are frozen, they cannot be used.for any other
purpose.
Obligation: An "obligation" is a Government liability resulting from a contract,
purchase order, or similar document.
Expenditure: An "expenditure" is payment to 3 contractor for delivery of supplies or
services.
:o a
C
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5.3 Types of Funds
Funds are appropriated for either a specific use or a category of uses. For example, some funds
are only for research and development programs, while others are used for operation and
maintenance. As shown in the following chart, funds are also appropriated for specific time
periods. The program office must ensure that the correct funds are cited.
TYPES OF FUNDING
Annual
©•Inspector General (IG)
Obligated only in the fiscal year for which the funds were appropriated.
Multi-year
©•Science and Technology
(S&T) (2 year funds)
©•Environmental Programs
and Management
(EPM) (2 year funds)
Obligated for more than one fiscal year.
No year
©•Buildings and Facilities
(B&F)
©•Hazardous Substance
Response Trust Fund
©•Leaking Underground
Storage Tanks Trust Fund
(LUST)
©•Oil Spill Response Fund
©•Federal Insecticide,
Fungicide, and Rodenticide Act
(FIFRA)
estate and Tribal Assistance
Grants
Obligated in no specific year or years
(good until expended)
«The "Bona Fide Needs" rule states that annual or expiring funds can only be used for bona fide
needs of the fiscal year for which the funds were appropriated anCmay no£be used to purchase
future years' requirement. This is a matter of particular concern when using one-year funds or
twp-yqar funds which are in the second year to procure serviceq^|f3he services are of a
continuous nature, e.g., janitorial services, they are considered "severable" and must be charged
to the current appropriation when the services are rendered. ~
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5.4 Mixed Funding
Typically, EPA contracts are funded from a single appropriation. However, if a procurement
will be funded with more than one appropriation (for example, a mixture of EPM, S&T and
Superfund monies), then you must demonstrate that the funds allocation mix is proportional to
the relative benefit expected to accrue to the program(s) supported by each funding source. The
proposed funding mix must be approved by the Director of the Financial Management Division in
OARM. Chapter 9 of the CMM provides guidance on this requirement.
5.5 What is a Purchase Request?
The Purchase Request (PR) is the document that describes needed supplies anr
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5.9 Procurement Integrity
The Federal Procurement Policy Act (41 U.S.C. 423) and implementing regulations in FAR 3.104
impose restrictions on both obtaining and disclosing certain information obtained during the
conduct of a procurement. It requires certain Agency officials involved in a procurement to take
definitive action when contacting or contacted by offerers regarding non-Federal employment.
Also, it prohibits a former official's acceptance of compensation from a contractor if the former
official either served in an identified position or made certain contract decisions involving more
than $10 million to the contractor.
5.10 Reporting Contact
Participating personally and substantially means active and significant involvement in any of the
following activities directly related to that procurement:
Drafting, reviewing, or approving the Statement of Work.
Preparing or developing the solicitation.
Evaluating bids or proposals, or selecting a source.
Negotiation price or terms and conditions of the contract.
Reviewing and approving the award of the contract award.
If an Agency official who is participating personally and substantially in a procurement in excess
of $100,000 oofitauirandfis contacted by a person who is a bidder or offerer in that procurement
regarding possible non-Federal employment for that official, the official shall:
• Promptly report that contact in writing to their supervisor and their ethics official:
• Reject the possibility of non-Federal employment; or
• Disqualify himself or herself from further participation in the procurement.
5.11 Post-Employment Restrictions
A former Agency official may not accept compensation from a contractor as an employee,
officer, director, or consultant for a period of one year after such official served as: '
• the procuring contracting officer,
• source selection authority,
• as a member of the source evaluation board, or
• the chief of a financial or technical evaluation panel
for a contract in excess of $10.000,000 awarded to that contractor.
This prohibition does not prevent a former Agency employee from accepting compensation from
any division or affiliate of the contractor that does not produce the same or similar products or
services as the entity of the contractor that is responsible for the contract.
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5.12 Disclosure, Protection, and Marking Information
If contacted, inform potential offerers of the following:
«> You cannot disclose information about future requirements.
e» Generally, proposed contract actions are publicized 30 days before issuance of
the solicitation.
In accordance with FAR 3.104, you should talk about current or pending acquisitions on a need-
to-know basis only.
Procurement requirements must be kept secure to prevent premature disclosure of information or
disclosure of restricted information. Generally, you are prohibited from disclosing:
& Plans that would provide an undue or discriminatory advantage to private or
personal interest.
& Confidential information received from one offerer.
&> Information requiring protection under the Freedom of Information Act.
i
£t Information pertaining to internal Agency communications (e.g., technical reviews,
contracting authority, or recommendations referring thereto).
&> Number of prospective sources that requested a copy of the solicitation.
Do not disclose contractor bid or proposal or source selection information to any unauthorized
person. This includes:
I Bid prices or proposed costs or prices submitted to the Agency.
I Source selection or technical evaluation plans.
I Evaluations of technical, cost, or price proposals.
I Competitive range determinations.
I Ranking of bids, proposals, or competitors.
I Reports and evaluations of source selection panels, boards, or advisory councils.
I Any other information marked as 'SOURCE SELECTION INFORMATION-SEE
FAR 3.104"
@> Individuals responsible for preparing source selection material" must mark the cover
page and each page the individual believes contains source selection information with the
legend. "SOURCE SELECTION INFORMATION-SEE FAR 3.104."
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5.13 Proprietary Information
Proprietary information is information contained in a bid or proposal or otherwise submitted to the
Government marked by the contractor as proprietary information in accordance with applicable
law and regulation.
w Even after contract award information marked proprietary cannot be
disclosed unless your CO makes a determination otherwise.
Criminal, civil, and administrative penalties may apply to Agency officials who disclose proprietary
or source selection information.
«• Other laws, such as the Privacy-Act and the Trade Secrets Act may
preclude release of information both before and after award.
If you are asked to disclosed proprietary or source selection information, or if you have a question
about what can be disclosed, ask your CO before you release anything.
In accordance with FAR 15.404 vour Contracting Officer may release some information to
prospective offerers to generate more interest (i.e., competition). This is accomplished by using
a:
Presolicitation Notice-A letter to potential sources providing information on the proposed
procurement, requesting certain information from sources, and stating whether there will be a
Presolicitation conference.
Presolicitation Conference-A meeting held with potential sources to explain complicated
specifications or aid the sources in preparing offers for submission.
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CASE STUDY
Project officer, Justine Time is working on a procurement for which there are three
recommended sources. That evening over coffee with Ruby Redd, her neighbor, she mentioned
the specifics of the requirement and how excited she was to have been given such a high dollar
value, complex procurement. Ruby repeated the same information to her cousin, Tom Tumble.
Tom is the vice-president of one of the large firms identified as a source. Tom used that
information to have his firm takeover the only known company manufacturing one of the
components.
Question 1: What information did Justine divulge that she shouldn't have?
Question 2: Is there anything she could tell her neighbor?
Question 3: How did this information harm the Government?
Question 4: Is there any time you can divulge information before a solicitation has been issued?
5-8
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Chapter 6
Statement of Work Preparation
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Chapter 6
SOW PREPARATION
Course Learning Objectives •
At the completion of this chapter, you will be able to:
Overall: Identify the importance of a well-written statement of work. Describe the
information required in the statement of work.
Individual:
1. List the procurement areas the statement of work impacts.
2. List some typical elements of a statement of work.
3. Define "Work Breakdown Structure."
4 List the information that should be provided in the statement of work when reports are
required.
5. Identify the restrictions on printing under contracts.
i
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6.1 A Statement of Work (SOW) is....
GT the basis of the Government requirement. It describes the work to be performed
or the services to be delivered. The SOW delineates the tasks, describes the
essential and technical needs or requirements, and sets forth the standards that
will be used to determine that the requirements have been met.
(I the basis for determining the type of contract. The degree of specificity used in
the SOW will be the primary criterion used by the Contracting Officer in choosing
the contract type. A definitive SOW, completely describing the required
performance or item will lead more toward a fixed price type of contract. A broadly
defined SOW will lead to a cost reimbursement type of contract.
GT the basis for the independent government cost estimate (IGCE). A good SOW will
provide sufficient information on the work required for preparation of the cost
estimate.
fJ the basis for judging acceptability or responsiveness of prospective contractors'
proposals and for selecting the best contractor. A prospective contractor's
approach to a research and development task is measured against the research
goals set forth in the SOW. A prospective contractor's personnel skills are
measured against the skill requirements reflected either implicitly or explicitly in
the SOW.
CI the basis for measuring contractor performance. How do we know if the
contractor accomplished what we asked her/him to do? Each SOW must have
measurable (i.e., in terms of quality, timeliness, quantity, etc.) performance
standards or acceptance criteria.
An inadequate or poorly written Statement of Work may result in:
© unreasonable prices;
© failure to obtain competition that might otherwise be achieved;
© failure to obtain the desired effort from the contractor;
© a lengthening of the procurement process; and
® poor technical proposals and divergent cost proposals.
6.2 Planning and Preparation
Background Research. The SOW is the heart of the procurement. It must clearly define the
requirement and provide to the contractor the background and related information necessary to
understand the requirement. The SOW should communicate its relationship to the agency
missjon and the agency goals, objectives, needs and desires to be fulfilled through the
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procurement. In order to accomplish this through the SOW, the writer must do some
preparatory research.
Review the documents which authorize the project involved. This may include the authorizing
legislation, the scope of the contract SOW, organizational mission statements and even EPA
promulgated pollution standards or regulations. Review available literature related to the field
or to the project. Review available information regarding work done in the field by other
agencies. Review any prior research or preliminary procurement action such as site reviews or
feasibility studies. Review any similar procurement actions.
The SOW will be influenced by any number of restraining forces and factors. Similarly, the
preparation of the SOW will be influenced by restraining factors. Another area of background
research, therefore, must identify these forces and factors. The writer should review the
available funding; research any applicable regulatory restraints such as mandated milestones
or accomplishments' dates or technical performance considerations.
The writer must also do some research to identify those documents, procedures and rules that
will be made a part of the SOW itself and with which the contractor must comply, e.g., scientific
or safety standards. As important as the identification of each of these is the determination as
to the extent of compliance expected. Will the entire document be made a part of the contract
or only specific paragraphs? Is the procedure an internal agency procedure? If so, will
changes be needed to permit the contractor to adapt it to the contractor's operation; will such
elementary things as organizational responsibilities be applicable to the contractor?
Elements of a SOW
Trtle
Scope: Should reveal a quick overview of what the SOW covers
Background: If applicable, a brief description of the problem(s) to be solved or the need giving rise to this requirement.
Objectve: The overall effect this requirement will achieve.
Contractor Tasks Defines and explains the work to be performed.
I Main stepr the contractor will complete and the sequence in which the
work will be performed.
Level of effort Of applicable).
Reference to related studies, documentation, and specifications.
Design/functional/performance characteristics (for supplies)
Quality Assurance requirements
Support equipment for contract end items
Government/contractor furnished property, facilities, equipment services required*
Contract End Items: Provides requirements related to the product or services deliverable.
I Inspecton and Acceptance Criteria
I Data requirements (reports, technical data, etc.)
I Special Reporting or Special Work Plan Requirements
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* NOTE: The Agency's (revised) policy on government furnished and contractor-acquired
property under EPA contracts in Procurement Policy Notice 96-03, dated May 1,1996 states'
Generally, in accordance with the FAR, the Agency may not furnish property to its
contractors unless an exception in FAR 45.302-1 is met. The policy does provide for a
class deviation to the FAR which will permit the Agency to provide property under the
following additional circumstances:
# under existing contracts for a limited period of time.
# under procurements in process for a limited period of time.
# at specific EPA laboratory locations.
# under certain emergency conditions.
# when the property is existing Agency property.
6.3 Analysis of Work to be Done
f
One approach used in SOW development is the Work Breakdown Structure (WBS). WBS
involves breaking the overall requirement into major phases or tasks that represent a logical,
and usually chronological, division of the work effort. Each major task should be broken down
further into as many sub-tasks as practical, given the situation. This will make it easier to
identify the work required, and to determine staffing, milestones, and schedule.
The following is a portion of a WBS for remedial design oversight under the Response Action
Contract:
Main task* Field investigation
Subtask: Site Reconnaissance Oversight
- ecological resources reconnaissance
- well inventory
- residential well sampling
- land survey
- topographical mapping
- field screening
Subtask: Geological Investigations Oversight (soil/sediment)
- surface soil sample collection
Subtask: Air Investigations Oversight
Subtask: Hydrogeological Investigations Oversight-Ground Water
- well systems installation
- collect samples...
As you can see, each contract function is broken down into component parts, i.e., work areas,
tasks and subtasks.
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6.4 Tips on Terminology or Words Matter
jy t
V ^*
^frequent problert^encountered in defining the contract tasks is the use of wojxlsj^assist," "as
required? "as necessary," and "as directed." If you must use these words,^especific^about
what action the contractor is to take. ^*aa- '
Assist connotes personal services. It infers working side-by-side, being subject to supervision.
The word is totally undefined in terms of identifying the work and its range and depth. Spell out
explicitly what the contractor must do.
, As required. The result of this approach is an undefined work condition. It has no expressed
' limitations. It places the Government in a position of not expressing its minimal needs. It could
lead to a debatable condition concerning the contractor's compliance with the contract or work
assignment. Under what conditions will the required service be needed? The SOW must be
declarative as to its minimal needs.
/ As applicable/As necessary. If the Government does not know what is necessary or applicable,
it must not leave to the contractor the responsibility for determining the minimal needs of the
contract. The SOW should forthrightly state the requirements so that the contractor can comply
.. with the requirement using his or her best efforts and expertise to accomplish the tasks.
/- As directed. This condition, as a part of a work task in a SOW, connotes a personal service
situation in which the contractor is placed under direct supervision.
'Be carefuT^bout using the word "support"; it is an ambiguous term. Specify the specific type of
jpport needed.
6.5 Reporting Requirements
For many EPA contracts the deliverable will be a report of some kind. For each separate report
required under the contract, describe the following:
• Type of report (e.g., draft, final, interim, special, etc.)
• Descriptive title (e.g., monthly progress report)
* Minimum content requirements
• Number of copies required
• Distribution (with complete addresses of all recipients)
• Delivery schedule
+ . Number of days the Government will have to review, comment,
approve/disapprove and return (as appropriate)
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*• NOTE: The Government Printing and Binding Regulations issued by the Joint Committee on
Printing mandate that contractors or subcontractors must not become prime or substantial
sources of printing for Federal agencies.
Contractors (ma vTioftengaae in or subcontract for printing services. "Printing" includes
composition, plate making, presswork, binding, microform publishing, or the end items
produced by such processes. Copying of compact disks (CD) and computer diskettes are also
considered printing by the Joint Committee on Printing, and must be procured through the
Government Printing Office.
EPA contractors may provide "duplication, photocopying or Xeroxing" services of less than
5,000 units of one page, or less than 25.000 units in aggregate of multiple pages for any
individual requirement. Contractors may provide two sets of CD-ROMs or computer diskettes
for archival purposes.
Printing services obtained in violation of this guidance will result in the cost of such printing
being disallowed under cost reimbursable contracts.
6.6 Getting Feedback
The chart below illustrates techniques your Contracting Officer can use to test and improved the
Government description of need(s).
DECISION TABLE
Selecting Techniques for Testing and Improving Government Descnption of Need(s)
SELECT
Industry Panel
Solicitation for Information or
Planning Purposes
Presohcitation
Notices
Presohcitation
Conference
IF
1 The need can be identified but most beneficial
approach is unknown
1 Input from experts in industry would eliminate non-essential or obsolete
requirements
1 It will test the market's capabilities to perform the requirement
1 There is a need for written responses
1 . A more economical or less formal means of obtaining information from
potential sources cannot be obtain
1 There is a possibility that there could be several approaches to
obtaining the final product
1
1
1
1
1
1
There is a need to develop or identify sources
There will be a presohcitation conference followed by a formal
solicitation
Additional insights from the contractors could produce an improved
SOW that would result in a more inclusive solicitation document
Information as to the nature and size of the procurement may generate
more competition
Submission of proposals would be time consuming and costly; advance
planning by the contractors may be necessary
There is a need to identify interested sources to solicit
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PRACTICAL EXERCISE
Words can Make a Difference1
Directions: Read the phrases and sentences and identify the only acceptable statement:
1. To the satisfaction of the Project Officer.
2. Contractor may be required to furnish manuals.
3. All reasonable requests of the Project Officer shall be complied with.
4 In accordance with best commercial practice.
5 Workmanship shall be of highest quality.
6. Installed in a neat and workmanlike manner.
7. The contractor shall use only good materials.
8. Acceptance will be made only after the contractor has carefully performed the duties outlined
in the SOW.
9. The finished product should have pleasing lines when visually inspected.
10. The contractor is to provide manuals and/or floppy disks.
11. The leather shall be skillfully fitted over the frame.
frt2. yhe guides shall promote a smooth operation by preventing any metal to metal contact
between suspension members.
13. Contractor is to fabricate the requirement in accordance with the attached drawings only.
14. Contractor is to scan the documents and implement the requirements.
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Chapter 7
Performance-Based Service Contracting
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Chapter 7
PERFORMANCE-BASED SERVICE CONTRACTING
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Qescribe the unique features of performance-based service contracting.
Individual:
1 . List problems common to Government service contracts.
2. Define performance indicators.
3. Explain the use of incentives.
7-1
U>S> EPA Headquarters Llr^-
Mail code 3201 '
1200 Pennsylvania Avenue NW
Washington DC 204GO
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7.1 Performance-based Service Contracting (PBSC)
Performance-Based Service Contracting (PBSC) emphasizes objective, measurable
performance requirements and quality standards, as well as describing what is to be
accomplished without describing how the job must be done. Performance-Based SOWs
(PSOW) provide contractor performance standards and measures. Standards set forth:
what, where, when, how many, and how well.
Office of Federal Procurement Policy (OFPP) Letter 91-2 requires the use of performance
requirements and specific quality standards in defining contract requirements for service
contracting. More specifically, it prescribes the use of performance-based contracting methods
to the maximum extent practicable when acquiring services.
PBSC is a Government-wide tool intended to correct problems commonly associated with a
service contract, including:
& cost overruns;
ti schedule delays;
& failure to achieve specified results; and
ft other performance problems.
7.2 Real World SOWs
Generally, all SOWs should be performance-based to the maximum extent practical. In reality,
there is no such thing as a pure performance-based SOW. However, the Government stands to
benefit in the long run if its SOWs are performance-based.
In situations where the entire contract is not conducive to PBSC, such as cost reimbursement,
level-of-effort or "umbrella" contracts, some tasks may be. PBSC methods should be used to
the maximum extent possible.
7.3 Defining the Work
In order for a PSOW to be effective, each task or service must be identified. This is usually
accomplished by the use of a tree diagram or a Work Breakdown Structure diagram. The
purpose is to break down the services needed into their component parts (tasks) to the point
where each can be identified and measured. The total of these tasks, then, is the work to be
accomplished. Successful completion of the total tasks, in accordance with the standards
provided, constitutes successful contract performance.
Prospective contractors must be provided the Government's best estimate of projected
workloads so they can estimate the resources required to provide the services. For example,
on an EPA hotline solicitation, extensive records were attached to the RFP which specified the
number and length of calls for every day over a two-year period.
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7.4 Identify the Input, Work, and Output for Each Task
The list of inputs constitutes the resources necessary to perform the task. The list of outputs
constitutes the sum of the services to be provided (the work to be performed). The work
methodology should not be specified as part of the work description unless necessary for
standardization, safety requirements, etc. It should be left to the contractor to derive the most
efficient method (work) to achieve the outputs.
The inputs are normally facilities, tools, material, and the workload. The outputs are the
services to be performed. The work (usually labor and, supervision and management coupled
with adequate procedures and quality control) is supplied by the contractor.
7.5 Establish Acceptable Performance Indicators
Indicators are criteria by which satisfactory service may be measured. Indicators normally relate
to-quantity, quality, time of delivery or performance and format of the service or deliverable.
For example, on a hotline contract, indicators may include promptness in picking up the call or
accuracy of responses.
A standard must be established by which an individual indicator can be measured as
acceptable or unacceptable. Whenever possible, this is done by a specified measurement
device or some other means of objective testing.
A subjective test may be used if a value judgement is the only means available to establish
acceptability. Such subjective testing, however, should be carefully designed to impart as much
objectivity to the judgement as possible and the test must be uniformly and consistently applied.
Standards are usually given with tolerances to establish a reasonable standard of achievement.
The Acceptable Quality Level (AQL) establishes a maximum allowable error rate or variation
from the standard AQL's are expressed as maximum number of unsatisfactory performances
(failure to meet the standard) per 100 repetitions. For example, in a shuttle bus contract the
performance standard might be: "arrive at scheduled stops within five minutes of the contract
schedule." The AQL might be 5%, i.e., the shuttle could be more than five minutes late 5% of
the time.
If the maximum number is exceeded, contract performance is unsatisfactory and the
government may take whatever remedial action is available under the contract terms. That
could include deduction of a specified amount of money for nonperformance or unsatisfactory
performance (as determined in a deduction table contained in the contract); or, ultimately, and if
otherwise advisable, termination for default.
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7.6 Incentives
Incentives should be used when they will induce better quality performance and may be
positive, negative or both. They should be applied selectively to motivate contractor efforts that
might not otherwise be emphasized, and to discourage inefficiency. Negative incentives, such
as deductions from the contract price must represent (as nearly as possible) the cost of the
service forgone.
7.7 Develop and Publish the Quality Assurance Plan
A Quality Assurance Plan (QAP) sets forth the required service, the AQL, the method of
surveillance (sampling guides, checklists, decision tables)and any incentives. Because a
contractor must provide reasonable assistance to the Government during such inspections, and
since the contractors normally pattern much of their own quality control procedures after the
Government's inspection techniques, this document should be issued in tandem with the
PSOW.
SAMPLE QAP FOR SHUTTLE BUS SERVICES
Required
Service
Arrive on time
Traffic violations
per mile
Standard
bus must arrive
within five
minutes of
contract
schedule
drivers must
obey all traffic
laws
AQL
5%
0%
Method of
Surveillance
checklist
review DMV
records
Deduction from contract
price for exceeding AQL
20%
33%
7.8 Further Assistance
Guidance for writing and administering PSOWs can be found in A Guide to Best Practices for
Performance-Based Service Contracting, available from the OFPP. Additional material is also
contained in the Guide for Writing and Administering Performance Statements of Work for
Service Contracts, also available from OFPP. GSA and many contractors offer training courses
on PBSC and PSOWs.
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Chapter 8
Hot Spots
-------
Chapter 8
HOT SPOTS
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: List areas of vulnerability in EPA contracts:
Individual:
1. Define and list factors that characterize personal services.
2. Define and list prohibitions against advisory and assistance services.
3. Define "conflict of interest."
4. Define and recognize "inherently governmental activity."
5. Define and recognize "sensitive/vulnerable functions."
6. Describe what a management control is and list some typical examples.
^^~--*tv-.-.-.-.i.-jf.Ti
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This chapter will cover areas related to writing SOWs including personal services, inherently
governmental functions and Advisory and Assistance Services which, traditionally, have been
"hot spots" at EPA.
8.1 Determine if services are personal or nonpersonal
/-"—^
Scrutinize the SOW to ensure that you a^e not procuring personal services. Personal services
oecur when contractor personnel appear to be. or are treated as Government employees.
When an agency has a need for services to be performed, but the personnel ceiling cannot be
raised to allow them to hire individuals, they may attempt to contract out for those services.
Such practices would circumvent the civil service hiring laws.
FAR 37.104(a) states:
"The Government is normally required to obtain its employees by direct hire under
competitive appointment or other procedures required by civil service laws."
Agencies must have specific statutory authority to award contracts for personal services.
What constitutes direct supervision?
Rejecting performance or deliverables provided as a result of a service contract does not
constitute direct supervision. The Government must make a decision whether a service is
acceptable for payment purposes. Direct supervision is relatively continuous Government
supervision of contractor employees.
Factors to consider in determining if a Government-employer contractor-employee relationship
exists are:
^Performance on site.'
^Principal tools and equipment furnished by the Government.
^Services are in furtherance of assigned function or mission.
#Civil service personnel are performing comparable services.
*The services will be needed beyond one year.
^Requires Government direction, directly or indirectly.
If any of these factors are present, carefully review the overall requirement to determine if the
service is personal in nature.
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The following chart provides examples of personal and non personal services.
PERSONAL AND NONPERSONAL SERVICES
PERSONAL
NONPERSONAL
Day-to-day stenographic and secretarial duties in
a Government office under Government
supervision.
A contract integrated with an accounting firm to
perform day-to-day accounting functions for the
Government.
An engineer integrated into the organization of a
federal agency.
Maintenance of ADP equipment
Laboratory services
Audit services
Lawn care and gardening services
Temporary Help Services Contracts with temporary help service firms for the brief or
intermittent use of the skills of private sector temporaries are not treated or regarded as
personal services. However, these services cannot be used in lieu of regular recruitment under
civil service. Other restrictions apply-contact 0AM if you are planning to contract for temporary
services.
8.2 Factors That Tend to Characterize Services as Personal Rather than Nonpersonal
* Government can obtain civil service employees to do the job, or whether, on the other
hand, the contractor has specialized knowledge or equipment that is unavailable to the
Government.
* Services represent the discharge of a Government function that calls for the exercise of
personal judgement and discretion on behalf of the Government.
* The requirement is continuing rather than short-term or intermittent.
* Government reserves the right to assign tasks to and prepare work schedules for
contractor employees during performance of the contract. (Note: However that at the
inception of a nonpersonal services contract, the CO may incorporate work schedules
for the contractor or may establish a time period for performance of orders).
* Government retains the right (whether actually exercised or not) to supervise the work
of the contractor personnel, either directly or indirectly.
* Government reserves the right to supervise or control the method by which the
contractor performs the service, the number of people employed, and the special duties
of individual employees.
# Government will review performance by each individual contractor employee, as
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opposed to reviewing a final product or service on an overall basis after completion of
work.
* Government retains the right to have contractor personnel removed from the job for
reasons other than misconduct or security.
# Contractor personnel are used interchangeably with Government personnel to perform
the same functions.
# Contractor personnel are integrated into the Government's organizational structure.
4 Note: For additional information on the personal services, consult EPA Order 1900.1 A,
Proper Use of Contractor Services.
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PRACTICAL EXERCISE
Personal or Nonpersonal?
Directions:
1. Underline the phrases or terms that make this requirement a personal service.
2. Identify which of the six factors below apply.
3. Rewrite the requirement as a nonpersonal service.
PERSONAL:
Tw^nty^fiye^guards are needed to provide security service at the Federal Building, 111 West
End~§free7on an ongoing basis. The 25 guards will report to the Federal Officer Security Chief
in the Security office in Room 10. There the guards will be given their uniforms, walkie talkies.
Assignments will be made bv the Federal Officer Security
Chief. Each guard is to perform the functions as required bv the assignment. At the end of
each day, the guard will receive his daily performance evaluation. If a positive evaluation was
made, the guard may return the nexf dayfor ariotheFassignment.
THESE ARE THE 6 FACTORS
1. Performance on site
2. Principal tools and equipment furnished by the Government.
3. Services are in furtherance of assigned function or mission.
4. Civil service personnel are performing comparable services.
5. The service will be needed beyond one year.
6. Requires Government direction, directly or indirectly.
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8.3 Determine if Services are Advisory or Assistance
FAR 37.201 defines advisory and assistance services as:
"Services to support or improve agency policy development, decision-making,
management, administration, and operation of management systems."
There are several types of advisory and assistance services, as diagramed below:
TYPES OF ADVISORY AND ASSISTANCE SERVICES
SERVICES
Individual Experts and Consultants
Studies, Analyses, and Evaluations
Management and Professional
Support Services
Engineering and Technical Services
DESCRIPTION
Persons possessing special,
current knowledge or skill
combined with extensive
operational experience
Organized, analytic assessments
that provide insights necessary to
understanding complex issues or
improving policy development or
decision-making
Advice, training, or direct
assistance for organizations to
improve efficiency or operations of
managerial, administrative, or
related systems
Advice, training, or under unusual
circumstances, direct assistance
RESULTS
Information, opinions, advice, or
recommendations to enhance
understanding of complex issues or
to improve the quality and timeliness
of policy development or decision-
making
Structured documents containing
data or leading to conclusions and/or
for recommendations
Information, opinions, advise,
training, or direct assistance that
lead to the improved design or
operation of managerial,
administrative or related systems
To improve efficiency or operation or
maintenance of existing platforms,
weapon systems, related systems,
and associated software
In order for you to contract for advisory and assistance services, it must be essential to the
agency's mission to:
1. Obtain outside points of view to avoid too limited judgement on critical issues;
2. Obtain advice regarding developments in industry, university, or foundation research;
3. Obtain the opinions, special knowledge, or skills of noted experts;
4. Enhance the understanding of, and develop alternative solutions to, complex issues;
5. Support and improve the operation of organizations; ,
6 Ensure the more efficient or effective operation of managerial or hardware systems.
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8.4 Activities and Programs That Are Not Defined Advisory and Assistance Services
In accordance with FAR 37.204, the following activities are excluded or exempt from the
definition of advisory and assistance:
I Activities that are reviewed in accordance with OMB Circular A-76 on acquiring
cpmmercja|.pr.oducts.and-services.
I Architectural and engineering services.
I ADP/Telecommunications functions and-felated-sefviees-that-aFe=eontroiled=m
aecordance-wrth-the-Federal-lflforfnatton-Resotjrces-Management-Regulatien
I Day-to-day operation of facilities and functions.
I Government-owned, contractor-operated facilities.
I Clinical medicine and research on basic medical, biological, social, etc.
phenomena.
I Those support services of a managerial or administrative nature performed as a
simultaneous part of, and nonseparable from specific development, production,
or operational support activities.
I Contracts entered into in furtherance of statutorily mandated advisory
committees.
I Initial training, training aids, and technical documentation acquired as an integral
part of the lease or purchase of equipment.
I Routine maintenance of equipment, routine administrative services, printing
services, and direct advertising costs.
I Auctioneers, realty brokers, appraisers, and surveyors.
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8.5 ProMbitlons^Against the Use Of Advisory and Assistance Services
Advisory and assistance services cannot be used to:
1. Perform work of a pdicVj decision-making, or managerial nature which is the
direct responsibility of agency officials;
2. Bypass or undermine personnel ceilings, pay limitations, or competitive
employment procedures;
3. Contract for, on a preferential basis, former Government employees:
4. Specifically aid in influencing or enacting legislation;
5. Obtain professional or technical advice which is readily available within the<^
agency or another Federal agency. '
If you determine that the requirement is prohibited, you must
• recast the requirement or
• do the work in-house.
8.6 Contracting for Advisory and Assistance
If the requirement for advisory and assistance service is legitimate, you must:
* Take action to avoid any organizational conflicts of interest that:
- result in an unfair competitive advantage to the contractor
- impair the contractor's objectivity in performing the work.
* Have complied with the procedures in this FAR 37.207.
* Provide a statement of need and certification (Attach to the purchase request)
* Obtain approvals. (See chapter 2 of the Contracts Management Manual for details)
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PRACTICAL EXERCISE:
"ADVISE AND CONSENT"
Directions: Identify requirements in the chart below that could be considered as advisory and
assistance services by citing the applicable Factor Number in Column 2. If not an advisory and
assistance service, write N/A in Column 2. The factors are provided below.
Determining Factors for Advisory and Assistance Services
1 . Obtain outside points of view to avoid too limited judgement on critical issues;
2. Obtain advice regarding developments in industry, university, or foundation research;
3. Obtain the opinions, special knowledge or skills of noted experts;
4. Enhance the understanding of, and develop alternative solutions to complex issues;
5. Support and improve the operation of organizations;
6. Ensure the more efficient or effective operation of managerial or hardware systems.
Resources |
ADP telecommunications |
On site report typing |
Preaward survey
Payroll
Electrical/mechanical training materials
| Computer software |
Study on the efficiency of management |
Operation of gift shop
No.
I
I
I
I
I I
I
I
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8.7 Conflicts of Interest (COI)
The Federal Acquisition Regulation (FAR) Section 9.501 defines COI as a situation in
which, because of other activities or relationships a firm:
• is unable or potentially unable to render impartial assistance or advice to the
Government, or
• has impaired objectivity in performing the contract work or might be
otherwise impaired, or
• has an unfair competitive advantage.
COI is of particular concern at EPA because of the type of services for which we contract. Over
the past several years, organizational COI has been the object of mounting concern in the
procurement community. It has been the subject of hearings held before the Senate
Committee on Governmental Affairs and an issue of concern in reports issued by The Office of
Technology Assessment and General Accounting Agency. In acknowledgment of this concern,
the Agency has placed increased emphasis on COI issues.
If the Government were to award a contract to an offerer whose potential for a COI is clearly
recognizable when comparing its business activities with its Government contract obligations,
the Agency's credibility with the public could be severely damaged. Such a loss of public
confidence in the integrity of the Agency's programs could adversely affect EPA's ability to
execute environmental initiatives.
The Agency cannot risk relying upon contractors for management support who, by the very
nature of their other work, either directly or through another firm, will place them in actual or
potential COI situations. Consequently, the Agency has developed policies and procedures to
avoid, mitigate or neutralize actual or potential COI.
Included in these policies are provisions which allow the CO to prohibit any firm from receiving
an award for a management support or sensitive services contract if it is determined that actual
or potential COI, or the appearance of such, could occur if the firm were to perform the
management support or sensitive services.
COI determinations are made bv the Contracting Officer on a case-by-case basis by comparing
the statement of work with the representations made by each offerer regarding their business
activities and affiliations. COI policies and provisions also provide for the establishment of
safeguards for avoiding and for identifying, mitigating and neutralizing conflicts of interest during
contract performance.
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8.8 Inherently Governmental Functions
"Inherently Governmental Function" means a function that is so intimately related to public
interest as to mandate performance by Government employees. An inherently governmental
function includes activities that require either the exercise of discretion in applying Government
Authority, or the making of value judgements^ making decisions for the Government, including
the interpretation and execution of the laws of the United States.
The following list of inherently governmental functions is from FAR 7.503. Contracts shall not
be used for the performance of these functions. Every statement of work should be carefully
reviewed to ensure that inherently governmental functions are not contracted.
1. The direct conduct of criminal investigations;
2. The control prosecutions and performance of adjudicatory functions other than those
relating to arbitration or other methods Of alternate dispute resolution;
3. The command military forces, especially the leadership of military personnel who are
members of combat, combat support or combat service support role;
4. The conduct of foreign relations and the determination of foreign policy;
5. The determination of Agency policy, such as determining the content and application
of regulations, among other things;
6. The determination of Federal program priorities for budget requests;
7. The direction and control of Federal employees;
8. The direction and control of intelligence and counterintelligence operations;
9. The selection or nonselection of individuals for Federal Government employment,
including interviewing or hiring of individuals;
10. The approval of position descriptions and performance standards for Federal
employees;
11. The determination of what Government property is to be disposed of and on what
terms (although an agency may give contractors authority to dispose of property at
prices within specified ranges and subject to other reasonable conditions deemed
appropriate by the agency);
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12. In Federal procurement activities with respect to prime contracts-
(I) Determining what supplies or services are to be acquired by the
Government (although an agency may give contractors authority to
• acquire supplies at prices within specified ranges and subject to other
reasonable conditions deemed appropriate by the agency).
(ii) Participating as a voting member on a Technical Evaluation Panel (TEP)
or attending TEPs.
(iii) Approving any contractual documents, to include documents defining
requirements, incentive plans, and evaluation criteria. Includes preparing
statements of work, work assignments, technical direction documents,
delivery orders, or any other work issuance document under a contract
that the contractor is performing or may perform.
(iv) Awarding contracts.
(v) Administering contracts (including ordering changes in contract
performance or contract quantities, taking action based on evaluations of
contractor performance, and accepting or rejecting contractor products or
services);
(vi) Terminating contracts;
. (vii) Determining whether contractor costs are reasonable, allocable, and
allowable, including reviewing vouchers and invoices to determine
reasonableness of costs, hours, and work performed; and
(viii) Participating as a voting member on a Performance Evaluation Board
(PEB), participating in and/or attending PEBs. Includes the actual
preparation of Award Fee Plans and preparing Award Fee Letters
(including typing).
13. The approval of Agency responses to Freedom of Information Act (FOIA) requests
(other than routine responses that, because of statute, regulation, or other Agency
policy, do not require the exercise of judgement in determining whether documents are
to be released or withheld), and the approval of Agency responses to the administrative
appeals of denials of FOIA requests.
14. The conduct of administrative hearings to determine the eligibility of any person for
a security clearance, or involving actions that affect matters of personal reputation or
eligibility .to participate in Government programs.
15. The approval of Federal licensing actions and inspections.
16. The determination of budget policy, guidance and strategy.
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17. The collection, control, and disbursement of fees, royalties, duties, fines, taxes
and other public funds, unless authorized by statute, such as 31 U.S.C. 952
(relating to private collection contractors) and 31 U.S.C. 3718 (relating to private
attorney collection services), but not including-
(I) Collection of fees, fines, penalties, costs or other charges from visitors or
patrons of mess halls, post or base exchange concessions, national
parks, and similar entities or activities, or from the persons, where the
amount the amount to be collected is easily calculated or predetermined
and the funds collected can be easily controlled using standard cash
management techniques; and
(ii) Routine voucher and invoice examination.
18. The control of the treasury accounts.
19. The administration of public trusts.
20. The drafting of Congressional testimony, responses to Congressional
correspondence, (includes briefing materials to congressional staffers) or Agency
responses to audit reports from the Inspector General, General Accounting Office, or
other auditing entities.
8.9 Sensitive/Vulnerable Functions
Unlike inherently governmental functions, sensitive/vulnerable functions may be contracted out.
However, they may approach being inherently governmental because of the nature of the
function, the manner in which the contractor performs the contract, or the manner in which the
Government administers contractor performance. These functions require close scrutiny from
Federal officials. The following list of sensitive/vulnerable functions isTfom FART.503.
1. Services that involve or relate to budget preparation, including workload
modeling, fact finding, efficiency studies, and should-cost analyses, etc.
2. Services that involve or relate to reorganization and planning activities.
3. Services that involve or relate to analyses, feasibility studies, and strategy
options to be used by Agency personnel in developing policy.
/
4. Services that involve or relate to the development of regulations.
5. Services that involve or relate to the evaluation of another contractor's
performance.
6. Services in support of acquisition planning.
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7. Contractors providing assistance in contract management (such as where the
contractor might influence official evaluations of other contractors).
8. Contractors providing technical evaluation of contract proposals.
9. Contractors providing assistance in the development of statements of work.
10. Contractors providing support in preparing responses to Freedom of Information
Act requests.
11. Contractors working in any situation that permits or might permit them to gain
access to confidential business information and/or any other sensitive
information (other than situations covered by the Defense Industrial Security
Program described in FAR 4.402 (b)).
12. Contractors providing information regarding agency policies or regulations, such
as attending conferences on behalf of an agency, conducting community
relations campaigns, or conducting agency training courses.
13. Contractors participating in any situation where it might be assumed that they
are Agency employees or representatives.
14. Contractors participating as technical advisors to a source selection board or
participating as voting or nonvoting members of a source evaluation board.
15. Contractors serving as arbitrators or providing alternative methods of dispute
resolution.
16. Contractors constructing buildings or structures intended to be secure from
electronic eavesdropping or other penetration by foreign governments.
17. Contractors providing inspection services.
18. Contractors providing legal advice and interpretations of regulations and statutes
to Government officials.
19. Contractors providing special non-law enforcement, security activities that do not
directly involve criminal investigations, such as prisoner detention or transport
and on-military national security details.
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8.10 Management Controls
Management controls for sensitive/vulnerable services can include appropriate contract clauses
addressing Conflict of Interest, Confidential Business Information and proper identification of
contractor employees. Possible management controls include requiring contractors to:
• submit reports that contain recommendations and explain and rank policy or
action alternatives, if any,
• describe what procedures they used to arrive at their recommendations,
• , summarize the substance of their deliberations,
• report any dissenting views,
• list sources relied upon,
• ensure that the methods and considerations which recommendations are based
are clear, and
• All data, documents or reports produced by the contractor shall be suitably
marked as contractor products.
Management controls must be listed in Requests for Approval of Sensitive/Vulnerable Services.
Once Agency officials have approved the Request, the Project Officer has final responsibility for
the implementation and oversight of these controls.
Even if only preliminary research or data gathering is performed by the contractor, it must be
carefully examined by EPA personnel for any contractor partiality, favoritism, and Conflict of
Interest, prior to its incorporation in Agency matters. In all cases, there should be a clear record
that the contractor's work was reviewed and that final decisions were made by Agency
personnel. Such records of review could include notes from reviews of draft and final
documents by Agency personnel, minutes from progress meetings with contractors, reports
from Agency peer and board reviews, and so forth.
*• NOTE: Procurements involving sensitive services require special approvals. Chapter 2 of
Contracts Management Manual contains preparation instructions. The vast majority of EPA
contracts involve sensitive services. If you believe your procurement does not fall into this
category, contact your Contracting Officer for a determination of whether or not this requirement
applies.
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Chapter 9
Cost Estimating
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Chapter 9
COST ESTIMATING
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Describe an Independent Cost Government Estimate (IGCE), how it is
formulated, and its elements.
Individual:
1. Define "Independent Government Cost Estimate."
2. List the uses of an IGCE.
3. Identify and define the elements of an IGCE.
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ACQUISITION TRAINING FOR PROJECT OFFICERS
Chapter
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Subject
Registration and Orientation
Overview
Forecasting and Planning
Break
Sources
Lunch
Contract Types
Initiating the Procurement
Break
Statement of Work Preparation
Performance-Based Service Contracting
Hot Spots
Cost Estimating
Break
Source Selection
Developing Evaluation Factors
Lunch
Evaluating Proposals
Negotiating and Awarding the Contract
Post-Award Orientation
Final Examination
Dayl
8:00-8:30
8:30-9:00
9:00 - 10:00
10:00-10:15
10:15-11:30
11:30-12:30
12:30-1:30
1:45-2:30
2:30-2:45
2:45 - 3:30
3:30-4:00
Day 2
8:00 - 9:00
9:00-10:00
10:00-10:15
10:15-10:30
10:30-11:30
11:30-12:30
12:30-1:15
1:15-2:00
—
2:00 - 4:00
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9.1 What's an IGCE?
Independent Government Cost Estimates have always been an integral part of effective acquisi-
tion programs both in Government and private industry. A cost estimate is generally defined
as a projection or forecast of the economic or financial value of goods and/or services to be
delivered in the future. An Independent Government Cost Estimate is a detailed estimate of
the cost to the Government for services and/or supplies to be acquired. The estimate must be
the Government's own in-house estimate and must not be based upon information obtained
from contractors/ offerers from which proposals will be solicited. An IGCE is the
Government's estimate of what a responsible contractor should propose based on the statement
of work.
«•" The IGCE must not be divulged to any potential contractor.
I Current policy requires IGCEs be submitted with PRs greater than $25,000. |
9.2 Uses of IGCEs
EPA uses IGCE's for several purposes. Among them are the following:
• For evaluation of proposals for new contracts. Once an IGCE has been completed, all
offers received can be compared to the IGCE. Differences and similarities can be
compared and various conclusions can be drawn. The Project Officer (PO),
Contracting Officer (CO), cost estimator and cost analyst participate in this comparison
analysis, depending on the situation. Examples of what this comparison might disclose
include the following:
(1) The proposals overstate or work required.
(2) The SOW does not sufficiently explain the requirements.
(3) The SOW is good, the IGCE is good, the technical proposals are good, but the
proposal prices are either too high or too low.
(4) The proposals may include ideas and/or new technologies not considered by the
Government.
• For budget purposes. A good IGCE can be used to prepare the budget, prioritize areas
of concern and monitor the work in process. You must always keep in mind that the
IGCE is an estimate and may differ from the final cost. In an ideal situation these
differences will be insignificant. However, there may be significant differences. You
should analyze closely the differences to understand why they occurred and learn from
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them for the future. It is a good idea to document significant differences for future
references.
• To document negotiation objectives. This is a continuation of the process of comparing
the IGCE to the proposals. The differences and similarities should be highlighted and
the CO and PO should work together to determine what the Government's negotiation
objectives should be and what issues will be discussed during negotiations. Desired
outcomes should be documented as part of the CO's prenegotiation plan.
• To document award decisions. Any contract award should be based on a fair and
reasonable price for the required work. The IGCE will assist the CO and POs in their
determination that the Government will pay a fair and reasonable price and will get an
acceptable service or product. Any significant difference between the IGCE
negotiation objective and the final cost/price negotiated, should be addressed and
documented for the contract file.
9.3 Who is responsible for preparing IGCEs?
It is the responsibility of the Program Office personnel to develop the Independent
Government Cost Estimate. These persons are responsible for determining the resources
necessary to perform the work described in the statement of work. The accuracy and com-
pleteness of the IGCE are the responsibility of the Program Office, not the Contracting
Officer.
9.4 Steps in Developing IGCEs
There are various steps required in the development of an IGCE. All are necessary for a good
cost estimate. The time expended and the depth of information needed for each step will
depend on the phase and complexity of the work being estimated. The various steps are
summarized in the following paragraphs:
® Know the requirement, project or service being procured. In Government
contracts, the Statement of Work (SOW) is the source document which defines
the requirement, project or service. Any work not included in the SOW should
not be included in the cost estimate.
© Establish ground rules and assumptions. Examples of things to look for here
include the following:
• Determine what the schedules and milestones are for completing the cost
estimate and for completion of the entire project.
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• Determine if this is a brand new endeavor, continuation or follow-on
procurement.
• Determine if management has the need for any built in reserves and what
impact budgets may have on your estimating.
• Document all ground rules and assumptions.
© Determine if any historical databases are available and what other sources of
data are available for the cost estimator to use. This could include experience
on like or similar efforts, any type of professional materials, surveys and per-
sonal expertise of the cost estimator and co-workers. Document all sources of
information.
© Determine what method of estimating will be used. The two methods to be
discussed in this guide are the "Top-down and the Bottoms-up" methods. You
may use a combination of these methods. Document the estimating method
chosen and why it was selected.
© Using the chosen method of estimating, prepare your estimate for quantities for
labor, materials, travel and other elements of cost. Document the quantities
used and how they were determined.
© Review and organize your information and estimate unit costs for each category
of cost and compute your estimate. Document the source and dates of your
costs.
® Review the resulting cost estimate for credibility, reasonableness, accuracy, and
completeness. Make sure all steps in the IGCE preparation have been well
documented.
® Use the estimate to prepare the procurement package.
9.5 Types of Cost Estimates
Every cost estimate will be based on forecasts and cannot be predicted with absolute certainty.
EPA's goal for cost estimates is to achieve predictions that are as accurate as possible using
the information available and the best estimating technique for a given situation. Generally
speaking, there are two major types of cost estimates:
T parametric (top down) and
A engineering (bottoms-up).
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In many instances a combination of these two methods may be used.
9.6 Parametric or Top Down
This is called the ballpark approach and is based upon pricing major measurable units such as
labor hours, cubic yards, numbers of moves, numbers of laboratory tests or number of
computers, major computer systems requirements, etc. to determine an approximate estimate
of the costs.
This approach requires the use of a database with like elements of work. It requires collecting
and organizing historical data and relating it to the work output being estimated. When mak-
ing any estimates based on historical data, adjustments have to be made to the database
information for the specific work required and for cost increases/decreases due to differing
requirements and economic conditions.
The top down method would be used in the early planning stages of a project when the precise
quantities or needs are not yet known or when requirements are not fully known or detailed
specifications are not available.
This is the method which would probably be used when preparing an IGCE for a new contract
as opposed to a work assignment or a delivery order on an existing contract. The estimate
would result in an "order-of-magnitude" projection of costs, and would have to be refined as
the work product becomes more defined.
The top down approach may not detail all peripheral costs, such as site preparation access,
regulatory permitting costs, specific license requirements, mainframe timeshare costs or
software, but some estimates of the cost of these items should be included.
9.7 Engineering or Bottoms-up
This is called the detailed estimate and represents the opposite end of the cost estimating
spectrum. It presumes that the total effort can be separated into a work breakdown structure
(WBS), and pricing can be applied to each element such as labor, overhead, travel, equipment,
other direct costs and G&A.
The database for a bottom-up estimate has to be very detailed and represents the accumulated
experiences of many previous and similar projects. Adjustments still have to be made and you
should never depend entirely upon any historical database. If a program is just starting to pre-
pare IGCEs, formal supporting databases may not exist. However, there may be sufficient in-
house experience and prior contracts for similar work which will provide information to assist
you in using this method.
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This type of estimate is prepared following completion of a detailed design specification of a
proposed construction project, detailed requirements for software development, and whenever
the needs are well defined.
9.8 Identifying Costs
Contractors incur costs in two broad categories: direct costs and indirect costs.
9.9 Direct Costs
Direct costs are costs that can be directly associated with a particular project or contract. If a
cost is incurred specifically for a contract and would not otherwise be incurred, it is a direct
cost. Examples of direct costs include:
direct labor, materials, travel, equipment, subcontracts, consultants, computer usage
time, courier service and long distance phone calls to name just a few.
9.10 Direct Labor
Direct labor cost includes the labor hours, Professional (P) & Technical (T) levels and
disciplines and/or labor categories. Estimates for labor hours and rates can be derived from
one or a combination of the following:
(1) A current database for similar work being performed on a current contract or a
similar contract with adjustments for any differences.
(2) Round table discussions with Government experts, supervisors and peers.
(3) Personal experiences and professional judgement.
(4) Available Government models for the type of work required.
(5) Historical data on prior similar contracts. (Caution: You should never rely
completely on historical data; there will generally be some adjustments re-
quired.)
9.11 Other Direct Costs (ODCs)
Examples of ODCs include the following:
Telephone Supplies Reports
Postage Reproduction Computers
Equipment Messenger Service
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9.12 Indirect Costs
Indirect costs are not directly associated with a specific project or contract but are necessary
for the work to be done. Examples of possible indirect costs are as follows:
Utilities
RenL
Telephone
Office supplies
Fringe benefits
Generally speaking, most contractors will have a minimum of two indirect rates, i.e., an
overhead rate and a General & Administrative (G&A) rate.
9.13 Overhead
Overhead expenses are common expenses for everyday management of a project or contract
such as rent, utilities, clerical labor, etc. The base for the overhead expense pool may be
direct labor hours, machine hours, direct material costs or direct labor dollars. The most
common base is direct labor dollars. On a new procurement, it is necessary for the cost
estimator to select a basis of allocation for indirect rates and document the selection.
9.14 General & Administrative (G&A)
G&A expenses are generally expenses for the overall management of a company. Examples
of expenses found in G&A pools are salaries for upper management, accounting and legal
expenses, rentjtnd utilities for corporate offices, etc. The base for allocating G&A expenses is
generally total cost, but other allocation bases may be used.
9.15 Profit or Fee
Profit is associated with fixed price contracts and fee is associated with cost reimbursable type
contracts. The estimate of the profit/fee for a new procurement is an area where the CO can
be particularly helpful. He or she can either give you a "normal" fee percentage to use or
work with you in preparing an estimate based on EPA's Weighted Guidelines for profit/fee.
When estimating fee on an award fee contract, take the conservative approach and include the
maximum fee available.
*- At EPA it is not the responsibility of the estimator to review and analyze the contents
of the indirect pools and bases. These details are left to the experts in the Cost Policy and
Rate Negotiation Branch (CPRNB) of the Office of Acquisition Management.
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Chapter 10
Source Selection
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Chapter 10
SOURCE SELECTION
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Explain the purpose of source selection and how to choose Technical Evaluation
Panel members.
Individual:
1. List the purpose of source selection and the two basic methods.
2 Describe the criteria for choosing Technical Evaluation Panel members.
10-1 U-S-EP^ Headquarters L,,r.,
1U1 Mail code 3201
1200 Pennsylvan.a Avenue NW
Washington DC 204CQ
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10.1 Source Selection
Source selection is the process of soliciting and evaluating offers for award in a competitive
negotiated environment. The purpose of source selection is:
• maximize competition;
• minimize the complexity of the solicitation, evaluation, and selection decision;
• ensure impartial and comprehensive evaluation of all offerers' proposals; and
« ensure selection of the source whose proposal has the highest degree of realism and
whose performance is expected to best meet stated Government requirements.
There are two basic approaches to source selection:
1. Lowest-Price Technically Acceptable Proposal-under this approach, all of the evaluation
factors, except price, are, in effect evaluated in a "Go, No Go" basis. It is appropriate when price
is properly the deciding factor once the technical acceptability of offerers has been determined.
"Go, No Go" factors define a standard of comparison for contract requirements which proposals
either satisfy completely or fail to meet.
2. "Best Value" Concept-is an approach that considers the appropriate balance of technical
merit, management capacity, and cost factors for a specific requirement that will provide the
"best value" to the Government. There may be a trade-off of higher price for a better supply or
service.
Most of EPA's contracts are awarded on(a "best value" basisjwhere there is a technical
evaluation of offers. This text will cover the technical evaluation process at EPA. Further
information on this process can be found in the EPAAR, the Contracts Management Manual, and
The Cookbook: How to Get Contracts Awarded at EPA.
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10.2 Who's on the Team?
The key players in the source evaluation are set forth in the following chart:
Official
Acquisitions estimated to
be greater than $15M-
$25M for Information
Technology ,or Superfund
Acquisitions estimated to
be less than $15M«$25M
for Information-
Technology or Superfund
Source Selection
Official
Chief of the Contracting
Office
Chief of the Contracting
Office
Source
Evaluation
Board
Contracting Officer's Branch
Chief
Determined by the Chief of
the Contracting Office, if
necessary
Technical
Evaluation
Panel (TEP)
Chairperson
/Project
Officer
Project Officer
TEP members
At least two technically
knowledgeable individuals
At least two technically
knowledgeable individuals
Business
Evaluation
Panel (BEP)
Chairperson
/Contracting Officer
Contracting Officer
BEP Members
Contract Specialist,
Cost/Price Analyst
Contract Specialist,
Cost/Price Analyst
* For acquisitions valued at $500,000 or less, the Project Officer may be the only
member of the TEP and the Contracting Officer or contract specialist may be the
only member of the BEP.
(1) Source Selection Official (SSO). The SSO is the official responsible for overall
management of the source selection process. Duties of the SSO include appointing the
members and chairpersons of the Source Evaluation Board, the Technical Evaluation Panel,
the Business Evaluation Panel, and approving the solicitation document. The SSO approves
the competitive range and makes the source selection decision.
(2) Source Evaluation Board (SEB). The SEB consists of a chairperson, who is
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SEB. The SEB makes recommendations to the SSO on selection of a contractor for award.
(3) Technical Evaluation Panel (TEP). The TEP develops the evaluation criteria and
the Statement of Work for the solicitation and performs the technical evaluation of offers. All
members of the TEP must review all proposals initially submitted in response to a solicitation.
Unless approved in advance by the SSO, only individuals who evaluated initial proposals may
evaluate revised proposals submitted after determination of the competitive range.
(4) Business Evaluation Panel (BEP). The BEP reviews the solicitation evaluation
criteria and Statement of Work from a business perspective; evaluates the business and
contractual aspects of the offerers' business proposals; and considers other factors such as
responsibility of the offerers.
10.3 Organizing and Staffing the TEP
Remember the following guidelines when choosing your TEP:
¥ TEP members must have adequate expertise consistent with the complexity of the
acquisition.
¥ The technical evaluatipn process requires a lot of reading, analysis, and
documenting-choose people skilled in these areas.
¥ The process is time consuming-choose people who are understand the
evaluation milestones, are committed to the process, and are available to see it
through.
If Experienced evaluators save time-choose at least one person who has been
through the technical evaluation process before.
¥ If your procurement is a follow-on, one member of the TEP must be someone who
is not involved in managing the current contract.
¥ A smaller team is easier to manage-the team will have to reach a consensus on
the proposal evaluations. (Five people is the suggested number.-) — m& )C .
Ensure your team members are familiar with the Standards of Conduct and
Procurement Integrity Regulations and do not have an actual or potential conflict
of interest. (All team members must complete: Conflict of Interest and Non-
Disclosure forms.)
Ensure your members understand the requirements for nondisclosure and
confidentiality. Inform members of the arrangements for retrieving, marking,
holding, storing, and returning documents connected with the TEP.
Rating technical proposals is an inherently governmental function which only
regular or special Government employees of EPA, or other Federal Government
employees, can do. Contractors cannot rate technical proposals.
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10.4 Logistical Considerations
Make necessary arrangements for a suitably large workplace (such as a conference room) which
can accommodate all TEP members at the same time and allows for a large number of
documents to be spread out and examined and secured when not in use.
It's helpful to have administrative support, such as a typist.
If each member has access to a computer or the group has at least one laptop, drafting
individual reports and the consensus report will be much simpler.
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Chapter 11
Developing Evaluation Factors
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Chapter 11
DEVELOPING EVALUATION FACTORS
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Explain how evaluation factors are developed.
Individual:
1. Identify the general guidelines to follow in developing evaluation criteria.
2. Explain when and how to use past performance as an evaluation factor.
3. Differentiate between past performance and corporate experience.
4 Explain, in general terms, the process for determining the importance of evaluation factors.
5. Define "normalizing"
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11.1 General Guidelines
The evaluation factors you select depend on the specific nature of your contract needs. All
contracts differ, so it is not a good idea to just copy evaluation factors from similar or old
requirements. However, you may apply the following general guidelines when you generate
factors.
Consistency. The technical evaluation factors must agree with the statement of work.
It is important that they are accurately described. Likewise, it is most important that they
are accurately incorporated into the solicitation. The evaluation factors and the
statement of work must accurately identify the basis for the Governments's
measurement of how each offerer's proposal meets the Government's requirement.
Limited in Number. Avoid the tendency to generate too many evaluation factors. A
large number of factors dilute the relative importance of the most significant factors.
Also, having a very large number of factors may create overlap and waste valuable time.
Eliminate those factors which are not important enough to influence the source
selection.
Independence. You must select evaluation factors which do not overlap. For example,
"evidence of successful completion of similar projects" and "applicable project
experience" are nearly the same factor. Eliminate or consolidate factors which overlap.
Relevance. An evaluation factor may be valid (measure what it is supposed to
measure) without being relevant to the source selection. The factor must relate to the
contract statement of work. For example, in a source selection for services, you would
not ask for experience in manufacturing. Ask yourself if the factor really belongs in the
evaluation.
Reliable. A reliable factor is one which each evaluator can apply in a consistent
manner to rate each proposal the same way with a minimum variation among
evaluators. If your factor reads, "All key personnel will be professionals in their field."
Will each evaluator have the same understanding of what a "professional" is?
Measurable. Each factor must have a measurable variance. This difference can be
either quantitative or qualitative. A quantitative variance measures or numbers, such as,
pages per minute on a high speed printer. A qualitative variance relates to degree of
excellence or superiority, such as responsiveness to performance problems.
Determinative. The Comptroller General has stated in several decisions that the use of
an area as an evaluation factor is valid only if the agency's needs warrant comparative
evaluation in those areas. The FAR reinforces this by stating the evaluation factors will
include only those factors which will have an impact on the source selection decision.
The simplest way to assess determinance is to ask yourself, "Is the Government willing
to pay more for higher merit in this factor?"
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11.2 Categories of Evaluation Factors
The following table shows some sample evaluation factors which may be used in typical
solicitations. Remember, each of these evaluation factors may require development of one or
more factors (and several subfactors with one or more elements) and standards for
measurement.
SAMPLE EVALUATION FACTORS
General Management
• Quality Control
• Cost Accounting
• Management Information Systems
• Cost Schedule Control Systems
• Estimating
• Subcontract Management
• Property Management
• Security
• • Safety and Accident Prevention Programs
• Procurement Systems
• Continuous Process Improvement
• Reports and Procedures
• Recycling - RCRA
Past Performance
Technical Comprehension of Requirements:
• Scope and Methods
• Experience
• Work Control Methods
• Innovation
• Value Engineering
Organization and Staffing
• Key Personnel
Skill Mix
• Accountability
• Capacity (surge capacity)
Experience:
• Comparable Size and Complexity
Phase-in Plan:
• Implementation Schedules
• Learning Curve
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Use of Past Performance as an Evaluation Factor
Past performance must be an evaluation factor ir^aJTcompetitively negotiated acquisitions with
al^SflFrfatecfevaue^inHexeess1©!^^^^^^®^ Pasfperformance should normally be weighted
at least 25% of the total points for non-cost/price factors.
Offerers will submit a list of similar contracts and subcontracts performed within the last three
years. The list of references may contain contracts or subcontracts performed for any Federal
or state government agency, any local government, and/or any commercial business.
The evaluators should will a reasonable number of contracts and/or subcontracts from the list to
conduct reference checks. The determination of the number of references and reference
checks should depend on the weight allocated for past performance, and the size, complexity,
and importance of the solicitation.
When a determination has been made by the Contracting Officer that an offeror has no relevant
past performance experience, the weighting for the past performance evaluation shoulcTbe
neutral. A neutral score, in accordance with EPA's scoring plan, is "3" (see EPAAR 1515.608).
The Agency may use past performance information obtained from other than the sources
identified by the offeror, and that the information obtained will be used as part of the rating for
the evaluation criterion. If "other sources" are identified, the evaluators must document the file
indicating who the "other sources" are. The evaluators should contact at least one of the "other
sources" to compare the results to the other references.
For more extensive information on the use of past performance in technical
evaluations, consult Procurement Policy Notice 96-01, dated December 4, 1995.
Corporate Experience
This factor refers to the firm's technical experience and abilities that are relevant to the
requirements of the RFP. It measures the extent of the offerer's past and current experience in
performing similar work.
Procurement Policy Notice Number 95-03 establishes a policy that the weighing of corporate
experience in technical evaluation criteria normally may not exceed 15 percent.
There is a distinction between corporate experience and past performance. At times the terms
have been used interchangeably. Briefly, in accordance with recent Office of Federal
Procurement Policy guidance, corporate experience pertains to the type and amount of work -
previously performed by a contractor, while past performances relates to "quality" and how well
a contractor has performed.
For example, in an acquisition for safety training, corporate experience would be rated solely on
the kind and amount of such training performed by the offeror, regardless of how well these
11-4
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services had been performed. In rating the offerer's past performance, only the quality of these
training efforts would be considered.
Price or Estimated Cost Factors
In a technical competition, price or estimated cost is not as important a consideration as the
offerer's technical ability to perform the work. However, it still is an important factor that must
be taken into consideration in the source selection process.
In awarding cost-reimbursement contracts, proposed costs are only estimates and not absolute
figures; therefore, they may or may not be the determining factor in source selection.
Generally, as technical proposals become more equal in merit, cost or price becomes more
important.
11.3 Reviewing Your Factors
The following table provides some of the most common problems or weaknesses found in draft
factors, subfactors, and standards.
IF
Then
The wording of an evaluation factor is vague
or ambiguous (do panel members agree on
the meaning?)...
-OR-
The standard describing the factor does not
establish the minimum acceptability ...
Rewrite the terminology to define what the
language means and how it will be applied in
the procurement, or eliminate the factor.
All panel members must agree on the
meaning. Examples of ambiguous terms are
"similar," "comparable," "satisfactory," and
"substantial."
The description of the factor does not clearly
specify the elements or subfactors which are
needed ...
Rewrite the factor to indicate the elements or
subfactors required.
If the importance assigned to each factor or
subfactor does not accurately reflect its
relative importance and relationship to one
another ...
Revise the relative importance.
Duplicate factors for one requirement are
used ...
Ensure the factors evaluate distinct aspects
of the requirement
-or-
Eliminate or consolidate duplicate factors.
The evaluation factors appear very complex,
difficult to apply and may require help from
outside (non-Government) advisors .. .
Ask your Contracting Officer about the use of
outside advisors as soon as possible.
11-5
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USE THE STATEMENT OF WORK (SOW) TO DEVELOP EVALUATION FACTORS
The following practical exercises provide practice in using the SOW in developing evaluation
factors.
PRACTICAL EXERCISE 1
Situation: You have the attached information, extracted from a Statement of Work
(SOW). Using only this document and the text/reference, answer the following questions.
Extract from SOW: 'This project requires an organization with highly qualified personnel
to organize, staff, and conduct pollution monitoring services. Pollution is believed to be
connected with increased wildlife mortality and morbidity in and near national parks,
military installations and other Federal lands. This work will supplement long term ongoing
Government studies intended to determine the cause for the rapid decline of certain
wildlife populations, including migratory birds at selected sites..."
"....Offerers must be familiar with wildlife and game survey methodology..."
Task: Based only on this information,
I. What are the likely problem areas in this type of procurement?
2. Does it require new or untried methodology?
3. Will it be hard to manage?
4. Is it difficult to predict the costs?
5. What evaluation factors do you recommend?
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PRACTICAL EXERCISE 2
Situation: You have the attached information, extractecTfrom a SOW. Using only this
information, and the text/reference, answer the following questions.
Extract from SOW: "This agency has an urgent requirement for the services of a
private sector organization with extensive experience in the planning and presentation of
seminars concerning sexual harassment in the work place. The specific topics to be
covered must include:
• Recognizing sexual harassment according to Federal and agency guidelines.
• Appropriate and inappropriate behavior in the workplace.
• The role of the supervisor.
• Submission, processing and disposal of sexual harassment allegations."
"...The successful offerer must demonstrate the ability to present up to 240 seminars of
two hours duration each in one calendar year at any of the agency sites throughout the
United States and overseas. This may include up to ten seminars at any one time, at
different locations. This effort will require a demonstrated familiarity with Federal and
agency guidelines concerning sexual harassment. Offerers will be required to cite the
successful completion of similar or related seminars for the Government and private
sector organizations. Due to the urgency, sensitivity and importance associated with this
requirement, the instructors must have extensive experience and professional degrees
in such areas as counseling, clinical psychology, adult education, or an equivalent field."
Task- Based only in this information, what evaluation factors do you propose?
11-7
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11.4 Determining the Relative Importance of Cost/Price and Technical/Business Factors
Follow this 3-step method for weighting evaluation factors:
Stepl:
Start with the least important factor and assign a weight of 10.
Next, go to the next most important factor and assign a weight that shows how much more
important that factor is relative to the least important factor.
For example, if the next important factor is twice as important as the least important factor, you
might assign it a weight of 20. Continue this process, working from least important upward to the
most important until all the factors have been weighted.
Suppose you had four factors:
» Least important =10 points
*• Next most important factor is twice as important, so it equals 20 points
» Next most important factor is three times as important, so it equals 30 points
» Most important factor is four times as important, so it equals 40 points
The total points are (10+20+30+40)=100
Make sure that you do not exceed 100 points for all factors combined.
Step 2:
Once you have completed the weighting for all the factors, then return to the least important
factor. Use the same process for the subfactors.
Within each factor, start with the least important subfactor. Follow the same procedures as in
Stepl.
Then go to the next most important subfactor within that factor. Assign a weight that reflects
how important it is relative to the least important factor.
Continue this process until all the subfactors within the least important factor are accounted for
before you go on to the next most important factor.
Step 3:
The third step is to "normalize" the weights. Normalization is a mathematical technique used to
make all the factor weights add up to 100 and each group of subfactors to add up to the total
weight within that factor.
Add up the weight assigned to all the major factors and multiply by 100 to give the final weight.
Then within each major factor, multiply the subfactor weight by the major factor weight.
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Example 1
Normalizing the
weights in
factors
Assume there are three major factors in a procurement: Technical,
Management, and Key Personnel
•Key personnel is the least important.
•Management is twice as important as Key Personnel.
•Technical is five times as important as Key Personnel.
The resulting weights would be:
•Key Personnel =10
•Management = 20
•Technical = 50
If you were distributing 100 points, the relative weights would be:
For key personnel: 10/80 x 100=12.5
For Management: 20/80 x 100=25
For Technical: 50/80 x 100=62.5
Example 2
Normalizing
Weights in
Subfactors
Assume the Management factor consisted of five subordinate subfactors in
the following relative order of importance:
•Quality Control - 80
•Subcontract Administration - 55
•Government Interface - 50
•Reports and Procedures - 40
•Security-10
The math for the "Quality Control" subfactor would be: 80/235x25=8.5
Weights Less
Than One
If, after normalizing, you end up with a weight of less than one for any
factor, it may be trivial and you should consider deleting it or combining it
with another factor.
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PRACTICAL EXERCISE
Situation: You are a contract specialist reviewing evaluation factors prior to a
discussion with the Program Office. The acquisition involves five very large waste
disposal pumps for treatment and recycling of water at a Government facility. This is
part of a Government-wide program to meet mandatory new national environmental
standards. Similar procurements within the past five years have been very troublesome,
with most of the pumps breaking down after only 12,000 hours of operation. Market
research shows there are only three known manufacturers of these pumps in the United
States. One of these three manufacturers has provided all of the replacement pumps
under this program on the basis of lowest cost, over the past five years. The Program
Office is concerned that the new pumps should operate at least 25,000 hours MTBF
(mean time between failure), with interruption only for minor maintenance, such as
lubrication or filter replacement. The Program Office has proposed the following
technical evaluation factors'
• Ease of Installation - (must be installed within 72 hours to replace existing
pumps), worth 40% of evaluation weight.
• Ease of Operation - (must not require more than 2 days of training per operator),
worth 30% of evaluation weight.
• Ease of Maintenance - (must require less than 15 minutes for filter change or
lubrication), worth 30% of evaluation weight.
Task: Based only in this information, what would you recommend to the Program
Office?
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Chapter 12
Evaluating Proposals
-------
Chapter 12
\
EVALUATING PROPOSALS
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Explain the procedures for evaluating proposals.
Individual:
1. Identify proper and improper methods for evaluating proposals.
2. Define "interrogatory" and its purpose.
3. Explain what is involved in the consensus process.
4. Describe areas to review in the consensus document.
12-1
U.S. EPA Headquarters L, rt «•
Mail code 3201
1200 Pennsylvania Avenue NIV
Washington DC 20460
-------
12.1 Guidelines for Evaluating Proposals
Follow these guidelines when evaluating proposals:
¥ Each evaluator must read each proposal in its entirety and must independently
evaluate and score each proposal.
¥ Only evaluation criteria specified in the RFP will be applied to each offerer's
proposal.
¥ Each proposal will be evaluated against the evaluation criteria. Proposals must
not be evaluated against one another.
% Evaluations must be supported by a strong detailed narrative which is consistent
with scores. Do not use phrases such as "looks good to me" or "a strong write-
up in this area."
* Support the statements in the narratives by providing examples right out of the
proposals. Ask WHY and/or HOW an offerer fulfilled or met the evaluation
criteria elements.
EXAMPLE:
Statement: The offerer demonstrated excellent experience in
managing large dollar, highly complex, multi tasked contracts.
WHY/HOW: The offerer cited more than 200 prior contracts that they have
successfully managed. These contracts include the $60 M EPA
Technical Enforcement Support contract, DOE's $2.5 billion
Strategic Petroleum Reserve Project and $900 M Uranium Mill
Tailings Remedial Action Program. The offerer has more than 40
years of experience with Federal contracts from many different
agencies spanning many program areas including Superfund and
RCRA Enforcement.
* Write up narratives FIRST then assign that criterion a numerical score. You will
find it easier to score once you have read over what you have written.
¥ The cost proposal, and cost data, will not be provided to evaluators. This is done
to preclude development of a bias for or against an offerer on nontechnical
grounds. It permits the evaluators to evaluate the proposals strictly on their
knowledge of the technical or business aspects.
* Each evaluator is personally responsible for safeguarding the information in the
offerers' proposals. TEP members shall not discuss any aspects of the
proceedings with anyone outside the TEP. If there is any question in your mind
regarding who has a "need to know" contact the CO. This does not preclude
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discussions with TEP members' management relative to status and timing.
However, discussions relative to particular offerers or aspects of their proposals
are prohibited.
Refer to the CO any attempted communications by offerers.
12.2 Interrogatories
"Interrogatory" is a written question. The purpose of interrogatories is to better understand an
offerer's proposal and to satisfy the legal requirement to have meaningful discussions with all
firms in the competitive range (if discussions will be held). When offerers' proposals contain
deficiencies, ambiguities, and/or suspected mistakes, you must formulate questions or
interrogatories for offerers.
The term "deficiency" is a general term of art referring to any part of a proposal that fails to
satisfy the government's requirement. Interrogatories are also required for ambiguities and
suspected mistakes. During the evaluation process, TEP members of the panel should write
down questions for each offerer, if applicable. Questions should be stated in such a manner to
avoid technical leveling or leading the offerer in a specific direction.
The Office of General Counsel has pointed out the following typical problems with
interrogatories:
¥ The TEP does not provide interrogatories to request specific information from an
offerer to sufficiently address the TEP's identified weaknesses or areas where an
offerer could improve its proposal.
¥ The proposed interrogatories request information from an offerer which is not
consistent with the RFP's stated evaluation criteria, e.g., "curiosity questions."
¥ The proposed interrogatories do not address all of the weaknesses identified by
the evaluators and therefore does not allow the offerer an opportunity to provide
sufficient information in response to improve its score or proposal. There must
be equal treatment-if you ask one with a deficiency, ask another similarly
situated offerer.
12.3 EPA's Scoring Plan
EPA has a numerical scoring system. Be sure all evaluators understand this system before
evaluations begin Remember: point ratings, i.e., 0-5, are meaningless and lead to mere
conclusions. Documentation supporting your score must be reasonable and consistent with the
selection criteria. You need clear rationale of why the Government should pay extra for this.
You must also have a record clearly supporting your rationale.
A score of "0" means the element is not addressed, or is totally deficient and without merit.
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A score of "1" means the element is addressed but contains deficiencies and/or weaknesses
that can be corrected only by major or significant changes to relevant portions of the proposal,
or the factor is addressed so minimally or vaguely that there are widespread information gaps.
In addition, because of deficiencies, weaknesses, and/or information gaps, serious concerns
exist on the part of the TEP about the offerer's ability to perform the required work.
A score of "2" means information related to the factor is incomplete, unclear, or indicate an
inadequate approach to, or understanding of the factor. The TEP believes the offerer would be
unable to perform satisfactorily.
A score of "3" means the response to the factor is adequate. Overall, it meets the
specifications, such that the TEP believes that the offerer could perform to meet the
Government's minimum requirements.
A score of "4" means the response to the factor is good with some superior features.
Information provided is generally clear, and the approach is acceptable with the possibility of
more than adequate performance.
A score of "5" means the response to the factor is superior in most features.
12.4 Individual Panel Member Reports.
Each TEP member will evaluate each factor for every offerer and document, in writing, a score
and his or her findings. This information should be held in the PO's file and made available
upon the request of the CO.
The narrative descriptions must fully support all scores. For example, for a score of 1, must
clearly describe all of the problems with the offerer's proposal. On the other hand, a perfect
score of 5 also must have a detailed narrative supporting that score.
12.5 The Technical Evaluation Report (TEPR): Coming to Consensus
After the individual reports are completed, the panel members should fully discuss their findings
and develop a detailed TEP consensus report (TEPR). The TEPR will detail the numerical
score the group gives each offerer in each factor. It is imperative that the narrative correlates
precisely with the score given. The TEPR must identify any weakness, deficiencies, concerns,
uncertainties, or suspected mistakes. It should indicate whether the weakness/deficiencies are
significant or minor, and whether risks to contract performance are anticipated if uncorrected or
unchanged. The chairperson will consolidate and record interrogatories for the consensus
report based on the full panel's discussion.
Chairperson (PO) is responsible for compiling the consensus scores and narrative and for
facilitating the consensus process. It is recommended that the panel members share the
responsibility of recording the consensus notes and narrative during the process in order to
assist the Chairperson. Please note that each member must sign the consensus signature
summary page attached to the back of the consensus report.
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12.6 TIPS for Proofing the TEPR
Once you submit the TEPR to the Contracting Officer, he or she will use the following
procedures for critiquing the TEPR:
Step
Action
1 Read the entire report
The first step is to read the entire TEPR Conclude by reading the technical
evaluation score matrix This should give you an overview of the reasoning and
the conclusions and determinations made by the TEP
2 Critique for application of the
evaluation factor;
The second step is to critique for application of the evaluation factors, subfactors,
and elements (if applicable) applied to each proposal. Look for hints or signs that
they were not uniformly applied. Look for any sign that an evaluation factor(s)
other than those in the RFP was used See if there is any sign that the standards
were not applied If there is any sign that factors were not properly applied, the
source selection process may be invalid and open to challenge
3. Critique Scoring Procedure
The third step is to cntique the application of the scoring procedure Check to
see if the scoring procedure was carefully and completely applied Remember,
the scoring sheets for individual technical evaluators should support the results
shown in the matrix If they do not, resolve any discrepancies
4 Check Comparison of
Proposals
Check to see if the proposals were evaluated against the evaluation factors,
instead of against one another Especially, look for any sign that proposals were
evaluated in any way against the highest ranked proposal. (This may happen
when an impressive proposal stands out during the evaluation)
5 Cntique the Basis of Award
Make sure the basis for evaluation is throughly documented. Check for
insupportable conclusions and findings, especially if an offerer is found
"unacceptable.'
6 Cntique Strengths and
Weaknesses
Check to see that the strengths and weaknesses of each proposal are discussed
and listed This may be especially important later if the SSO has to consider
tradeoffs Remember, a strength in one area, does not necessarily offset a
weakness in another area For example, the very best "business plan," does not
necessanly make up for fifth best 'technical approach." On the other hand, a
proposal that is rated second best in an area may be the highest rated overall
The comments about weaknesses should include statements as to what should
be done to correct that weakness In some cases, an appropriate
recommendation would be a request for more information, i e, an interrogatory.
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PRACTICAL EXERCISE
Review the "Good" and "BAD" examples of an individual evaluation on one offerer's proposal.
Be prepared to present your findings on what the good and bad features are.
GOOD GOOD GOOD GOOD GOOD GOOD GOOD GOOD GOOD GOOD GOOD GOOD GOOD GOOD
INDIVIDUAL SCORE SHEETS
TEP NAME: Jane Doe OFFEROR: UBSTER. INC.
TECHNICAL EVALUATION CRITERIA RFP WOOOOOO-E1
1. CORPORATE EXPERIENCE TOTAL 20 POINTS
b. Management Experience 10 Points
The offerer will be evaluated on the extent of their management
experience anticipating or resolving potential problems during
contract performance and in managing large dollar, highly complex,
multi tasked, multi-disciplinary contracts.
STRENGTHS: UBSTER illustrated in their proposal an excellent
contingency plan to address problems as they arise (Page 26) and they
have several checkpoints built into their plan to prevent problems.
UBSTER demonstrated they could respond to EPA problems, i.e., a staff
member worked around the clock for two months to provide analytical
and reporting support for a Congressional hearing on the adequacy of
the RCRA groundwater monitoring program at land disposal facilities.
UBSTER clearly demonstrated experience in resolving management
problems on short notice and for those requiring critical actions
(Page 44). UBSTER recognized and emphasized the importance of
extensive communications with EPA personnel at all levels and outlined
a complete, effective communications network in their proposal (Page
56).
UBSTER demonstrated superior experience by indicating prior contracts
where they have successfully managed large, multi-disciplinary
contracts. These contracts include the $60 M EPA Technical
Enforcement Support contract, DOE's $2.5 billion Strategic Petroleum
Reserve Project and $900 M Uranium Mill Tailings Remedial Action
Program (Page 19). In addition, UBSTER, Inc. has supported OSW, OERR
and OWPE since the passage of RCRA in 1976 and CERCLA in 1980. • They
have been involved with all of these programs on activities including
regulatory development and program enforcement (Pgs. 20-25). They are
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currently managing 35 large dollar EPA contracts in the areas of
Superfund and RCRA. (Exhibit A/Pg. 106). They have more than 40
years of experience with Federal contracts for various other agencies.
WEAKNESSES:; None were identified.
INTERROGATORIES: None were identified.
Score: 5_ Weight: 10 Total: 10
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BAD BAD BAD BAD BAD BAD BAD BAD BAD BAD BAD BAD BAD BAD BAD BAD BAD
INDIVIDUAL SCORE SHEETS
TEP NAME: Jane Doe OFFEROR: UBSTER. INC.
ATTACHMENT D - TECHNICAL EVALUATION CRITERIA RFP WOOOOOO-E1
1. CORPORATE EXPERIENCE TOTAL 20 POINTS
b. Management Experience 10 Points
The offerer will be evaluated on the extent of their management
experience anticipating or resolving potential problems during
contract performance and in managing large dollar, highly complex,
multi tasked, multi-disciplinary contracts.
STRENGTHS: Page No.
UBSTER, Inc. has lots of real good experience. Their write-up in this
area was strong. They included many exhibits and graphs illustrating
their experience. UBSTER, Inc. has managed a lot of contracts for the
private sector. They indicated in their proposal that they can
resolve problems. They know how to get the job done.
WEAKNESSES:
UBSTER, Inc. has no EPA contracts.
INTERROGATORIES:
1. Do you have any EPA contracts?
Score: 3. Weight: 10 Total: 10
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Chapter 13
Negotiating and Awarding the Contract
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Chapter 13
NEGOTIATING AND AWARDING THE CONTRACT
Course Learning Objectives
At the completion of this chapter, you will be able to:
Overall: Explain the process the Contracting Officer follows to negotiate and award the
contract.
Individual:
1. Describe the contents of the Business Evaluation Panel Report.
2. Explain what a competitive range determination is.
3. Describe the purpose of and forbidden practices in discussions.
4 Define "debriefing" and what can be disclosed in a debriefing.
5. Define "protest" and explain the impact on contract award or performance.
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13.1 Preparation of the Business Evaluation Panel Report
Concurrent with the preparation of the TEPR, the Chairperson of the Business Evaluation Panel
must prepare a Business Evaluation Panel Report. The BEP includes:
©> discussion of any factors which might prevent award to an offerer (i.e.,
appearance on a suspended/debarred list);
@> preliminary analytical cost evaluation report;
©> worksheets or a formal narrative to identify cost elements which appear
unreasonable or questionable; and
e» For level of effort contracts, the report will compare proposed costs with the cost
standards specified in the solicitation, e.g., man-hours per labor category.
A supplemental BEP Report is delivered to the Contracting Officer after completing the
evaluation of revised proposals and prior to final selection. It includes the appropriate
consideration, analysis, and findings concerning the following elements of the business
proposal of each offerer in the competitive range:
@> A detailed cost analysis on the business proposals;
@> Evaluation of proposed management structure to be utilized for
performance;
<&> Evaluation of offerer's subcontracting program as it relates to small
business, labor surplus area concerns, and socially and economically
disadvantaged business enterprises;
@> Evaluation of those business elements submitted with each proposal
which could lead to a determination of nonresponsibility by the
Contracting Officer; and
Any information which might reveal that an offerer has an actual or
potential organizational conflict of interest.
13.2 Determination of the Competitive Range
Following receipt of proposals and completion of the TEPR and BEPR, the CO has two options:
® of allowed in the RFP, he or she can make award on initial proposals or
© he or she can make a competitive range determination.
Determination of the competitive range is a responsibility of the Contracting Officer, subject to
the approval of the SSO, and involves his or her consideration of the ranking of the technical
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proposal, price, cost, and other factors. The competitive range consists of those proposals that
have a reasonable chance of being selected for award.
Competitive Range Example
The following example highlights the principle of determining the competitive range based on
the technical and business evaluations of a group of offers:
Offerer Technical Evaluation Score Cost/Price
Doe Co. 330 $250,000
Ray Inc. 325 175,000
Me Co. 275 145,000
Far Co. 245 150,000
Sew Co. 150 115,000
La Co. 125 92,000
(1) La Co., while offering the lowest price/cost, has submitted an offer that is seriously lacking
in essential technical qualities. A review of the scoring would show several technical elements
to have been scored as "0" or "1". Therefore, La will not be included in the competitive range.
(2) Doe Co., while attaining the highest technical ranking, has offered a price/cost that is
unreasonable for the effort required.
(3) Sew Co. has attained a score showing that portions of the proposal do not meet the
minimum requirements. This is also reflected in the business proposal. The offer should not be
considered within the competitive range.
(4) The offers of Ray Inc., Far Co., and Me Co. are close with respect to both the technical
evaluation and price/cost offered. Therefore, these three offers should be included within the
competitive range. Depending upon the circumstances, Doe Co.'s offer may also be included.
13.3 Written or Oral Discussions
When the CO determines that written or oral discussions are necessary, he or she can limit the
discussions to those proposals within the competitive range. The purpose of discussions is:
O To advise an offerer of deficiencies in its proposal so the offerer is given an
opportunity to satisfy the Government's requirement;
© Attempt to resolve any uncertainties concerning the technical proposal or in the
terms and conditions of the proposal;
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© Resolve any suspected mistakes by calling them to the offerer's attention as
specifically as possible without disclosing information concerning other offerer's
proposals or the evaluation process.
O Provide the offerer a reasonable opportunity to submit any cost or price, technical,
or other revisions to its proposal that may result from the discussions; and
© Provide the offerer an opportunity to discuss past performance information obtained
from references on which the offerer previously did not have opportunity to
comment.
The GAO case law indicates that meaningful discussions require that an offerer be told the
significant aspects of its proposal that have been downgraded so that the offerer is provided
with an opportunity to address those aspects and to revise its proposal. In other words, the
offerer should be advised of areas which because of weakness can be improved such that the
TEP may consider raising the evaluation score.
13.4 Forbidden Activities
FAR forbids the following activities during the discussion process:
% Technical leveling-helping an offerer to bring its proposal up to the level of other
proposals through successive rounds of discussion, such as pointing out
weaknesses resulting from the offerer's lack of diligence, competence, or
inventiveness in preparing its proposal. Giving answers to problems rather than
merely identifying the problem or coaching is technical leveling. Very few GAO
protests have been sustained based on technical leveling.
23 Technical transfusion-disclosing technical information pertaining to one proposal
that results in the improvement of a competing proposal.
% Auction techniques including:
23 indicating to an offerer a cost or price that it must meet to obtain further
consideration;
% advising an offerer of its price standing relative to another offerer; or
% otherwise furnishing information about other offerers' prices.
As the technical expert, the Project Officer may be invited to assist the Contracting Officer with
negotiations. It's important to remember what NOT to do during discussions:
% Never indicate to offerers that they will win ah award.
23 Never give an offerer an advantage by disclosing information to him or her only.
23 Never disclose the Government's cost estimates.
23 Never allow a deadline to affect the discussion strategy.
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Just before discussions, talk with your Contracting Officer on the discussion objectives and any
special ground rules, such as who is to speak. Usually, the fewer persons who speak for
the Government, the better.
13.5 Best and Final Offers
All offerers included in the competitive range are notified by the Contracting Officer at the
conclusion of discussions of the opportunity to submit a revised proposal. Revised proposals
are subject to a final evaluation (price or cost, technical, and other salient factors considered) to
the extent deemed necessary by the Contracting Officer.
The TEP may have to reconvene and evaluate revised proposals. Evaluations are performed
in accordance with the procedures previously prescribed for use in the evaluation of initial offers
in order to determine the relative ranking of the revised offers. Any changes to scores resulting
from revised proposals must be substantiated with a complete rationale-i.e., written
explanations of what elements of the proposal were changed and how it affected the rating.
13.6 The Award Decision
The selection of a source is made following receipt and evaluation of all proposal revisions.
The selection of a source or sources is based upon consideration of the TEP and BEP findings
of significant strengths, weaknesses, and risks associated with each offer, business and
management ratings, price or cost, and other factors which may influence the award decision.
There are two types of award notifications:
Pre-Award Notifications. When the proposal evaluation period is
expected to exceed 30 days, or when a limited number of offerers have
been selected as being within the competitive range, the Contracting
Officer notifies those offerers outside the competitive range that their
proposals are unacceptable.
Post-Award Notices. Promptly after contract award, the Contracting
Officer notifies the unsuccessful offerers, in writing, of the source
selected for award, unless the offerer had been given a pre-award
notification.
13.7 Debrief ings
When a contract is awarded on the basis of competitive proposals, an offerer may request a
debriefing concerning the basis for the selection decision and contract award
Debriefings may be done orally, in writing, by electronic means, or any other method acceptable
to the Contracting Officer.
Normally the Contracting Officer will chair the debriefing. FAR requires individuals actually
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responsible for the evaluations to provide support. As Chairperson of the TEP, the Project
Office may be requested to participate in the debriefing. Unless approved bv QAM, only the
Contracting Officer can conduct a debriefing.
At a minimum, the debriefing information will include:
• The Government's evaluation of the significant weaknesses or deficiencies, in the
proposal, if applicable,
• The overall evaluated cost or price and technical rating, if applicable, of the
successful offerer and the debriefed offerer;
• The overall ranking of all offerers when any ranking was developed by the Agency
during the source selection;
• A summary of the rationale for award;
• Reasonable responses to relevant questions about whether source selection
procedures contained in the solicitation, applicable regulations, and other applicable
authorities were followed.
However, point-by-point comparisons with other offerers' proposals may not be made.
Debriefings must not reveal any information that is not releasable under the Freedom of
Information Act including:
% Trade secrets;
% Privileged or confidential manufacturing processes and techniques; and
% Commercial and financial information that is privileged or confidential, including cost
breakdowns, profit, indirect cost rates, and similar information; and
£2 The names of individuals providing reference information about an offerer's past
performance.
The Contracting Officer will include a summary of the debriefing in the contract file.
13.8 Protests
A Protest is a written objection by an interested party to a solicitation for a proposed contract for
the acquisition of supplies or services. A protest could also be a written objection by an
interested party to a proposed award or the award of such a contract.
An interested party for the purpose of filing a protest means an actual or prospective offerer
whose direct economic interest could be affected by the award of a contract or the failure to'
award a contract.
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Protests can prevent contract award or, if the contract has been awarded, can stop work under
the contract. The action that the Contracting Officer will take will be affected by whether the
protest is submitted:
before award, or
after award, and
whether filed directly with
EPA,
the General Accounting Office (GAO), or
the General Services Board of Contract Appeals (GSBCA) for
automated data processing (ADP),
and
whether the protest is sustained or denied.
There are specific procedures for the Contracting Officer to follow regarding protests set forth in
FAR, Part 33 and EPA Acquisition Handbook, Unit 7.
<&• NOTE: If an offerer voices a complaint about a procurement and the way the
procurement is/was handled, document the complaint and refer the offerer to the
Contracting Officer. Do not discuss the matter with the offerer yourself.
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Chapter 14
Post-Award Orientation
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Chapter 14
POST-AWARD ORIENTATION
14.1 Post-award Orientation
In many cases, contracts are awarded and contractor performance begins routinely without any
post-award orientation as such. Post-award conferences are normally held for complex
contracts.
Contracting Officers use post-award orientations to:
• Ensure that both parties have a clear and mutual understanding of all contract
requirements.
• Identify and resolve potential problems, and
• Introduce Government Representatives,
• Furnish notices and other data to the contractor, and
• Otherwise set the stage for a good working relationship under the contract.
Often, the persons who will perform or administer the contract did not participate in events
leading up to contract award. An orientation conference can help them understand the terms
and conditions of the contract.
As Project Officer, you will serve as a liaison between the contract end-users (work assignment
managers and delivery order project officers) and the contracting office.
All Project Officers are required to take OAM's 3-day contract administration course. This
course will acquaint you with your post-award duties.
GOOD LUCK!
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