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Steve –
Your post raises some interesting issues, but without the contract in hand, it is very difficult to ascertain whether the fixed-price contract you reference should have been subject to the submission of information other than cost or pricing data, as non-certified cost data is currently known. (Note: FAR case 2005-036, if finalized, would make further changes to distinguish "certified" from "uncertified" cost or pricing data.)
While it is true that the purchase of a tube of toothpaste will not be subject to any cost data submissions, this is because there is an end product for which direct price comparisons can be made. In the example you cite of a competitively awarded fixed-price service contract, it is not at all unusual for contracting officers to request information other than cost or pricing data in order to ascertain whether the contractor's proposed cost "build up" is realistic for the work to be performed. Such data is not cost or pricing data, and does not subject the contract to the price reduction clause for defective pricing, nor subject the contractor to post-award audits. The Federal Acquisition Streamlining Act (FASA) developed this concept of "uncertified cost data" precisely so that contracting officers could get cost information without subjecting contractors to the Truth in Negotiations Act (TINA).
[Continued below…]
Posted by jsmeditor on April 10, 2008 - 03:50 PM
[…Continued from above]
One reason for obtaining this uncertified data is to perform cost realism analysis, a concept embodied in FASA. I cannot criticize a contracting officer who determines that he/she needs to obtain information other than cost or pricing data in order to establish cost realism for a proposed contract price.
Had the contract described been of the time-and-materials/labor hour variety, the contracting officer might have been able to compare labor billing rates. But in the case of a fixed-price service contract, in many instances the only way to determine cost realism is to request the data – which is differentiated from cost or pricing data, as the latter must be certified in accordance with TINA, and permits post-award audits.
One of the reasons for the FASA distinction between "certified" and "uncertified" cost data was at least in part to allow contracting officers to obtain the basic data without necessarily requiring a contract to be subject to TINA, with the attendant post-award audit clauses which were perceived by some as an impediment to bringing non-traditional government contractors into the supplier base.
Rich Loeb
Posted by jsmeditor on April 10, 2008 - 03:50 PM
Dear Mr. Kelman, Let me begin by saying that I concur with you that current trends are a move in the wrong direction. There has as of late been a lot of discussion regarding the number of contractors involved in government business. Ironically since we are all at least theoretically part of the government this could just be interpreted as someone other than the primary organization paying the individuals benefits. Regardless, what contractors can do - although may not always do - is bring fresh insight to problems. Having worked as a direct employee of the Lockheeds and Northrops as well as a manufacturing consultant to both, the advantage I brought as the latter was a much different perspective of the business issues and thus a different approach to the recommended solution. It is often difficult for the direct employee to see the issue from the company perspective rather than from the individual department or organization perspective. It may also be difficult for the employee to make the recommendation they truly believe is the proper solution due to fear for their job or management retaliation. The contractor need not worry about these things. However, no solution is executed without the buy in of the direct employees so the contractor in fact acts only as the team lead - not as the decision maker. Thus, if the recommended solution is not accepted the contractor can assume responsibility. But if the recommended solution is accepted, the direct employee team can take credit and move forward….
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Posted by jsmeditor on April 10, 2008 - 04:15 PM
[…Continued from above] I understand and agree with your friend. There comes a time when it is just not cost effective to pursue a contract. I understand the fear of auditing and recrimination on the part of the contracting officer - but this tells me that energy is being wasted on the wrong tasks. It is common for a bidder to quote daily or hourly rates and provide a project plan executing those rates - based on the requirements as defined in the FRS. This, along with the written understanding that any change to those requirements resulting in a change to that plan, should be sufficient. To ask for more is pointless. To limit bids to current contractors is to limit the quality of the deliverable and success of the project. Even contractors need to be challenged for new ideas and approaches to avoid becoming too set in their thinking and approach. We spend far too much time complaining about projects coming in past schedule and over budget. That time should be spent defining requirements and selecting the correct contractor that enables project success. We do not learn. Thank you for listening. scharles@glovia.com
Posted by jsmeditor on April 10, 2008 - 04:16 PM
Steve:
You becry the government's request for cost buildup data when buying commercial items. I have spoken to many commercial companies large and small about how they buy for themselves and they have told me that on occasion when they can't determine pricing based upon the market for any number of reasons, require their suppliers to give them access to their cost data. In fact, with trusted suppliers, these companies often have arrangements that not only disclose costs but provide for the buyer and supplier to work together to reduce costs and thus the price to the buyer. They don't require a certified cost accounting system, that's true but they cost data.
The real problem is the fact that we don't have enough competent contracting professionals to do the work and the folks we do have are afraid, not just of oversight by the IG, GAO and Congress, but of their own management chains. This fear manifests itself in their failure to stand up and do the right thing.
Take a look at Alliant. Read the judge's opinion and look at the facts. GSA lost that protest because Jim Williams let his folks force an answer which brought a couple of large companies to the award based on their history of bringing business to GSA instead of follwoing their own source selection rules. Look at the protests of ITES II and others, all of which resulted from a management team that didn't rely on its contracting team to do the right hting and instead forced a desired solution. I know that you're a champion of the 1102, now you need to stand up for them and take to task the management teams that are driving solutions.
You want to make a difference, convince Shay Assad and Frank Anderson to train price analysts instead of changing the definiton of commercial items. Get Jim Williams to focus on best value for customers instead of revenue for FAS and get Paul Denett to reign in the number of inter and intra agency IDIQs.
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