Webinar: Making the Right Choices in Government Contracting Part 1

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Public Contracting Institute LLC Webinar: Making the Right Choices in Government Contracting Part 1 Presented by Richard D. Lieberman, FAR Consultant, Website: www.richarddlieberman.

1 Public Contracting Institute LLC Webinar: Making the Right Choices in Government Contracting Part 1 Presented by Richard D. Lieberman, FAR Consultant, Website: rliebermanconsultant@gmail.com. Mr. Lieberman is a procurement consultant and retired government contracts attorney. He is the author of eight books including The 100 Worst Government Mistakes in Government Contracting,; The 100 Worst Mistakes in Government Contracting (with Jason D. Morgan), and Elements of Government Contracting. His published articles include 10 Big Mistakes in Government Contract Bidding, 10 Big Mistakes in Government Contract Administration, Incorrect Government Advice Whom Should You Heed and The Ten Big Mistakes Made by Small Businesses and New Government Contractors. Mr. Lieberman is a former Deputy Inspector General and Assistant Inspector General of the Department of Defense. He served as a Professional Staff Member of the Senate Appropriations Committee. He has taught government contracts courses for the Public Contracting Institute, Federal Publications Seminars, LLC, the George Washington University Law School, the University of Maryland and numerous military, aerospace and information technology contractors. Lieberman 1

2 Government v. Commercial Contracting (results on many choices) Aspect 1. Statutory and Regulatory Framework Commercial Contracting UCC, common law Government Contracting USC Titles 10, 40, 41, FAR, DFARS, others,ucc 2. Type of Contract Mostly FFP, also FFP, cost-reimbursement, 3. Oral or written? Oral or written Generally in writing 4. Competition Requirements No such requirement 5. Authority of Agents Apparent authority Full & Open competition Only actual, written authority 6. Audits Rare Fact of life 7. Socioeconomic requirements None or minimal Mandatory (e.g. setasides)

3 Reading Remember to read the entire solicitation, including all clauses incorporated by reference. This contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically at this/these address(es): [Insert one or more Internet addresses]. FAR Clauses Incorporated by Reference. (FEB 1998) Lieberman 3

4 Another Problem: Christian Doctrine A mandatory contract clause that expresses a significant or deeply ingrained strand of public procurement policy is considered to be included in a contract by operation of law, even if not included therein. Examples: Christian Doctrine applies to include: FAR Termination for Convenience of the Government, FAR Disputes, FAR Payments Under Time-And-Materials And Labor-Hour Contracts; FAR , the Protest After Award clause, FAR , Price Reduction for Defective Cost or Pricing Data. but not FAR , Variation in Estimated Quantity, FAR Government Furnished Property, Lieberman 4

5 Reading If everything else fails, read the instructions - Anonymous Be sure to follow the solicitation s submission instructions Example: Page limits While Techsys argues that [Department of Energy] should have been more flexible in the handling of the page limitation [150 pages], an agency that has set out a clear page limitation in a solicitation is not obligated to sort through hundreds of pages to decide which pages should or should not be counted toward that limitation. []. Further, where, as here, the agency has set specific page limits and indicated that any and all pages submitted would count toward that limit, the agency was not obligated to ask the offeror, after submission of its proposal, to "clarify" its proposal by selecting which pages it wants counted. []. Under these circumstances, the agency reasonably computed the 150 pages and properly declined to consider those portions of Techsys's proposal that exceeded the stated limits. B Lieberman 5

6 Sample Section L: Instructions to Offerors Proposals shall be submitted as two (2) separate documents, as follows: Documents Original Copies Solicitation, Offer and Award Document 1 2 Technical Proposal 1 2 The originals shall be clearly identified as the ORIGINAL, and bear the original signature(s) of the offeror. The copies shall be complete and clearly identified as COPY or DUPLICATE. Lieberman 6

7 Polling Question 1) When submitting an offer in response to a solicitation, which part of the solicitation is MOST important? a) The Specifications or Statement of Work b) Instructions to Offerors c) Clauses incorporated by reference Lieberman 7

8 Response to Polling Question

9 Sec. M: Evaluation Factors for Award-Cost/Technical Trade SECTION M - EVALUATION FACTORS FOR AWARD 1. BASIS FOR CONTRACT AWARD: The Government will base award on the best overall (i.e., best value) proposal, considering price and all other factors. Price is less important than the other factors combined. 2. EVALUATION FACTORS (listed from highest rated factor to lowest rated) Factor I: Technical Sub-factors: (equal in weight) (a) Post Office Operations and Mail Handling Plan (b) Management Plan Subfactors (equal in weight): a. Management Capability and Approach b. Key Personnel Qualifications Factor II: Past Performance Factor III: Total Evaluated Price (Note: Total Evaluated Price is the sum of the Evaluated CLIN Prices for the B Base Year and all Option Years. Evaluation of options does not obligate the Government to exercise the option(s). However, the contractor is obligated to perform each option period if exercised. Failure to provide prices for all items within each CLIN is unacceptable and will render the offeror ineligible for award.) Lieberman 9

10 Sec. M: Evaluation Factors for Award-Lowest Priced Technically Acceptable The Government intends to award an indefinite quantity indefinite delivery (IDIQ) firm-fixed price (FFP) contract to the lowest price technically acceptable offeror in accordance with FAR BASIS FOR CONTRACT AWARD Technical acceptability will be determined in accordance with the following evaluation factors, based on information submitted in response to the provisions entitled Technical Proposals. In order to be determined technically acceptable, the offeror must be technically acceptable in each of the areas identified by the following evaluation factors: (A) Technical Compliance (B) Corporate Experience (C) Test Plan for First Article Testing. Lieberman 10

11 Reading Always read, consider and acknowledge all of the amendments to the solicitation. You must acknowledge material amendments or constructively acknowledge them, or your offer will be rejected because it is either nonresponsive to the IFB or fails to meet the requirements of the Request for Proposals. Example: an amendment changing dimensions of a filter and changing a drawing is material. B A material amendment imposes legal obligations not contained in the original solicitation or would have more than negligible effect on price, quantity, quality, specifications or delivery For constructive acknowledgment you must include something in your offer that appears only in an amendment (e.g. new geographic locations) Questions & Answers are normally included in an amendment very important and must be read carefully. FAR & FAR Lieberman 11

12 Timing Timing and arrogance are decisive factors Marya Mannes Always submit your bid/offer on time Any proposal, bid, modification, or withdrawal of a bid received at the Government office designated in the solicitation after the exact time specified for receipt of bids is "late and will not be considered, unless FAR , FAR A hand-carried proposal that arrives late may be considered if improper government action making it impossible for the offeror to deliver the proposal on time was the paramount cause for the late submission, and where consideration of the proposal would not compromise the integrity of the competitive procurement process. B Proposal for KC-X Tanker ($35B) due at 2 PM, receipt said 2:05 PM. The U.S. Aerospace, Inc. messenger arrived at Wright-Pat at 1:15 PM, a COR took him to the building and upon arrival, gave him a receipt for 2:05 PM Alleged Government misdirection was not the paramount cause. B Lieberman 12

13 Timing Be sure to deliver on time as required by the delivery schedule, or if you discover a delay be sure to request an extension in the delivery date, and always offer consideration to the government. The Government may, by written notice of default to the Contractor, terminate this contract in whole or in part if the Contractor fails to deliver the supplies or to perform the services within the time specified in this contract or any extension. FAR days after due date (notified considering default ). ASBCA days after due date (issued show cause) ASBCA days after due date (default). ENGBCA days after due date (issued show cause). DOTCAB days after due date (default). DOTCAB 3095 Offer consideration for change in delivery date CO has no authority to make the change without it. (What consideration is OK?) Consequences of default are severe: Excess cost of reprocurement Possible loss of future contracts Lieberman 13

14 Timing Always assert your right to an equitable adjustment in a timely manner The Contractor must assert its right to an adjustment under the Changes clause within 30 days from the date of receipt of the written order. However, if the Contracting Officer decides that the facts justify it, the Contracting Officer may receive and act upon a proposal submitted before final payment of the contract. FAR If the Contracting Officer knows about this claim, strict compliance with notice requirement is not required. ASBCA Even oral notice to the Contracting Officer is acceptable. ASBCA Lieberman 14

15 Timing Never start to work or incur costs before your contract is actually signed, on the promise of award A Government intent letter to award is not enough to form a contract. A Government award letter stating the CO accepts your bid or proposal forms a contract, or a signed contract forms a contract. Unfunded Contracts: (Availability of funds clause): Funds are not presently available for this contract. The Government's obligation under this contract is contingent upon the availability of appropriated funds from which payment for contract purposes can be made. No legal liability on the part of the Government for any payment may arise until funds are made available to the Contracting Officer for this contract and until the Contractor receives notice of such availability, to be confirmed in writing by the Contracting Officer. FAR ***Do not work on anything without a signed contract THAT IS FUNDED. Lieberman 15

16 Verbal / authority Question Authority -Timothy Leary Never rely on the verbal representations of a government official; always rely on the written solicitation. Any prospective bidder desiring an explanation or interpretation of the solicitation, drawings, specifications, etc., must request it in writing. Oral explanations or instructions given before the award of a contract will not be binding. FAR Oral may be used to solicit micropurchases and simplified acquisitions (up to $150K) Example: an oral change permitting high pressure laminate was not accepted because the written solicitation, requiring another material, controlled. B Page Limitation-excluding the cover page and past performance forms, the technical proposal is limited to twenty (12) pages in at least 11 pt font, 1 margins. Dept of Homeland Security RFPcan t be changed by a phone call Lieberman 16

17 Verbal / authority-cont d You accepted direction from an unauthorized official, regarding your obligations under a contract Contracting officers have authority to enter into, administer, or terminate contracts and make related determinations and findings. Contracting officers may bind the Government only to the extent of the authority delegated to them. Contracting officers shall receive from the appointing authority (see [FAR] ) clear instructions in writing regarding the limits of their authority. Information on the limits of the contracting officers' authority shall be readily available to the public and agency personnel. FAR Example: Solicitation said Contract Specialist was to be contacted for questions, bidder ed him to ask if it could fax bid and was told it could. Faxed bids were prohibited by terms of solicitation, and Contract Specialist had no authority to amend it. Bid was rejected. B CORs, COTRs, Contracting Specialists, ACO s have no authority to award contracts or change quantity, specifications, delivery schedule or price (material aspects of contract). FAR , , DFARS , HHSAR (h), others. Lieberman 17

18 Verbal / authority-cont d You followed oral promises and direction, instead of what was in the written contract. Contract modification means any written change in the terms of a contract. FAR Change order means a written order, signed by the contracting officer, directing the contractor to make a change. FAR Supplemental agreement is a contract modification that is signed by the contractor and the contracting officer. FAR Oral modifications may not be made where the FAR requires they be in writing. 835 F. 2 nd 865. Lieberman 18

19 Polling Question You called a Contracting Officer and asked for a clarification in an RFP. The secretary switched you to a Contract Specialist. Do youa. Hang up b. Ask the Contract Specialist for the Clarification c. Ask the Contract Specialist for Clarification and then write an to the Contracting Officer asking that the CO confirm the answer d. Politely advise the Contract Specialist that you need the answer from the CO, and confirm the answer in writing Lieberman 19

20 Response to Polling Question Lieberman 20

21 Proposal Preparation You failed to ask about a patent ambiguity in the solicitation Patent ambiguity exists when any part of solicitation on its face does not have one plain meaning but has two reasonable interpretations. 314 F. 2d 501 Latent ambiguity is the same, but it is not obvious on the face of the solicitation Contractor has duty to submit questions to clarify patent ambiguity before it submits its bid, otherwise contractor assumes risks for any additional costs. 277 F.3d 1346 For latent ambiguity, courts adopt a contractor s reasonable interpretation of latent ambiguity under contra proferentem (construing against drafter, the government). 676 F.2d 647. Always submit questions in WRITING Lieberman 21

22 Methods of Contract Formation Govt Contractor Govt Result RFP Proposal (Offer) Accepts Contract (K) IFB Bid (Offer) Accepts Contract (K) RFQ Quote Issues PO ("Offer") Nothing until Contractor accepts in writing or fully performs; at that point a K (FAR ) Just as in other types of govt and commercial contracts, an Offer may be withdrawn any time before it is accepted. Lieberman 22

23 Proposal Preparation-cont d Never assume that RFQs, IFBs and RFPs are the same, or that quotes and bids or proposals are the same and understand how a unilateral contract can lapse. Normally the Gov t can accept an offer (bid or proposal in response to IFB or RFP) to form a contract. For Requests for Quotes ( RFQ ), a response is a quote, (not an offer) which cannot be accepted by Gov t to form a contract. FAR (a) Gov t can issue a purchase order based on the quote, which contractor may accept in two ways: Written acceptance By delivering the supplies or services, or making substantial performance towards delivery. Without written acceptance, Gov t may withdraw its order before the due date, or if the contractor fails to deliver by the due date, the purchase order lapses. Either way, the Government owes nothing. 72 Fed. Cl Lieberman 23

24 Offers Always ensure that any bid you submit is a conforming bid. In sealed bidding, per FAR Part 14, award may be made only to a responsible bidder whose bid conforms to the IFB and is lowest in price. FAR (a). Nonconforming bids must be rejected. FAR (a). Examples of nonconforming bids: Fails to conform to the delivery schedule in the IFB Fails to acknowledge a material amendment to an IFB Fails to conform to one or more specifications Imposes conditions that would modify the IFB Limits the bidder s liability to the government Limits the government s rights under any clause Fail to state a specific price or states a qualified price Lieberman 24

25 Polling Question You submitted a proposal and receive a letter from a contracting officer stating Your proposal dated 5/28/16 in response to RFP 6-28 has been accepted and this is your notification of contract award. Attached is the complete contract. Please sign and return. On the last page, you discover that two FAR clauses have been incorporated by reference. The clauses require material duties on your part but they were not in RFP 6-28, and they are not mandatory clauses that express a significant or deeply ingrained strand of public procurement policy (i.e. the Christian Doctrine is inapplicable). Do you: 1) Sign and perform the contract without complying with the two FAR clauses? 2) Sign, perform the contract and comply with the two FAR clauses? 3) Write to the CO and cite FAR (requiring that the RFP include all clauses expected to be in the contract) and suggest that the agency accept your RFP as the basis of the contract (which it said it did), or delete the two new clauses & re-sign the contract. Explain that the agency must clarify this patent ambiguity, and your proposal never considered the two clauses. Lieberman 25

26 Answer to Polling Question Lieberman 26

27 Offers Always ensure that any proposal you submit is fully compliant with the RFP requirements. In a negotiated procurement, per FAR Part 15, any proposal that fails to conform to the material terms and conditions of the solicitation is technically unacceptable and may not form the basis for an award. B Material terms of a solicitation are those which affect the price, quantity, quality or delivery of the goods or services offered. B et. al Examples of technically unacceptable proposals that fail to conform include: Takes exception to any specific requirement in the RFP Alters delivery locations in the RFP or takes exception to the delivery schedule Offer a quantity different from that required in the RFP Insists on a discount, where no discounts are specified Fails to meet minimum education or skill requirements in the RFP Fails to meet minimum experience requirements in the RFP Fail to propose a product or service that meets the Minimum specifications Adds or revise terms concerning government notification as required in the RFP Be sure that your offer complies Lieberman 27

28 Award of Contract Always request a post-award debriefing in all negotiated procurements Must submit written request to CO within 3 days of notification. FAR Can provide significant help in preparing future proposals Can identify reasons to protest (or not to protest) Gov t must provide: Your proposal s weaknesses & deficiencies Overall evaluated cost/price and technical rating of your offer and the winner s offer Your past performance information Overall ranking of offerors if developed Rationale for award Reasonable responses to questions Even awardee can request debrief (OFFPP Memo, Mythbusting 3, Jan. 5, 2017) Lieberman 28

29 Lessons Learned Today Learn from your own good/bad choices don t repeat them Learn from the good/bad choices of others don t repeat them either! When confronting a new problem think outside the box, in order to avoid repeating past bad choices There are many bad choices in government contracting don t repeat any bad ones that you learned today, or may learn in other presentations. Lieberman 29

Webinar: Making the Right Choices in Government Contracting Introduction

Public Contracting Institute LLC Webinar: Making the Right Choices in Government Contracting Introduction Presented by Richard D. Lieberman, FAR Consultant, Website: www.richarddlieberman.com, Email rliebermanconsultant@gmail.com.