2. Procurement Rules and Practices

Question 2: Reduce costs of transactions for contractors

If a member of the Chief Acquisition Officers Council has never participated with a contractor in developing a formal proposal in response to a Federal solicitation, each is encouraged to engage one of the Agency contractor’s and ask to observe the (painful and expensive) processes industry goes through to respond to a Federal solicitation, particularly a high dollar value procurement involving submission of a complex technical proposal.


An Agency may believe that 60 - 90 days is long enough to prepare a “proposal” … In reality for the major, complex procurements, companies begin assembling teams of technical personnel, technical writers, establishing office space, setting up or arranging for proposal production capability with graphic artists, “proposal writers” etc etc months in advance of an RFP release. Sometimes writing “mock” proposals based on what they “think” the Government may ask for in a solicitation, doing whatever research may be possible on the work and expending thousands/millions of dollars in “anticipation” of release of the RFP depending upon the anticipated value of the procurement.


Once released, the expensive proposal “machines” go to work, working 12 – 18 hour days, 7 days a week – scrutinizing every word in the RFP, identifying conflicting or even potentially conflicting language, trying to interpret “ambiguities” and then evaluating whether to seek clarifications from the Government – or potentially lose a “competitive edge” by asking for clarification. Allocating “page counts” to every portion of the RFP where the RFP establishes page limitations based upon some hypothetical calculation of what is “really” important in the proposal. Rearranging and reformatting writing, diagrams, charts, etc in order to take advantage of every square inch of available “page space” so as not to violate the page limitations. [Of course, no real basis for establishing the page limitations existed in the first place.]


While seemingly simplistic, can a response to an RFP’s criteria really be done in 50 pages, or might the proposal (and the Government) have benefitted from receipt of a 52 page proposal? My experience has been simply limiting a proposal to the number of pages needed to adequately address the topic, with a stated condition that extraneous, repetitious or wordy submissions are not desired is adequate to limit the size of proposals without creating artificial (and costly) constraints.


A concept to pursue is what should occur in a “streamlined” competition process and what is really needed to select a contractor? Beyond what experience and past performance the firm (or consortium) has in performing the type of work to be performed, what (successful) experience the key personnel or manager(s) have in managing similar work, and what physical capabilities in terms of equipment and resources are needed and does the offeror possess or have access to those resources, what else is really needed? Does the Government really need all the other “technical and management approach” information/plans to perform an evaluation and selection of the offeror “most likely” to be able to perform the work? If not, a proposal may only need to be “about” 30 pages, including resumes…


And then we come to the subject of cost, and “pricing proposals” and cost or pricing data…


For complex, long term cost reimbursement projects, particularly those involving decontamination, environmental remediation, demolition of high hazard containing facilities, etc. does someone really believe there can be realistic “pricing” of such work? Of course, cost estimates can be made based upon numerous “assumptions” or prior experiences in different types of facilities/sites, but in reality – no one knows beyond some probable “range” of costs what may be encountered and what the work may actually end up costing. And among competing, qualified and capable companies, is that range of costs going to be substantially different in estimating and/or performing the work? Yet millions of dollars are spent by industry developing “cost proposals,” more spent by the Government evaluating (???) the pricing assumptions and even more money spent by auditors making sure the numbers all add up and are in the proper formats and tables. The Government then takes these numbers, doing its most probably cost estimates and uses these “at best” questionable dollar amounts in some fashion to select a contractor.


At least one Agency provides “plug” numbers to be utilized by all offerors in the proposals which are then “trued up” after award …. And arguably, the revised numbers after award cannot be much better than the plugged numbers – but the contractor is then expected to perform within the revised “estimates.” And of course, after award, the original or revised “estimated” costs somehow become sacrosanct and can only be changed through formal, legally justified change proposals and supported by submission of more “cost or pricing data.” But in reality, the cost estimate amounts were no more than “best guesses” dressed up to look like “cost or pricing data.”


The problem becomes even more complex and costly when these long term projects are subject to Agency budgetary limitations. Regardless of the “estimated cost” of the work in the contract, if the contract funding becomes subject to Federal budgetary restrictions then the “estimated’ costs and the time to complete the work must be revised. And of course, all this must be subject to creation and submission of more “cost or pricing data,” more evaluation, more audit and more expenditure of more money by industry and Government to create and evaluate all the “paper” – all likely to change again.


For long term, complex work which is replete with unknowns and budgetary constraints/fluctuations, contracting on a “budgetary” basis for such work would be cheaper for both industry and the Government. Although counter intuitive, it may be easier (and cheaper from a manpower and effort perspective) to contract for such complex work on a budgetary basis using technical baselines to manage the work and costs than for some more traditional service type work where real and valid “cost or pricing data” estimates of labor and materials can be made and subcontract prices more readily established via the open market and competition.



21 votes
Idea No. 50