Best Value Flashcards

Question

Price means cost plus any ___________ applicable to the contract type. fee or profit administration fee fixed fee processing fee FAR 15.401

Answer 1

fee or profit

Answer 2

The agency may use any method or combination of methods

Answer 3

incentive and mandatory

Answer 4

within 45 days from its receipt by the Government

Answer 5

It is authorized and prepared by a Government official

Answer 6

Statement of Work The four parts of the Uniform Contract Format (UCF) are: The Schedule (Part I) Contract Clauses (Part II) List of Documents, Exhibits, and Other Attachments (Part III) Representations and Instructions (Part IV) The Statement of Work (SOW) is included in "The Schedule" but is not a separate part of the UCF.

Answer 7

The government conducts market research to make decisions about the contracting process. Should every company be eligible to compete? Should this contract be set aside for small businesses or for women-owned small businesses? Is there a commercial product available or should the government pay someone to develop something new? The fruits of market research may answer some or all these questions. Whether the government consolidates it into a formal market research report or not, the process of collecting and analyzing market research is designed to influence future government contracts. Are you paying attention?

Answer 8

Although the contracting officer is ultimately response for performing market research, other federal employees may help. The program office which needs the goods or services may assist in performing market research.

Answer 9

Anything within reason. The government can examine prior contracts, search the Internet, attend conferences, invite potential contractors to an "industry day" at the agency, or pick up the phone and call people. Maybe the government will read trade journals, scientific articles, or attend training to learn more about a specific industry or technology. Maybe the governmentwill email your company with a series of questions. Answer that email!

Answer 10

Yes, I'm glad you picked up on that characteristic. Market research can be almost anything if it gives the government useful information to make a contracting decision.

Answer 11

Market research should begin as soon as the federal agency identifies a need (realizes it wants to buy something).

Answer 12

The government uses its best judgment to determine how much market research is optimal or necessary. Depending on the size, complexity, urgency, dollar value, or other factors, market research could take ten minutes or ten months or more.

Answer 13

Market research is your opportunity to be heard. The government collects market research to make decisions. If you provide the market research, you influence the decisions. If you do not provide any information for the government's market research, you have ceded the opportunity to your competitors. Therefore, tell the government why you deserve the contract. Are you the best? Fastest? Lowest priced (but are you technically acceptable)? What's your special set-aside signal? Are you a small business? Women-owned small business or WOSB? Let the government know. Explain why your type of business is the only type of business that should qualify.

Answer 14

Sources Sought Notice or SSN means the government wants to know what types of businesses will compete for an upcomingcontract. Think of the SSN as a special type of maybe the contract will be a women-owned RFI. Instead of general information like the RFI small business set-aside. requests, the SSN explores what businesses exist, what products and services they offer, and most importantly, how these businesses are classified for potential contract set-asides. Government contracts can be "set aside" for specific types of businesses, like small businesses or women-owned small businesses. Read Part 6, Competition Requirements, and Part 19, Small Business Programs for more information.

Answer 15

The largest and most complex source selections typically use FAR Part 15 procedures. If the government needs a new contract for hundreds of millions of dollars, it will likely use the source selection procedures of FAR Part 15.

Answer 16

The two "flavors" of FAR Part 15 source selections are tradeoff and lowest price, technically acceptable (LPTA).

Answer 17

Tradeoff means the government can "trade off" price against nonprice evaluation factors, like past performance, experience, technical qualifications, or management planning.

Answer 18

Yes, the government has significant flexibility in selecting the winning proposal when using the tradeoff method.

Answer 19

Tradeoffs are subjective. The tradeoff method balances the government's preference for a lower price against one or more nonprice.evaluation factors like technical specifications or past performance. Measuring the objective benefit of paying a higher price for a higher rated, nonprice evaluation factor is difficult, if not impossible. Therefore, the government measures its comparative preference for different combinations of price and nonprice ratings by something called the "price premium."

Answer 20

Price premium refers to how much the government values an increase from one rating of a nonprice evaluation factor to another, higher rating of a nonprice evaluation factor. This increase usually comes with a corresponding price increase. (If one proposal was rated higher than another, but had the same price, there is no reason to select the lower rated proposal.) For example, company XYZ submits a proposal for $100 that is rated "Excellent" for past performance. Company ABC submits a proposal for $90 that is rated "Marginal" for past performance. The price premium represents the "extra" $10 price difference that gets the government a contractor that is rated "Excellent" instead of "Marginal." The government can decide that $10 is worth the marginal increase from "Marginal" to "Excellent." Or the government can decide that $10 is not worth the marginal increase. This decision concerns the "price premium," which will be mentioned or discussed in any detailed source selection decision document.

Answer 21

The source selection decision document is a formal memo explaining the government's subjective choice of a winner in a tradeoff source selection. There are many other names for this memo, but the function remains the same: provide the government's reasoning for selecting the winning contractor's proposal instead of theunsuccessful proposals. Unless there is one proposal that is rated higher and priced lower than every single other proposal (which is unlikely), the decision document will need to account for the different "price premiums" between the competitive proposals.

Answer 22

Often, but not always. The default rule is that the contracting officer is the source selection authority, or the single decisionmaker for selecting the winning contractor. However, in larger and more complex contracts, the source selection authority or SSA will be someone other than the contracting officer, such as a senior official in the agency.

Answer 23

No, the source selection authority (SSA) will probably not read every proposal. Nor must the SSA evaluate every proposal, nor must the SSA read every evaluation. Instead, the SSA may receive a high-level briefing from the evaluation team (the people who actually read the proposals and provide written evaluations based on the evaluation factors). The high-level briefing will review the final evaluation ratings of the top proposals and may recommend selection of a particular contractor.

Answer 24

Lowest price, technically acceptable (LPTA) creates a race to the bottom. The government sets the minimum specifications. Any proposal that meets or exceeds the minimum specifications is eligible. Proposals that are technically acceptable will be ranked on price. The lowest price, technically acceptable proposal wins.

Answer 25

No, LPTA requires the government to select the proposal that is lowest priced and technically acceptable. The hands of the government are tied in this respect, with no discretion.

Answer 26

No, under LPTA, proposals will not receive extra credit or favored treatment for exceeding the minimum requirement. Your company should focus on price while providing no effort beyond what is required for technical acceptability.

Answer 27

The most important condition for using LPTA is that government needs are clearly defined. If government requirements are not clearly defined, the government cannot set the bar for technical acceptability, or the minimum level for eligibility.

Answer 28

Government contracting competitions disclose evaluation factors to let potential contractors know what is important to the clients. If price is important, price will be an evaluation factor. If past performance and technical specifications are important, those too will be evaluation factors. Evaluation factor is a term of art in government contracting. Think of the evaluation factor as some attribute or characteristic of the potential contractor that generates a benefit to the government (or which creates a risk if it is absent or deficient). Let's say one evaluation factor is a security mitigation plan for power outages. If a potential contractor has a thorough, logical, and time-tested security mitigation plan, that plan is a significant benefit to the government client. It may contain one or more strengths thatIf a different potential contractor has a nonsensical plan, that detail is certainly a risk for the government client. This weakness can translate into a poor evaluation factor rating. In this example, these two potential contractors will be scored or evaluated differently on the evaluation factor of a security mitigation plan.

Answer 29

The most common evaluation factor is price. Unless there is a special exception, price will be evaluated for all government contract awards. Even during competitions where price is the least important factor, such as in some tradeoff competitions, price is still evaluated.

Answer 30

Other common evaluation factors include past performance, experience, and technical approach.

Answer 31

Technical approach is a very broad evaluation factor that may include subfactors. Sometimes the technical approach factor is simply to evaluate exactly how the potentialcontractor will perform the contract. Overreliance on technical approach may indicate that this government contracting opportunity is an "essay-writing contest." In other words, how you write the proposal may be just as important as the objective content or promises within your proposal. Style and presentation may matter more than substance!

Answer 32

No, the government can choose any number of evaluation factors. It can always create a new evaluation factor. If you can imagine some feature or attribute of a potential contractor that matters to success under a government contract, you can imagine an evaluation factor to measure that feature or attribute.

Answer 33

Past performance is a common way the government can evaluate your proposal or your company. Price is the single most common evaluation factor, but past performance is a likely close second or third. To reduce the risk of failure, the government wants contractors who have already "been there, done that." Government clients know that history repeats itself. Looking to the past can help you to predict the future. The past performance of your company is so important to winning new government contracts.

Answer 34

Yes, you should keep a detailed database of your past company performance. This database should include past performance with government clients and other, private sector businesses. Keep track of the client contacts, work description, dollar amount, periods of performance, and any other relevant information. Treasure your formal awards, and carefully copy and save any praise or accolades your company receives. All this information will help you when you must explain your past performance to future clients.

Answer 35

Past performance includes any relevant information about your company actions under previous government contracts. This record includes meeting contract requirements, successful performance, workmanship, customer service, cost control, scheduling, reporting, and many other factors. Every aspect of how you interact with your government client affects your ability to win future government contracts, so stay on top of your game.

Answer 36

Yes, the government has considerable flexibility in how it evaluates past performance of your company. Important details about this process should be listed in the solicitation, usually in Section L (Instructions to Offerors) or Section M (Evaluation Method).

Answer 37

Yes, sometimes the government requests specific instances of past performance. Your company can submit a description of past performances and related information, such as the client, contract, date, location, etc. Always choose past performances where you know your company succeeded and the client was impressed.

Answer 38

Sometimes the government evaluates your past performance using questionnaires. These questionnaires are sometimes called past performance questionnaires or PPQs. Your company submits several past performance descriptions along with the contact information for each client. The government sends questionnaire forms to each client you chose for your past performance. The clients send the questionnaires back to the government. Your company never sees the questionnaire replies, although you can find out how the government rated or evaluated your overall past performance.

Answer 39

Yes, sometimes the government discriminates between past performances by relevance or how recently the work was performed. For relevance, the government favors workin the same industry, contract type, dollar value range, etc. Work performed 10 years ago is less relevant than work performed last year. Always submit past performances that are as relevant and recent as possible.

Answer 40

Sometimes the government reads about your company in the Contractor Performance Assessment Reporting System (CPARS). The CPARS database contains records, both positive and negative, on government contractor past performance. If your contract is eligible, the government will enter information about your company, the contract, and your performance into CPARS. This information should be objectively based on facts, dates, data, and be verifiable. However, opinions about performance will always be somewhat subjective.

Answer 41

Yes, as a government contractor, you can make comments about your company in CPARS. This opportunity is available whenever the government records negative information in CPARS. Your one chance to correct the record is to state your case in writing.

Answer 42

To prepare for CARS evaluations, your company must collect and organize important information about its performance of all its government contracts. Keep any email messages, memoranda, or documents that show praise or positive feedback from the government. If the praise comes in person or on the phone, write a memorandum to file documenting the praise. Keep track of key dates and deliverables. Document any problems that arise and explain what your company did to help. Information like this, based on objective documents and dates, will be helpful when you need to retell your side of the story in CARS. Keep your response objective, organized, and focused.

Answer 43

The difference between past performance and experience is simple. Experience evaluates whether your company in the past did something relevant to the upcoming government contract. Past performance evaluates how well your company performed, not just whether it did something. If experience is a record of your attendance at school, past performance is the report card. If experience is your diploma, past performance is your actual grade point average.

Answer 44

The government can use past performance and experience as evaluation factors. If the government uses past performance, a special government rule allows your company to compete despite having no past performance. The government wants to encourage newcomers, so a special rule states that a potential contractor with no past performance cannot be rated favorably or unfavorably on past performance. The potential contractor with no past performance must receive some sort of neutral rating on past performance. Keep in mind that your competitors with excellent past performance retain an advantage. This special rule keeps your company from being disqualified completely. In the final decision, the government can value a positive rating on past performance more than a neutral or nonexistent rating on past performance.

Answer 45

Another way to rate potential contractors is to assign a color for each evaluation factor. Each evaluation factor will be rated as "purple," "blue," "green," "yellow," or "red."

Answer 46

In formal source selections under FAR Part 15, and certain task order competitions under FAR 16.505, your company may be entitled to a debriefing if you request it within a certain number of days. The debriefing is your opportunity to learn why you lost the contract and understand how you can prepare better proposals in the future.

Answer 47

Debriefings can be in person, over the phone, in writing, or by email communication. Contracting officers also have the discretion to perform debriefings in other formats as they see fit. Maybe the contracting officer will perform your debriefing using a webcam and microphone over the Internet.

Answer 48

Yes, the format of the debriefing will significantly affect what your company gains from the debriefing. If your debriefing is in writing, although you may be able to ask follow-up questions to the original written debriefing, nothing beats a "live" conversation. Of course, an in-person or video-streamed conversation will produce facial cues and body language that you cannot detect in writing or over the telephone. Written debriefings eliminate the possibility of "surprise questions" and revealing answers the government may withhold if they have more time for consideration, as they do in written debriefings.

Answer 49

A debriefing must include at least the following info: Significant weaknesses and deficiencies of your proposal, if any Overall evaluated cost or price and technical rating of the winner Overall evaluated cost or price and technical rating of your proposal Past performance info about your company Overall ranking of the competitors, if such a ranking occurred Summary of the rationale for picking the winner For commercial items, the make and model of the winner's commercial item Reasonable responses to relevant questions about whether the source selection followed the solicitation rules, laws, regulations, and other applicable authorities

Answer 50

TINA is the Truth in Negotiations Act. Congress passed a law which became known as the Truth in Negotiations Act to give the government a huge advantage in sole-source negotiations. Since there is no competition, the government requires the contractor to disclose the "cost or pricing data" associated with the final cost or price. This is like playing poker with your cards facing up on the table. This disclosure of cost or pricing data allows the government to look at your proprietary financial information to pressure you into a lower cost or price. If the cost or pricing data is certified, you expose your company to a significant amount of risk, so these situations should be avoided whenever possible.

Answer 51

TINA requires the contractor to disclose "cost or pricing data" and to certify the data in certain circumstances. The government uses this information to negotiate with the contractor. Let's be clear about this. No company would disclose this proprietary financial information (cost or pricing data) voluntarily. This deal is bad for

Answer 52

Large defense contractors have billions of dollars and hundreds or thousands of highly paid employees. These defense contractors run rings around the government contracting officers and program managers. There is no comparison if one side has 30 players while the other side has a team of 3. To level the playing field, Congress passed a law which became known as the Truth in Negotiations Act or TINA. If there is competition, meaning two or more contractors, the government can assume the invisible hand of the free market pushes prices down to a competitive level. However, in a sole-source negotiation, a contractor has significant power to determine pricing. TINA diminishes that power.

Answer 53

In plain English, cost or pricing data means all facts that a reasonable businessman would expect to affect the cost or price negotiations. Remember that key word: "facts." These facts are different from the actual price or cost. Let's also look at the Federal Acquisition Regulation (FAR) definition: "Cost or pricing data" (10 U.S.C. 2306a(h)(1) and 41 U.S.C. chapter 35) means all facts that, as of the date of price agreement, or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price, prudent buyers and sellers would reasonably expect to affect price negotiations significantly. Cost or pricing data are factual, not judgmental; and are verifiable. While they do not indicate the accuracy of the prospective contractor's judgment about estimated future costs or projections, they do include the data forming the basis for that judgment. Cost or pricing data are more than historical accounting data; they are all the facts that can be reasonably expected to contribute to the soundness of estimates of future costs and to the validity of determinations of costs already incurred." There's a lot to unpack in that definition. Many lawsuits or claims have explored what is or is not cost or pricing data. Here are some practical examples of cost or pricing data: Vendor quotations Nonrecurring costs Info on changes in production methods or purchasing volume Data supporting projections of business prospects or objectives Unit-cost trends such as those associated with labor efficiency Make-or-buy decisions Estimated resources to attain business goals Info on management decisions that significantly affect costs

Answer 54

No! This misconception is common. The cost or pricing data consists of facts that a reasonable businessman would want to know because they would affect the negotiations. You are required to disclose these facts to the government. You are not required to base your price on these facts (or on the cost or pricing data)! In other words, your complete cost or pricing data could lead a reasonable businessman to think that the price should be $1 million, including a tolerable profit of 20 percent. That does not mean your price must be $1 million. You can include a much higher profit and price and ask for $2 million or $20 million!

Answer 55

Sometimes the contractor has an exemption where it does not have to provide certified cost or pricing data. In these cases, the contracting officer may still request other than certified cost or pricing data. This is precisely the same information, except that your company is not required to certify the information. If this sounds like a strangely convenient benefit the government created for itself, you're on the right track.

Answer 56

No, you can always refuse to submit. However, in such a case the government is likely to decline awarding you the contract. When you are in a sole-source negotiation for a government contract, you have a lot of leverage. You are the only potential contractor. Therefore, you might be able to get away with refusing to disclose any cost or pricing data, despite what the laws and regulations require of the contracting officer. There are also waiver procedures for the contracting officer to give your company a pass or exception to providing cost or pricing data. You are not guaranteed to get a waiver or pass. Nor are you guaranteed to get the government contract. You must analyze your competitive negotiation position and decide whether to play nice. If you push things too far, you might lose the government contract.

Answer 57

When an employee of your company certifies the cost or pricing data, it creates significant risk. If the cost or pricing data is wrong or defective, the government can "claw back" or demand money back from your company. Your company also risks being accused of submitting a false claim, which is a serious charge. For these reasons, you should always consult a competent government contracting expert when you are making decisions about certified cost or pricing data. It's also important to know the rules of whether you need to submit cost or pricing data. If you are not a rules expert you need to hire one.

Answer 58

If Congress or federal agencies have defined the prices, your company does not need to provide certified cost or pricing data. For example, sometimes the prices of utilities like electricity or water are defined by law or regulation.

Answer 59

Your company's last shot is to obtain a waiver, in writing, from the government. This requires the signature of a high-level government official. That means you may have to go "over the head" of the contracting officer. Be careful about asking for this exception to submitting certified cost or pricing data. You do not want to antagonize the contracting officer!

Answer 60

Acceptance is when an authorized representative of the government takes ownership of supplies delivered under a contract or approves specific services performed under a contract. Acceptance acknowledges that your company's supplies or services conform with all quality or quantity requirements of the contract. Think of acceptance as the formal, official "thumbs up." You must distinguish acceptance from delivery or performance. Just because your company mailed products to the federal agency does not mean they were accepted. Just because a federal employee signed for the mailed products does not mean they were accepted. Just because you performed the services does not mean they were accepted. You need to read your contract carefully to determine what constitutes acceptance. In summary: Delivery is not (necessarily) acceptance. Performance is not (necessarily) acceptance. Acceptance is the official act of the government verifying that whatever your company provided or performed met all requirements of the contract.

Answer 61

Usually, the contracting officer or some other federal employee will provide acceptance.

Answer 62

Conditional acceptance means your company's delivery or performance was "close, but no cigar." Your company needs to fix, cure, correct, supplement, or change something to achieve complete acceptance. Full acceptance is conditioned upon your company making the changes.

Answer 63

Inspection is the process whereby the government examines your supplies or services to determine if they conform to the details of the contract. Before accepting your delivery, the government must verify that you satisfied the standards of the contract.

Answer 64

Usually, a federal employee like the contracting officer will perform inspection. Sometimes the contracting officer or contract will designate others to perform inspection. In many contracts, inspection (and testing) is the responsibility of the contractor itself, not the government. You need to carefully read the clauses in your contract related to delivery, inspection, and acceptance.

Answer 65

I cannot answer this question without reading your government contract. There are several different clauses that change the delivery, inspection, and acceptance terms depending on a wide variety of factors. Government contracts have flexibility to select or alter delivery, inspection, and acceptance terms to adapt to different circumstances.

Answer 66

A carrier provides transport services. For example, a company that offers to ship your luggage across the ocean is providing carrier services. The carrier is sometimes called a commercial carrier.

Answer 67

A common carrier offers and provides transport services to the general public. Anyone can purchase transport services from a common carrier.

Answer 68

A contract carrier provides transport services by individual contracts with one or more clients. Contract carriers are more exclusive than common carriers. Instead of offering transport services to the general public, contract carriers operate on a contract-by-contract basis, perhaps for a limited, continuous set of clients. For example, a contract carrier may contract with a large corporation to move employee household items and office equipment. This contract carrier makes enough money from the single client (the large corporation), so this contract carrier has no need to offer common carrier services to the general public.

Answer 69

The shipper asks the carrier to transport items. The carrier transports the items for the shipper. The shipper requests and pays. The carrier makes sure the items arrive where the shipper specifies.

Answer 70

A bill of lading is a document used in transport services. The carrier provides a copy of the bill of lading to the shipper. The bill of lading is a receipt of the items to be transported by the carrier. When passing through checkpoints or customs clearance, the carrier can present the bill of lading to show title to the items, a list of all items in transport, or as proof of a contract to transport the items.

Answer 71

A commercial bill of lading or CBL is prepared for use in the private sector and is not created by a government official. A government bill of lading or GBL is prepared and authorized by a government official.

Answer 72

For domestic shipments within the contiguous United States, the contracting officer is supposed to allow the use of commercial bills of lading or CBL. The contracting officer may authorize government bills of lading for international shipments or noncontiguous domestic shipments (or in other situations where appropriate). "Contiguous" refers to American states that are connected and share a border. In other words, Alaska and Hawaii are not part of the contiguous United States because they are separated by foreign territory or oceans. Alaska and Hawaii share no borders with any other American state.

Answer 73

The government's preference is to use commercial carriers, including both common carriers and contract carriers. Generally, the government will use its own vehicles for transport only if it is economical in comparison.

Answer 74

Value engineering is the process whereby the contractor suggests changes to the contract or statement of work that may save cost or time. By proposing a different way of performing the work, the contractor reduces acquisition, operation, or support costs—or finishes the work faster. The government encourages value engineering because the contractor often has a better understanding of the best way forward, so why not listen to what they have to say?

Answer 75

The government encourages value engineering by allowing the contractor to share in the cost savings. If the contractor saves the taxpayer money, the contractor gets to keep some of the money saved—a classic "win-win" situation.

Answer 76

The contracting officer will formally accept or reject each value engineering change proposal. Remember, any changes to the contract can be authorized only by the contracting officer. Of course, the contracting officer will probably rely on the analysis and recommendations of a team of government engineers and project managers.

Answer 77

The contractor submits to the contracting officer a value engineering change proposal (VECP). The value engineering change proposal outlines the required changes to the contract or statement of work, as well as the proposed cost or time savings.

Answer 78

The two approaches are incentive-based value engineering and mandatory value engineering.

Answer 79

The incentive-based approach is completely voluntary. Your company uses its own resources to develop and propose a value engineering change proposal. Your government contract will specify exactly what percentage of the cost savings your company gets to keep as a reward. The contract will also explain what development and implementation costs are allowable (and therefore reimbursable as payments) during the value engineering process. The mandatory approach is a requirement of your contract. Using the mandatory approach, your contract will have a line item, deliverable, or clause that requires your company to perform value engineering. The percentage of the cost savings your company receives under the mandatory approach will be less than the percentage received under the incentive-based approach. No matter what type of value engineering your contract contemplates, your company will not share in any cost savings unless the value engineering cost proposal is accepted and approved by the contracting officer. Therefore, the government has the final decision on any value engineering changes to your contract.

Best Value Flashcards

FAR Parts 10, 15, 46, 47, and 48