Introduction to Federal Contracting

2. Introduction to Federal Contracting Breakout Session # 301 Monday, April 14, 2008 Time: 11AM-12PM Presenter: Janie Maddox Corporate Learning Solutions

3. Seminar Objectives • Understand the federal contracting environment from both the buyer(Govt.) and sellers(Federal Contractors) perspective

4. Seminar Outline of Introduction To Federal Contracting • Comparison of Fed vs. Commercial Contracting • Phases of the Procurement Process • The FAR • Acquisition of Commercial Items • Procurement Methods • Contract Types • Proposal Analysis Techniques • Contract Award • Contract Administration Issues • Contract Planning/Performance Monitoring • Contract Changes/Subcontracts/ • Terminations/Disputes • Inspection/Acceptance/Closeout

5. Federal Contracting political influences socioeconomic concerns public accountability size and complexity of contracts Commercial Contracting less regulated no set process no requirement to solicit multiple vendors longer relationships with suppliers different elements in selecting sources Comparison of Federal and Commercial Contracting

6. Categories of Contracts • Products/Supplies • Services • Major System Acquisition • R&D • Construction & Architect-Engineer • Information Technology • Utility Services

7. The Contracting Process Pre-Award and Solicitation Evaluation and Award Requirements Determination Market Research Selection/Consent/ Approvals Acq Planning Competitive Or Sole Source Evaluation/ Negotiation Award RFP BUSINESS PLANNING . . . MARKETING PROPOSAL PREPARATION NEGOTIATION CONTRACT ADMINISTRATION Performance Monitoring/ Payments Physical Completion/ Closeout Contract/System Compliance Contract Modifications Kick off . . . SUBCONTRACTING . . . DELIVERY & COMPLIANCE . . . CHANGES, . . .. . . INVOICING . . . SCHEDULING MONITORING ACCEPTANCE CLAIMS & DISPUTES CLOSEOUT & COLLECTION Note: shaded represents contractors activities during each Phase

8. Contracting Office Contracting Officer Contract Negotiator/ Administrator CORs, COTRs, QAEs Price/Cost Analysts Legal Auditor Competition Advocate/SADBU QA/Trans Specialists Program Office Program/Project Manager Engineers Logistician IT Managers Technical Representatives End User/Customer Contractor The Acquisition Team

9. The FAR • Established to codify uniform policies for acquisition of supplies and services by executive agencies

10. Organization of The FAR • Subchapter A - General • Parts 1-4 • Subchapter B - Competition and Acquisition Planning • Parts 5-12 • Subchapter C - Contracting Methods & Contract Types • Parts 13-18 • Subchapter D - Socioeconomic Programs • Parts 19-26 • Subchapter E - General Contracting Requirements • Parts 27-33 • Subchapter F - Special Categories of Contracting • Parts 34-41 • Subchapter G - Contract Management • Parts 42-51 • Subchapter H- Clauses and Forms • Parts 52-53

11. Numbering of The FAR FAR FAR# Title Part 14 Sealed Bidding Subpart 14.1 Use of Sealed Bidding Section 14.103 Policy Subsection 14.103-1 General

12. Numbering of The FAR (Cont.) • Subdivisions below the section or subsection level shall consist of : • alpha numeric as follows: lower case alphabet, Arabic numbers, lower case Roman numerals, and upper case alphabet. • Illustrative example: (a)(1)(i)(A) • Subdivisions, below the 4th level, shall repeat the sequence.

13. Using FAR Part 52.2 • Sets forth the text of all FAR provisions & clauses • Keyed to the parts of the FAR • All FAR provision/clause numbers begin with "52.2" • The next two digits of the provision or clause number correspond to the number of the FAR subpart in which the provision or clause is prescribed • In the body of FAR, clauses and provisions that implement subpart policies and procedures are listed in a subsection entitled “Clause(s)”

14. Agency Supplements • An agency head may issue agency acquisition regulations that implement or supplement the FAR • Same structure as the FAR but preceded by the Agency Prefix number, • GSA prefix is 5 • DOD prefix is 2 • Illustrative Example: FAR 6.304; GSAR 506.304 • Must not conflict or be inconsistent with FAR

15. Publicizing Procurements • Placement of a Synopsis in FedBizOps required for procurements over $25,000 • Synopsis • Description of Supplies/Services to be acquired • Information on obtaining a copy of the solicitation

16. Uniform Contract Format (UCF) • Part 1 • A. Solicitation/Contract Form • B. Supplies/Services and Prices • C. Description/Spec./SOW • D. Packaging and Marking • E. Inspection and Acceptance • F. Deliveries or Performance • G. Contract Administration Data • H. Special Contract Requirements

17. UCF, (Cont.) • Part 2 Contract Clauses • I. Contract Clauses • Part 3 List of Attachments • J. List of Documents, Exhibits • Part 4 Representations and Instructions • K. Representations, Certifications, and other statements of offerors • L. Instructions to Offerors • M. Evaluation for Award

18. Government Acquisition of Commercial Items • Policies and procedures unique to commercial item acquisitions • Contained in FAR Part 12 • Establishes acquisition policies resembling the commercial marketplace • Encourages the acquisition of commercial items and components • Mandated by FASA statute • Definition in FAR 2.102

19. Government Acquisition of Commercial Items, (Cont.) Agency responsibilities • Conduct market research • Acquire commercial or non-developmental items when they meet needs • Require prime contractors and subcontractors to establish preference for commercial items-flow down clause

20. Simplified Acquisition Procedures • Threshold- $2,500 to $100,000 • Set aside for Small Business • Firm Fixed Price Only • Competition requirement limited to reasonable number of sources • Oral quotes up to $25,000 • Synopsis over $25,000 • Initiating Document-RFQ

21. Simplified Acquisition Procedures, (Cont.) • Purpose of SAP • Reduce administrative costs • Improve opportunities for small business • Promote efficiency and economy • Avoid unnecessary administrative burdens

22. Simplified Acquisition Procedures, (Cont.) • Common methods of purchasing • Hard copy and Electronic Purchase Orders • Purchase Orders are offers to buy that are binding upon acceptance • Credit Cards • Test Program till January ‘08 • SAP Can Be used for acquiring Commercial Items up to $5.5 million & even up to $11 million IAW FAR 13.500(e)

23. Sealed Bid Procedures • FAR Part 14 • Describes Sealed Bid Procedures • A well-defined requirement is necessary • Firm Fixed Price or Fixed Price-EPA only • Solicitation Document-Invitation for Bids (IFB)

24. Sealed Bidding, (Cont.) • Contractor submits a Sealed Bid by Bid Opening time on Solicitation • No discussions, clarifications, correction • Award is based on price alone

25. Contracting By Negotiation • Two Types • Sole Source Acquisitions • Competitive Acquisitions • Use of Source Selection Processes • Solicitation Document • Request for Proposal (RFP)

26. Source Selection Techniques • Best Value Continuum • Lowest Price Technically Acceptable • Best Values is expected to result from selection of the technically acceptable proposal with the lowest evaluated price • Tradeoff Process • Appropriate when it is in the Govt.’s best interest to consider award to other than the lowest priced offeror or the highest technically rated offeror

27. Competitive NegotiationsSource Selection Processes • Objective-Select the Proposal that represents the Best Value to the Govt. • Informal Source Selection • CO makes source selection decision • Formal Source Selection • Used in high dollar procurements • Source Selection Authority selects • Source Selection Team recommends

28. Formal Source Selection Process-Solicitation Stage • Evaluation factors for Section M, Evaluation Criteria • Price or cost shall be evaluated • Past Performance factor equal to or more than highest rated factor such as Management Capability, Technical Expertise • Rating Approach need not be disclosed but as a minimum state whether all non-cost factors combined are more important, equal or less important than cost or price

29. Contract Award Issues • Debriefing-Explanation by procuring agency on why a competitor did not win • Discussion of the significant weaknesses and deficiencies in the offeror’s proposal • Protests-An objection submitted by an interested party • Protest Forums • Agency • Comptroller General (GAO) • U.S. Courts

30. Fixed-Price Most desirable type Minimum risk & burden on Govt. Defined Requirements Risk of performance on Contractor Contractor paid upon acceptance of tendered items/services Cost Reimbursement Least Desirable type Maximum risk & burden on Govt. Unknown requirements Risk of performance on Govt. Contractor paid for best efforts Fixed-Price vs. Cost Reimbursement

31. Factors to Consider in Selecting Contract Type • Risk factors • Contract administration factors • Type and complexity of the requirement • Urgency of the requirement • Period of performance • Extent of subcontracting

32. Contract Types Fixed Price • Provides for a fixed price • Occasional adjustable price for economic factors/incentives • Normally less government oversight • Application • Fairly stable design • Definitive scope • Some government surveillance during performance

33. Contract Types, (Cont.) Cost type • Pay allowable incurred costs • Total cost estimate established for obligation and contractual ceiling • Contractor exceeds ceiling at own risk • Contractor assumes less risk • More government oversight • Application • Uncertainties exist in contract performance • Fixed-price type cannot be used • Contractor accounting system must be adequate

34. Contract Types, (Cont.) Time & Materials/Fixed Rate Per Hour • Fixed hourly rates for labor/skill categories • NTE amounts usually established Incurred hrs. for each task order must be supported • Other direct costs or materials reimbursed at actual cost

35. Primary Techniques to Proposal Analysis • Price analysis shall be used when cost or pricing data are not required • Cost analysis shall be used when cost or pricing data are required • Cost realism analyses shall be performed on cost-reimbursement contracts to determine the probable cost of performance for each offeror.

36. Price & Cost Analysis • Price analysisis the process of examining and evaluating a proposed price without evaluating its separate cost elements and proposed profit. • Cost analysisis the review and evaluation of the separate cost elements and profit in a proposal and the application of judgment to determine how well the proposed costs represent what the cost of the contract should be, assuming reasonable economy and efficiency

37. Cost Realism • Is the process of independently reviewing and evaluating specific elements of each offeror's proposed cost estimate to determine whether the cost elements--- • are realistic for the work to be performed • reflect a clear understanding of the requirements • are consistent with the unique methods of performance and materials described in the offeror's technical proposal.

38. Contract Administration • Activities performed after contract awarded to determine: • How well both parties are meeting the contract requirements • Constitutes the primary part of the procurement process • to assure the Govt. gets what it paid for • Focuses on monitoring: • Performance (quality) • Schedule • Price (within budget) • The nature & extent of it varies from contract to contract • Ranges from: • the minimum acceptance of delivery & payment • to extensive involvement Ultimate Goal-Assure the end users are satisfied!!

39. Contract Administration Planning • Planning should start in the early stage of acquisition • Start by reviewing the contract file for • Primary requirements • Critical clauses • The formality of the plan depends on the contract complexity • Simple as determining milestone dates—commercial-type contracts • As a minimum plans should identify (if applicable) • Special terms & conditions • Contract milestones • Reports & due dates • Party interfaces • Warranty issues, subcontracting plans, etc.

40. Performance Monitoring/Problems • Govt. protects interests by • Monitoring contractor performance • Inspecting contractor products • Informing the contractor of any problems • Identifying and implementing non-contractual and contractual remedies

41. Types of Contract Changes • Unilateral • directed by CO • Bilateral • Negotiated and signed by both parties • Constructive • a change recognized after it happens

42. Subcontract Issues • Privity between Prime and Subcontractor • Govt lacks privity but requires the Prime to flowdown specified clauses to Subs • Contractor’s Purchasing System Review • CPSR conducted when Prime has annual sales greater than $25 million • Subcontract Consent Requirements

43. Terminations • Termination for Convenience • Right of Govt. • Termination for Default • Failure to perform • Termination for Cause • Commercial Item Contract

44. Disputes • A disagreement between the contractor and the CO regarding the rights of the parties under a contract • Contract Disputes Act of 1978 • Contractor submits a Claim to CO • CO makes decision within 60 days • Contractor may appeal negative CO decision to: • Board of Contract Appeals • Court of Federal Claims

45. Inspection of Goods and Services • Inspection and Acceptance. Under contracts for goods, the products delivered by the contractor should be inspected by the Govt. upon receipt, and either accepted or rejected. • For service contracts, inspection and acceptance may be upon the completion of stated tasks or timely achievement of milestones or events.

46. Acceptance • Acceptance • constitutes acknowledgment that the supplies or services conform with applicable contract quality and quantity requirements • may take place • before delivery, • at the time of delivery, • or after delivery • shall be evidenced by execution of : • an acceptance certificate, • inspection or receiving report form, or • commercial shipping document/packing list • Acceptance is final, barring latent defects/fraud

47. Non-Conforming Goods/Services • Govt’s rights if goods or services do not comply with Fixed Priced contract • Rework at no additional costs • Reject entire shipment • Accept entire shipment • Accept part of shipment

48. Closeout • The process of settling all outstanding contractual issues after physical completion of contractor effort • Examples of Issues include: • Overhead rate settlement • Disposition of Govt. property • De-obligation of excess funds

49. Wrap Up

50. Thank You for Attending!