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Information for Contractors

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3. How the U.S. buys

3.1 Acquisitions, Solicitations and Contracts

3.2 Information for Contractors

This section outlines the various stages of the procurement process; from being selected as a contractor, to options for recourse if a bid is not successful. By becoming familiar with this information, contractors can focus on procurement procedures that are relevant to their specific circumstances.

Table of Contents

The Cardinal Principles for Contracts

No matter what type of competitive procurement procedure is used, contracting officers must determine before obligating the government under a contract, that:

Responsiveness generally means that a contractor is agreeing to terms and conditions in the U.S. government's solicitation.

A contractor who takes exception to government requirements reflected in an Invitation for Bid (IFB) is automatically excluded from consideration for award.

In a negotiated procurement, the contracting officer may give a non-responsive contractor an opportunity to make its offer responsive.

Responsibility: The contractor has, or has made arrangements to obtain, the wherewithal to perform under the contract. Reputation and past performance are taken into account by the U.S. government.

The contracting officer may determine that a contractor is responsible simply based upon existing knowledge of the contractor. The contracting officer also may obtain information to build confidence that a contractor is responsible. A pre-award survey team may be sent to the proposed contractor's facilities.

Responsibility is usually not an issue when you are working on U.S. defense contracts because performance through the Canadian Commercial Corporation (CCC) is guaranteed by the Canadian government.

Fair and Reasonable: The contracting officer determines that price or cost is fair and reasonable by either of two methods – price analysis or cost analysis.

Price analysis is the preferred method. The contracting officer compares the offered price against various yardsticks to ensure it is fair and reasonable. The offered price may be compared to other prices received, to the government's estimate, to catalog or market prices or to past prices paid for the same or similar products.

Cost analysis is a line-by-line examination of proposed labour costs, material costs, various overhead costs and proposed profit. It is more expensive to accomplish than price analysis, and is used only when price analysis is not appropriate. For example, cost analysis is often used on research and development contracts where cost reimbursement contracts are contemplated. As price analysis is mandatory, it will be used in conjunction with cost analysis to aid in determining reasonableness of specific cost elements and/or the reasonableness of the proposed overall cost.

Types of Solicitations

There are three general types of U.S. government solicitations that result in various contract pricing structures: IFB, RFP and RFQ. For agencies that have their own supplements implementing the FARs, such as the Federal Aviation Administration or the Department of Defense, there may be other types of solicitations used for contracting.

Invitations for bids (IFB)

IFBs, or "sealed bidding" solicitations (FAR Part 14) are limited to firm-fixed price or firm-fixed price with an economic price adjustment. These types of offers are called "bids" and are submitted by "bidders."

A U.S. agency uses an IFB when the solicited product or service is readily available and when the contract award decision will be based solely on price and price related factors (e.g. transportation costs, if any). The Cardinal Principles, also apply.

When you submit your bid, you make a commitment to keep it open during the evaluation period, usually for 30 days. You may be asked to extend your acceptance period if the contracting officer anticipates delays in making a contract award.

The basic steps involved in contracting using an IFB are:

Requests for proposals (RFP)

RFPs, or "negotiated" solicitations (FAR Part 15), have much more flexibility than IFBs. Offers are called "proposals" and are submitted by "offerors". The types of contracts resulting from an RFP are outlined in FAR Part 16. Such contracts can be a variation of fixed price, (e.g., fixed-price incentive contracts, fixed-firm priced level of effort contracts), time-and-materials, labour hour or, any of a variety of cost-reimbursement type contracts.

Evaluating RFPs

The agency will evaluate your proposal against the solicitation evaluation criteria in the RFP. This may include factors or sub-factors such as technical approach, key personnel, management plan, price, and past performance. Technical approach and key personnel are considered "quality" factors.

If you offer products or services that require a more detailed or sophisticated evaluation, you will be preparing a proposal that contains information required by the agency to conduct a "best value" analysis. By law, the government must evaluate quality, past performance and price, although the contracting officer retains authority to waive past performance as an evaluation factor.

Following evaluation, proposals are compared against one another and either an award is made, or a competitive range is established for subsequent discussions.

Read Section M of the RFP carefully to determine which factors and sub-factors are weighted the most important, and tailor your response accordingly. The agency is required to identify the weight of each evaluation factor when the tradeoff method of selecting a contractor is being used. If listed factors are not so "weighted", offerors can presume that all factors are weighted equally. Past performance often constitutes a significant evaluation element. Past performance evaluation may include consideration of commercial work, work for the Canadian government or a specific province. The regulations state that if an offeror has no past performance record, "the offeror may not be evaluated favourably or unfavourably". The agency may however, look at major subcontractors, company officials, key personnel and the like in making a past performance evaluation.

The basic steps involved in an agency's RFP solicitation are:

Requests for Quotation (RFQ)

When a proposed procurement is under the simplified acquisition threshold, the contracting officer may use a request for quotation (RFQ).

Most RFQs contemplate making award based on price and price-related factors, much in the same manner as IFBs. However, contracting officers may elect to use the tradeoff method of source selection and consider other factors in addition to cost (such as past performance). In fact, the FAR encourages them to do so.

The major difference between the RFQ and the other methods of solicitation is that responses to IFBs and RFPs are considered firm offers that can be accepted by the government and a contract created. When the government issues a purchase order to a contractor following the receipt of quotations, the purchase order is normally not considered to be a contract. Instead it is an offer from the government to buy. When the contractor accepts the offer, it then becomes an enforceable contract.

Reading Solicitations

To assess a solicitation:

Solicitation structure and format

Solicitations use uniform contract formats as set forth under FAR Subpart 14.2 for IFBs and FAR Subpart 15.2 for RFPs. Note that the solicitation and resulting contract will be interpreted as a whole, so you should carefully take that approach when formulating your bid or proposal. Solicitations are normally structured as follows:

Section A. Solicitation/Contract Form: The Standard Form 33 identifies the issuing office, the type of contract, the due date for offers, the address to which offers must be submitted, and the name of the government point of contact. This is a one-page document.

Section B. Supplies or Services and Prices and Costs: This section contains a brief description of supplies or services being acquired and their quantities. It also provides a space for bidders or offerors to enter their prices for each supply or service. Individual items of supplies or services are listed by Contract Line Item Number (CLIN) or by SubClin. This section normally identifies any desired option rights the government is asking for, such as the right to order additional quantities of items or additional periods of service. (For example, the government may want the option to buy 50% more than the specified quantity of nuts and bolts, or to purchase additional years of engineering services).

Section C. Description/Specifications/Work Statement: This section describes the government's requirements. For example, the brief description in Section B may indicate "Engineering Services as described in Section C" and Section C could contain many pages of the specific engineering service requirements. When the brief description in Section B is sufficient, Section C may be deleted. When Section C contains the statement of work, purchase description, or specifications, it may also refer to other essential contract requirements such as federal or military specifications that are not written as part of the solicitation, or to other documents furnished elsewhere in the solicitation, such as information furnished in Section J.

If your review of Section C discloses that it may need correction, you should contact the contracting officer immediately to request that it be changed. For example, your review may disclose that the government appears to:

Section D. Packaging and Marking: Describes any requirements for packing, packaging, preservation and marking of deliverables.

Section E. Inspection and Acceptance: Describes steps the contractor and/or the government must take to ensure that delivered items meet government quality standards, quality control requirements and quality assurance requirements. It should be noted that quality assurance requirements, including inspection and acceptance requirements, may also be reflected elsewhere in the solicitation. For example, quality assurance requirements may be specified in Section C or in specifications or standards referenced in Section C. In addition, the government almost always includes quality assurance clauses, including inspection and acceptance clauses, in Section I. In your review of the solicitation, make sure that these various quality provisions are consistent and compatible. If not, bring them immediately to the attention of the contracting officer.

Section F. Deliveries or Performance: The delivery schedule will normally be found here. It may specify time, place, and method of delivery.

Section G. Contract Administration Data: This section contains information pertaining to contract administration. For example, it may identify the funds being used for the procurement (accounting classification), it may identify the government personnel who will be involved in contract administration, such as the contracting officer, contract specialist, contracting officer technical representative, and others. Some contracts will describe the limitations on the authority of these persons in this section, while some agencies prefer to handle this issue with separate correspondence to the contractor. Some do both.

This section may also include information regarding the preparation of invoices for payment.

Section H. Special Contract Requirements: Describes any requirements of the contract not mentioned elsewhere. This section is sometimes used to identify government furnished property, special security requirements such as key control or limited access to facilities, and other information not specifically covered in other sections.

Section I. Contract Clauses: Identifies optional clauses selected by the contracting officer (and clauses required by law or regulation). Clauses cited here are most often those taken from FAR Part 52 or agency supplements. Many are not reproduced but are "referenced", along with the appropriate FAR or FAR supplement citation. Locate, read and understand each clause that has been incorporated by reference to save yourself the time and effort of competing for contracts you cannot legally fulfill.

Section J. List of Attachments: Identifies any exhibits and attachments that are included with the solicitation or incorporated by reference.

Section K. Representations, Certifications: Requires companies to provide representations and certifications indicating their status with respect to matters such as small business size status, woman-owned status, equal employment opportunity (EEO) compliance, and other legal and policy issues. In some cases, the certifications are merely to collect information (for example, is the company woman owned?). In other cases certifications can help determine eligibility for award. For example, a procurement set-aside for small businesses can only be awarded to a company that represents and certifies that it is a small business.

Section L. Instructions, Conditions and Notices: Instructs companies on how to prepare and submit their bids or proposals for that specific solicitation. It is extremely important to follow the instructions in Section L. Failure to do so could result in your offer being rejected.

It is also important that Section L be compatible with Sections C and M. Delays, protests, and overturned awards can result when the evaluation criteria (Section M) is not consistent with the requirement (Section C) or when Section L is not asking for the right information to make a contract award decision given the requirement and the evaluation criteria. If your review of a solicitation indicates inconsistencies among these sections, it is important that you bring it to the attention of the contracting officer immediately so that the government may appropriately amend the solicitation.

Section M. Evaluation Factors for Award: Provides evaluation criteria for selection of the winning contractor. Section M should always be read in conjunction with Sections L and C.

Central Contractor Registration

Contractors MUST be registered in the Central Contractor Registration (CCR) database now located on the System for Award Management (SAM), before they can be awarded a U.S. government contract. Exceptions exist for some classified contracts, emergencies and micro-purchases.

The purpose of the database is to increase visibility of government contractors for specific supplies and services, and to establish a common source of contractor data for the government. Government agencies can search this list rather than maintaining their own lists of contractors.

You can register by going to the SAM site and following the instructions. Following registration, you will be given a Trading Partner Identification Number (TPIN). The TPIN is your password when you need to make changes to your data. The website has a handbook with registration instructions. Contractors who find the instructions daunting can register with the help of the Canadian Commercial Corporation (CCC).

An additional resource, the Dynamic Small Business Search, offers the capability for users to identify small and disadvantaged businesses by commodity, location and other factors that could be helpful in identifying teaming or subcontracting arrangements.

Contractor Selection

The contractor selection process can fall under any of the three techniques described below.

Low price: A low price award is made to the lowest price among responsible contractors who have submitted responsive bids or offers. In sealed bidding, an award is made without discussion. In negotiated procurements, discussions can take place. The lowest price is determined by the price the bidder or offeror has put forth and any price related factors (such as the cost of shipment when products are being procured FOB (free on board — the point where title for goods passes to the buyer).

Low Price, Technically Acceptable (LPTA): Under LPTA, offerors must submit written and/or oral proposals. Those proposals are evaluated on a pass/fail basis against evaluation criteria that have been identified in the Request for Proposal. Contractors who have one or more "fails" are not eligible for award. Contractors who have all "passes" are eligible for award. If discussions are held, a contractor with one or more "fails" could, at the discretion of the U.S. contracting officer, be placed in the competitive range and given an opportunity to improve its proposal through discussion. Award is made to the "passing" contractor with the lowest evaluated price or cost.

LPTA procurements may also be conducted using two-step sealed bidding.

Both low price and LPTA negotiated methods normally take less time and are more objective in nature than source selections made under tradeoff.

Tradeoff: Tradeoff source selection allows the U.S. government to trade low price for quality. The government can pay more to a contractor with a more attractive technical approach.

Typical evaluation factors for LPTA or tradeoff include:

The U.S. contracting cfficer can chose to evaluate any factor the agency feels is pertinent. A solicitation may even identify a mix of LPTA and tradeoff factors.

Refer to FAR Subpart 15.1 for the contractor selection process.

Contractor Selection Example

The following example demonstrates the subjective nature of a tradeoff source selection.

In a solicitation that reads, "Proposals will be evaluated against the following merit factors which are equal in importance:

"All merit factors when combined are significantly more important than price or cost."

For the purposes of our example, assume the government will assign a maximum of 25 points to each factor.

A group, usually known as Source Selection Evaluation Board (SSEB), Technical Evaluation Team (TET), or Proposal Evaluation Board (PEB), is assigned to evaluate proposals. They read them, score them, reach a consensus, and send a consensus report to the U.S. contracting officer (or another designated source selection authority). This group may determine that one technical approach is worth 23 points, while another is worth only 15 points. In addition to assigning a score, the group furnishes the contracting officer a rationale for the scoring.

For purposes of the simplified example, assume that Contractors A, B, and C have been given the following scores and have proposed the following cost:

Simplified example of 3 contractor scores and their proposed costs
ContractorScoreProposed Cost
Contractor A95US$1.8 million
Contractor B92US$1.5 million
Contractor C86US$1.0 million

The contracting officer/source selection authority can decide which of these represents the best value and award to any one of the three. (It is well founded in U.S. legal precedent that, notwithstanding an evaluation scheme where non-cost factors were paramount, the contracting officer may choose a lower rated proposal in order to take advantage of the lower cost.)

Thus, the buying agency chooses evaluation factors, determines their relative importance, decides the "scores" of the proposals, and then has great flexibility in picking the winner. It is entirely possible that one group of evaluators would score differently than another and that one source selection authority would make a different selection than would another.

Numbers for scoring were used in this example to better demonstrate the concept. However, some agencies use colors (blue = exceptional, for example); others use adjectives (exceptional, acceptable, marginal, or poor). Contractors are generally not informed in the RFP of the method of evaluation. They must, however, be informed of non-cost factors and their relative importance. They must also be informed as to whether all non-cost factors when combined are:

It is extremely important that you follow the proposal preparation instructions stated in the RFP. Failure to do so could result in your proposal being rejected without evaluation. It is also important to remember that written proposals and oral presentations are marketing mechanisms. They should be both professional and persuasive.

Contract Administration

Your contract will be under the direct jurisdiction of a U.S. contracting officer unless administered by the Canadian Commercial Corporation (CCC) when dealing with the Department of Defense. Either the Procuring Contracting Officer (PCO) who awarded the contract or an Administrative Contracting Officer (ACO) assigned specifically to administer contracts will be in charge.

If your contract is for a relatively simple effort such as for furnishing commercial supplies, you may have no contact with the contracting officer. However, if your contract has substantial scope or complexity, you will have frequent contact with the contracting officer or with the Contracting Officer Representative (COR) or the Contracting Officer Technical Representative (COTR). The latter are the eyes and ears of the contracting officer on matters relating to the contract. Unlike the contracting officer, however, representatives have no authority to change or waive terms and conditions of the contract.

Depending on complexity and scope of the contract, other U.S. government personnel may have assigned duties. For example, there may be a government quality assurance representative or a government property administrator. Keep good records of your communications with these individuals in the event contract actions later become a matter of dispute.

If your contract is with the Department of Defense (DoD), the CCC administers most U.S. defence contracts for Canadian products and services, in coordination with Defense Contract Management Area Operations (DCMAO). See DFARS Part 225 for DoD regulations concerning contracting with Canadian contractors. CCC can help administer U.S. civilian agency contracts. Once CCC endorses your contract, it oversees contract management, administration, accounting, delivery and payment.

If you do not use the CCC, you must establish your own contract administration system. FAR Part 42 contains an extensive list of contract administration functions. If an Administrative Contracting Officer (ACO) or Contracting Officer's Technical Representative (COTR) has responsibilities for certain actions, your contract administration system should anticipate those responsibilities.

Other Considerations during the Life of the Contract

Changes. If you are building an item to government specifications, the U.S. government has a right to unilaterally change such things as design or materials. If you are furnishing a service, the U.S. government has the right to unilaterally change the description of the service. If these unilateral changes impact the cost or time required, an equitable adjustment can be negotiated.

The U.S. government may not change commercial item contracts unilaterally. Such changes require agreement of the parties.

Inspection and acceptance. These provisions may vary substantially from contract to contract. The U.S. government may rely entirely on your inspection system, or it can inspect deliveries directly. Some U.S. government inspection clauses give the government the right to inspect at anytime and anyplace and to require the contractor to furnish reasonable assistance.

You may be required to comply with international quality standards specified in the contract.

Disputes. U.S. government contracts give contractors the right to litigate any dispute with the contracting officer. A dispute may occur over interpretation of a specification or the amount of an equitable adjustment. Appeals can be made to a Board of Contract Appeals or to the U.S. Court of Federal Claims. To avoid much of the cost and time associated with litigation, each agency offers alternative dispute resolution (ADR) options involving mediation, arbitration or other resolution techniques.

Audits. The U.S. government may have the right to audit reimbursements or other costs. It may seek Canadian government assistance. The government may conduct audits for:

These audit rights do not apply to services and products that fall under the broad definition of "commercial items".

Record Keeping. Various clauses in the contract may require the contractor to keep records related to specific use of U.S. government property and patents. Contracts of requisite scope or complexity may require a significant number of periodic reports.

Terminations. U.S. contracts have clauses that permit the U.S. to terminate a contract.

Generally, the Termination for Convenience clause allows the government to terminate even when there is no fault on the part of the contractor. The contractor recovers its reasonable costs (and reasonable profit on those costs) but no anticipatory profit. The contractor may also be reimbursed for reasonable administrative expenses incurred as the result of the termination.

The provisions of the Termination for Default clause may be invoked for failure to perform or otherwise violating any contract term or condition. In a default case, recovery of costs may not be permitted, and the contractor can be charged the excess cost of reprocurement. Limited recovery may be possible if the government takes possession of work in process. The equivalent clause in commercial item contracts is called Termination for Cause and holds that the contractor shall "be liable to the government for any and all rights and remedies provided by law".

Some contractors have been able to "dispute" default terminations successfully. The normal remedy is to have Termination for Default changed to Termination for Convenience.

Proposal considerations. Contract clauses such as changes, inspection and acceptance, termination for default are described in the solicitation (RFQ, RFP, IFB). They should be taken into account in pricing your bid or proposal.

Performance reports. The U.S. government maintains centralized data systems to store records (report cards) of contractor performance. The government uses these records in determining responsibility for future contract awards and to "score" contractors when past performance is being used as a tradeoff factor in source selection. If you plan to continue contracting with the U.S. government, use good business sense in dealing with the customer. Any potential disagreement should be identified early and resolved expeditiously to avoid damaging the relationship.

Debriefings and Protests

Under negotiated procurements, an unsuccessful bidder is entitled to a debriefing. A debriefing may be either pre-award or post-award, but not both. You must submit your request for a debriefing to the contracting officer within 3 days of receipt of the notice of exclusion from competition or, notification of contract award to another offeror.

At a pre-award debriefing the agency must discuss:

For a post-award debriefing, the agency must discuss:

The purpose of a debriefing is to recognize that the government appreciates your participation in the process and to help you improve for next time.

The debriefing may take place by telephone, mail, or face-to-face. When a significant amount of money is involved, or the procurement is otherwise sensitive, the contracting officer will opt for a face-to-face debriefing at a government office.

Substantially more information is available at a post-award debriefing than at a pre-award briefing, and contractors whose proposals did not make the competitive range will often request that their debriefings be delayed until after an award has been made.

Notwithstanding the official purpose of a debriefing, procurement officers may approach debriefings warily and may not volunteer information beyond the minimum required. The reason is that some contractors use debriefings as a "fishing expedition" to see if they can find an issue to protest to either the U.S. Comptroller General or the U.S. Court of Federal Claims.

Protests

Contractors invest significant resources in preparing proposals. If they feel they were not treated fairly or in accordance with published rules, they have a right to "protest" in an attempt to get the award decision overturned or to have their bid and proposal costs recovered. A protest can result in significant delays to the agency and additional costs.

Contractors have 10 calendar days from the time they knew, or should have known of a "protestable" issue, to lodge a protest. If they first learn of the issue at a debriefing, the clock starts then.

Many published rules and a large body of legal precedent established by the Comptroller General and the U.S. courts exist with regard to the negotiated procurement process. Rules deal mainly with judgment issues. If a contractor is indeed on a "fishing expedition," the agency is probably most vulnerable to protests stemming from the "reasonable responses to relevant questions" portion of the debriefing. For this reason, contracting officers may request that questions be submitted in advance of a debriefing so that thoughtful answers may be developed before the actual debriefing takes place.

Competing contractors as "interested parties" have a right to protest. The solicitation will inform you of this right. However, to foster good relationships with their customers, many companies protest only for the most flagrant of regulatory abuses.

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