Henry Vinson

Understanding Government Contracting


John H. Martinez-D.President

Gary HarlinProgram Director


Henry Vinson, CCAS, CBDS

• 18 Years Experience Managing Large Retail Shopping Centers for Military Forces• 14 Years Government Contracting Experience (Including Chief, Construction &

Equipment Division ) • 10 Years Small Business Owner: Government Contracting Consultant (Included

total preparation of Construction Technical Proposals)

Agenda• Objectives• Historical Perspectives• Overall Contracting Issues• Rules, Regulations & The Law• The Procurement Process• IFB vs. RFP• Uniform Contract Format• Registrations & Certifications• Electronic Commerce &

Marketing• Contract Terminations• Claims and Ethics

Objectives

– Subjects Necessary for you to Start or Continue Government Contracting with Confidence

– Subjects that if you don’t know, your shouldn’t be doing Government Contracting

– How to stay out of Trouble

– Have Fun!

Historical Perspective


The constitution provides the authority for the Government to contract

Historical Perspective.

• 1792 - Department of Treasury was delegated authority for all government contracting

• 1809 - Advertised bidding was authorized by law• 1861 - During the civil war, The Sundry Appropriations Act was

passed• 1941 - War Powers Act


1947 - DEFENSE PROCUREMENT ACT –

Approximately 100 pages

1948 - ARMED SERVICES PROCUREMENT ACT - CREATED THE ARMED SERVICES

PROCUREMENT REGULATION

1970 - DEFENSE PROCUREMENT ACT –

Approximately 3000 pages- CREATED COST ACCOUNTING

STANDARD BOARD


1976 - DEFENSE ACQUISITION REGULATION - OFFICE OF FEDERAL PROCUREMENT

POLICY ACT

1984 - FEDERAL ACQUISITION REGULATION –

Approximately 20,000 pagesNote: We’ll cover all 20,000 pages today!

- CREATED A SINGLE ACQUISITION REGULATION SYSTEM OF RULES AND REGULATIONS) FOR GOVENNMENT WIDE USE

- DAR (DEFENSE ACQUISITION REGULATIONS)- FPR (FEDERAL PROCUREMENT

REGULATIONS)- NASAPR (NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION PROCUREMENT REGULATIONS)


WE HAVE SEEN INCREASED GOVERNMENT LEGISLATION AND COMPLIANCE ACTIVITY OVER THE PAST DECADE

COMPETITION IN CONTRACTING ACT ( 1984 ).ANTI-KICKBACK LEGISLATION ACT ( 1986 ).FALSE CLAIMS AMENDMENTS ACT ( 1986 ).AMENDMENTS TO TRUTH IN NEGOTIATIONS ACT

( 1986 ).DEFENSE ACQUISITION IMPROVEMENT ACT ( 1986 ).DoD IG ( DEPARTMENT OF DEFENSE - INSPECTOR

GENERAL) FRAUD INDICATORSAUDITS : DCAA, DCAS, DoD IG, GAO ( DEFENSE

CONTRACT AUDIT AGENCY, DEFENSE CONTRACTS ADMINISTRATIVE SERVICES, DEPARTMENT OF DEFENSE INSPECTOR GENERAL, GENERAL ACCOUNTING OFFICE)

FAR Part 15 Rewrite (1997) PROGRAM FRAUD CIVIL REMEDIES ACT (1986)

USS Carl Vinson, USS Sacramento, USS Ingraham

Why Get Into Government Contracting?

The Government

is the Largest Buyer of

Goods And

Services in the World


There are Many Governments Therefore many Buyers


There is a Process to Government Acquisition and…..

It can be learned


THE GOVERNMENT AS A CUSTOMER

- THE GOVERNMENT DEFINES THE BUSINESS AND ESTABLISHES THE RULES

– IF YOU WANT TO DO BUSINESS WITH THE GOVERNMENT - YOU DO IT ON THEIR TERMS

– FEW OF THE RULES ARE “NEGOTIABLE”– GOVERNMENT REPRESENTATIVES HAVE LITTLE

DISCRETION IN ESTABLISHING THE RULES

– WAIT ! But I can save the government money if they will only do it my way.

The The GoldenGolden Rule Applies Here Rule Applies HereThe The GoldenGolden Rule Applies Here Rule Applies Here


RTCa. It’s in there (You gotta do it)

b. It’s not in there (You ain’t gotta do it)

a. It’s open for interpretation (You gotta do it)


Government-Commercial The Differences

• Unilateral Right to Make Changes

• Equitable Adjustments – cover later

• Audit and Surveillance Rights

• Compliance With Social and Economic Programs

• May be Limitation on Profit or Amount and Type of Costs

• Absolute Right to Terminate – cover later

Rules, Regulations & The Law

The FAR(Federal Acquisition

Regulation)The Government Contracting

Biblehttp://www.arnet.gov/far/

http://business.cch.com/

Rules, Regulations & The Law

The FAR (Published Daily as part

of the Federal Register)

http://www.arnet.gov/far/http://business.cch.com/

$79.00

The Government Contracts Reference Book

This quick-reference guide provides ready definitions for more than 1,500 terms, phrases and acronyms used in government procurement.

$60.00

FAR OverviewFAR Overview

• AGENCY ACQUISITION REGULATIONS– Federal agencies may issue their own regulations that

“implement or supplement” the FAR– DOD FAR supplement (DFARS) applies to DOD and foreign

military sales and NATO projects– DFARS is published as chapter 2 in title 48 of the code of

federal regulations– GSA acquisition regulation (GSAR) supplements FAR and

contains other provisions– GSAR is published in the code of federal regulations– NASA, DOE, DOT, and EPA have implementing regulations

as well


• REQUIREMENTS

– Government requirements are established by the FAR

– The rules are fixed and there is little flexibility - on your part or the government’s


• EXEMPT– Some government organizations claim to be exempt

from the FAR. Examples are:

Break

Solicitation Phase(In the beginning)


SolicitationPrepared & Published

ProposalPhase

Pre-BidConf

ContractAward

Contract Performance

ContractCloseout

Funding

Continued Fundingand Payment

FinalPayment

•FARFAR •MunicipalityMunicipality PolicyPolicy•StateStateRegsRegs

The Governmental Procurement Process

Negotiation

Definitions

Warranties &Latent Defects

Definitions

Liquidated Damages

Statement of Work

Definitions

• Defective Spec. or Implied Warranty of Specifications – Constructive Change

claim to obtain

Equitable Adjustment is possible

Definitions

• Ambiguity – Two or more interpretations of a solicitation or contract requirement

Ambiguity

Honey I’ve won the Lottery…..Pack

Your Bags!

Ambiguity

After an argument

he says,

“I’m Sorry,

I love you!

Responsive vs. Responsible

Bid/Proposal

due Time & Date

Payment Process

Gettin’ Paid

• In the Beginning

• During

• Close-out

Definitions

• Should• Shall• May• Must• Will

Government contracting’s perversion of words

Definitions

• Should

• May

• Must

• Will

• Shall

Definitions

• Requirements Person vs

• Contracting Person (Cos have no money, their

purpose is to insure compliance of rules, regulations, and laws….

(on both sides)Note: Constructive Changes ! A No NoOnly COs with Warrants have authority to

Obligate Government Funds

Definitions • Contracting Officers (COs or KOs) have Warrants• Many Types: The Procuring CO (PCO), the Administrative

CO (ACO), The Purchasing and Administrative CO (PACO), Corporate Administrative CO (CACO), Contracting Officer’s Representative (COR) and the TCO. (TCO is a specialist in terminations and settlements)

• Be careful, there are Purchasing Agents & Buyers who may or may not be Cos

Note: Contracting Officers are Mini-Judges

Break


• IFB vs RFP


• IFB – Bid (not negotiable & public opening)

• RFP – Offer Well then…..What’s a

RFP?

IFB

• Invitation for Bid – IFB

• FAR Part 14 – Sealed Bidding

IFB

• Invitation must describe the Requirements– Clearly– Accurately– Completely

IFB

• Unnecessarily restricted specifications or requirements that might unduly limit the number of bidders are prohibited

• Must be posted in public places• No discussion – cover later• Award only to responsible, responsive bidders and is most advantageous to the

government – cover later• Must use Uniform Contract Format – cover later• Late bids and offers will not be opened or considered – cover later• Fax bids – only if authorized by the solicitation• Electronic bids – only if authorized by the solicitation

RFP

• Request for Proposal – RFP

• FAR Part 15 – Contracting by Negotiation

RFP• Types (15.002)

– Sole Source(Unsolicited

proposals)

– Competitive (The preferred method)

More DefinitionsRFP

• Fair not Equal Treatment:• As of January 1998 they don’t have to

treat you equal any more• Contractors are treated fairly and

impartially but need not be treated the same

More DefinitionsRFP

• Competitive Range• No longer have to include all proposals when they

have a reasonable chance for award. In fact, the rule is….when in doubt, throw it out

• CO uses only the most highly rated proposals. Further, they throw out what exceeds the number of which an efficient competition can be conducted….only use the number of offerors that permits efficient competition

More DefinitionsRFP

• Exchanges - (Conversations)– Pre-proposal – COs now have broad discretion to

talk with industry before issuing the solicitation. Cos may also have “one on one” meetings with potential offerors

More Government Contracting Perversion of Words

RFP

• After receipt of proposals• There are three types of Exchanges

– 1. Clarifications – only when CO contemplates awarding without discussion. This type is used to resolve minor or clerical errors or clarify past performance “information” which it has not had a prior opportunity to respond.

More DefinitionsRFP

– 2. Communications – If CO conducts discussions….then Exchanges must occur before competitive range is established. Thus it’s called Communications. • Requires CO to discuss with the offerors any adverse

past performance before being excluded from competitive range. CO may address:

• A. ambiguities• B. perceived weakness or deficiencies• C. information relevant to performance

More DefinitionsRFP

– 3. Discussion – (Negotiations) Occurs after the competitive range has been established. CO must discuss:

– A. significant weakness– B. deficiencies– C. Other items that may be altered or

explained to enhance the proposal’s possibility of award

More DefinitionsRFP

– 3. Discussion – contd.

– No more “Best and Final.” Offerors no longer have the same number of times to revise their proposal. After discussions are concluded a common date/time is established for all proposals.

More DefinitionsRFP

– 3. Discussion – contd.

– Auctioning is still law in so far as revealing an offeror’s price. However, CO may state the offeror’s price is to high or to low. Further, CO may disclose to all offerors the government estimate.

RFP

• Source Selection Process and Techniques

– Best Value – (15.101) Risk of unsuccessful contract performance is minimal, cost or price may play a dominant role

– Trade Off – (15.101-1)Best interest of the Gov. to award to other than lowest price or highest technically rated offeror

RFP

• Trade Off condt. – Must be authorized by the solicitation

– Solicitation must state all evaluation factors (other than price) when combined are significantly more important, equal to, or significantly less important than price – Cover later

Note: CO must document the file with rationale

RFP• Lowest Price -Technically Acceptable (15.101-2)

• a. Appropriate when best value is expected to result from selection of the technically acceptable proposal with the lowest price.

• b. Solicitation shall specify that award will be made on the basis of the lowest evaluated price of proposals meeting or exceeding the acceptability standards for non-cost factors.

RFP• Lowest Price -Technically Acceptable (15.101-2) Condt.

• If a small business past performance is not acceptable, it’s referred to the Small Business Administration (SBA) for a Certificate of Competency (COC) determination.

• Tradeoffs are not permitted• Non-price factors are not

rated• “Exchanges” may occur

RFP

• Oral Presentation (15.102)– Qualifications of presenters– Restrictions on Time (or not fair)– “Discussions” not allowed– Must comply with rules pertaining

to “Communications”Note: Questions & Answers are

considered “Discussions”

Break

Uniform Contract Format

Details in Proposal Writing Course

Registration & Certifications

• 8 (a)• HubZone• CCR (update monthly)

www.sba.gov• Texas Hub

(512) 463-5872• NCTRCA

www.nctrca.org

North American Industry Classification Code

(NAICS) Codes, Product Codes, & Service Codes

NAICS:

236220 Barracks Const.

Product & Service:

77 – Musical Instruments

11 – Nuclear Ordnance

Y - Construction

http://www.census.gov/eos/www/naics/

Electronic Commerce

• Cross Timbers

• Web Sites to find Bid Opportunities

---Both as a Prime and as a Sub ---

Cross Timbers Procurement Center

• Gary Harlin

• Roger Flores

817-272-5978

Web Sites

• Feds: www.fbo.gov

• Local: www.hcadfw.org

• State & Local: www.state.tx.us/portal/tol/en/gov/2/9

Contract Termination

Contrary to Popular Belief, this is not the Way the Department Of Defense Terminates it’s Contracts

TYPES OF TERMINATIONS

There are five recognized reasons for termination of a contract, they are:

• Performance

• Mutual Consent

• Operation of Law

• Termination for Convenience (T4C)

• Termination for Default/Cause (T4D)

CONTRACT TERMINATIONDEFINITION

• THE CANCELING OF ALL OR A PART OF A PRIME CONTRACT OR SUBCONTRACT PRIOR TO ITS COMPLETION THROUGH PERFORMANCE

MORE DEFINITIONS

• TERMINATION COSTS - Such costs as disposal of inventory, severance pay, rehabilitation, professional services and other settlement expenses. (Anticipatory profits are not an allowable item)

T4C

• TERMINATION FOR CONVENIENCE (T4C) - The Government’s unilateral contractual right to terminate a contract, in whole or in part, whenever it is in the best interest of the Government to do so. (note: A contractor has a right to be compensated fairly in accordance with the T4C clause of the contract.

T4C Equitable Adjustment

T4D

• TERMINATION FOR DEFAULT (T4D) - The government’s contractual right to terminate a contract, in whole or in part, for failure of the contractor to perform any provision of the contract, failure to deliver, or failure to make progress so as to endanger the performance of the contract. A contractor has the right to appeal this decision under the disputes Clause. (Note: Also known as Termination for Cause)

T4D

• Phone Call – Call Henry

• Letter of Warning – Call Henry

• Cure Letter – Call Henry

• Show Cause Letter

• Default Letter

T4D

• Phone Call – Call Henry

• Letter of Warning – Call Henry

• Cure Letter – Call Henry

• Show Cause Letter – Call your Attorney

• Default Letter – Call your Attorney

T4D

If possible convert to T4C

Claims• Contract Disputes Act of 1978

– Must be in writing

– Must ask CO for Final Decision

– Over $100,000 must be certified (Ethics?)

– May appeal CO final decision within 90 days to BCA or to US Court of Federal Claims within 12 months

Claims

• Follow instructions outlined in the Solicitation/Contract. If that don’t work….

• Ask CO for instructions on how to file a claim. If that don’t work….

• Call Henry

Government Contracting Basics

Email Henry: [email protected]

– Counseling– Construction Contracting Questions– Proposal Review– Problems

I hope you had this much fun, I did!

THANK YOU!THANK YOU!