# Presentation: 398079

## Module 7 –Contracting

- 	Government Specific Course II

- 7-

- Module 7 –Contracting

- 	Government Specific Course II

- 7-

- Topic 1 –
- Introduction/Objectives

## Learning Objectives

- 	Government Specific Course II

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- At the end of this module, you will be able to:
- Define different steps of managing acquisition process.
- State how performance-based considerations are used in acquisition planning.
- Describe legislation, policies, regulations, and methods used in contracting, and business and industry practices.

## Question

- 	Government Specific Course II

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**	**Why are performance-based considerations so important to government projects?

## Capital Programming

- 	Government Specific Course II

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- Effective capital programming uses long range planning and disciplined and integrated budget
- Process should provide accurate information on acquisition, life cycle costs, schedules, and performance of current and proposed assets
- Must provide agency Executive Review Committee risk adjusted schedule and performance goals
- Federal Acquisition Streamlining Act of 1994 requires Agency Heads manage agency portfolio of major acquisitions within 90 percent of individual investment's cost, schedule and performance goals

## Acquisition Risks

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- It is extremely important that managers understand the risks involved with each acquisition.
- Without knowledge of risks involved, managers at all levels—Agency, Office of Management and Budget (OMB) and Congress—cannot make the best decisions for allocation of resources
- After this has taken place and money has been allocated, the contracting process can begin.

## Four Phases 

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- Four Phases

- Four phases are:
- Pre-Solicitation Phase
- Solicitation, Evaluation, and Award
- Contract Administration
- Termination (if necessary)

- 	Government Specific Course II

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- Topic 2 –
- Building an Acquisition Team

## Team Building Process

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- Process begins when a capability need is identified
- Product or service that you need for which there exists no current solution
- Pre-solicitation phase begins when that need is identified.
- Includes all the steps necessary to prepare a solicitation for the solution to that need

## Acquisition Team 

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- Acquisition Team

**Acquisition Team** is assembled
- Important that the members of the team understand their roles and responsibilities
- Successful teams are typically ones where specific duties are assigned, performance measures/milestones  developed, and members are held accountable
- Leadership is shared between the Program Manager and the Contracting Officer.
- Program manager is responsible for ensuring resulting contract meets the long-range and short-range requirements of the activity’s mission.

## Partnership: PM & CO

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- Once a decision is made to acquire the product or services through the contracting process, a partnership is formed between the Program Manager (PM) and the Contracting Officer (CO).
- Both play a critical roll in ensuring that the contracting process is successful
- Integrated team will assist them
- Contracting Officer:
- Assist the team in many ways
- Backbone of acquisition process

## Other Team Members

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- Small Business Office
- Provides advice on small business matters
- Assists to develop acquisition strategies to maximize participation by small and disadvantaged businesses
- Competition Advocate
- Develops acquisition strategies that foster competition;
- Provides advice to Acquisition Team
- General Counsel
- Provides legal advice to Acquisition Team; reviews Acquisition Documents for legal sufficiency.

## Contracting Officer

- 	Government Specific Course II

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- Individual authorized to enter, administer, and/or terminate contracts
- Ensures all contract actions comply with laws, etc.
- Ensures both  government and contractor comply with terms and conditions of contract
- Acts as focal point for customer service, etc. and coordinates with our customers to plan and execute acquisition strategies
- May delegate responsibilities, e.g., Contracting Officer’s Representative (COR)

## COR

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- Contracting Officer’s Representative (COR)
- Appointed, in writing, by a Contracting Officer who monitors the technical or performance aspects of a contract and performs other duties specified by their appointment letter
- Should participate in developing the requirement and other pre-award activities so that he/she is familiar with all aspects of the contract

## Contract Specialist

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- Acquisition professional works directly for Contracting Officer
- Performs most day-to-day functions required to advertise and award government contracts
- Synopsizing (advertising) requirement, preparing contract documents for Contracting Officer’s review and approval, answering questions from prospective contractors, etc.
- Also responsible for assisting the Contracting Officer in the administration of the contract

## Acquisition Team Members

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- Tailored to the needs of the specific team.  Acquisition Team consists of:
**Acquisition professionals**, including procurement personnel and representatives of the technical organization.
**Prime contractor and subcontractors **that will deliver the required goods or services.
- The role of each member is to exercise personal initiative and sound business judgment in providing the best value product or service to meet the customer’s needs.

## Acquisition Team Members (cont.)

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- Each member of the Acquisition Team plays a vital role:
- Property Administrator (PA)
- Authorized representative of contracting officer for all actions regarding government property
- Ensures government property provided to a contractor used in performing contracts used ONLY as authorized
- Enforces liability for loss, damage, destruction
- Oversees contractor's control, protection, preservation and maintenance of government property.

## End User/Customer

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- Key participant on the Acquisition Team
- The one with the need, who knows best what they want
- Should consult the customer when building the solicitation and making price-related decisions

## Financial Manager

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- Plans, organizes, directs, and controls the dollars and resources of a program
- Takes care of business and financial functions, the latter including management of acquisition funds
- May be part of acquisition planning, cost estimating and budgeting, contractor surveillance, and budget execution (i.e. paying bills)
- Provides the acquisition team with the information needed to make all decisions on the kind and type of money available

## Auditor

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- Accountants with specialized training and experience in examining and analyzing cost or pricing data provided by offerors and contractor records
- Their support can be invaluable in cost proposal analysis.

## Technical/Engineer Specialist

- 	Government Specific Course II

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- Generally writes specifications, statements of work, and/or technical evaluation factors
- Evaluates technical proposals
- Requirements manager acts as technical specialist. Larger acquisitions may involve teams or panels of technical experts who (depending on the deliverable) may be engineers, scientists, or other similar professions.
- Have good understanding of costs necessary to build deliverable, and types and sources of commercial products that satisfy a requirement.

## Quality Assurance Personnel (QAP)

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- Also known as Quality Assurance Evaluators (QAE), Quality Assurance Representatives, and Contracting Officer’s Technical Representatives (COTR)
- Have technical expertise required to ensure that the contractor delivers exactly what the contract requires.
- Normally used when a product has to be accepted or a service needs evaluating

## Legal Counsel and Contractor

- 	Government Specific Course II

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- Legal Counsel
- Provides guidance regarding legal compliance and interpretation of laws and regulations
- Contractor
- Major player of the team with industry expertise
- Includes prime contractor and subcontractors
- Has industry experience
- Provides goods or services being procured

## Question

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**What are the advantages of an acquisition team?**

## “Customer Focus”

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- “Customer Focus”

- The contracting officer’s mission is to find ways to help the customer get what they want.
- You add value by creating a “customer focus” that ultimately encourages a culture change throughout organizations.

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- Topic 3 –
- The Contracting Process

## Contracting Process

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- The acquisition system has shifted from a strict hierarchical structure to one that allows **increased involvement and empowerment of individuals **throughout the workforce. The reasoning behind this trend is:
- Recognition that decisions are faster and better when made at lowest qualified level.
- Impact of information and knowledge-based technology, encourages communication and knowledge sharing among all team members.

## Question

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**Why is it better for the lowest-level qualified person to make decisions?**

## Awareness of Trends

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- Contracting professionals must maintain awareness of trends marketplace to advise team of alternatives.
**Competition**: What are the "other" folks doing? What are the costs of supplies and materials, and the availability of resources?
**Technological advances:** Is the technology new and changing daily? Or is it leveling off?
**Financial arrangements:** Is the commercial marketplace using innovative solutions to financing challenges? Would those solutions work in Government?
- Contracting professional must be “agent" for customer.

## Pre-Solicitation Phase

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- Acquisition team creates a list of requirements that define what the solution to capability need will look like.
- Team then creates an acquisition plan that includes background and objectives of acquisition and their “acquisition strategy,” includes how much acquisition should cost and where the solution sources are.
- After they have formulated an acquisition plan and strategy, they use the Uniform Contract Format (UCF) to create a Request for Proposal.

## Uniform Contract Format

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- UCF is a standardized format for preparing solicitations.  It contains the information that the acquisition team determines during the acquisition planning and source selection planning phases.
- RFP uses the Uniform Contract Format (UCF).
- UCF is comprised of:
- Table of contents for the solicitation.
- 13 sections (A through M) in four parts (I, II, III, and IV)

## Sections of UCF

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- All sections of UCF are important; some sections are critical when communicating your capability to vendors.  Some of these critical sections of the solicitation include:
- Section B: Supplies or Services and Prices/Costs
- Section C: Description/Specifications/Work Statement/SOO/PBSW
- Section J: List of Attachments
- Section L: Instructions, Conditions, and Notices to Offerors or Respondents
- Section M: Evaluation Factors for Award

## Sections of UCF (cont.)

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- Section B: Supplies or Services and Prices/Costs
- The way you present your requirements in the solicitation can have a significant impact upon a source selection.
- This section contains brief descriptions of supplies or services required.
- Each item in this section is identified by a CLIN (Contract Line Item Number) (if applicable).

## Sections of UCF (cont.)

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- Section C: Description/Specifications/Work Statement/SOO/PBSW
- Contains descriptions, specifications, and information to identify the government's requirements.
- This is an addition to the descriptions contained in Section B.
- Should use functional or performance requirements to the maximum extent possible.

## Sections of UCF (cont.)

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- Section J: List of Attachments
- List provides the title, date, and number of pages for each attached document, exhibit, and other attachment.

## Sections of UCF (cont.)

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- Section L: Instructions, Conditions, and Notices to Offerors or Respondents
- This section includes solicitation provisions and other information and instructions not required elsewhere in the solicitation to guide offerors in preparing proposals.
- Some information and instructions that could be contained in Section L are:
- When and where to submit proposals.
- How to submit proposals (paper, electronic).
- Page limitations and type size.

## Sections of UCF (cont.)

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- Section L (continued):
- Other information and instructions that could be contained in Section L are:
- Organization (format) of the proposal.
- Past performance information.
- Required cost or pricing data.
- Request only the information needed to evaluate proposals against the evaluation factors.
- Never ask for information you do not intend to evaluate.

## Sections of UCF (cont.)

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- The instructions provided in Section L must:
- Be clearly and precisely stated.
- Be keyed to the evaluation factors.
- Describe the type, scope, content, and format of the information to be submitted.
- Describe the order in which proposal responses and materials are to appear.
- Be limited to the information needed to do the evaluation.

## Question

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**Why should instructions be limited to the information needed to do the evaluation?**

## Sections of UCF (cont.)

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- Section M: Evaluation Factors for Award
- All significant factors that will be used to evaluate the proposals must be identified in Section M.
- The relative importance of the evaluation factors must be stated in descending order of importance.
- The evaluation factors used in a solicitation depend on the requirement. Each solicitation is different, so the evaluation factors may also be different.

## Sections of UCF (cont.)

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- Section M: Evaluation Factors for Award
- The goal: to clearly state the basis upon which the government will make the source selection decision.
- Some evaluation factors might include:
- Price or cost
- Past performance
- Technical excellence
- Management capability
- Personnel qualifications
- Prior experience

## Sections of UCF (cont.)

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- Section M includes the evaluation factors identified by the acquisition team during the source selection planning stage.
- These factors inform offerors of all the significant considerations upon which their proposals will be evaluated and how they can best prepare their proposals.
- This is why evaluation factors should be limited to those areas which will reveal substantive differences or risk levels among competing offers.

## Sections of UCF (cont.)

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- Some evaluation factors, like price/cost and past performance, are mandatory evaluation factors that you must use (with few exceptions) for every acquisition, large or small.

## Solicitation, Evaluation, Award

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- Solicitation, Evaluation, and Award phase includes the evaluation of the proposals from the Request for Proposal (RFP) submitted at the end of the pre-solicitation phase.
- From this evaluation, the acquisition team chooses which vendor(s) to award the contract.
- In the RFP, the acquisition team includes **Evaluation Factors**.
- Evaluation factors are _very_ important as acquisition team decides which proposal to award a contract based on these factors.
- Communicating these factors clearly to the vendor is a major task of the acquisition team.

## Question

- 	Government Specific Course II

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**Why do you think price/cost and past performance are mandatory evaluation factors?**

## Proposal Reviews

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- After the acquisition team has reviewed each proposal against the evaluation factors, the proposals are referred to a higher authority for review.
- In formal source selection, these authorities include:
- Source Selection Evaluation Board (SSEB)
- Source Selection Advisory Council (SSAC)
- Source Selection Authority (SSA)

## Proposal Reviews (cont.)

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- Source Selection Evaluation Board (SSEB) evaluates proposals against the requirements in the RFP and rates each proposal against the requirements.
- Source Selection Advisory Council (SSAC) performs a comparative analysis of SSEB's evaluation of proposal.
- Source Selection Authority (SSA) oversees the source selection process and selects the sources(s) whose proposal is the best value to the government.
- Decides which proposal to award a contract, but it is up to the Contracting Officer to actually sign the contract on behalf of the government.

## CAO Duties

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- After the contract has been awarded and the unsuccessful offerors debriefed, Contracting Officer decides whether or not to delegate the administration of the contract to the Contract Administration Office (CAO).
- CAO has many responsibilities.  Federal Acquisition Regulation (FAR) lists over 80 distinct functions!
- CAO is the office which will administer these functions over the life of the contract.
- Contracting officer arranges a post-award orientation with the winning contractor.
- Purpose is to achieve a clear and mutual understanding of all contract requirements

## Production Surveillance

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- One of the most important functions of contract administration is **Production Surveillance**.
- Involves government review and analysis of the contractor’s performance plans, schedules, controls, and industrial processes, and their actual performance under them.
- Ensures that the contractor is doing what they said they were going to do when they said they were going to do it.

## Contractor’s Past Performance

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- Important factor in determining how much production surveillance is a contractor’s **past performance.**
- Documents a contractor’s performance throughout life of the contract; used to:
- Helps the government make savvy source selections.
- Determines amount of production surveillance
- Past performance information collected and shared between agencies.
- Mandated by Federal Acquisition Regulation.

## Question

- 	Government Specific Course II

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**Why do you think agencies share past performance information?**

## Contract Modification

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- Sometimes it is important to modify a contract after both parties have agreed to its terms.  There are only two authorized ways of modifying a contract:
- Unilateral Modifications
- These are signed by the Contracting Officer.
- Bilateral Modifications
- These are signed by the Contracting Officer and the contractor.
- Only two authorized methods, because there are usually associated costs or schedule changes associated with a contract modification

## Contract Modification (cont.)

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- The CAO administers the contract until the contract is physically completed.
- A contract is physically completed when the government has inspected and accepted the deliverables/services.

## Contract Termination

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- Termination clauses or other contract clauses authorize contracting officers to terminate contracts for convenience, or for default, and to enter into settlement agreements under the regulation of the FAR.
- The CO should only terminate contracts when it is in the government’s interest
- The CO should effect a no-cost settlement instead of issuing a termination notice when:
- It is known that the contractor will accept one
- Government property was not furnished
- There are no outstanding payments

## Contract Termination (cont.)

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- When the price of the undelivered balance of the contract is less than $5,000, the contract should not normally be terminated for convenience but should be permitted to run to completion.
- After the contracting officer issues a notice of termination, the termination contracting officer (TCO) is responsible for negotiating any settlement
- Auditors and TCO’s shall promptly schedule and complete audit reviews and negotiations
- If the same item is under contract with both large and small business preference should be given to the continuing performance of small business contracts

## Contract Termination (cont.)

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- The CO is responsible for the release of excess funds resulting from the termination unless this responsibility is specifically delegated to the TCO.

## Contract Termination (cont.)

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- The CO can terminate contracts for convenience or default only by written notice to the contractor.  The notice states:
- That the contact is being terminated for the convenience of the Government (or for default) under the contract clause authorizing it.
- Effective date of termination.
- Extent of termination.
- Any special instructions.
- Steps contractor take to minimize impact on personnel if terminated, together with other terminations, will result in a significant reduction in the contractor’s work force.

## Contract Termination (cont.)

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- The settlement of these terminated contracts may be effected by:
- Negotiated agreement
- Determination by the TCO
- Costing-out under vouchers using Standard Form 1034, Public Voucher for Purchases and Services Other Than Personal, for cost-reimbursement contracts
- A combination of these methods
- TCO negotiates a fair and prompt settlement with contractor and settle a settlement proposal by determination only when it cannot be settled by agreement.

## Contract Termination (cont.)

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- After termination, the contractor shall comply with the notice and termination clause of the contract.
- Stop work immediately on the terminated portion of the contract and stop placing subcontracts there under
- Terminate all subcontracts related to the terminated portion of the prime contract
- Immediately advise the TCO of any special circumstances precluding the stoppage of work
- Perform the continued portion of the contract and submit promptly any request for an equitable adjustment of price
- Take necessary or directed action to protect and preserve property in the contractor’s possession

## Contract Termination (cont.)

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- After termination, contractor shall comply with notice and termination clause of the contract.
- Promptly notify TCO in writing of any legal proceedings out of any subcontract or other commitment related to terminated portion of contract
- Settle liabilities and proposals out of termination of subcontracts, obtaining any approvals or ratifications
- Promptly submit contractor’s own settlement proposal, supported by appropriate schedules
- Dispose of termination inventory, as directed or authorized by TCO

## Contract Termination (cont.)

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- The duties of the TCO include:
- Direct the action required of the prime contractor
- Examine the settlement proposal of the prime contractor and, when appropriate, the settlement proposals of subcontractors
- Promptly negotiate settlement with the contractor and enter into a settlement agreement
- Promptly settle the contractor’s settlement proposal by determination for the elements that cannot be agreed on, if unable to negotiate a complete settlement

## Contract Termination (cont.)

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- Ensure access funds created by termination are relocated.
- TCO shall estimate the funds required to settle the termination, and within 30 days after the receipt of the termination notice, recommend the release of excess funds to the contracting officer.
- TCO should maintain continuous surveillance of required funds to permit timely release of any additional excess funds
- If the previous releases of excess funds result in anchorage of the amount required for settlement, the TCO shall promptly inform the contracting officer, who shall reinstate the funds within 30 days.

## Contract Termination (cont.)

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- If TCO suspects fraud or other criminal conduct related to the settlement of a terminated contract, TCO should discontinue negotiations and report the facts under agency procedures.

## Termination Settlement

- When a termination settlement has been negotiated and all required reviews have been obtained, the contractor and the TCO shall execute a settlement agreement on Standard Form 30

- (Standard Form 30)

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## Termination Settlement (cont.)

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- Settlement should cover:
- Any setoffs that the government has against the contractor that may be applied against the terminated contract
- All settlement proposals of subcontractors, except proposals that are specifically excepted from the agreement and reserved for separate settlement
- More information on settlement agreements is located in FAR 49.109.

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- Topic 4 –
- Performance-Based Considerations

## PBA

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- Performance-Based Acquisition (PBA) is one of the key components of an effective product support strategy.  This process:
- Establishes the negotiated baseline of performance, and the corresponding support necessary to achieve that performance.
- Reflects a range of support levels to facilitate revisions in support requirements without preparing new performance-based agreements.

## PBA (cont.)

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- Principal objective of PBSA is to state government’s requirements in terms of performance objectives or outcomes desired rather than method used in performance.  PBSA involves:
- Acquisition strategies, methods, and techniques that describe and communicate measurable outcomes
- PBA is a method of contracting where you define **results** rather than the **process** by which those results are obtained.
- Defining a service requirement in terms of performance objectives and performance measurement

## PBA (cont.)

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- Some objectives that are fulfilled by using PBA are:
- Maximizing performance.
- Maximizing competition and innovation.
- Encouraging and promote the use of commercial services.
- Shifting the performance risk to the contractor.
- Providing potential cost savings.

## PBA (cont.)

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- All executive departments are required to use PBA to the maximum extent when acquiring services (FAR 37.102).
- President has directed all executive departments to contract out commercial services using Office of Management and Budget’s (OMB) Revised Circular A-76.
- This document outlines procedures designed to subject commercial activities performed by government personnel to the forces of competition.
- Competitive sourcing depends on skilled acquisition professionals planning, competing, awarding, and managing long term service contracts.

## Solicitations

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- Per FAR 37.601, solicitations may use either a performance work statement or a statement of objectives.  Performance-based contracts for services will include:
- A performance work statement (PWS).
- Measurable performance standards (i.e. in terms of quality, timeliness, quantity, etc.) and the method of assessing contractor performance against performance standards.
- Performance incentives where appropriate.
- When used, the performance incentives should correspond to the performance standards in the contract.

## PBA Process

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- The PBA process consists of seven steps that comprise its general components.  These steps include:
- Establishing an integrated team.
- Describing the problem that needs solving.
- Examining Private-Sector & Public-Sector Solutions.
- Preparing a PWS (Performance Work Statement) or SOO (Statement of Objectives).
- Deciding how to measure and manage performance.
- Selecting the right contractor.
- Managing performance.

## PBA Process (cont.)

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- Step 1: Establish an Integrated Project Team
- Acquisition team is a vital part of this process.
- Integrates all stakeholders’ efforts toward one goal: finding solutions to agency mission and program needs.
- Acquisitions are conducted by teams of people, working cooperatively toward a common goal.
- This is the model used, which have come to recognize the limitations of clearly defined roles, responsibilities, and organization boundaries.
- Efficacy of this team is central to finding the right solutions to agency needs.

## PBA Process (cont.)

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- Create the Project Team Charter, which:
- Conveys the objectives of the program team
- Defines the scope of the new IPT's authority
- States how and by what measure the success of the IPT will be evaluated
- Identifies customers and stakeholders
- States the types of expertise the team must have
- States the amount and types of funds available

## Question

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**Why is it important to empower members of the acquisition team?**

## PBA Process (cont.)

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- Step 2:  Describe the problem that needs solving
- Link acquisition to mission and performance objectives
- Define (at high level) desired results
- Decide what constitutes success
- Determine the current level of performance
- Develop the Need Statement

## PBA Process (cont.)

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- Step 3:  Examine private-sector and public-sector solutions
- Take a team approach to market research
- Spend time learning from public sector counterparts
- Talk to private-sector companies before structuring the acquisition
- Consider one-on-one meeting with industry
- Look for existing contracts
- Document market research

## PBA Process (cont.)

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- Step 4:  Develop a PWS or an SOO
- PWS:
- Conduct an analysis
- Apply the “so what?” test
- Capture the results of the analysis in a matrix
- Write the performance work statement
- Let the contractor solve the problem, including the labor mix
- (continued on next slide)

## PBA Process (cont.)

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- Step 4:  Develop a PWS or an SOO (continued)
- SOO:
- Begin with the acquisition’s “elevator message”
- Describe the scope
- Writhe the performance objectives into the SOO
- Make sure the government and the contractor share objectives
- Identify the constraints
- Develop the background
- Make the final checks and maintain perspective

## PBA Process (cont.)

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- Step 5:  Decide how to measure performance
- Review the success determinants
- Rely on commercial quality standards
- Contractor propose metrics and quality assurance plan
- Select few meaningful measures to judge success
- Include contractual language for negotiated changes

## PBA Process (cont.)

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- Step 5:  Decide how to measure performance
- Apply the contract-type order of precedence carefully
- Use incentive-type contracts
- Consider “award term” and other incentive tools
- Recognize the power of profit as a motivator
- Most importantly, consider the relationship

## PBA Process (cont.)

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- Step 6:  Select the right contractor
- Compete the solution
- Use downselection and “due diligence”
- Use oral presentations and other opportunities to communicate
- Emphasize past performance in evaluation
- Use best-value evaluation and source selection
- Assess solutions for issues of conflict of interest

## PBA Process (cont.)

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- Step 7:  Manage Performance
- Keep the team together
- Adjust roles and responsibilities
- Assign accountability for managing contract performance
- Add contractor to team at a formal “kick off” meeting
- Apply the six disciples of Performance-Based Management
- Regularly review performance in a Contract Performance Improvement Working Group
- Ask the right questions
- Report on the contractor’s “past performance”

## PBA’s Key Practices

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- There are seven key best practices that are crucial to the success of a PBA team.
- Ensuring senior management involvement and support.
- Taping multi-disciplinary expertise.
- Defining roles and responsibilities
- Empowering team members
- Identifying stakeholders and nurture consensus.
- Developing and maintain the knowledge base over the project life.
- “Incenting” the team.

## PBA’s Key Practices (cont.)

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- Ensure Senior Management Involvement and Support
- Most best-practice studies agree senior management involvement and support is a predictor of success.
- Integrated project team has members whose affiliations cut across organizational boundaries.
- “Turf” can become an issue unless there is strong, effective senior management support and a shared vision.  Also, responsibilities must be understood.
- Creating “buy in” from leadership and establishing the realms of authority are essential to performance-based project success.

## PBA’s Key Practices (cont.)

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- Tap Multi-Disciplinary Expertise
- Many more types of people play a role in acquisition teams today.
- For example, in addition to contracting staff, there are those from the program, financial, user, and even legal offices that we learned about before.
- All of these skills and more can be required to create a true performance-based approach to an agency’s needs.
- Your skill and competency as a project manager is critical to this process. Multi-disciplinary expertise includes your _own_ expertise, too!

## Question

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**Why are using different areas of expertise so important in acquisition teaming?  **
**Does anyone have a personal example of why it is important and how it is used?**

## Roles & Responsibilities

- 	Government Specific Course II

- 7-

- Define Roles and Responsibilities
- It is important that the members of the team understand what their roles and responsibilities are.  Regardless of its representation, the team is responsible for ensuring that the acquisition:
- Satisfies legal and regulatory requirements.
- Has performance and investment objectives consistent with the agency’s strategic goals.
- Successfully meets the agency’s needs and intended results.
- Remains on schedule and within a tight budget.

## Roles & Responsibilities (cont.)

- 	Government Specific Course II

- 7-

- Successful teams typically have a number of features.
- Shared leadership roles.
- Individual as well as mutual accountability.
- Collective work-products.
- Performance measures related to the collective work-product.
- In a team environment, the roles and responsibilities of the members blur and merge, often with striking results.

## Roles & Responsibilities (cont.)

- 	Government Specific Course II

- 7-

- PBA teams are not a training ground.  They are teams of people who are among the best in their fields.
- Regardless of whether the requirement may be for a single function or multiple functions, estimated dollar value should not be a large determinant in the amount of effort devoted to the acquisition.

## Rules of Conduct

- 	Government Specific Course II

- 7-

- Develop Rules of Conduct
- Setting the ground rules, and then insisting on their use, is a key to effective team operation.
- Given a clear purpose and defined approach for working together, teams are much more likely to move quickly through the early phases of team performance and achieve the desired result.

## Empowerment

- 	Government Specific Course II

- 7-

- Empower Team Members
- Far 1.102(a) states that: “Participants in the acquisition process should work together as a team and should be empowered to make decisions within their area of responsibility.”
- Empowering team members means:
- Clearly defining levels of empowerment.
- Giving team members appropriate responsibility, authority, and autonomy.

## Stakeholders

- 	Government Specific Course II

- 7-

- Identify Stakeholders and Nurture Consensus
- Stakeholders include:
- Customers
- The public
- Oversight organizations
- Members and staff of Congress
- At minimum, stakeholders should be consulted and, at times, may participate on the team.

## Knowledge Base

- 	Government Specific Course II

- 7-

- Develop and Maintain Knowledge Base Over Project Life
- Acquisitions often take months, and the contracts that are awarded are often performed over years.
- Project is passed to a contract administrator with no information.
- Solution is to focus on contracting and acquisition program/project manager.
- Same key members (program manager, project manager, and contracting officer) from initial discussions through contract closeout.
- Continuity can lead to success.

## Incent the Team

- 	Government Specific Course II

- 7-

- As you know, continuity is important.  So what can be done to keep a team together?
- The most fundamental incentives are those that link program mission and team members’ performance, and then tie performance to pay.
- Team’s objectives should carry a value in terms of pay, recognition, and awards.
- Performance objectives should be program-based, not acquisition-based.
- Incentives should be tied to the “right” results.

## Determine Current Level

- 	Government Specific Course II

- 7-

- Probably the most important step in this process is to “Determine the Current Level of Performance”, because it is what makes this methodology so useful.
- The reasoning is to establish a baseline against which future performance can be measured.
- If you do not know where you started, you cannot tell how far you have come.
- New solicitations written with provision for delivery of baseline and/or current performance levels
- Project team must determine adequacy of baseline data for new contract to ensure they achieve the best results.

## Need Statement

- 	Government Specific Course II

- 7-

- At this point, a Need Statement must be developed
- Defining the need in a concise narrative statement serves multiple purposes for the acquisition.
- Allows dialog with market research participants.
- Conveys initial message to sources
- Becomes the foundation for subsequently building the Statement of Objectives (SOO) or Performance Work Statement (PWS) once market research is complete.
- It sets the tone throughout the process to solve the problem to the post-award performance-based management environment (PBM).

## Need Statement (cont.)

- 	Government Specific Course II

- 7-

- The government must be able to define its own objectives.  Here are some best practices in developing the need statement:
- Use a team-based approach.
- Ensure the team is made up of program, customer, and other stakeholder staff.
- Employ a facilitator.

## Need Statement (cont.)

- 	Government Specific Course II

- 7-

- Stay strategic.
- Focus constantly upwards to the highest level objectives and achieving the agency goals rather than getting bogged down in specific details or approaches.
- Relate the activities to the strategic agency plan.
- Validated throughout the agency.
- Determine the current level of performance to establish baseline.

## Need Statement (cont.)

- 	Government Specific Course II

- 7-

- To determine whether your need statement is adequate, ask of it these questions.  Does the need statement:
- Succinctly identify the agency problem that needs to be solved?
- Clearly state the results or outcomes required to solve the problem?
- Identify the specific agency goals and objectives to be met?
- Convey a clear vision for success?
- Link to the agency’s strategic plan?

## Private vs. Public Sector

- 	Government Specific Course II

- 7-

- Step 3 is to examine the Private-Sector and Public-Sector Solutions
- Market research is:
- The continuous process of collecting information to maximize reliance on the commercial marketplace and to benefit from its capabilities, technologies, and competitive forces in meeting an agency need.
- Essential to the government’s ability to buy best-value products and services that solve critical problems.
- Called “market research,” -  a vital means of arming the team with the expertise needed to conduct an effective performance-based acquisition

## Private vs. Public Sector (cont.)

- 	Government Specific Course II

- 7-

- Best Practices for examining private and public-sector solutions to an agency need are to:
- Take a team approach to market research
- Spend time learning from public-sector counterparts
- Talk to private-sector companies before structuring the acquisition
- Consider one-on-one meetings with industry
- Look for existing contracts
- Document market research

## Performance Work Statement

- 	Government Specific Course II

- 7-

- At this point a Performance Work Statement (PWS) is made from a Statement of Objectives (SOO)
- Offerors use the SOO to develop the PWS
- However, SOO is not contained in contract

## PWS (cont.)

- 	Government Specific Course II

- 7-

- There are 5 steps in the process of creating a PWS:
- Conduct an Analysis
- Apply the “So what?” Test
- Capture the results of the analysis in a matrix
- Write the Performance Work Statement
- Let the Contractor Solve the Problem, Including the Labor Mix

## PWS (cont.)

- 	Government Specific Course II

- 7-

- SOO is created by the government
- A PWS may be prepared by the Government or result from a SOO prepared by the Government where the offeror proposes the PWS (FAR 37.602)
- The SOO shall, at a minimum include:
- Purpose
- Scope or mission
- Period and place of performance
- Background
- Performance objectives, i.e., required results
- Any operating constraints

## PWS (cont.)

- 	Government Specific Course II

- 7-

- PWS – Conduct an Analysis
- Preparing a PWS begins with an analytical process often referred to as “job analysis.”  This analysis:
- Involves a close examination of the agency’s requirements.
- Forms the basis for establishing performance requirements, developing performance standards, writing the performance work statement, and producing the quality assurance plan.

## PWS (cont.)

- 	Government Specific Course II

- 7-

- There are a number of ways for the project team to approach this analysis.  Regardless of the approach your team chooses, your task remains to:
- Form a description of the requirement in terms of results or outcomes.
- Create measurable performance standards.
- Decide upon acceptable quality levels (AQLs).

## PWS (cont.)

- 	Government Specific Course II

- 7-

- PWS – Apply the “So what?” Test
- An analysis of requirements is often a close examination of the status quo.
- This is exactly that kind of detail to _avoid_ in a PWS.
- The project team needs to identify the essential inputs, processes, and outputs during job analysis.
- The whole point of PBSA is to solicit innovative and streamlined approaches.
- If the IPT does not analyze correctly, contractors will likely bid back the same work breakdown structure.

## PWS (cont.)

- 	Government Specific Course II

- 7-

- PWS – Apply the “So what?” Test (continued)
- The “So what?” test means continually verifying the need for the inputs, outputs, and processes identified in job analysis.
- The team should ask questions like:
- Who needs this output?
- Why is the output needed?
- Is it worth the effort and cost?

## PWS (cont.)

- 	Government Specific Course II

- 7-

- PWS – Capture the Results of the Analysis in a Matrix
- As the information is developed, the integrated project team should capture it in a performance matrix.  The most common is a six-column approach that lists the following:
- Desired Outcomes – What do we want to accomplish as the end result of this contract?
- Required Service – What task must be accomplished to give us the desired result?
- Performance Standard – What should the standards for completeness, reliability, accuracy, timeliness, quality and/or cost be?

## PWS (cont.)

- 	Government Specific Course II

- 7-

- PWS – Write the Performance Work Statement
- The most common is a six-column approach that lists the following (continued):
- Acceptable Quality Level (AQL): How much error will we accept?
- Monitoring Method: How will we determine that success has been achieved?
- Incentives/Disincentives: What “carrot” or “stick” will best reward good performance or address poor performance?

## Write PWS

- 	Government Specific Course II

- 7-

- There is no standard template for a PWS.  Federal Acquisition Regulation only requires that a PWS:
- Describe work in terms of required results rather than either "how" the work is to be accomplished
- Enable assessment of work performance against measurable performance standards.
- Rely on the use of measurable performance standards and financial incentives in a competitive environment

## Write PWS (cont.)

- 	Government Specific Course II

- 7-

- Organization of the PWS can be adapted by the IPT.
- Introduction.
- Background information.
- Scope.
- Applicable documents.
- Performance requirements.
- Deliverables
- Before finishing, apply these final checks:
- Examine requirements carefully
- Search for process descriptions or “how” statements and eliminate them.

## Performance Standards

- 	Government Specific Course II

- 7-

- Performance Standards establish the performance level required by the government.
- Standards shall be measurable and structured to permit an assessment of the contractor’s performance.
- Agencies must evaluate the proposed performance standards made in response to the SOO to see if they meet the agency needs.

## Question

- 	Government Specific Course II

- 7-

**What are some common examples of Performance Measures?**

- 	Government Specific Course II

- 7-

- Topic 5 –
- Cost and Price Analysis

## Price Analysis

- 	Government Specific Course II

- 7-

- What is Price Analysis?
- Essentially price comparison
- Evaluation of a proposed price without analyzing any of the separate cost elements that it is composed of
- What is Cost Analysis?
- The evaluation of the separate elements, that make up a contractor’s total cost proposal or price
- Determine if they are allowable, directly related to requirement and ultimately, reasonable.
- Cost and price analysis is always required and is ordered specifically to each agency.

## Price Analysis Example

- 	Government Specific Course II

- 7-

- For the U.S. :Department of Housing, HUD’s regulations at 24 Code of Federal Regulations (CFR) Part 84, “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations,” and 24 CFR Part 85, “Administrative Requirements for Grants and Cooperative Agreements to State, Local and Federally Recognized Indian Tribal Governments," both require grantees to perform a cost or price analysis for *every* procurement action, including contract modifications (e.g., "change orders"), using HUD grant funds.

## Perform Price Analysis 

- 	Government Specific Course II

- 7-

- Perform Price Analysis

- When should you perform price analysis?
- Use price analysis whenever you are comparing lump sum prices – not cost estimates - received from contractors in a competitive pricing situation (e.g., when sealed bids are obtained)
- Competition means that two or more responsible (e.g., not debarred or suspended, etc.) offerors (“bidders”), competing independently, submit priced offers that satisfy the grantee’s contract requirement.
- Greater number of offers = greater competition = better pricing

## Cost Analysis

- 	Government Specific Course II

- 7-

- Cost Analysis is a bit more tricky. Should be used when:
- Using the **competitive proposal** (or "negotiated") method of contracting, e.g., for acquiring professional, consulting or architect/engineering (A/E) services.
- Offerors are required to submit cost proposals that show elements
- Negotiating a contract with a **sole source**
- Obtain a complete cost breakdown from sole source contractor and perform analysis using the cost principles to establish a fair and reasonable price

## Cost Analysis (cont.)

- 	Government Specific Course II

- 7-

- Cost Analysis should be used when (continued):
- After soliciting competitive sealed bids, you receive **only one bid**, and it differs substantially from your independent estimate of the contract price.
- If you determine that the bid is unreasonable and decide to not recompete, then you may formally cancel the solicitation and negotiate a contract price with the single bidder.
- In that case, you must obtain a cost breakdown of the single bid price and use cost principles to after soliciting competitive sealed bids

## Negotiating a Modification

- 	Government Specific Course II

- 7-

- Negotiating a **modification** to any type of contract, if the modification changes the work authorized under the contract, and changes the price or total estimated cost, either upwards *or *downwards.
- You must obtain a detailed breakdown of the contractor's proposed cost - not a lump sum proposal - before negotiating the change in contract price.

## No Price or Cost Analysis

- 	Government Specific Course II

- 7-

- Two situations you do not have price competition and no cost analysis
- Price can be established on the basis of catalog or market prices of commercial products or services
- Product considered to be "sold in substantial quantity" when regular sales volume is large enough to constitute real commercial market.
- Services are considered to be "sold in substantial quantity" when contractor/vendor customarily provides them.
- Price is set by law or regulation.

## Profit Negotiations

- 	Government Specific Course II

- 7-

- Profit must be negotiated separately
- Whenever you are required to perform a cost analysis, and you are negotiating a contract action that provides for a profit or fee, you must negotiate profit separately.

## Profit Negotiations (cont.)

- 	Government Specific Course II

- 7-

- When negotiating profit, consider all of the following:
- The complexity of the work to be performed.
- Contractor’s risk – How much risk?
- Contractor's investment (labor, oversight, etc.) – How much and what type of resources?
- Subcontracting. The amount of profit depends upon the size, nature and oversight needs of the subcontracts the contractor will use.
- Quality of the contractor's past performance
- Industry profit rates in the surrounding geographical areas for similar work

## Cost and Price Analysis

- 	Government Specific Course II

- 7-

- Cost and price analysis apply differently to different types of contracts
- For Small Purchases
- For routine, commercial type purchases, comparing price or rate quotes obtained from an adequate number of qualified vendors is sufficient price analysis.
- If small purchase is for professional or technical services then at least a limited cost analysis is appropriate.

## Cost and Price Analysis (cont.)

- 	Government Specific Course II

- 7-

- Cost and price analysis apply differently to different types of contracts (continued)
- For Sealed Bidding, this is the preferred method for contracting for supplies, equipment and construction.
- Normally, the competitive pricing forces of the marketplace determine the reasonableness of the low price obtained through sealed bidding.
- Always compare its own independent cost estimate to the low competitive bid received.

## Cost and Price Analysis (cont.)

- 	Government Specific Course II

- 7-

- Cost and price analysis apply differently to different types of contracts (continued)
- Competitive Proposals
- Most often used to contract for professional, consulting, and architect/engineering (A/E) services.
- To determine the reasonableness of proposed costs, obtain cost breakdowns from the offerors showing all the elements proposed total costs and perform a cost analysis of each proposal
- Cost principles describe the allow ability of various types of costs

## Cost Principles

- 	Government Specific Course II

- 7-

- Which costs principles should you use?
- Depends upon the type of organization with which you are contracting.
- The use of one set or another is contract-specific.

## Cost Principles (cont.)

- 	Government Specific Course II

- 7-

- Here is a list of some examples of cost principles and the types of organizations covered by each:

## Contract Types

- 	Government Specific Course II

- 7-

- Cost and price analysis apply differently to different types of contracts (continued)
- Non-competitive proposals
- Sometimes called sole source contracts and are different from single bids
- No competition is intended, and usually, there is no market to help set the price or estimated cost.
- Since there is no price competition to tell you if the price or estimated cost is reasonable, you must obtain a breakdown of the proposed costs and perform a cost analysis.

## Contract Types (cont.)

- 	Government Specific Course II

- 7-

- Other contact actions or types require cost analysis
- Contract Modifications
- If negotiating a modification to any contract that changes the scope of work previously authorized use cost analysis to arrive at a reasonable cost.
- Only exception to this rule is a contract modification.
- Changes in scope do not always result in increased costs.
- These modifications require cost analysis using cost principles to determine that the price change is fair and reasonable.

## Contract Types (cont.)

- 	Government Specific Course II

- 7-

- Other contact actions or types require cost analysis (continued)
- Contract Terminations
- Terminating a contract means unilaterally ending it before its stated end.
- Contracts are usually terminated for convenience when the buyer no longer has a need for the service or products
- Contracts may be terminated for cause when the contractor fails to perform the contract as written.
- Must use cost analysis - and the appropriate cost principles

## Contract Types (cont.)

- 	Government Specific Course II

- 7-

- Other contact actions or types require cost analysis (continued)
- Cost-reimbursement Contracts
- In determining reasonable costs under any cost-reimbursement contract, a cost analysis using the cost principles is required.
- Architect/Engineer Contracts
- Cost analysis is required in determining if the cost portion of an A/E contract is fair and reasonable.

## Contract Types (cont.)

- 	Government Specific Course II

- 7-

- Construction Contracts
- Includes all contracts and contract modifications negotiated on the basis of cost for construction management or construction, alteration or repair of buildings, bridges, roads, or other kinds of real property
- Does not include contracts for equipment, or other kinds of personal property

## Price Analysis

- 	Government Specific Course II

- 7-

- There are many different techniques used for Price Analysis.  Use as many of the following techniques as applicable and appropriate:
- Compare competitive prices received in response to the solicitation to one another.
- Compare proposed prices with prices under existing contracts and with prices proposed in the past for the same or similar items/services.

## Price Analysis (cont.)

- 	Government Specific Course II

- 7-

- Techniques: (continued)
- Apply rough yardsticks (e.g., dollars per pound, per square foot, per hour, etc.) to compare prices and highlight significant inconsistencies that warrant additional pricing inquiry.
- Compare competitive price lists, published catalog or market prices of commodities and products, similar indices and discount or rebate arrangements.
- Compare proposed prices with your independent (i.e., in-house) cost estimates.

## Cost Analysis

- 	Government Specific Course II

- 7-

- For cost analysis verify the accuracy of the cost and pricing information submitted, and evaluate the reasonableness.
- To be considered reasonable, proposed costs must meet three critical tests.
- Allowable: Applicable cost principles will usually state whether a type of cost is allowable or not.
- Allocable: Costs are logically related to, or required in the performance of the contract.
- Reasonable: Defined as what a prudent business would pay in a competitive marketplace.

## Cost Analysis (cont.)

- 	Government Specific Course II

- 7-

- For cost analysis verify the accuracy of the cost and pricing information submitted, and evaluate: (continued)
-  The necessity for proposed cost items.
- Technical personnel should review the proposed direct cost elements.
- A cost may be allowable under the cost principles and allocable to the type of work to be performed.
- The application of audited or pre-negotiated (e.g., by the Federal Government) indirect cost (e.g., overhead) rates, labor and fringe benefit rates, or other factors.

## Cost Analysis (cont.)

- 	Government Specific Course II

- 7-

- For cost analysis verify the accuracy of the cost and pricing information submitted, and evaluate: (continued)
- Effect of the offeror's current practices on future costs. Does the offeror have a track record of containing costs (completing contracts at or "under cost")? Does the offeror overrun costs?
- Projection of the offeror's cost trends. Is there any indication that his/her costs are likely to increase or decrease over the life of the contract?

## Cost Analysis (cont.)

- 	Government Specific Course II

- 7-

- The next step is to compare the costs proposed by the offeror with:
- Actual costs previously incurred by the same contractor for the same or similar work
- Actual costs of previous the same or similar work performed by other contractors.
- Previous cost estimates from the offeror or other offerors for the same or similar items.
- The methods proposed by the offeror with the requirements of the solicitation
- Final step is to verify if the offeror’s cost submissions comply with the appropriate set of cost principles.

- 	Government Specific Course II

- 7-

- Topic 6 –
- Review

## Learning Objectives

- 	Government Specific Course II

- 7-

- Let’s review the learning objectives for this module on contracting:
- Define the different steps of managing the acquisition process.
- State how performance-based considerations are used in acquisition planning.
- Describe the legislation, policies, regulations, and methods used in contracting, and business and industry practices.

## Key Points

- 	Government Specific Course II

- 7-

- The Acquisition Process is made up of three phases:
- The Pre-solicitation phase
- Solicitation, Evaluation, and Award
- Contract Administration

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- Pre-Solicitation Phase
- The Process begins when a capability need is identified
- Product or service that you need for which there exists no current solution
- Pre-solicitation phase begins when need is identified
- Includes all the steps necessary to prepare a solicitation for the solution to that need
- We also learned about forming an **Acquisition Team**

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- Acquisition Teaming:
- An Acquisition Team is made up of **acquisition professionals **and **prime contractor and subcontractors **
- The major players on an Acquisition Team are:
- Small Business Office
- Competition Advocate
- General Counsel
- Contracting Officer
- Contracting Officer’s Representative (COR)
- Contract Specialist

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- Acquisition Teaming (continued):
- The major players on an Acquisition Team are (continued):
- The Property Administrator (PA)
- The End User / Customer
- The Financial Manager
- The Auditor
- The Technical/Engineer Specialist
- Quality Assurance Personnel (QAP)
- Legal Counsel
- The Contractor

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- UCF during the Pre-Solicitation phase is a standardized format for preparing solicitations. Some of the important sections of the UCF are:
- Section B: Supplies or Services and Prices/Costs
- Section C: Description/Specifications/Work Statement/SOO/PBSW
- Section J: List of Attachments
- Section L: Instructions, Conditions, and Notices to Offerors or Respondents
- Section M: Evaluation Factors for Award

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- The next phase is Solicitation, Evaluation and Award.
- Includes the evaluation of the proposals the acquisition team receives from the Request for Proposal (RFP) submitted at the end of the pre-solicitation phase.
- Acquisition team chooses vendors to award contract.
- Proposals are referred to a higher authority for review.  In formal source selection, these authorities include:
- Source Selection Evaluation Board (SSEB)
- Source Selection Advisory Council (SSAC)
- Source Selection Authority (SSA)

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- The next step is Contract Administration.
- After the contract has been awarded and the unsuccessful offerors debriefed, the Contracting Officer decides whether or not to delegate the administration of the contract to a Contract Administration Office (CAO).
- A CAO has many responsibilities.  Federal Acquisition Regulation (FAR) lists over _80_ distinct functions!
- The CAO is the office which will administer these functions over the life of the contract.

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- If there is a problem with the contract or it is deemed unnecessary there are regulations for terminating the contract prematurely.
- Termination clauses or other contract clauses authorize contracting officers to terminate contracts for convenience, or for default, and to enter into settlement agreements under the regulation of the FAR.
- The CO should only terminate contracts, whether for default or convenience, when it is in the government’s interest

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- The CO should effect a no-cost settlement instead of issuing a termination notice when:
- It is known that the contractor will accept one
- Government property was not furnished
- There are no outstanding payments, debts due to the Government, or other contractor obligations

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- Next, we discussed the use of performance-based considerations.
- A Performance-Based Acquisition (PBA) is one of the key components of an effective product support strategy.  This process:
- Establishes the negotiated baseline of performance, and the corresponding support necessary to achieve that performance.
- Reflects a range of support levels to facilitate revisions in support requirements without preparing new performance-based agreements.

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- Remember that the PBA process consists of seven steps that comprise the general components of the PBA process.  These steps include:
- Establish an integrated team.
- Describe the problem that needs solving.
- Examine Private-Sector & Public-Sector Solutions.
- Prepare a PWS (Performance Work Statement) or SOO (Statement of Objectives).
- Decide how to measure and manage performance.
- Select the right contractor.
- Manage performance.

## Key Points (cont.)

- 	Government Specific Course II

- 7-

- Next we covered Cost and Price Analysis.
- Price Analysis:
- Essentially price comparison
- Evaluation of a proposed price without analyzing any of the separate cost elements that it is composed of
- Cost Analysis:
- The evaluation of the separate elements (e.g., labor, materials, etc.) that make up a contractor’s total cost proposal or price
- Determines if they are allowable, directly related to requirement and ultimately, reasonable.