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Blog - Archive for January 2012

"EXCHANGES WITH INDUSTRY BEFORE RECEIPT OF PROPOSALS"

Posted on Thursday, January 26, 2012 11:54:28 AM

Yes, that is the title of FAR 15.201.  "Exchanges of information among all interested parties, from the earliest identification of a requirement through the receipt of proposals, are encouraged."  (Emphasis added.)  All interested parties are encouraged to get involved in talking about the government's needs.  FAR 15.201 says such communication is encouraged so that potential bidders (offerors) can determine "whether or how they can satisfy the Government's ability to obtain quality supplies and services, including construction, at reasonable prices, and increase efficiency in proposal preparation, proposal evaluation, negotiation, and contract award."  It reads like an open invitation to do a lot of talking, doesn't it?

There are a lot of success stories about how well FAR 15.201 communication can work.  But there also are some real horror stories about how lack of communication can kill a procurement in more ways than one.

The regulation encourages industry days, small business conferences, public hearings, market research, one-on-one meetings, presolicitation notices, draft RFP's, RFI's, presolicitation or preproposal conferences and site visits (during which talking can take place).  One on one meetings are encouraged.

The only warnings in the section are to be consistent with the integrity requirements in FAR 3.104 and when the buy is on the street, the contracting officer cannot just talk to one bidder about information necessary for proposal submission without sharing that information with all bidders.  FAR 3.104 covers certain obvious fairness, favoritism, ethics and self-aggrandizement rules.  (No bribes, conflicts of interest, disclosure of contractor secrets or source selection information prior to award.)  It does not inhibit communications contemplated by FAR 15.201.  FAR 3.104 covers basic moral tenents.  It is not an excuse to refuse to talk with contractors.

While we're on FAR 3.104, we also should point out it does not inhibit release of source selection information after award.  FAR 15.506 on debriefings states the minimum information to be released.  The more source selection information that is released at debriefings, the fewer the protests.  We can testify that we once went to a debriefing at which the contracting officer released the SSEB report and the SSA's decision - right there at the debriefing!  We suggest this always ought to be the case.  (Redacted, of course, for contractor secret data.) 

We think FAR 15.201 is pretty straightforward and easy to understand and implement.  OFPP agrees.  Senior government acquisition officials agree.

Once the contract is awarded, it contains an implied obligation on the government's part to communicate and cooperate with the contractor, "to do whatever is reasonably necessary to enable the contractor to perform".  This is a time honored legal principle read into the contract as a matter of law.  If that is true, as it is, after award, does it not also make sense to treat communications before the proposal submission date mandatory as a matter of law?  We think so.

bill@spriggsconsultingservices.com

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THE BEST BOOK ON BEST VALUE YOU WILL EVER READ

Posted on Wednesday, January 25, 2012 9:15:22 PM

We posted our brief comment on a Judge Bush opinion on September 28, 2011. We also referred to it when we wrote about another Judge Bush opinion on January 15, 2012. We now invite you to read the best treatise published to date on best value procurements and it is found at www.uscfc.uscourts.gov/sites/default/files/firstline.pdf. This is the 79 page published opinion of Judge Bush in FirstLine Transportation Security, Inc. v. United States, U.S. Court of Federal Claims No. 11-375 C (September 27,2011). Judge Bush covers everything you need to know about best value tradeoffs, proper source selection evaluations and decisions, proper use of evaluation factors, the impropriety of turning best value tradeoff procurements into lowest price, technically acceptable awards, and how best value decisions must be made and documented.

The price of the successful awardee was 16% lower than the protester FirstLine’s price. FirstLine’s technical ratings included 33 strengths and no weaknesses whereas the successful awardee had 1 strength and 1 weakness. Yet the SSEB concluded that the higher technical merit offered by FirstLine did not justify the price differential because the successful awardee offered “an acceptable level of technical competence". Judge Bush said this “had the effect of converting the best-value procurement contemplated under the RFP into one based on low price and mere technical acceptability.” Essentially, the SSEB converted best value into LPTA. She went on to show that FAR 15.101-1 and 15.101-2(b)(1) contain entirely different procurement methods. Judge Bush then pointed out the SSEB was required under FAR 15.308 to properly document its tradeoff analysis, which it did not do. Although FAR 15.308 applies to the SSA, not the SSEB, since the SSA merely adopted the SSEB’s conclusion, the SSEB was obliged to meet the documentation requirements of FAR 15.308.
In documenting the tradeoff analysis, she said the SSEB report contained nothing more than conclusory assertions based on flawed premises. The report did not compare the competing proposals in any meaningful way. It did not address the relative benefits and disadvantages of the competing proposals and it did not explain why a higher-priced, but technically superior proposal does not merit its higher price. “The government cannot simply declare that a price premium is not justified by a superior technical proposal without some substantive discussion of why that is so.”
“Thus, when selecting a low-price technically inferior proposal in a best-value procurement where non price factors are more important than price, it is not sufficient for the government to simply state that a proposal’s technical superiority is not worth the payment of a price premium. Instead, the government must explain specifically why it does not warrant a premium.”
Judge Bush also noted that, with only one minor exception, there is no evidence the SSEB even considered the relative weight of the evaluation factors which had been stated in descending order of importance with all other factors more important than price.   The successful awardee and the government argued the government was free to disregard the evaluation factors as long as the evaluation of the proposals was reasonable. We can almost hear her banging her gavel: “That is not the law.”
 
Judge Bush then takes on the SSA’s decision. The decision making requirement is in FAR 15.308, which she quotes. First the SSA must reach an independent award decision based on a comparative assessment of the proposals against all of the criteria set forth in the solicitation.  Then, the SSA must document an independent award decision. “Here, the SSA’s documentation is limited to her adoption of the SSEB report and her otherwise unsupported statement that [the successful awardee’s] proposal represents the best value to the government.” Again, you can almost hear the gavel. The SSA must document the rationale for any business judgments and tradeoffs made or relied on by the SSA. The express language of FAR requires the SSA to exercise independent judgment and document that judgment. “Here, the SSA should have explained why the FirstLine proposal was not worth its higher price, notwithstanding its substantial technical superiority.”
The remedy? Do it over and do it right. Injunction issued. 
The lessons?
·         Scrub the evaluation factors. Make sure they comply with FAR 15.304.
·         Scrutinize the SSEB’s report to make sure it complies with FAR 15.305
·         Scrutinize the SSA’s decision to make sure it complies with FAR 15.308.
·         It’s against the law to take a best value tradeoff procurement and turn it into a LPTA.
We urge you to read Judge Bush’s opinion in FirstLine. It will tell you everything you need to know about how best value tradeoff procurements are supposed to work and it will tell you they are a far cry from LPTA’s.
bill@spriggsconsultingservices.com

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MYTH BUSTING IS HERE TO STAY

Posted on Sunday, January 22, 2012 12:17:15 PM

We've reported several times on OFPP's myth busting campaign.  It's a laudable effort to improve communications between government and industry.  Dan Gordon, now at George Washington University's law school, was its champion and indefatigable promoter.  Lesley Field now leads OFPP and she sounds just as committed as Dan (who, by the way, will continue to speak out in his new position).  Here's what Lesley recently wrote:

"Bill - thanks for your note.  We continue to promote the MythBusters principles and hope to have a follow-on effort that addresses myths from the private sector's perspective this spring.  Additionally, agencies have developed and most have posted their vendor [communications] plans.  We hope to make these more easily available through a central location shortly, and we're planning additional improvements that will make it easier for businesses to find out about collaboration opportunities with agencies.  So, we're very much committed to continuing the MythBusters effort and would be happy to discuss further."

We really need to hear from you on this.  Please send me an email about your successful and your unsuccessful efforts to engage the government, particularly contracting officers, in meaningful conversation.  Please send us a note about your experiences.

bill@spriggsconsultingservices.com

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USE LPTA FOR GRASS CUTTING, NOT TECHNICAL SERVICES

Posted on Friday, January 20, 2012 10:10:54 PM

We applaud the National Defense Industrial Association (NDIA) for making one of its 2012 issues the proper use of lowest price, technically acceptable (LPTA) acquisitions.  NDIA says it is acceptable to use LPTA for janitorial, grass cutting, mail handling and snow removal but not for complex engineering services.  Amen.  Tradeoffs among technical factors, past performance and price must be made for complex items and services.  Technical services, including most engineering projects, do not lend themselves to source selection based on LPTA.  NDIA points to the growing concern about DOD's expanded use of LPTA.  We believe LPTA should be under attack.  Criticisms of its use are warranted.  Acquisition leaders and contracting officers alike should heed NDIA's concern and our reminder to pay attention to FAR.

Yes.  Pay attention to FAR.  As we have pointed out, FAR 15.101 covers the "best value continuum" by saying LPTA may be appropriate "where the requirement is clearly definable and the risk of unsuccessful performance is minimal".  Grass cutting should go to the lowest priced bidder.  On the other hand, the "less definitive the requirement, the more development work required, or the greater the performance risk" tradeoffs (best value) should be used.  FAR 15.101-2 clearly says in the use of LPTA's, "tradeoffs are not permitted".

We need to interject a word about language.  Best value procurements are those in which there are tradeoffs among technical factors, past performance and price.  LPTA's are not best value procurements because they do not involve tradeoffs.  Yet LPTA's are considered part of the "best value continuum" in FAR 15.1.  We think the regulation creates some confusion among members of the contracting community because what we commonly call best value (tradeoffs) is discussed with LPTA's as part of a "best value continuum".  The two are separate notions.  We don't really see a continuum.  LPTA is not best value as we understand it.

So, what happens?  Contracting officers think the continuum is a sliding scale so that they can slip some procurements from best value tradeoffs to LPTA's.  Or, they think LPTA's are perfectly acceptable since they are discussed under the "best value continuum".  Wrong.  The slip approach violates the law against changing the rules in the middle of the game.  And the notion LPTA's are always perfectly acceptable is just plain wrong even under the continuum language in the regulation.

The answer?  Get on board with NDIA.  LPTA's are acceptable for grass cutting but not for more complex items and services.

bill@spriggsconsultingservices.com

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JUDGE BUSH STOPS ANOTHER BEST VALUE AWARD

Posted on Sunday, January 15, 2012 3:30:34 PM

On September 28, 2011, we reported that Judge Lynn Bush of the U.S. Court of Federal Claims (COFC) stopped a best value award because the trade-off analysis was flawed and improperly documented.  On January 9, 2012, she did it again.  This time she found disparate treatment of offerors and irrational evaluation ratings not based on evidence in the contemporaneous administrative record.

Judge Bush reiterates that the COFC defers to agency expertise when the agency assigns ratings to proposals.  However, the court is not bound by technical ratings not supported by the record made at the time the proposals are reviewed.  She states the court must review the technical ratings "not through the lens of post-hoc rationalizations, but by examining the contemporaneous record."  The court must look carefully at the documents the agency had before it when the decision was made.  Justifications offered after the fact to justify the decision are not persuasive.  The court also cannot affirm an improperly justified evaluation rating simply because there might be a rational basis the agency can come up with later.

"A tradeoff analysis based on signficantly flawed evaluation ratings is itself irrational," she says.  Because the ratings were incorrect and arbitrary, the best value award itself is flawed and must be overturned.  If the Source Selection Authority (SSA) relies on errors by the technical evaluation team, the SSA's decision is compromised.  It is possible to challenge an award when the evaluations simply don't make sense and the offerors are not treated with an even hand.

Her remedy is to set aside the award.  She points out the agency may re-procure the diplomatic security protection management services.   However, she lays down some specific guidelines as to how that reprocurement must take place.  In the redo, she plays a theme from her December opinion on which we reported.  The proper tradeoff analysis must be based on the independent judgment of the SSA.

We should emphasize a final point.  Her decision was not just based on the irrational technical evaluation ratings.  It also was based on the failure of the SSA to strictly follow the weighting scheme for evaluation factors which was set forth in the solicitation.  We've emphasized this many times in these blogs.  The meat of a solicitation is in its evaluation factors and the SSA is obliged to follow them strictly in reaching the decision to award. 

bill@spriggsconsultingservices.com

 

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WHO IS YOUR CONTRACT MANAGER?

Posted on Wednesday, January 11, 2012 8:24:00 PM

In our posting of September 2, 2011, we opined on why you need a contract manager. We listed fifteen (15) items on a list of things that a contract manager does and this list was not exhaustive or all inclusive. We repeat that important message below.

Our purpose now is to point out that we meant it when we said “you are in the most highly regulated industry in the world. You also know the regulations are more voluminous and complicated than the U. S. Tax Code.” What does that tell you?
 
Not all contract managers are lawyers and not all lawyers are contract managers. But in government contracting and subcontracting, your contract manager had better be a lawyer. Pure and simple. You need someone who can navigate the rigorous labyrinth of laws and regulations. Or, be sure to hire a contract manager who has a contract management lawyer at her fingertips. Yes, we said “contract management lawyer”, not just any lawyer. Your team needs contract management with legal expertise and talent steeped in government contracts and subcontracts experience. Whether it’s getting a contract, keeping it, or making a profit on it, you need complete contract management coverage. 
 
What a Contract Manager Does. Here’s a list:
 
1.       Knows the statutes, regulations and case law thoroughly and in depth;
2.       Knows, writes and speaks the English language clearly and concisely;
3.       Reviews solicitation documents for clarity and legal sufficiency;
4.       Assures proposals are well written and meet solicitation and regulation requirements;
5.       Handles discussions, clarifications and negotiations of proposals;
6.       Handles debriefings and protests;
7.       Monitors performance and assures compliance with all contract terms and conditions and regulation requirements;
8.       Handles all contract interpretation issues and questions about regulations;
9.       Investigates, identifies, analyzes and solves all contractual performance issues;
10.    Keeps a daily diary of contract performance and communications with the contracting officer;
11.    Handles all requests for equitable adjustment, claims, terminations and disputes;
12.    Handles all communications with the contracting officer;
13.    Prepares, reviews and signs all contractual documents;
14.    Reads all publications relating to acquisition news and keeps current on all statutes, regulations and  case law; and
15.    Handles contract closeout.
 
This list is not all inclusive.
 
So, why do you need a Contract Manager? Ask your friends at Lockheed Martin. Ask any member of the National Contract Management Association. Or, just ask yourself whether you are really good at doing the things on the list yourself or if you really have anyone else who is performing those duties. If not, you need a contract manager. You can’t do business with the government without one.
 
bill@spriggsconsultingservices.com
www.spriggsconsultingservices.com

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"LAWYERS ARE YOUR FRIENDS"

Posted on Wednesday, January 11, 2012 11:28:28 AM

Who said that?  Why, Dan Gordon, of course, on the eve of leaving his post as Administrator of the Office of Federal Procurement Policy (OFPP).  A contracting officer told Dan that she was nervous to meet with industry because she did not want to get in trouble with ethics officials.  "My answer to her was, if you need to, take five lawyers from your agency with you, but have the meetings.  Lawyers are your friends," he admonished her.  Dan was speaking in the context of his "lightbulb moment" when he decided to launch his mythbusters campaign,  He vowed that Lesley Field, his successor, and the entire OFPP team would be continuing the mythbusting campaign which really hasn't taken hold in the field yet.

According to Dan, some people in government have legitimate complaints about vendors' marketing campaigns to which they really don't like to listen.  So, there will be a second mythbusters campaign directed at contractors.

We all know the changes required by the mythbuster campaigns will be cultural.  "But I'm convinced that the push for the mythbusters campaign for more communication, early communication, honest communication, full communication, will pay off for the government, but also for industry," Dan said on his way to his new post at George Washington University.

We are aware of activities to continue the mythbusting campaigns about which we will report in these blogs.  Dan's replacement, Lesley Field, and her staff are the key players here.  But each of us has a role.  We ask you to go to www.actgov.org and www.bettergovernmentit.org and read what the American Council for Technology - Industry Advisory Council has written about better communication between government and industry.  In an exhaustive work the Council has interviewed and surveyed many people in government and industry and has come up with a list of thirteen (13) action items to improve how we conduct business.  Although the study had its genesis with the IT side of the house, the suggestions apply with equal force to all government contracting.

Too many lawyers?  Not according to Dan.  In government contracting, we submit lawyers are your very best friends.  Don't be shy.  We don't bite.  And, those of us who have devoted our lives to improving the federal acquisition landscape nuture the process.  We are not the obstructionists.  We truly facilitate.  In our opinion, there are not enough of us to go around in this, the most highly regulated and most complicated enterprise on earth.

And, contrary to popular culture, not all of us cost an arm and a leg.

bill@spriggsconsultingservices.com

 

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THE GOVERNMENT'S DUTY OF GOOD FAITH AND FAIR DEALING

Posted on Monday, January 9, 2012 6:48:15 PM

Listen to Judge Mary Ellen Coster Williams of the United States Court of Federal Claims:

"In addition to obligations expressly set forth in the text of a contract, every party to a contract owes a common law 'covenant of good faith and fair dealing' to its contracting partner. [Citation omitted.]  This implied duty obligates the parties to act 'with good faith and fair dealing in [their] performance and in [their] enforcement' of the contract.  [Citation omitted.]  A party must refrain from doing anything 'that will hinder or delay the other party in performance of the contract' or that will destroy the other party's reasonable expectations regarding the fruits of the contract.  [Citation omitted.]  The duty of good faith and fair dealing encompasses the duties to cooperate and not hinder contract performance." 

We should hasten to add it also includes the duty to communicate and disclose information vital to contract performance.  To which we also should add the duty to clearly state contract requirements and provide specifications free from errors, conflicts and omissions.

Notice in Judge Williams' opinion her reference to the government's obligation to refrain from anything that will destroy the other party's reasonable expectation regarding the fruits of the contract.  The Armed Services Board of Contract Appeals says this requires the government to do everything reasonably necessary to enable the contractor to perform. 

This rule has been around a long time.  But the workforce turns over and changes.  Education is improving but experience is the best teacher.  It's time we reminded everyone of the legal obligations of the parties to a contract.  In practical terms, this means they should work together and communicate.  It's the law.

bill@spriggsconsultingservices.com   www.spriggsconsultingservices.com

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GOVERNMENT COMMUNICATION WITH INDUSTRY

Posted on Sunday, January 8, 2012 3:50:07 PM

Recently, we've noticed an outstanding white paper from the American Council for Technology Industry Advisory Council on "Improving the Management of Federal Government IT Assets Through Better Communication With the IT Industry."  In 16 pages, this document describes the problems and presents proposed action items all designed to improve government communications with industry.  And, everything applies across the board to all procurements for all agencies.  We applaud this excellent work and look forward to following the implementation of its recommendations.

The ACT/IAC paper refers prominently to a little known Memorandum from the Deputy Secretary of Defense to all senior officials in any way engaged in acquisition.  ACT/IAC lauds this Memorandum, as do we, and points out that "we have also never heard any government employee cite an agency that encourages communication with the private sector."  Appalling!  It's time we all read this Memorandum and made sure everyone in DOD is aware of it.  Moreover, the policy should be extended to all agencies.  Indeed, it is squarely in line with Dan Gordon's Myth-Busters Memorandum to all senior government acquisition officials about which we've written before.

"The Department's policy is for representatives at all levels of the Department to have frequent, fair, even and transparent dialogue with the commercial base on matters of mutual interest, as appropriate, in a manner which protects sensitive information, operation, sources, methods and technologies.  For the Department, this includes representatives of end users and requirements generators as well as those within acquisition organizations.  Traditional and non-traditional suppliers are to be included in such dialogue.  Matters of mutual interest include, but are not limited to:  DOD and industry business practices and policies; removal of barriers to competition; technology trends and development objectives; security challenges; and the performance of organizations, contracts, projects and programs."  (Emphasis added.)

The memorandum attaches a summary of laws applicable to such communications.  Without citing the laws, here is what they say:  government officials may not participate in a matter that presents an actual or apparent conflict of interest; government officials may not disclose proprietary or source selection information; government officials may not give unauthorized preferential treatment to one firm but must treat all firms equally; government officials may not disclose trade secrets or other proprietary information without permission of the owner of the information; government officials must protect procurement-sensitive information; and, if applicable government officials must comply with the Federal Advisory Committee Act.

The DOD Memorandum says "officials within the Department are encouraged to communicate with industry . . . ."  Dan Gordon, on behalf of the President of the United States, says this applies across the board to all agencies on all acquistions.  Is anyone listening?

bill@spriggsconsultingservices.com  www.spriggsconsultingservices.com

 

 

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PROPER USE OF FIRM FIXED PRICE (FFP) CONTRACTS

Posted on Saturday, January 7, 2012 6:28:54 PM

In these days of fiscal austerity, the default contract type is firm fixed price.  But should it be?  What do the regulations say about FFP?  As we've said before, budget contraints do not rewrite the regulations.  They remain the same as always.  So what does FAR say about FFP?  FAR 16.202-1 describes FFP and goes on in 16.202-2 to state the proper application of FFP.  These shift-the-greatest-risk-to-the-contractor contracts are suitable when the government 1) can write "reasonably definite functional or detailed specifications"; and 2) when "the contracting officer can establish fair and reasonable prices at the outset."  

Among the tests of whether fair and reasonable prices can be established at the outset is whether "the contractor is willing to accept a firm fixed price representing the assumption of the risks involved."  Since FFP contracts place the maximum risk and full responsibility for all costs and resulting profit or loss on the contractor, you would think the admonition to discover whether the contractor is willing to accept the risks might have some meaning.  When was the last time you were asked whether a FFP contract was the right choice?  When have you been asked by your government buyer whether you were willing to accept the risk?

Obviously, you've never been asked.  These are contracts of adhension where the government dictates the terms and conditions of the sale. There is no negotition (or is there?) over the type of contract.  There could be.  You could protest the wrong type of contract.  But who is willing to do that?  So the contract by adhension rule is inviolate?  Probably.  But that does not prevent us from pointing out that the use of fixed price contracts must be based on an analysis of the facts against the language of FAR 16.202-2.  (We've discussed how to level the playing field during performance by reminding everyone in other blogs about the implied government obligations in every government contract.)

The latest problem with the drive to make all contracts fixed priced is the bait and switch tactic we've seen and also dicsussed in other blogs.  The government cannot write a firm fixed price contract and then administer it as if it is time and materials, for example.  Or, use some other excuse not to pay the firm fixed price.  In such a case, the contractor clearly has a remedy for breach of contract, constructive change or constructive termination.  So you may be stuck with the type of contract, but you should not be holding the bag when the government changes the rules of the game.

bill@spriggsconsultingservices.comwww.spriggsconsultingservices.com

 

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THE PROPER USE OF LOW PRICE, TECHNICALLY ACCEPTABLE (LPTA)

Posted on Saturday, January 7, 2012 2:27:39 PM

Many commentators have noticed an abuse of lowest price technically acceptable (LPTA) source selection.  In fact, there is growing concern that a solicitation is called best value, the evaluaton criteria actually say there will be a cost/technical tradeoff analysis, but in practice, the source selection becomes LPTA.  We'd like to set the record straight on the proper use of LPTA and call upon contracting officers to pay close attention to FAR Part 15 in writing evaluation criteria and in source selection practices.

Look carefully at FAR 15.101.  There is a best value "continuum".  The relative importance of cost or price may vary.  May vary.  Today's environment of budget austerity does not change the rule.  If requirements are clearly definable and the risk of unsuccessful performance is minimal, cost or price may properly become the predominant source selection discriminator (LPTA okay).  Conversely, the less definitive the requirement, the more development work is required or the greater the performance risk, the more technical excellence or past performance should come into play (LPTA not an option).

Then look very carefully at the language in FAR 15.101-2(a) dealing with LPTA.  LPTA should only be used when best value is expected to result from choosing the lowest priced technically acceptable proposal.  So harken back to the best value continuum.  Is the risk of successful performance minimal?  Will you get "best value" by ignoring the tradeoff process?  If not, LPTA is proscribed.  We'll wager that careful and close attention to this language in FAR 15.101 will result is fewer LPTA procurements.  Again, budget contraints have not amended FAR.  We believe that rules are necessary in public acquistion actions.  The rules are there for a purpose and they should not be ignored.

Finally, and equally importantly, read FAR 15.304 and 305 carefully.  The evaluation criteria must be clearly stated.  Clearly.  Too often we have seen evaluation criteria which are patently unclear.  Even more importantly, they are to be rigorously adhered to in the source selection process.  No deviations.  That means, source selection officials are not permitted - not permitted - to change best value tradeoff criteria to LPTA (without a redo).  In a recent example, LPTA was used, in our opinion, to include risky companies in what turned into a bidding war.

Contractors aggrieved by the government's failure to follow the regulation are not without remedy.  The rules are meant to be enforced.  Austerity does not waive procurement regulations.  Cutting corners to achieve cost savings is not permitted.  Unless or until Congress changes the system of rules and regulations, everyone - no exceptions - must follow them.

bill@spriggsconsultingservices.comwww.spriggsconsultingservices.com

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