answer the 4 question attach

Project Procurement Management Chapter 08: Plan Procurements (2 of 2)

Contract Negotiations Chapter 08: U.S. Federal Government

Contract Negotiations – Best Practices

Week 8

Questions and Issues: Do we have past experience dealing wit similar purchases (procurements)? Will we want to “pre-qualify” potential suppliers prior to sending out the solicitation?

What is the dependability and stability of project funding?

Will there be political pressure on the award of major procurements? Are there special considerations incorporated in the prime contract which must be addressed in selected procurements which will impact solicitation planning?

And… Is there a requirement to place a parentage of procurement awards with a special class of business?

Answers?

Selecting Proper Suppliers

Advertise, Solicit, Negotiate, Compete Advertise – On websites, through trade organizations and journals Solicitation – The Formal ITB / IFB, RFQ, RFP and even an RFI Negotiate – Negotiate the SOW within the RFP for a Price Compete – Seek multiple sellers / “offerors”

The Buying Approach

The Buying Approach

The Buying Approach

The Buying Approach

Two-sided Definition: Business v. Technical The “Business” Definition  The Scope of Work (SOW) for what will be procured

“A description of the product or service to be procured under a contract; a statement of requirements,” (PPM, p.149) Considered to be the single-most important document in the procurement process!!!!!! May be the ONLY “official” description of the work.

 Terms & Conditions (From Week 4) The collection of language that makes up a written contract A “Term” addresses a specific subject – e.g., price, payment, disputes

Written in / as “Contractual Clauses” A “Condition” either activates or suspends a term

Condition Precedent activates a term Condition Subsequent suspends a term

Whose are used? Do they flow down to subcontractors? What do they include?

Defining the “What” We Plan to Buy

Terms and Condition Categories to Include

Defining the “What” We Plan to Buy

Project Procurement Management, Figure 8.2: Contract/Subcontract Clauses . . . A Small Sampling

Two-sided Definition: Business v. Technical The “Business” Definition  The Requirements for Management Oversight

The most critical component: A fully-defined INTERNAL working Schedule (CPM-based)

Require: - An Initial Baseline Schedule

- Monthly Updates

- Tie to the Monthly Progress Payments

Why? Because obtaining an updated schedule is one of the most difficult items to obtain from sellers!

Defining the “What” We Plan to Buy

Two-sided Definition: Business v. Technical The “Technical” Definition  The Specifications

“The purpose of technical specifications is to define the features and functions that the purchased product [or service] will perform, the physical attributes, limitations, design requirements, constraints, and the environment in which the product will be used [or service provided].” (PPM, p.155)

 Two Types of Specifications: - Detail Design Specification: Of WHAT the product/service is comprised

Example: A new car – e.g., tire size, color, number of seats/doors, engine size, etc.

- Performance Specifications: Statement for HOW the service will function

Example: A new car – e.g., carry certain weight/number of passengers, attain a specific speed, achieve certain MPG, etc.

Defining the “What” We Plan to Buy

Three types of Procurement Competition  Full and Open Competition

“Anyone can Bid/Propose”

Preferred by Governmental entities

May increase procurement risk – May end up with unqualified entity  Limited Competition

“Among Pre-qualified Bidders”

May require a two-step process: - Determination of qualified bidders

- Pricing competition among those qualified

Procurement Competition

Three types of Procurement Competition  Selected [sole] Source(s)

Limited Government Opportunity – requires prior approval and unusual circumstances

Typically a Private Sector vehicle

From a specific category of suppliers, or from a preferred vendor

May increase procurement risk – Monopolistic Pricing????

Procurement Competition

Project Procurement Management Chapter 08: Plan Procurements (2 of 2)

PPM Week 8 Discussion Question

Question 08a: What is the difference between a contract scope of work (SOW) and a project work breakdown structure (WBS)? Which elements are common/disparate to each?

Best Practices for Planning Negotiations with the Federal Government:  Understand how to influence Federal Government buying appropriately

and ethically  Having an acceptable cost estimating and accounting system

 Understanding the legal framework of Federal Government contracts

 Understanding the Truth in Negotiation Act (TINA)  Knowing the key Federal Government acquisition thresholds

Federal Contract Negotiations

Contract Negotiations, p.173

How to Influence Federal Government Buyers APPROPRIATELY and ETHICALLY:

Influencing the Federal Government

Contract Negotiations, p.173-174

The Do’s:  Create a liaison office  Hire REGISTERED Lobbyists

 Join Professional Advocacy Groups

 Participate in Industry Trade Associations

 Write articles / Make presentations

 Serve on Advisory Boards and NGOs

 Perform well on current Contracts

 Develop relationships with Small Businesses

 Establish Strategic Alliances and Teaming Agreements

 Create an advisory group of retires Federal procurement experts

 Hire former senior Government procurement professionals

How to Influence Federal Government Buyers APPROPRIATELY and ETHICALLY:

Influencing the Federal Government

Contract Negotiations, p.174

The Don’ts:  Offer a job to a Government official

currently involved in a procurement related to your company

 Offer BRIBES, Kickbacks, or other inappropriate gratuities to Government employees

 Illegally obtain Government procurement planning solicitation or budget information

 Illegally obtain CONFIDENTIAL information of any sort – procurement related or not

 Make a false statement in the procurement process

 Fail to certify the accuracy and/or completeness of cost/pricing information submitted

 Make a false claim

Accounting System Audit Questions:

 Is the system in accord with GAAP?

 Will the system segregate DIRECT fro INDIRECT costs?

 Is it integrated with the company General Ledger?  Do Timekeeping and Labor Hour [functions] allow for Direct and Indirect

classification(s)?

 Can interim (monthly) costs be routinely calculated?

 Can it segregate unallowable costs per FAR Part 31 and/or specific contract terms and conditions?

 Can it itemize costs by contract line items?

Accounting Systems

Contract Negotiations, Figure 8-1: Government Auditor Accounting System Questionair, p.174

Accounting System Audit Questions (continued):

 Can it differentiate pre-contract and/or pursuit costs?

 Can the system generate the FAR-required reports and documentation?

 Can the system generate cost-based supporting data?  Is the system designed, operational, and capable of storing accurate data?

Accounting Systems

Contract Negotiations, Figure 8-1: Government Auditor Accounting System Questionnaire, p.175. From: Beyond an “Adequate” Accounting System, by Jeffrey A. Lubeck, Contract Management Magazine, May 2004.

Adequate Cost Estimating Systems:

Accounting Systems

Contract Negotiations, Figure 8-2: Examples of Verifiable Proposal Supporting Data, p.177, From: Is your Accounting System Asking for Trouble?, by Darryl L. Walker, Contract Management Magazine, May 2004..

Examples of Verifiable Proposal Supporting Data

Direct Labor Hours Labor-hour history of the same or similar projects Company or industry standards

Bill of Direct Materials

Material planning documents Engineering blueprints

Direct Labor Rates Labor cost history for the same or similar project Average labor rates from payroll data Market wage or salary survey information

Direct Materials Purchase history of the same or similar items Vendor quotations Vendor catalogs

Indirect Rate Historical annual indirect rates Budgetary/provisional rates

The Federal Acquisition Regulations:

 Developed by Congress to codify and publish existing policies

 Established in the Office of Federal Procurement Policy Act of 1974 and amended by Public Law 93-83

 Administered / Issues jointly by: - The General Services Administration (GSA) Administrator

- The Secretary of the Department of Defense (DOD)

- The National Aeronautics and Space Administration (NASA) Administrator

 FAR Part 15 – Contact Negotiation(s):

“Prescribes policies and procedures governing competitive and non- competitive negotiated acquisitions.”

Legal Framework

The Truth in Negotiations Act (TINA):

 Developed by Congress to reduce the number of disputes brought before contract appeals boards

 Established in the Truth in Negotiation Act as Public Law 87-653 (10 U.S.C. 2306) in December, 1962

 Requires contractors and subcontractors to submit and certify to the Government the data related to the basis of estimated contract cost.

 TINA REQUIRES that the information be “Current, Accurate, and Complete.”

Legal Framework

TINA Data Typically Disclosed:

 Historical costs, such as material costs, labor hours expended, labor rates paid, or labor union settlements

 “Make or Buy” program decisions

 Subcontractor and vendor quotations  Learning curve projections

 Other business base projections

Legal Framework

TINA Required Documentation:

 A record of significant events in the procurement

 A list of attendees at [any] briefing

 The current acquisition situation (status)  The previous price history (if any)

 A synopsis of offers submitted or received

 The analytical methods used to establish the price objectives  The delivery objectives

 The negotiation plan

 Signature blocks for the signatures of approving official(s)

Legal Framework

Contract Negotiations Chapter 08: U.S Federal Government

Contract Negotiations – Best Practices

CN Week 8 Discussion Question

Question 08b: What is the Truth in Negotiating Act (TINA), why was it enacted, and why is it important to the Federal procurement process?

Project Procurement Management Chapter 08: Plan Procurements (2 of 2)

Contract Negotiations Chapter 08: U.S. Federal Government

Contract Negotiations – Best Practices

Week 8