PRESS
ROOM
Acquisition Reform
Exploiting
Acquisition Reforms for Profitable New Business Capture
I.
WHERE'S THE RISK?
This Briefing
Paper sets forth several strategies to exploit recent acquisition
reforms to increase capture of new business and grow the bottom
line. It is undisputed that the dramatic shift from Military
Specifications ("MilSpecs") to performance
specifications requires successful offerors to assume
substantially greater levels of performance risk than ever
before. This risk is multiplied by new legislative and regulatory
"accelerants," which essentially negate the traditional
negotiated procurement sequence of initial proposals, discussions,
and submission of Best and Final Offers ("BAFOs").
In effect, these accelerants require contractors to assume
that they will not be invited to commence discussions with
the government. This results from the increased probability
that only the most highly rated initial proposals will be
admitted into the newly constricted competitive range, or
that award will be made on initial proposals. Accordingly,
offerors must submit their initial proposals as "First
and Final Offers." This is particularly true in "bet
the company" procurements.
The three
acquisition reform "accelerants" specifically addressed
are: (1) the arbitrary constriction of the competitive range
to achieve "efficient" competition ("if in
doubt, throw them out"); (2) mandatory evaluation of
past performance on initial proposals, for up to 50% of award
criteria; and (3) the government's double-edged sword to concurrently
capture proprietary technology and trigger civil and even
criminal action for contractor failure to comply with the
new pre-award disclosure requirements. Consequently, use of
legal counsel as members of the contractor's Integrated Product
Team ("IPT") is critical to pre-empting, containing,
and sharing the increased risk engendered by the "accelerants."
II.
INCREASED CONTRACTOR RISK RESULTS FROM THE USE OF PERFORMANCE
SPECIFICATIONS
By their
very nature, performance specifications inherently shift greater
risk from the government to the contractor. Accordingly, contractors
encountering performance problems can no longer routinely
assert that the contract requirements were met by showing
that MilSpecs were religiously followed. This deprives contractors
of the opportunity to "get healthy" from Engineering
Change Proposals ("ECPs") on work around solutions
and changes during performance. The use of performance specifications
also threatens the availability of the traditional government
contractor defense from tort liability. Contractors now
will have to pass a strict performance test to demonstrate
success. Moreover, the increased risk contractors face is
amplified by the complexities inherent in the continuing acquisition
of major systems, subsystems, and components, as a series
of stand-alone procurements. Use of performance specifications
on a stand-alone system, subsystem, or component procurement
is the equivalent of employing a "Total Systems Performance
Responsibility" ("TSPR") clause, which has
been used by some DoD customers. Under the typical TSPR clause,
failure to designate a systems integrator often resulted in
substantial program disruption and cost growth. Specifically,
customers using TSPR clauses often realized a short-term cost
savings in not awarding an integration contract. The systems
contractors, however, who were usually industry competitors,
often encountered tremendous difficulties in using the Associated
Contractor Agreements ("ACA") to interface with
one another. Neither could effectively compel the other to
cooperate to the fullest extent, for lack of contractual privity.
This was exacerbated by the fiercely jealous protection of
proprietary technologies in development programs. The resultant
discord was further amplified where these procurements were
awarded as fixed-price or fixed-price-incentive-fee
contracts. Often, the sheer magnitude of cost overruns
resulted in program cancellation. Consequently, current performance
risks under the implicit TSPR are increased not only by customer
prerogative, but also by evolving performance solutions of
sister contractors on interfacing systems, subsystems, and
components, which, in turn, may not be compensable.
The implicit
but unmistakable transfer of risk to the contractor by use
of performance specifications is a critical concept. For example,
a NASA launch vehicle contractor historically would build
hardware and conduct launch operations in accordance with
government-directed specifications and standards. In effect,
the government told the contractor "how to" build
the vehicle and "how to" conduct the launch. Under
performance specifications, the successful offeror may well
propose to launch that same spacecraft at a fixed cost, with
full refund in case of failure. This change recognizes that
the highest system performance specification is now the insertion
of the spacecraft into the proper orbit, and imports the concept
of flight insurance from the commercial spacecraft sector.
In essence, the hardware manufacturer becomes a service provider.
The bottom line is that successful offerors must now step
up to greater levels of risk on "bet the company"
programs, which should result in innovative solutions at relatively
less expense to the customer. Simply stated, the successful
offeror is driven to achieve a balance that satisfies the
customer's undisclosed "technical discriminators"
while meeting the customer's sensitivity to price, i.e., its
shrinking budget. Moreover, while any contractor can capture
new business by assuming wholesale risk during performance,
the real challenge is to identify the increased risks and
pre-empt, contain, and share those risks with the customer
and teaming partners to ensure profitable new business capture.
In other words, only calculated risk-taking will lead to
new contract awards, while protecting bottom-line growth and
maximizing shareholder value.
Moreover,
the "accelerants" discussed here effectively consolidate
the traditional, negotiated procurement sequence of initial
proposals, discussions, and BAFOs, to a single step, i.e.,
evaluation of "First and Final Offers." This means
that contractors submitting "First and Final Offers"
will assume even greater risk but with less information than
ever before. Contractors will now bid according to their perceptions
of customer discriminators and sensitivity to price. Therefore,
legal counsel, with understanding and experience of these
risks, should be a full participant in the IPT which, usually,
includes Engineering, Marketing, Manufacturing, Contracts,
Procurement, and Pricing experts for (1) proposal development,
especially if award is expected to be made on initial proposals;
and (2) negotiation of the resultant contract. Given the serious
impact of the accelerants, failure to properly leverage Legal
assets in new business capture is now the equivalent of blind
assumption of risk without a guarantee of tangible return.
III.
NEWLY AUTHORIZED CONSTRICTION OF COMPETITIVE RANGE FOR "EFFICIENT"
COMPETITION UNDER FARA
The
Contracting Officer's new authority to "constrict"
the competitive range creates the equivalent of award on "First
and Final Offers." Under the Federal Acquisition
Reform Act of 1996 ("FARA"), offerors in both
civilian agency and DoD procurements are now subject to arbitrary
constriction of the competitive range to an "efficient
number" following evaluation of initial proposals.
Moreover, as long as it states its intention in the solicitation,
the government may even limit the number of offerors it
intends to place in the competitive range. Therefore,
the Contracting Officer ("CO") will now admit only
the most highly rated offerors into the competitive range
for discussions, or award on initial proposals. This will
also include mandatory evaluation of their past performance
on initial proposals. Consequently, contractors who do not
prepare their initial proposals on "bet the company"
programs as "First and Final Offers" are unlikely
to survive for lack of new business capture.
This represents
a fundamental change to traditional negotiated procurements,
where almost all offerors routinely expected discussions and
submission of BAFOs. Under that incremental approach, offerors
often submitted initial proposals with intentional ambiguities
in key technical/business details. The reasonable expectation
was for an offeror to tender its genuine offer as the BAFO,
to prevent the perceived danger of "auction techniques"
and "technical leveling" in high priority programs.
This incremental strategy also kept the successful offeror's
pricing options open, and generally ensured that not too much
money was "left on the table" between its price
and the next-ranked proposal upon award. Now, however, COs
are expressly authorized to constrict the competitive range
to achieve "efficient" competition. The government
has shifted the competitive range dynamic from "when
in doubt keep them in," to "when in doubt throw
them out." This places an obvious premium on being rated
most highly in technical approach and other evaluation criteria,
such as "past performance," on initial proposals.
While performance specifications shift large amounts of risk
to contractors, the CO's new authority to constrict the competitive
range multiplies such risk because contractors can no longer
rely on discussions to provide a timely assessment of the
customer's true "technical discriminators" and price
sensitivity. Therefore, successful offerors' "perceptions"
of customer discriminators and price sensitivity will drive
them to assume risk in areas that will not always garner
additional evaluation ratings. This will similarly add
unnecessary pricing risk to the detriment of the contractor's
bottom line.
Nevertheless,
contractors can still profitably capture new procurements
by sharing risk with fellow contractors at all tiers and by
pre-empting or mitigating risk in their "First and Final
Offers." Because contractors could historically rely
on the implied warranty of MilSpecs, work around solutions
to performance difficulties were readily negotiated via ECPs
to compensate contractors for additional cost, lost profit,
and schedule slippages. Accordingly, much of legal counsel's
activity naturally occurred during performance, rather than
prior to award. However, performance specifications now potentially
preclude a contractor's ability to "get healthy"
on ECPs during performance, because the successful offeror
will have effectively assumed that risk from drafting its
own SOW. There is also an increased likelihood that the
traditional "government contractor defense" against
tortious liability will be unavailable, since the government
will have effectively become a "turnkey" or "subscriber"
customer. This increases contractor risk exponentially because
a single defective product could arguably lead to the demise
of an entire division. While insurance is available in many
ultra-hazardous activities such as launch vehicles, profit
margins can easily be decimated by the 20% insurance premium
once the launch vehicle engines are ignited. The fact is that
insurance carriers are increasingly reluctant to book risk
on trouble-plagued vehicles, such as the Long March Rocket,
following its third catastrophic flight failure, or on military-unique
systems with no known commercial application. Proper leveraging
of Legal assets as part of your IPT is therefore critical
to identifying risk and containing/sharing the contractual
and tort liability.
Increased
risk assumption on performance specifications is not the only
hazard that "efficient" competition creates for
contractors. The new constriction of the competitive range
on initial proposals demands the early drafting of risk-mitigation
plans in the face of (1) Total Systems Performance Responsibility
clauses, (2) "Interface Agreements" for future undefined
systems, (3) "Associated Contractor Agreements"
where an integration contractor is not designated, (4) "requirements
creep," and (5) customer refusal to definitize GFI/GFE
where it may have superior knowledge. These hazards are even
greater in classified and development programs,
where there are large numbers of mission-unique requirements,
"need to know" sister programs, integration requirements,
or software-intensive development complexities. These are
also in addition to the flurry of solicitation clauses routinely
incorporated by reference, even where such clauses have subsequently
been repealed or modified by statute. Such issues also include
post-award incorporation by reference of those clauses which,
though required by statute, were omitted from the solicitation.
Fortunately, legal counsel can fashion strategies to avert,
contain, share, or shift that risk, without loss of customer
goodwill. Additional issues, such as intricate
negotiation of proprietary technologies down to critical
software subroutines on major systems, can be definitized
during discussions after the offeror is safely within the
constricted competitive range or is designated as the apparent
awardee. Should award be contemplated on initial proposals,
legal counsel must carefully document those risk-reduction
steps and craft grounds for legitimate use of ECPs during
performance, to enable the customer to gracefully save
face by rectifying cost or schedule impacts. This is a
vastly preferable option to subsequently "writing off"
substantial cost overruns and lost profits, or initiating
litigation with the inevitable dissipation of customer goodwill.
IV.
MANDATORY "PAST PERFORMANCE" AS A "SIGNIFICANT"
EVALUATION FACTOR
Since
July 1, 1995, "past performance" has been mandated
as a "significant" evaluation factor for all civilian
agency and DoD contracts exceeding $1,000,000. This presents
a grave danger to contractors because there are no definitive
standards as to which aspects of past performance will be
emphasized for proposal evaluations. The Office of Federal
Procurement Policy has recommended that past performance be
ranked at least equally with any other non-cost evaluation
factor, i.e., implicitly at least 25%. Moreover, contractors
are understandably concerned that DoD components may count
past performance for as much as 50% of award criteria
in such major procurements as the Joint Air-to-Surface Stand-Off
Missile down-select solicitation to be imminently released.
Frankly,
for many institutional development contractors, application
of past performance as a mandatory evaluation criterion disrupts
business development strategies for capture of coveted Full-Rate
Production contracts on existing programs. Specifically, technology
"work arounds," and resultant budget and schedule
impacts in prior development phases of existing programs,
will injure incumbent contractors where past performance was
not a designated factor in those development solicitations.
A large number of current budget and schedule overruns stem
from stale fixed-price developmental contracts. Those contractors
will now be retroactively penalized in the subsequent Full-Rate
Production competitions for having reasonably assumed greater
levels of technical risk in the development solicitations,
particularly where innovative technology was the "discriminator"
for award of those phases. Even more ominous is the fact that
many contractors were encouraged to "buy in" to
such developmental phases to enhance customer goodwill and
keep those programs alive where there were insufficient
RDT&E funds available at the time. Since both contractors
and customers often knew that funding was insufficient,
many contractors bid the difference as de facto wholly
funded R&D to ensure competitive advantage for eventual
Full-Rate Production and life cycle aftermarket. Subsequently,
this unforeseen evaluation of past performance creates a "20/20
hindsight" scenario, because contractor "buy in"
on the development phase will now impede its ability
to win the subsequent Full-Rate Production competition
for that program, as well as unrelated programs.
Unfortunately,
the proposed DFARS rule on past performance effectively provides
a "strict liability" standard of adverse evaluation
where cost ceilings were overrun. This is also reflected in
the new "critical focus" on explanation of past
budget and schedule difficulties on "software intensive
development" programs under the recently issued DoD 5000
Series revision. This approach ignores the business
development strategies of contractors who consciously
invested as "loss leaders" with customer consent.
It also forces contractors, who had bid to generate profit
but encountered technical difficulties, to re-visit the potential
of asserting claims, pursuing ADR, or exploring other avenues
to protect their integrity. Previously, those contractors
would probably have reluctantly "eaten" the loss
on the fixed-price development contract so long as Full-Rate
Production was "on the horizon." Absent expeditious
corrective action by the contractor, that loss posture on
the development program may now preclude capture of the Full-Rate
Production contract as a matter law
when the past performance evaluation is conducted. Contractors
must immediately inventory past performance as it relates
to forecasted procurements, and Legal must devise program-specific
strategies to pre-empt erroneous or incomplete evaluation
for subsequent milestone phases and sister programs. We have
crafted fully articulated work around strategies in our new
Briefing Book on the Exploitation of Past Performance for
New Business Capture.
The detrimental
impact of past performance evaluations is rendered even more
alarming by the vast number of joint ventures, acquisitions,
corporate restructurings, and purchases of product lines to
expand market share. This is particularly true for developmental/producer
contractors who heavily leverage IR&D, wholly funded R&D,
and loss-leader RDT&E contracts to secure competitive
advantage for lucrative fixed-price Full-Rate Production and
"warm production" derivative revenues. Many of the
strategic business units that voluntarily "invested"
in fixed-price developmental programs have now become "impaired
assets" for purposes of new business capture, as opposed
to viable long-term "going concerns." While such
acquisitions were often closed at multiples of gross annual
revenues, those newly acquired "going concerns"
may well have become subsequently impaired when Congress mandated
past performance evaluations. In doing so, Congress jeopardized
the likelihood of those "going concerns" to win
future contracts. The cruel legacy will be twofold. The first,
is that such congressional edict effectively limits shareholder
return on those now-impaired "going concerns"
to their existing backlog, since new business capture
will be severely hampered, given the competitive nature of
the industry. The second, is that the acquired entity's past
performance history now legally taints the acquiring party
as the proverbial "being judged by the company you keep."
This requires immediate use of legal counsel to compartmentalize
and remediate the imputed threat to shareholder value.
There are a number of options in the restructuring of these
programs to subtly re-visit these issues with customers and
remove the stigma.
Under
the proposed DFARS rule, past performance data will be evaluated
for a period of the three years preceding the date of solicitation
issuance. Past performance "report cards" on existing
procurements will be issued at contract "completion"
by the CO, or annually for multi-year contracts. The proposed
DFARS rule defines date of "contract completion"
for prior contracts as the date of close-out. This means that
all contracts that have not been "completed" more
than three years prior will be considered for past performance
evaluation in subsequent procurements. Consequently, past
performance evaluations could well include more than a decade
of open contracts that have not been closed out due to lingering
administrative issues, such as cost overruns on stale, fixed-price
development contracts, schedule slippages, etc. The irony
is that those contracts with the strongest past performance
will be closed out in a timely manner and not be favorably
considered, while disastrous fixed-price development contracts
that have not been closed out will linger on with an infinite
"half-life." For that reason, legal counsel
should be enlisted to develop vehicles to close out stale
contracts without accelerating corporate "write-offs"
or inviting issuance of negative "report cards"
in the process. We have been successful in the use of such
options as confidential use of Rough Order of Magnitude
("ROM") and "gentleman's" Alternative
Dispute Resolution ("ADR") in concurrently closing
out such contracts while providing legitimate vehicles
for customers to replenish lost revenues by growth of other
high priority contractor programs.
Contractors
must also "scrub" existing relationships with business
partners to determine whether they should be maintained,
severed, or restructured. This presents challenges to
immediate procurements since (1) many teaming and subcontracting
agreements will already be locked in place, and (2) more than
50% of program revenue often flows through to subcontractors.
It has grave implications in existing developmental programs
and cooperative research and development agreements ("CRADAs"),
where joint ventures were used to trigger new requirements
with heavy amounts of IR&D, wholly funded R&D, B&P,
and commingled proprietary technologies. This is exacerbated
by the prevalent use of joint ventures to leverage technical,
management, price, and political advantage in down-selection
among "mega-teams" in today's major programs. Failure
to promptly review and reassure fellow teaming partners, or
mutually act to beneficially restructure such relationships,
will foster an atmosphere of suspicion, invite potentially
unfounded default terminations, and cultivate contractor
disputes at all tiers. We have crafted a number of
strategies to resolve such issues to the satisfaction of the
parties without triggering unsavory administrative disputes
and interminable litigation.
Moreover,
contractors who encounter cost overruns and schedule slippages
now have far greater problems than just poor past performance
evaluations. Both civilian agencies and DoD are currently
instituting performance-based management and schedule goals
for major acquisition programs. Whenever the Secretary of
Defense determines that major defense programs are "not
achieving, on average, 90 percent of cost, performance, and
schedule goals," he must conduct a program review.
In conducting the review, the Secretary must "(1) determine
whether there is a continuing need for programs that are significantly
behind schedule, over budget, or not in compliance with performance
or capability requirements; and (2) identify suitable actions
to be taken, including termination . . . ." Given the
drastically reduced DoD budget, and the fact that it is less
politically palatable to kill an existing Full-Rate Production
program, even it is deficient, it is virtually certain that
the review will result in the elimination of one or more development
programs. In other words, a defense contractor whose program
is only slightly noncompliant with its goals may be subject
not only to an adverse past performance "report card"
but, more importantly, to termination because the performance
of entirely unrelated programs has caused "the average"
to fall below 90% compliance. Therefore, it is vital for the
survival of existing programs and award of future procurements
for Legal to take immediate action to ensure that responsibility
for government-caused problems is properly assessed
before completion of a performance based review.
Furthermore,
the sources for past performance information are also unlimited.
Technical representatives and COs can trigger an adverse evaluation
by inadvertently providing incomplete or erroneous information
on a contractor's prior program performance. Obviously, the
motive is far more sinister in the case of disgruntled
former employees, who are tempted to extort ransom
by unfounded allegations of product substitution, false
certifications, or other scenarios that create the appearance
of impropriety, poor management, and poor past performance
all of which will impact upon past performance evaluation.
Moreover, failure to rebut an adverse evaluation will
result in a legal presumption that the poor "report
card" was factually correct, which, in turn, will inflict
damage in future procurements. Thus, contractor failure
to zealously rebut even one adverse past performance "report
card" on a prior procurement could be tantamount to
voluntary debarment.
Out of
necessity, contractors will expend valuable B&P funding
to rebut stale administrative disputes and clarify incomplete
or erroneous "report cards," instead of using those
diminishing funds to secure new contracts. Because the implications
of this to budgeted B&P are obvious, there is an immediate
need for Legal to move quickly to extinguish the sources
of those poor past performance evaluations, to avoid repetitive
harm from those same allegations on future procurements. Contractors
are thus well motivated to harness Legal assets to craft work
around strategies to protect their integrity on loss leaders,
fixed-price RDT&E cost overruns, and schedule slippages.
This stems from the well-founded fear that other customers
will be legally required to interpret failure to rebut
erroneous allegations as an admission of poor past performance.
We have crafted a number of strategies to protect imminent
procurements on major programs, and to compartmentalize and
resolve unfounded allegations from disgruntled employees.
V.
THE NEW DFARS FINAL RULE THREATENS PROPRIETARY DATA AND SOFTWARE,
AND CONTAINS VARIOUS CRIMINAL TRIGGERS
Meticulous
pre-award identification of technical data ("data")
and computer software ("software") is now required
for DoD procurements, to avoid waiver of proprietary rights
and avert the triggering of unfounded civil and criminal allegations
of "double dipping." You may already be aware
from our Briefing Book on the new DFARS Final Rule that we
strongly endorse the legitimate capture of privately developed
data and software assets from IR&D, B&P, wholly funded
R&D, and CRADAs, to ensure competitive advantage for Full-Rate
Production and derivative "warm revenues." The critical
necessity to protect such competitive advantage is underscored
by recent highly controversial statements of the Navy and
other Services to eliminate RDT&E funding and require
contractors to develop new systems as private-expense R&D.
Consequently, the need to protect proprietary data and
software inventories gleaned from IR&D, B&P, wholly
funded R&D, and CRADAs is paramount. Given the decreasing
levels of RDT&E funding amid calls for its very abolition,
contractors must select the vehicles that best protect proprietary
technology, while accelerating contractor return on IR&D
and wholly funded R&D through faster capture of the Full-Rate
Production contract. The recently issued DoD 5000 Series revision
mandates greater use of non-traditional contract vehicles,
where proprietary rights are better defensible, such as (1)
Advanced Concept Technology Demonstrations, (2) "rapid
prototyping," (3) "evolutionary and incremental
acquisitions," (4) "flexible technology insertion,"
and (5) increased use of modeling and simulation.
This is
a strong incentive for proliferation of virtual prototyping,
expansion of technical support services, growth of modeling
and simulation, and the insertion of proprietary technology
for after-market growth. It also provides opportunities for
contractors to engage in the "Technology Development
Approach" joint industry-government IPT, which is drafting
the "road map" to funnel RDT&E funding into
performance improvements over existing "baseline"
systems, such as helicopters, fixed-wing aircraft, avionics,
spacecraft, etc. By drawing upon current IR&D and wholly
funded R&D, contractors can encourage program management
to exercise the new discretion to fund development through
these non-traditional contract vehicles. Contractors can then
privately fund segregable portions of development, using these
vehicles to accelerate cash flow, while incrementally "evolving"
the program to achieve customer requirements at controlled
unit cost. Use of legal counsel to negotiate these contracts
and growth options will be critical to ensuring that statutory
competition requirements are not inadvertently breached in
the process, and that proprietary assets are properly protected.
The revised
DFARS, however, also provides new procedural and substantive
perils to contractors. First, it relinquishes the discretion
of contractors to identify privately developed data and software
assets at any time prior to delivery. Detailed identification
of all privately developed data and software assets prior
to award is now required to protect proprietary assets. The
new solicitation clauses clearly dictate that post-award
assertions to privately developed data or software will
be granted only if the contractor rebuts its pre-award
disclosure failure by affirmatively demonstrating new information
or inadvertence. This mandatory shift requires that Legal
conduct program-specific audits prior to the "bid/no
bid" management decision to protect proprietary technology
selected for incorporation into the Preliminary Technical
Solution.
There
are various protocols to efficiently audit existing inventories
of IR&D, wholly funded R&D, B&P, and CRADAs, to
protect proprietary assets from unfounded CO challenges during
performance. Such audits must meticulously reconstruct the
source-of-funding, the purpose of development, segregable
portions, and derivative data and software modules. Additionally,
we have historically negotiated non-traditional placeholder
vehicles into development contracts to protect assets
anticipated to be developed during performance at private
expense. This is important for development phases because
it is that innovative technology which drives the potential
willingness of DoD to pay a premium for those "technical
discriminators" in the subsequent Full-Rate Production
competition. Because "source of funding" determines
ownership, it is critical for Legal to craft these strategies
prior to the bid/no bid election so that specific subcomponents,
subprocesses, and even software subroutines, can be legitimately
segregated for privately funded development.
The new
DFARS Rule also contains other pre-award disclosure requirements
that can trigger various civil and criminal repercussions.
Both the old and new DFARS Rules require pre-award identification,
down to the specific document, of all "identical
or substantially similar" government-funded or "mixed-funding"
data and software ever "produced for, delivered
to, or obligated to [be] deliver[ed], to the Government under
any contract or subcontract." Specifically, inadvertent
contractor failure to make full pre-award disclosure of intended
use of mixed-funding or government-funded data and software
has purportedly triggered qui tam whistle-blower allegations
of False Statements Act and False Claims Act
violations on high profile programs. Review of the draconian
pre-award disclosure requirements dictates that prime-offeror
and subcontractor audits be conducted by Legal on all
existing and imminent programs, and that a protocol be
crafted for corporate and subcontractor compliance.
VI.
CONCLUSION
There
is no doubt that recent acquisition policy reforms have fundamentally
changed the "incremental" sequence of negotiated
procurements. The shift to performance specifications demands
that successful offerors assume substantially greater levels
of risk than ever before, with little, if any, opportunity
to "get healthy" through ECPs for technical difficulties,
or pricing and schedule judgment errors. Successful offerors
must anticipate that they will assume those greater risks
without the benefit of discussions, due to (1) the new constrictive
competitive range determination for "efficient"
competition, (2) mandatory evaluation of past performance
on initial proposals, and (3) the growing tendency for customers
to make award on initial proposals. Therefore, prudent business
judgment dictates that every "bet the company" proposal
be submitted as a "First and Final Offer."
The contractor's
plight is further exacerbated by such procedural triggers
as the new DFARS requirements to meticulously identify data
and software assets prior to award, or risk waiving proprietary
rights and inadvertently triggering civil and criminal repercussions
for unfounded allegations, such as "double dipping."
Consequently, early harnessing of Legal resources with broad
industry insight is critical to pre-empting, containing, and
sharing that increased risk, for those contractors who seek
to profitably conduct business with the government. We are
amenable to scheduling an on-site briefing as relates to application
of these strategies to your major programs. Please advise
as to your preference.
Endnotes
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