Of late the pages of this blog have been entirely coronavirus and COVID-19 obsessed—and for good reason. But that does not stop the Government Accountability Office from deciding bid protests.
With all that’s been going on, writing about a GAO decision regarding run-of-the-mill unreasonable cost realism evaluation is downright refreshing.
Continue readingGAO sustained a protest recently where the agency seemed to think that a reasonable cost was also a realistic cost.
That is not necessarily so.
Continue readingWe previously have written about the trending preference toward fixed-price contracts, and away from cost reimbursement contracts, in defense procurements. The Defense Department’s supplement to the FAR (known as DFARS), in fact, already includes restrictions on using cost-reimbursement or time and materials contracts.
Now the President has come out in favor of fixed-price defense contracting. In a Time Magazine article published today, President Trump signaled strong support for the fixed-price contracting preference, going so far as to “talk of his plans to renegotiate any future military contracts to make sure they have fixed prices.”
Earlier this month, the GAO released a comprehensive report detailing the trends in government contracting over a five-year period (from fiscal year 2011 through 2015). The entire report is available here. If you have a few hours to spare, it’s worth a read; if not, this post will summarize a few of its most eye-catching nuggets.
The 2017 National Defense Authorization Act establishes a preference for the DoD to use fixed-price contracts, and will require executive approval of cost reimbursement procedures for certain high-dollar procurements.
Under a solicitation for a cost-reimbursable contract, an offeror’s proposed costs are not controlling, because the government is on the hook for the contractor’s actual and allowable incurred costs. Before making an award decision, the government must consider whether the proposed costs should be upwardly adjusted.
A recent GAO bid protest decision highlights the need for offerors bidding on cost-reimbursable work to make sure that their proposed costs are realistic and substantiated—including the proposed costs of major subcontractors.
Here’s hoping that you had a wonderful Thanksgiving, full of relaxation, family time, football and lots of food.
For one Arizona contractor, the holiday was a little less festive this year, after the contractor lost out on a Navy cost-reimbursement contract–in part because the Navy unilaterally upped some of the contractor’s proposed labor rates. The GAO found nothing wrong with the agency’s decision, holding that the Navy reasonably determined that the contractor’s proposed labor rates were unrealistically low.