2012 Seminar & Workshop on U.S. Government Procurement

Presented By

Mr. Ping Li

PMP, CISSP

E-Mail: [email protected]

Ping Li Introduction 

   



Masters of Science in Information Systems Technology (George Washington University) Bachelor of Science in Electrical Engineering (University of Pennsylvania) Project Management Professional (PMP) Certified Information Security Auditor (CISA) - Pending Certified Information System Security Professional (CISSP) 20 years of project management and technical operations management experiences with the U.S. Government as Contracting Officer's Technical Representative (COTR) and Source Evaluation Board (SEB) member.

For this workshop, Mr. Li’s remarks are his own personal opinion and do

not represent the views of any federal agency or the United States Government. 2

Agenda

• Understanding U.S. Government Contracts • Contract Issue Examples • Case Study: US Air Force Tanker Procurement

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U.S. Government Budget Process: Fiscal Year (October 1 to September 30) Annual Budget Request Process: 1. 2. 3. 4. 5. 6.

Government departments/agencies submit budget to Office of Management Budget (OMB); OMB compiles the President’s Budget and submits it to Congress; Congress (House of Representative and Senate) writes and votes on spending bill (law); President signs final budget bill into law; Office of Management gives approved budget to departments/agencies; and Departments/agencies pays bills and salaries.

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U.S. Government Budget Process: Continuing Resolution: 1.

2.

If new budget is not signed before October 1, then all spending stay at last year’s budget level. No new contract can be awarded during Continuing Resolution.

Anti-Deficiency Law: 1. 2.

No contract can be awarded without actual budget. Cannot make a contract based on verbal promise.

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Funding Type (or “Color of Money”):

“One Year” Money (Only good for one fiscal year, must be used before September 30) “No Year” Money (Has no time limit, best for large, multi-year projects)

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Contract Types:

a.

b.

c.

d.

Firm Fixed Price (Exact specification, usually for equipment or supplies) Time & Material (T&M) (Labor categories, usually for consultants) Performance Based (Functional capabilities, usually for operation support with measurable Service Level Agreements - SLA) Cost Plus  

Cost Plus Fixed Fee (CPFF) Cost Plus Award Fee (CPAF)

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Contract Competitions: a.

b. c.

Full and Open (18 to 24 months) Limited Competition (12 to 18 months) Small Business Set-Aside (12 to 18 months)    

d. e.

Minority and Disadvantaged (8a) Women-Owned Service Disabled Veterans Native American

Sole Source (3 to 6 months) Task Order from Existing Government Wide Acquisition Contract (GWAC) (2 to 6 weeks) 8

Contract Selection Types: a.

Lowest Price (Usually for fixedpriced contracts)

b.

Best Value (Price + Technical strength, usually for cost plus or performance-based contracts )

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Contract Ceiling:

a.

Total Cost

b.

Total Labor Hours

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Period of Performance:

a.

Fixed start and end dates

b.

## months after signing contract

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Place of Performance:

a.

At Government site  

b.

Lower cost to Government; Government pays rent, phone, computer

At Contractor site  

Higher cost to Government; Contractor charges Government for portion of contractor’s facility and expenses.

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Contractor Types:

a.

Prime Contractor: 



b.

The only one signing contract with the Government The only one responsible for delivery of goods and services

Subcontractor:  



Works under the Prime contractor No legal relationship to the Government No guaranteed to get work (unless being Key Personnel)

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Contractor Roles: System Engineering & Integration (SE&I):  Design and build systems Independent Verification and Validation (IV&V):  Evaluate and test systems Federally-Funded Research and Development Centers (FFRDC)  

 



Does not sell hardware or software Does not develop systems Only provide advice to Government Can help Government evaluate bidders

RAND, MITRE, and some national laboratories designated by Government 14

Contractor Cost Calculations: For Cost Plus Contracts:   

 



Labor Rate (usually between $30 to $300 per hour), Overhead (usually 30% to 60% of Labor Rate) General and Administrative (usually 20% to 40% of Labor Rate) Other Direct Costs (travel expense, supplies) Pass Through (usually 2% to 10% of other company’s products or experts purchased by Government through this contract) Fee (or Profit) (usually 2% to 15% of Total Cost)

(Labor) + (Overhead) + (G&A) + (ODC) + (Pass Through) + (Fee) = Loaded Rate 15

Contractor Cost Calculations:

For Time and Materials:  “Loaded Hourly Rates” for each Labor Category

For Fixed Price Contracts: 

Fixed Price for each task or deliverable item

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Contract Termination Methods: a.

Completed all delivery of goods and services

b.

Reached Cost or Hours Ceiling

c.

Terminated for convenience (usually due to lack of Government funds)

d.

Terminated for Default (usually due to poor quality) 17

Contract Issue Examples:

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Contract Issue Example # 1: On a Fixed Price Contract, U.S. Government asks for changes:  What can the Government do to minimize change costs?  What can the contractor do to be paid for the changes?

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Contract Issue Example # 2: On a Fixed Price Contract, the Contractor is late in delivering the equipment or services:  What can the Government do to avoid paying for increased costs?  What can the contractor do to avoid penalty and still be paid in full? 20

Contract Issue Example # 3: On a Cost Plus Contract, U.S. Government asks for changes:  What can the Government do to minimize change costs?  What can the contractor do to get paid for the changes?

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Contract Issue Example # 4: On a Cost Plus Contract, the Contractor made many mistakes and had to re-do work:  What can the Government do to avoid paying for increased costs?  What can the contractor do to get paid in full for the re-work?

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Contract Issue Example # 5: On a Performance Based (or Cost Plus Award Fee) Contract, if the equipment delivered does not meet the functional specification of what was “expected”:  What can the Government do?  What can the contractor do?

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Contract Issue Example # 6: On a Time and Material contract, if the Senior Engineer labor category is $175.00 per hour: 



What can the Contractor charge the Government if that Senior Engineer is only paid $100 per hour? What can the Contractor charge the Government if that Senior Engineer is paid $200 per hour?

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Contract Issue Example # 7: On a Cost Plus Fixed Fee contract, Contractor A is the prime, teams with Contractor B, and wins a contract with U.S. Government: 





Is Contractor A required to give some work to Contractor B? How can Contractor B ensure that it gets some work from Contractor A? How can the Government force Contractor A to use Contractor B? 25

Contract Issue Example # 8: Contract Cancellation 



How can the Government cancel a contract after signing the contract? If the head of the Government Department tells the Contractor that they are fired and will cancel the contract, what steps can the Contractor take to protect its contract?

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Contract Issue Example # 9: Government owns all rights to intellectual properties developed under its contracts. Contractor A wins a Government contract bidding to use a software tool that was previously developed by the Contractor’s own funds: 

How can the Contractor protect ownership of that previouslydeveloped software? 27

CASE STUDY This is a fun and practical workshop to test the attendee’s understanding of US Government Procurement Let’s compete!

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Case Study: U.S. Air Force Tanker Contract 





Discuss recently-published news articles on the US Air Force KC-46A Aerial Tanker Contract Class participants will form two groups to pretend as the two bidders:  Boeing: (767)  Airbus/EADS: (A330) Each group will react to a set of procurement challenges

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Air Refueling Tanker Bidders:

Boeing 767

Fuel Load Capacity: 200,000 Pounds Fuel Burn Rate: 1,500 Gallons/Hour

Airbus A330

Fuel Capacity: 240,000 Pounds Fuel Burn Rate: 1,900 Gallons/Hour

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What Happened to AN-70 Bidder?

5 minutes late… 31

Case Study Workshop: U.S. Air Force Tanker Contract    

    

Submit bids (Be on time) Evaluate bids (Use exact specifications) Lobbying (Jobs, jobs) Award and Protest (Always expect protest) Re-open competition (2nd chance) Best and Final Offer (BAFO, lower cost) Winner vs. Loser (Are you happy?) Delivering the products (Get to work) Cost overrun (Need more time & money, please) 32

Q&A

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Thank You!

Mr. Ping Li

PMP, CISSP

E-Mail: [email protected]

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