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Introduction to Government Contract Management - Part I: The RFP Review

Posted by Russ Farmer on Fri, May 07, 2021 @ 09:52 AM

The Contract Management and Administration function is critical to the success of any government contractor, both large and small. The Contract Manager (“CM”) is responsible for “the business” aspect of the procurement effort from start to finish.

The government procurement process for contractors starts with a formal solicitation from the government and ends when all parties to the procurement (government, subcontractors and prime contractor) have “signed off” on contract completion.

In this first of an ongoing series, we will discuss CM responsibilities in the initial steps of the government procurement process.

 

Request for Proposal – Initial review

Government procurements usually start with a formal solicitation or Request for Proposal (“RFP”). The RFP usually provides a Statement of Work (“SOW”), specific details of the anticipated contract such as period of performance, type of contract, etc., proposal instructions and evaluation criteria. The RFP will also disclose if there are specific restrictions for contractors. The most common restrictions include “small business set aside” and “8(a) set aside”, i.e. minority-owned and economically disadvantaged small businesses. If no specific restriction is noted the solicitation is open to all (referred to as “open competition”).

Once the RFP is received, the CM needs to distribute a copy to the appropriate technical and management personnel.   Each person participating in the follow-up RFP review should:

  1. Read the RFP thoroughly, maybe even two or three times to be sure all the critical elements are identified,
  2. Clearly identify what is required contractually,
  3. Identify what type of contract is anticipated,
  4. Evaluate the various risks,
  5. Evaluate the terms and conditions for compliance issues,
  6. Ensure proper protection of intellectual property including proposal information, trade secrets and possible inventions either created as part of the proposal or during the awarded contract.

The CM should schedule a formal meeting with technical and management personnel to go through the RFP in detail together. Prior to this meeting, the CM should prepare a bulletized list of the key consideration components with an emphasis on elements of risk. Elements of risk include:

  • Contract type risk Although there are a variety of contracts used by the Federal Government there are three types commonly used in procurements:
     
    • Firm Fixed Price (FFP) (FAR 16.202) The contractor is required to deliver one or more specific deliverables for a set price. FFP contracts have the most risk for a contractor including: i) technical/performance risk, ii) timing risk, iii) financial risk, iv) management risk. If the contractor cannot place bounds on the risk an FFP proposal should not be submitted.

    • Cost Plus Fixed Fee (CPFF) (FAR 16.306) – The contractor is to use its best efforts toward the SOW until the estimated cost has been incurred. The contractor is required to provide a cost estimate to completion once 75% of the funded amount will be incurred within 60 days (FAR 52.232-20 and 21). There is very little risk either financially or technically in this type of contract as long as the contractor knows what its cost (both direct and indirect) are at any point in time. It is important to note that the contractor is not required to continue work if the funding amount (which can be less than the contract value) has been reached even if the statement of work is not complete.

There is some financial risk to the company on CPFF contracts until indirect rates have been finalized. DCAA may not audit and finalize indirect rates for several years after the work is performed. As a result of a DCAA audit the company could have to repay costs determined by DCAA to be unallowable for some reason.

    • Time and Material (T&M) – (FAR 16.601) – The contactor invoices for all time worked at specific hourly rates per labor category (this is the “Time” portion) and any approved “Materials” (loosely defined to include travel and other direct costs). The risk is primarily a financial risk associated with both hiring personnel at the salaries proposed by category and any indirect cost rate growth. T&M contracts typically do not have required deliverables at a fixed price. T&M rates can be risky if the Government does not allow G&A to be applied to Material and the contractor’s approved rate structure applies G&A to all costs.

  • Financial Risk:
     
    • Financial requirements to successfully perform the contract:
      • Hiring of personnel
      • Equipment
      • Facilities
    • Payment schedule
    • Bonding requirements
    • Penalties for breach of contract
    • Controlling indirect costs, and
    • Project Management to earn profit

  • Performance Risk:
     
    • Do we fully understand what is required in the statement of work?
    • Can we deliver what the government wants in the time required?
    • Is there any uncertainty (contract terms and SOW) needing clarification? How can we get clarification?
    • Do we have experience in performing similar work? If not, what subcontractors and/or consultants are needed to obtain the necessary experience?
    • How can we control increased work during the contract (what is commonly known as “scope creep”)?

 

RFP – Initial Review Meeting

The goal of this initial review meeting is to identify all the issues required to be satisfactorily addressed by the company which will then become the basis for making a bid/no bid decision. The agenda for this meeting should include:

  1. Risk identification and associated mitigation actions,
  2. Define elements of a winning team, i.e. answer the question “what will it take to win this award?”,
  3. Can we pull together a winning team based on the evaluation criteria in the RFP?
  4. If we will require subcontractors/consultants how quickly can we identify them and have Non-Disclosure Agreements (NDAs) in place to obtain input for a final bid/no bid decision?
  5. What areas require further research to answer?
  6. Are there sections within the RFP that require clarification and how do we get clarification?
  7. What is a reasonable proposal schedule and do we have resources to prepare a winning proposal?
  8. When do we need to make the bid/no bid decision with sufficient time to prepare and submit a proposal?

 

Bid/No Bid Decision Meeting

The objective of this meeting is to make a final bid/no bid decision. If it is “no bid” the “game” is over. If the decision is to submit a proposal (bid) then there will be a flurry of activity including:

  1. Identify the proposal manager who is responsible for making sure there is a complete proposal plan and schedule to include assignments and due dates.
  2. Obtaining answers to any questions of uncertainty or clarification within the RFP. Generally, any questions submitted after the RFP has been released will have both the question and answer provided to all prospective contractors (your competition) so care must be taken when asking questions.
  3. The CM needs to identify all potential subcontractors and consultants. Formal agreements need to be prepared, at a minimum this should include Non-Disclosure Agreements (if not already in place), formal Teaming Agreements or issuance of a formal RFP to multiple subcontractor candidates.
  4. From this point forward all communication within the company and externally needs to be on a Proprietary Information basis with only disclosure where needed and only if the proper agreements are in place.

In the second installment of this series (coming mid-May), we will discuss the responsibilities of the CM during the proposal process. To learn more about ReliAscent's outsourced government contract management and administration services, click here, or contact us today.

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Topics: government contract management, DCAA Audits, government contract administration, government contract management consulting, outsourced government contract management, Government RFP Review Process, dcaa audit support