The Three Ps of Procurement
By Michael A. Hordell and Sean P. Bamford
Every procurement, whether large or small, begins with a planning phase. On one hand, guidelines for procurement planning differ slightly, based on the agency procuring the goods or services, as well as the complexity of the procurement itself. Nevertheless, regardless of whether the procurement is estimated at over $1 million or under $100,000, a contracting officer should keep in mind the three Ps of the procurement process: Planning, Participation, and Protection.
Prudent Planning Sets the Stage
The federal government procurement process1 involves multiple steps, starting with an analysis of the agency’s needs and whether any limitations infringe on meeting those requirements. For example, agencies may only conduct procurements as permitted under authorization acts and appropriation acts (such as limitations on money or subject matter). In addition, an agency must have funds available to proceed with the procurement, as outlined in Article I, Section 9, Clause 7 of the Constitution and the Anti-Deficiency Act (31 U.S.C., Section 1341). This legislation prohibits obligating funds before Congress has appropriated the amount.
After answering initial questions as to whether the agency has the legal right to procure specific items or services, the agency must investigate issues such as the presence of any statutory or regulatory restrictions that might affect sources used by the agency.
In general, since the Competition in Contracting Act (CICA) became law in 1985, government agencies have operated under the policy of “full and open” competition.2 However, exceptions exist. For example, certain items or services must be purchased from the National Industries for the Blind or the National Industries for the Severely Handicapped.
To obtain assistance in identifying particular needs, a procuring agency might contact end users of the product or service being procured. This process will allow the contracting officer to gain a full understanding of the minimum needs for both the agency and end user.
After identifying the agency’s needs, the agency will, in most cases, begin to develop the Request for Proposals (RFPs). As part of this process, the agency will assign a team to develop specifications. This team will generally include individuals who are technical experts with regard to the items or services being procured by the agency.
Agencies are required to develop specifications that permit full and open competition, state the agency’s minimum needs, and include restrictive provisions or conditions only to the extent that they satisfy the agency’s minimum needs or are required by law. When an agency overstates its minimum needs, the agency violates the CICA.3 However, restricting competition to a particular item through the RFP’s requirements or specifications is not always improper. As long as the agency satisfies a specific, legitimate need, was reasonable, and did not unduly restrict competition, the agency (in most cases) will not violate the CICA.4
An agency might encounter a situation by which contractors complain to the agency or file a protest with the Government Accountability Office, citing that the agency’s requirements are too restrictive. Nevertheless, a mere disagreement with an agency’s requirements does not make them an unreasonable restriction. Therefore, a contracting officer should not be dissuaded solely because of a contractor’s complaints. This recommendation does not imply that an agency should ignore what a contractor suggests or includes in a protest. In fact, certain instances may call for the agency to actively seek contractor input.
For some procurements, an agency will conduct market research prior to issuing a formal RFP. When procuring a product or service that has not been previously procured by the agency or that is “cutting-edge technology,” it may be beneficial for an agency to issue a draft RFP, statement of work, specifications, or a Request for Information (RFI), which are all forms of market research. In this way, the agency will be able to request input from a given industry.
For example, issuing an RFI might be especially beneficial when the agency is procuring commercial off-the-shelf software and is unfamiliar with various programs that could satisfy the application’s needs. By conducting an RFI, the agency will gain valuable information that will assist in the development of an RFP.
After the agency establishes minimum needs for the procurement and develops requirements or specifications, the next step involves identifying any unique requirements or clauses to be included in the solicitation. To perform this step, an important part of the procurement planning process focuses on establishing evaluation criteria. For instance, various regulations, such as 10 U.S.C., Section 2305(a)(2) and 41 U.S.C., Section 253a(b), require that all RFPs include a statement covering all the significant factors and subfactors the agency reasonably expects to consider in evaluating the proposals, as well as the relative importance of each factor and subfactor.5
A procuring agency is also required to state in the RFP, at a minimum, whether all evaluation factors other than cost or price, when combined, are (1) significantly more important than cost or price; (2) approximately equal to cost or price; or (3) significantly less important than cost or price.6 Although omitting this information is not a fatal error, its absence could subject the procurement to a protest and, in turn, delay the acquisition process while the protest is resolved.
In addition, each RFP must evaluate cost or price,7 the quality of the procured product or service by considering one or more non-cost evaluation factor(s),8 and past performance. Although some exceptions exist, these requirements generally apply to source selections for negotiated, competitive acquisitions estimated to exceed $1 million.9
The RFP itself contains several sections, each of which contains important information. However, Sections C, L, and M include key data. Section C contains a detailed description of the items and/or services being procured, while describing the action to be performed. Generally, Section C does not prescribe how the tasks are to be performed, unless the government agency uses performance specifications or a service contract.
Section L instructs offerors as to the content and format of information to be included in their proposals. This section guides offerors in preparing their proposals, outlines what the public entity plans to buy, and emphasizes any special-interest items or constraints.
Lastly, Section M forms the basis for evaluating each offeror’s proposal. This section informs offerors about the relative order of importance of assigned criteria to ensure that integrated assessments can be made of each offeror’s proposal. While it is critical for all RFP sections to be unambiguous, information in Sections C, L, and M must be clear, or a procuring agency will likely face a protest.
The agency is also generally required to publish notification10 of the procurement action at www.FedBizOpps.gov (if the procurement value is more than $25,000) or, for small procurements, by displaying the notice in a public place and/or on an electronic bulletin board.11 Thereafter, the solicitation is provided to potential offerors in various ways. Most agencies post their RFPs on an Internet site.12
In some procurements, especially those that are logistically or technically complex, it might be necessary to hold a pre-proposal bid conference, which provides an opportunity to answer questions, provide added information, or allow the contractors to view a facility or work site.
An agency, in response to an offeror’s or bidder’s questions, should issue an amendment when providing answers to those questions. An amendment should also be issued when the agency determines the need to amend its requirements. However, before an agency reaches this step, and ideally performed from the very beginning of the process, the RFP should be reviewed by members of the Office of Counsel and the Procurement Policy Office. While this review may not prevent the need to amend a solicitation, the process will ensure full agency participation that can enhance the procurement’s final result.
For optimum results, it is crucial that during the planning process, procuring agencies involve the Office of Counsel (abbreviated as “Counsel”) and the Procurement Policy Office (referred to as “Policy”), if the agency has a policy office. While some contracting officers might view Counsel as an obstacle that must be hurdled before issuing a solicitation, Counsel participation in the procurement process generally helps contracting officers avoid specific problems.
Both the Counsel and Policy offices provide unique perspectives to any procurement. Each representative looks for information that a contracting officer may not be aware of. These individuals provide a review that is not influenced by pressures placed on contracting officers by end users.
By calling on individuals to review the RFP, who will not be evaluating offeror’s proposals, the contracting officer will gain impartial “eyes” to assess the agency’s actions. The Policy Office is generally concerned with whether all of the proper clauses, especially local clauses that tend to be omitted from the RFP, are correctly inserted and that the agency’s procurement policy is not being circumvented.
The Counsel counterpart will review documents with an eye towards preventing litigation. Representatives will review the RFP to ensure that it is legally sufficient and achieves the minimization of risk.
In addition, Policy and Counsel reviews will ensure that the resultant awardee will be aware of somewhat arcane laws, such as recommending that the Berry Amendment (containing domestic source restrictions) is included in the RFP. If necessary, Counsel members can explain these laws to the contracting officer.
Counsel and Policy representatives can also assist the contracting officer in addressing practical issues, such as when the agency may restrict full and open competition. Issues relating to full and open competition include the following:
(1) Should the procurement be restricted to contractors who have specific certifications or clearances?
(2) Are there data requirements or other limitations restricting the procurement to a limited number of sources or even a single source?13
(3) Is it in the government’s best interests to limit competition in order to develop alternate sources of supply or to maintain a select base of suppliers?14
(4) Should the procurement be set aside for small businesses?15.
Only after the agency has determined its actual needs, as well as
reviewed any legal or policy concerns involved, can the agency begin to develop an appropriate vehicle for satisfying those needs.
In addition, Counsel and Policy members might be good sounding boards for ideas that might not be related to their roles in the acquisition process. For example, because of their respective impartiality, along with serving as “buffers” between the contracting officer and the end user, these individuals may instruct the contracting officer about how to best proceed with an RFP and state the agency’s minimum needs.
In regards to the planning and participation functions, the agency’s goal is to ensure that the public entity has established its needs, followed by awarding a contract to the offeror whose proposal satisfies specific requirements and represents the best value to the agency.
However, another prime goal focuses on protecting the agency and its customer, at all times. Essentially, this goal relates to establishing a procurement process, which to the maximum extent possible, prevents the filing of a bid protest.
A well-planned procurement, which integrates Counsel, Policy, and the necessary procurement officials in the preparation process, is less susceptible to bid protests. This involvement does not make a contract award protest proof, because no award is totally resistant. However, an agency can reduce its exposure to a potential, successful protest by following guidelines outlined in this article and in FAR Part 7.
In addition, an agency can reduce contract claims, especially based on ambiguous specifications or requirements, by relying on Counsel members to review the RFP’s requirements and specifications.
Following the simple guidance outlined in this article will allow the agency to meet its needs in an expedient manner. In the end, all parties want to satisfy needs of the end user and protect the agency from unnecessary litigation. At times, even when a contracting officer follows the three Ps, a bid protest will be filed and ruled in favor of the contractor. Nonetheless, this outcome does not mean that the agency failed to solicit an optimum procurement. In those rare instances when an agency complies with the three Ps and is unsuccessful in defending against a protest, for whatever reason, the agency has expanded its knowledge base and will be better prepared for future procurements.
Editor’s Note: Michael A. Hordell, Esq., is a former Procurement Counsel for the Gov-ernment Accountability Office and is the head of Pepper Hamilton LLP’s Government Con-tracts Practice Group, based in Washington, DC. He is also the current Chair-Elect of the American Bar Association’s Section of Public Contract Law.
The co-author, Sean P. Bamford, Esq., is a former Assistant Counsel with the Defense Logistics Agency and current associate at Pepper Hamilton LLP.
Additional articles in this six-part series, “A Year in the Life of a Procurement,” will appear in upcoming issues of Government Procurement Journal. Articles will address legal issues surrounding the following topics: pre-proposal protests, evaluation of offers, post-award protests, contract administration, and contract claims.
1 Federal Acquisition Regulations (FAR) Part 7 addresses the processes and policies related to procurement planning. Though not discussed in this article, FAR Part 7 is an invaluable resource through-
out the procurement planning process and should be used by all contracting personnel.
2 See FAR Subpart 6.1 for a discussion of full and open competition.
3 See Systems Management, Inc., Qualimetrics, Inc., Comp. Gen. B- 287032.4; B-287032.4, Apr. 16, 2001, 2001 CPD, Paragraph 85.
4 See American Eurocopter Corp., B-283700, Dec. 16, 1999, 99-2 CPD, Paragraph 110; see also Instrument Specialists, Inc., B-279714, July 14, 1998, 98-2 CPD, Paragraph 106.
5 See FAR 15.304(d).
6 See FAR 15.304(e).
7 See 10 U.S.C., Section 2305(a)(3)(A)(ii); 41 U.S.C., Section 253a(c)(1)(B); FAR 15.304(c)(1).
8 These factors could include past performance, compliance with solicitation requirements, technical excellence, management capability, personnel qualifications, and prior experience. See 10 U.S.C. 2305(a)(3)(A)(i) and 41 U.S.C. 253a(c)(1)(A).
9 The Department of Defense issued a deviation from this requirement. See DAR Tracking Number: 99-O0002, 15.304-(c)(3).
10 Note that emergency, certain classified procurements, and other special acquisitions may not be publicized. See FAR Section 5.202. For example, where an agency determines that it has an “unusual and compelling urgency” for a supply or service and delay in award would result in “serious injury” to the government agency, an award may be made without publication and with limited or no competition. See FAR Section 6.302-2.
11 See FAR Section 5.101; FAR Section 5.203.
12 See FAR Section 5.102.
13 See FAR Section 6.302-1.
14 See FAR Subparts 6.2, 6.3.
15 See FAR Section 6.203, 6.204.