Summary
We think this $600M IDIQ draft solicitation for shared IT services came out of the oven a bit early and is under-cooked. The draft contains many unresolved pricing issues and conflicting pricing requirements.
Background
The Department of Transportation Enterprise Information Technology Shared Services (EITSS) is a seven-year follow-on to the existing Common Operating Environment- IT Services Support (COE-IT) contract. The incumbent contract is held by ActioNet, Inc. under IDIQ contract # DTOS5909D00467 and runs through September 30, 2019. Currently, COE-IT has cumulative funding obligations of about $439M, including options, out of a total estimated ceiling of $500M. EITSS was advertised as a $600M Full & Open competition with a 25% small business set-aside. DoT has neither confirmed or clarified this acquisition strategy in their draft RFP.
The draft RFP includes three task order performance work statements:
• Program Management & Integration Support (PM/IS) (Attachment J-1)
• End User Support (Attachment J-2)
• Infrastructure Operations (Attachment J-3)
Ordering Period and Task Order Period
The IDIQ ordering period totals 7.5 years reflecting a 24-month base period and (5) 12-month option periods and a 6-month extension period. Task Order length cannot exceed 7.5 years, meaning offerors should take a 15-year view to their pricing strategy. Curiously, the current pricing template is aligned to the 7-year IDIQ ordering period and does not address the extended task order performance period. This could be important if IDIQ ceiling rates are required. We recommend offerors prepare for the longer-term view when considering ceiling rates.
What’s the Real IDIQ Ceiling?
The draft identifies a $7M ceiling (in two separate sections). DoT’s Q&A indicated a $600M IDIQ ceiling. We realize the draft reflects an obvious blunder. However, we’re not sure a $600M ceiling is sufficient if EITSS is also intended to replace FITSS and RSIMSS contracts (as was confirmed in the Q&A).
What's the Acquisition Strategy?
Previous Q&A documents stated the contract would be awarded under full & open competition with 25% small business set-aside. The draft pricing template (Attachment J.37) and Section L, imply that DoT intends to set aside the End User Support task order for small business offerors while large businesses will compete for PM/IS and Infrastructure Operations. However, DoT has not explicitly stated that intent. Furthermore, there is no comment on the contemplated number of IDIQ contracts DoT will award.
Will the Real Pricing Volume Please Stand Up?
We counted four separate pricing instructions
- L.15 Price/Business Proposal
- L.16 Cost/Business Proposal
- L.17 Firm Fixed Price CLINs
- L.17.1 Time and Material Labor CLINs
The instructions at L.15 do not provide any specific instructions about submission of cost or pricing information. The title implies submission of a price proposal. L.16 requires offerors to provide a complete breakdown by cost element (material, labor, indirect, etc.) – a costproposal. However, the J.37 pricing template only requests fully burdened labor rates. Section L.17 address fixed price CLINs. However, neither instructions nor the pricing template identify the PWS portions that are fixed price. Section L.17.1 instructs offerors “to make an independent assessment of the resources required to perform the tasks described in the PWS (Attachment J-1, J2 and J3). Offerors should use their own judgment based on their experience and approach to complete this project. Propose the price appropriate for the requirement...” However, the pricing attachment identified 100 FTE per year for End User Support and 50 FTE per year for PM/IS (no information on Infrastructure Ops). We have two important questions here:
1. Are offerors required to use the LOE as stated in the pricing template or are they permitted to adjust LOE according to their technical approach?
2. Will the LOE plugs drive total evaluated price? Section M is silent on total evaluated price and only states, “The Government will evaluate offers by considering rates presented for the seven-year base period and the additional six-month period that may be authorized IAW FAR 52.217-8… The total proposed price will consist of the Contractor’s proposed rates for the five-year base period and the option pricing for the additional six-month period.” We interpret this language to potentially mean that DoT will apply the Offeror’s fully burdened labor rates to the LOE plug figures shown in the pricing template to arrive at a Total Evaluated price. Offerors should aggressively seek clarification on exactly how DoT intends to evaluate prices.
Conflicting Pricing Signals
Attachment J.37 pricing template contains a transition pricing table and three task order pricing tables (End User, PM/IS, and Infrastructure Ops). It also provides 111 labor category descriptions. However, not all 111 categories are utilized in the pricing template and at least one labor category is missing – Asset Manager – Senior.
Importantly, section B.3 states the services specified in the IDIQ have been determined to be commercial. Yet, the pricing requirements (and associated documentation) seem to contradict this determination. The previous COE-IT solicitation requested commercial type pricing by functional area. Each functional area was priced per seat, per account, per gigabyte, etc.
For EITSS, fully burdened labor rates are requested by labor category and task area. The template requests both on-site and off-site labor rates. J.37 also contains this curious language, “The DOT fully expects that the contractor will mirror the current staff currently in place today on Day 1 of the contract. The SEC fully expects the contractor to work with the SEC to transition the staffing and delivery model over time to a Firm Fixed Price (FPP) contract that lower the staff count and to gain operating and cost efficiencies. The rates provided by Offeror will be used to assess the Day 1 staffing model.” We’re left wondering whether this is a commercial type contract with Service Level Agreement type pricing objectives or a staff-augmentation type contract with incumbent pay and retention objectives.
To Escalate or Not?
The pricing attachment instructs offerors to propose rates for the base period. For option period, the template implies an automatic escalation is applied based on the US Department of Labor’s Bureau of Labor Statistics’ Employment Cost Index (ECI) for Civilian Labor (DOL ECI – Civilian Labor) of the previous year. However, the Section L instructions request offerors to propose and fully justify their proposed labor escalation rates.
Subcontracts/Consultants
The draft RFP does not require submission of separate subcontractor rates or budgets. However, the draft RFP requires primes to provide:
• A Negotiation Memorandum which includes documenting the extent to which adequate price competition was obtained, or justification in its absence AND a cost reasonableness analysis on all its proposed Subcontractors and Consultants in accordance with FAR 15.404-3
• A cost proposal (our emphasis) inclusive of any supporting documentation needed to substantiate proposed rates, hours, and overall costs.
• Subcontract Checklist (completed by subcontractor)
From our own experience as government consultant evaluators, we sympathize with the Government’s intention to push down subcontractor pricing reasonableness determinations back to the prime where it belongs. In many cases, the Government expends too much time doing the prime’s homework. Given the size of this IDIQ contract, we expect primes will include many subcontractor teammates and therefore primes should budget sufficient time to comply with these subcontract pricing terms.
IDIQ Labor Rate Ceilings?
Section B references Federal Supply Schedule Rates (with discounts) will be incorporated into the IDIQ contract. There is no other mention of Federal Supply Schedule in the draft RFP. It is unclear whether offerors are supposed to bid from their Supply Schedule or whether they are permitted to proposed custom burdened rates tailored to this contract vehicle. We’re also unsure how this requirement squares with the other parts of the RFP which stated that escalation would be automatically applied since supply schedules cover more than one year (typically) and already have escalation built in.
Partial or Full PWS Compliance?
We found the following section M statement odd and recommend offerors seek clarification, “Offerors are required to address all the evaluation factors, but they are not required to propose to the entire PWS”. With regards to pricing, we believe the DoT wants offerors to price the entire PWS (by applicable task order). The quoted statement would seem to imply that offerors could price something less than the complete PWS.
Key Pricing Questions to Resolve
Based on our 1st read of the Draft RFP, we suggest offerors resolve the following questions:
1. What is the acquisition strategy? Is the PM/IS task order reserved for small business? How many large and small IDIQ contracts are contemplated?
2. Is this a commercial acquisition and if so, why aren’t the instructions and pricing templates aligned accordingly to commercial pricing?
3. What is the total evaluated price? Will the labor plug figures be applied to proposed labor rates OR is evaluated price based on the as-proposed resources budgeted by each offeror?
4. Are offerors required to use their Federal Supply Schedule rates as the basis for fully burdened labor rates and are they permitted to augment their schedule with newly proposed labor categories to cover any gaps?
5. Which task orders should a large offeror address? Are offerors required to address the entire PWS or can they tailor their scope?
6. Does the scope of the (3) task order PWS include scope from legacy FITSS and RSIMSS contracts?
This is our brief review of issues we uncovered. There are many other bugs in the document. For example, we found this conflicting guidance in Section L.13, “Large Business Technical proposals covering Infrastructure and End User shall exceed 105 pages. All pages exceeding 105 will not read. Small Business Proposals shall exceed 55 pages. All pages exceeding 55 will not be read.” Offerors should carefully review this draft and provide thorough comments and questions to DoT.
About the author: Mike Gallo is Partner and Principal Consultant at Federal Pricing Group, a firm focused on providing expert contracts pricing to small and mid-sized federal government contractors and cost-related acquisition support services to federal agencies. You can find more resources like this article at
https://www.federalpricinggroup.com/.
