Bidding Farewell to Old Ways

Steven Kelman

February 1996

FEDERAL ACQUISITION GUIDE

Bidding Farewell to Old Ways

FAR rewrite to encourage innovative buying methods.

common complaint among federal contracting officers is that they still are not being given much room to exercise their own judgment and to be innovative. The government's rigid procurement system has traditionally been inflexible when it comes to proposal review and negotiation procedures. Evaluators are forced to use detailed factors and subfactors when assessing bid proposals. And if a company is asked to make even the slightest deviation from its initial proposal, the agency is forced to reopen negotiations with all bidders.

"The source-selection process can be very expensive and labor intensive for both agencies and companies," says Steven Kelman, administrator of the Office of Federal Procurement Policy. "Current methodology is so time-consuming and burdensome that the government is having a hard time attracting good people who are technically qualified to evaluate bid proposals."

In an effort to streamline government buying methods, some agencies are changing competitive source-selection rules. One example is the growing popularity of oral proposals. Instead of relying on written bids-which can run tens of thousands of pages and take evaluators months to read-an increasing number of agencies are awarding contracts based on oral proposals. Each bidding team is called into a conference room and given a set amount of time to convince observers why it can do the best job on a contract.

The Treasury Department, for instance, recently used oral proposals to evaluate bids on a five-year, $30 million public relations contract for the redesigned $100 bill. Five companies were given two hours each to demonstrate how they would stage a worldwide campaign to inform people about the new note and reassure them that their old greenbacks would not be recalled. The presentations were videotaped and promptly reviewed by technical evaluation teams.

In an amazing feat of procurement efficiency, Treasury's task-order contract was let to Young & Rubicam subsidiary Burson-Marsteller in only 84 days. Losing bidders were debriefed shortly after the award announcement and no protests were filed.

"We were working under severe time restraints because the new $100 bill was going to be issued soon," says Robert Welch, director of the Treasury Department's Office of Procurement. "Had we taken the time to plow through hundreds of pages of written bids, we would have lost the momentum that was essential in a public relations campaign of this magnitude. For that reason, oral proposals were the only way to go."

Another innovative procurement technique being used by agencies is draft bid solicitations, in which vendors are asked how to assess the feasibility of a contract's statement of work. In large defense and information technology contracts, for instance, draft solicitations may provide helpful comments about restructuring contract proposals to yield lower bids. Or if the wording in certain sections is confusing, vendors can point out discrepancies and give agencies a chance to clarify the language before issuing formal bid solicitations.

Some agencies, such as the Internal Revenue Service and the Social Security Administration, have been experimenting with a two-phase selection process. The first phase is an informal solicitation asking companies for references and statements about why they deserve to win contracts. After serious competitors are determined, the second phase commences with formal contract proposals.

By restricting the competitive range to what are perceived as the best proposals, agencies can save time and money on evaluating bid proposals. But until statutory changes contained in pending procurement-reform legislation are enacted, agencies are prohibited from disqualifying bidders. All they are allowed to do at this stage is issue advisory lists detailing who they have determined to be serious competitors. All companies, however, still can submit proposals.

In response to requests made by government contracting officers and vendors eager to see new contracting methods implemented, the Office of Federal Procurement Policy has started rewriting Part 15 of the 1,600-page Federal Acquisition Regulation (FAR), the blueprint for federal procurement. Part 15 deals with competitive negotiations. The goal of the rewrite is to explicitly authorize innovative source-selection techniques that encourage a more open exchange of information among buyers and sellers.

Contracting officers say they need more flexibility in addressing concerns with bidders before they determine competitive ranges on contracts. As it stands now, there is no clear delineation between what is mandated by law and what is optional in the FAR.

"There needs to be a clear distinction between what constitutes holding discussions with a bidder and what constitutes seeking clarifications from a bidder," says Kelman of the procurement policy office. "Contracting goals need to be clearly defined."

The office expects to complete the FAR rewrite by October. The National Performance Review, meanwhile, has recommended taking the rewrite a step further by overhauling the FAR and translating it into guiding principles, rather than a compendium of rules and regulations. But some believe a revision could do more harm than good.