QA Contractor Questions and Government Responses_Amd 003.pdf

Contractor Questions & Government Responses

Question 1: The Price Proposal instructions at Section L of the RFP and in the Pricing Matrix (in Attachment 5/Amendment 1) require the Offeror to provide cost information, namely “unit prices and/or target prices, and FPIF profit rates for all listed items in the Pricing Matrix.” Section L, ¶ 6.2.1; see also id. at ¶¶ 6.2.4 (“The Offeror shall provide prices for Target Cost Unit Price, and Target Profit Rate”); 6.4.10. But those instructions provide no guidance where an offeror proposes a commercial product or service (as defined at FAR 2.101) for an item listed on the Pricing Matrix. Those instructions are also inconsistent with FAR 12.207(d) (which permits incentives in conjunction with commercial items only when the incentive is based solely on factors other than cost) and SOW section 4.2.2, which instructs that “[t]he contractor shall use unmodified COTS to the maximum extent possible.” Will the Air Force confirm that where an offeror proposes to provide a commercial product or service for an item listed in the Pricing Matrix, the offeror need not provide unit prices, target cost prices, target profit rates, and FPIF profit rates, and instead may provide firm fixed prices for those commercial products or services? Alternatively, will the Air Force consider amending the solicitation to permit the proposal of commercial items based on firm fixed pricing?

Government Response #1:

The Air Force has conducted extensive market research for two years and determined the CCR to be non-commercial. The CCR is an acquisition for supply with incidental services. IAW Section L , 6.3 “Price analysis techniques shall be used to ensure fair and reasonable pricing IAW FAR 15.404-1(b). Providing information to assist with pricing evaluation to further support proposed pricing will expedite the source selection process.” In accordance with FAR 15.403-3(a), information other than cost or pricing data may be required to support price reasonableness. The Government reserves the right to obtain data as appropriate. Should the CO determine proposed prices appear unreasonable or the possibility that an Offeror does not fully understand the requirement, the offerors may be required to submit other than cost and pricing data to support price reasonableness and/or price realism.” IAW Section L, 6.2.1 “If an Offeror’s proposed price/rate is zero, then the Offeror shall provide rationale to support the zero dollar.” IAW Section L, 6.2.6 “Unexplained price variances from year-to-year could suggest unbalanced pricing. It is in the Offeror’s best interest to provide explanations or supporting rationale for any significant annual CLIN price/rate variances.” IAW Section M, 2.5.4, “If requested by the CO, data other than certified pricing data shall be evaluated to support a determination of reasonable, balanced, and realistic pricing. This information will only be requested if all other sources have been insufficient to support a determination of reasonable and/or balanced pricing and/or price realism. Offerors may provide any additional data other than certified cost or price data as believed necessary to support or justify proposed pricing.”

Question 2: The Price Proposal instructions at Section L of the RFP and in the Pricing Matrix (in Attachment 5/Amendment 1) require the Offeror to provide cost information, namely “unit prices and/or target prices, and FPIF profit rates for all listed items in the Pricing Matrix.” Section L, ¶ 6.2.1; see also id. at ¶¶ 6.2.4 (“The Offeror shall provide prices for Target Cost Unit Price, and Target Profit Rate”); 6.4.10. But those instructions provide no guidance where an offeror proposes a commercial product or service (as defined at FAR 2.101) for an item listed on the Pricing Matrix. Those instructions are also inconsistent with FAR 12.207(d) (which permits incentives in conjunction with commercial items only when the incentive is based solely on factors other than cost) and SOW section 4.2.2, which instructs that “[t]he contractor shall use unmodified COTS to the maximum extent possible.” Will the Air Force confirm that where an offeror proposes to provide a commercial product or service for an item listed in the Pricing Matrix, the offeror may adjust the formulas in the Pricing Matrix for that item so as not to disclose cost data for that commercial product or service?

Government Response #2:

The Air Force has conducted extensive market research for two years and determined the CCR to be non-commercial. IAW Section L , 6.3 “Price analysis techniques shall be used to ensure fair and reasonable pricing IAW FAR 15.404-1(b). Providing information to assist with pricing evaluation to further support proposed pricing will expedite the source selection process.” In accordance with FAR 15.403-3(a), information other than cost or pricing data may be required to support price reasonableness. The Government reserves the right to obtain data as appropriate. Should the CO determine proposed prices appear unreasonable or the possibility that an Offeror does not fully understand the requirement, the offerors may be required to submit other than cost and pricing data to support price reasonableness and/or price realism.” IAW Section L, 6.2.1 “If an Offeror’s proposed price/rate is zero, then the Offeror shall provide rationale to support the zero dollar.” IAW Section L, 6.2.6 “Unexplained price variances from year-to-year could suggest unbalanced pricing. It is in the Offeror’s best interest to provide explanations or supporting rationale for any significant annual CLIN price/rate variances.”

IAW Section M, 2.5.4, “If requested by the CO, data other than certified pricing data shall be evaluated to support a determination of reasonable, balanced, and realistic pricing. This information will only be requested if all other sources have been insufficient to support a determination of reasonable and/or balanced pricing and/or price realism. Offerors may provide any additional data other than certified cost or price data as believed necessary to support or justify proposed pricing.”

Question 3: As noted in the previous questions, the Pricing Matrix does not contemplate a pricing structure for offering commercial solutions. Will an offeror be determined non-compliant and rejected if it proposes only a firm-fixed price for certain line items in the pricing matrix (6.1, 6.2.1, 6.2.4, 6.4.10, Attachment 5/Amendment 1), where the offeror proposes to provide a commercial product or service as defined by FAR 2.101 for those line items?

Government Response #3:

The Air Force has conducted extensive market research for two years and determined the CCR to be non-commercial. IAW Section L , 6.3 “Price analysis techniques shall be used to ensure fair and reasonable pricing IAW FAR 15.404-1(b). Providing information to assist with pricing evaluation to further support proposed pricing will expedite the source selection process.” In accordance with FAR 15.403-3(a), information other than cost or pricing data may be required to support price reasonableness. The Government reserves the right to obtain data as appropriate. Should the CO determine proposed prices appear unreasonable or the possibility that an Offeror does not fully understand the requirement, the offerors may be required to submit other than cost and pricing data to support price reasonableness and/or price realism.” IAW Section L, 6.2.1 “If an Offeror’s proposed price/rate is zero, then the Offeror shall provide rationale to support the zero dollar.” IAW Section L, 6.2.6 “Unexplained price variances from year-to-year could suggest unbalanced pricing. It is in the Offeror’s best interest to provide explanations or supporting rationale for any significant annual CLIN price/rate variances.”

IAW Section M, 2.5.4, “If requested by the CO, data other than certified pricing data shall be evaluated to support a determination of reasonable, balanced, and realistic pricing. This information will only be requested if all other sources have been insufficient to support a determination of reasonable and/or balanced pricing and/or price realism. Offerors may provide any additional data other than certified cost or price data as believed necessary to support or justify proposed pricing.”

Question 4: The Price Proposal instructions at Section L of the RFP and in the Pricing Matrix (in Attachment 5 and Amendment 1) require the Offeror to provide cost information, namely “unit prices and/or target prices, and FPIF profit rates for all listed items in the Pricing Matrix.” Section L, ¶ 6.2.1; see also id. at ¶¶ 6.2.4 (“The Offeror shall provide prices for Target Cost Unit Price, and Target Profit Rate”);

6.4.10. But those instructions provide no guidance where an offeror proposes a commercial product or service (as defined at FAR 2.101) for an item listed on the Pricing Matrix. Will the Air Force please confirm how it intends to evaluate items on the Pricing Matrix for which an offeror proposes to provide a commercial product or service, i.e., if an offeror proposes a firm-fixed price for a commercial product or service, will the Air Force still markup the proposed price by 125% for purposes of the evaluation?

Government Response #4:

The Air Force has conducted extensive market research for two years and determined the CCR to be non-commercial. IAW Section L , 6.3 “Price analysis techniques shall be used to ensure fair and reasonable pricing IAW FAR 15.404-1(b). Providing information to assist with pricing evaluation to further support proposed pricing will expedite the source selection process.” In accordance with FAR 15.403-3(a), information other than cost or pricing data may be required to support price reasonableness. The Government reserves the right to obtain data as appropriate. Should the CO determine proposed prices appear unreasonable or the possibility that an Offeror does not fully understand the requirement, the offerors may be required to submit other than cost and pricing data to support price reasonableness and/or price realism.” IAW Section L, 6.2.1 “If an Offeror’s proposed price/rate is zero, then the Offeror shall provide rationale to support the zero dollar.” IAW Section L, 6.2.6 “Unexplained price variances from year-to-year could suggest unbalanced pricing. It is in the Offeror’s best interest to provide explanations or supporting rationale for any significant annual CLIN price/rate variances.”

IAW Section M, 2.5.4, “If requested by the CO, data other than certified pricing data shall be evaluated to support a determination of reasonable, balanced, and realistic pricing. This information will only be requested if all other sources have been insufficient to support a determination of reasonable and/or balanced pricing and/or price realism. Offerors may provide any additional data other than certified cost or

Question 5: The Price Proposal instructions at Section L of the RFP and in the Pricing Matrix (in Attachment 5 and Amendment 1) require the Offeror to provide cost information, namely “unit prices and/or target prices, and FPIF profit rates for all listed items in the Pricing Matrix.” Section L, ¶ 6.2.1; see also id. at ¶¶ 6.2.4 (“The Offeror shall provide prices for Target Cost Unit Price, and Target Profit Rate”);

6.4.10. But those instructions provide no guidance where an offeror proposes a commercial product or service (as defined at FAR 2.101) for an item listed on the Pricing Matrix. For items for which an offeror proposes a firm-fixed price for a commercial product or service, will the contract as awarded contain FFP CLINs for those items and exclude those items from the FPIF administration process?

Government Response #5:

The Air Force has conducted extensive market research for two years and determined the CCR to be non-commercial. IAW Section L , 6.3 “Price analysis techniques shall be used to ensure fair and reasonable pricing IAW FAR 15.404-1(b). Providing information to assist with pricing evaluation to further support proposed pricing will expedite the source selection process.” In accordance with FAR 15.403-3(a), information other than cost or pricing data may be required to support price reasonableness. The Government reserves the right to obtain data as appropriate. Should the CO determine proposed prices appear unreasonable or the possibility that an Offeror does not fully understand the requirement, the offerors may be required to submit other than cost and pricing data to support price reasonableness and/or price realism.” IAW Section L, 6.2.1 “If an Offeror’s proposed price/rate is zero, then the Offeror shall provide rationale to support the zero dollar.” IAW Section L, 6.2.6 “Unexplained price variances from year-to-year could suggest unbalanced pricing. It is in the Offeror’s best interest to provide explanations or supporting rationale for any significant annual CLIN price/rate variances.”

IAW Section M, 2.5.4, “If requested by the CO, data other than certified pricing data shall be evaluated to support a determination of reasonable, balanced, and realistic pricing. This information will only be requested if all other sources have been insufficient to support a determination of reasonable and/or balanced pricing and/or price realism. Offerors may provide any additional data other than certified cost or

Question 6: Please confirm that the Air Force is not requesting “certified cost or pricing data” as defined in FAR 2.101 and in accordance with the Truthful Cost or Pricing Data statute.

Government Response #6:

For the purposes of a formula price adjustment with FPIF CLIN settlement, the government will expect, and contractor required to validate pricing to include that of commercial components, included in this NON- COMMERCIAL acquisition, consistent with 15.404-1 to include possible "other than certified cost and pricing data". Administration of the FPIF CLINs shall be IAW FAR 52.216-16.

Question 7: Amendment 1 to the Solicitation added $750,000 per day in liquidated damages to 52.211-11.

Was this liquidated damages amount assessed in the context of FAR 11.501 Policy?

Government Response #7:

Timely performance to complete the CCR modification to the KC-135 fleet is critical in supporting the Air Force's air refueling capabilities. IAW FAR 11.503(a) Use the clause at 52.211-11, Liquidated Damages- Supplies, Services, or Research and Development, in fixed-price solicitations and contracts for supplies, services, or research and development when the contracting officer determines that liquidated damages are appropriate (see 11.501(a)) IAW FAR 11.501(b) Liquidated damages are used to compensate the Government for probable damages. Therefore, the liquidated damages rate must be a reasonable forecast of just compensation for the harm that is caused by late delivery or untimely performance of the particular contract.

Use a maximum amount or a maximum period for assessing liquidated damages if these limits reflect the maximum probable damage to the Government. Also, the contracting officer may use more than one liquidated damages rate when the contracting officer expects the probable damage to the Government to change over the contract period of performance. The $750,000 per day in liquidated damages is an estimated value based on losses incurred by the Government for delays in delivery of similar efforts.

Question 8: The following FAR/DFAR clauses are missing information:

a. 52.219-28 Alt. 1

b. 52.225-8

c. 52.227-11

d. 52.246-19

e. 252.215-7004

f. 252.234-7002

g. 52.233-2

Government Response #8:

a. 52.219-28 Alt. 1 has been removed from the solicitation.

b. 52.225-8 – Fill-ins added. See Amendment 3.

c. 52.227-11 – Fill-ins added. See Amendment 3.

d. 52.246-19 has been removed from the solicitation.

e. 252.215-7004 – Fill-ins added. See Amendment 3.

f. 252.234-7002 – Fill-ins added. See Amendment 3.

g. 52.233-2 – Fill-ins added. See Amendment 3.

Question 9: There are multiple ways the contractor can interpret and fill-out the pricing matrix. The assumptions being made by the contractor combined with the structure of the pricing matrix drive significantly different values of Total Evaluated Price for the same work/delivery. In summary the questions are:

a. For EMD sub-CLINS (X001-X019), does all work for which pricing is extended need to be completed within the delivery period specified in Section F of the Solicitation?

Government Response #9a:

For CLINs X001 – X019 the government will issue an order at time of award with a specified delivery date for each CLIN. Currently Section F is an estimate based upon expected schedule.

b. For Installation and Kit sub-CLINs (X020 – X024), do all deliveries and all services performed need to be completed within the delivery period specified in Section F of the Solicitation?

Government Response #9b:

For CLINs X001 – X019 the government will issue an order at time of award with a specified delivery date for each CLIN. Currently Section F is an estimate based upon expected schedule.

c. The averaged CLINS impact the Total Evaluated Price (TEP) in such a way as to reduce TEP for years in which the contractor does not extend a price to the government. Is this the government’s intent?

Government Response #9c:

Averaged CLINs are not known when ordering will take place, it is depending upon each Offerors proposed solution. CLINs in orange are priced for each year, and then averaged in order to calculate the TEP. Because the government does not know when ordering will take place the CLINs in “orange” on the Pricing Matrix are averaged CLINs, the governments TEP calculation takes into account the average price for those CLINs and it is for evaluation purposes ONLY. IAW Section L, 6.2.1 “If an Offeror’s proposed price/rate is zero, then the Offeror shall provide rationale to support the zero dollar.” IAW Section L, 6.2.6 “Unexplained price variances from year-to-year could suggest unbalanced pricing. It is in the Offeror’s best interest to provide explanations or supporting rationale for any significant annual CLIN price/rate variances.”

d. The quantities and years averaged for the Installation and Kit sub-CLINs appear to be internally inconsistent (both with each other and with the SOW).

Government Response #9d:

Quantities in Pricing Matrix for A-Kit/B-kits/Installs have been updated to reflect the average period of 3 years, an average of 25 per to match. The SOW quantities of the B-Kits differ as spares have been adding into the production totals. The number of aircraft for this contract scope is 275, with 15% spares.

e. Does the government want the ability to fund work prior to the contractor’s scheduled start date for a given task?

Government Response #9e:

After contract award and during the performance of the contract the government will issue orders based on need and funding. The government intends to fund the work as the CLINs/Options are exercise. The intent of the averaged CLINs in the pricing matrix is to give the contractor the option to bid the pricing based upon their unique solution and schedule.

The following examples are used to illustrate the above questions and the practical impact of their answers on the Total Evaluated Price. All details contained herein are used for illustrative purposes only.

Example 1: Averaged sub-CLINs under the EMD section

1. The contractor schedule has the Qualification/Development/Operational Testing work of the Fuel System (CLIN X005) starting in the middle of Option 1 (Year 2) and running for a 2 year period.

Government Response Question #9:

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing assumptions would need to be specified in the Price Volume III, as IAW Section M, 6.4.5.

2. The contactor plan has $5000 of effort in Option 1 (Year 2), $10000 of effort in Option 2 (Year 3), and $5000 of effort in Option 3 (Year 4)

a. Total effort is $20,000

b. TEP is $20,000 x 1.25 = $25,000

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing

3. 3 different methods can be used to fill out the pricing matrix resulting in 3 different total evaluated prices:

Ex 1. Method 1:

1. Put the work in the years in which it will be done.

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing

Ex 1. Method 2:

1. Sum the total work and put it in the year it will be awarded.

2. This assumes some escalation for future years.

Government Response Question #9:

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing

Ex 1. Method 3:

1. Sum the total work and put it in the year it will be awarded.

2. This assumes some escalation for future years.

3. Offer pricing for the Basic Year prior to when work will start to enable the government to fund this work whenever funds are available.

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing

Summary of Example 1

Each of the above methods extend to the government pricing for the same work, but result in 3 different Total Evaluated Prices: $6250, $20,900, and $25,900.

Example 1 assumes that all work listed under a sub-CLIN must be performed within the Delivery Period specified in Section F.

Example 2 and Example 3 assume that Deliver Period in Section F is not tied to when the work in each sub- CLIN must be started or completed. This example illustrates Question 1, 3, and 5 above.

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing

Example 2: Average sub-CLINs within Installations and Kits regarding quantity alignment

1. Each A-Kit and B-Kit has a cost of $0.80 with no escalation over time.

2. Each Installation has a cost of $0.80 with no escalation over time.

3. 25% max profit is being added to drive a TEP of $1.00 per LRU.

When the pricing matrix is completed, the TEP is shown below:

Since pricing was chosen to drive a TEP of $1 Each, the Total Evaluate Price indicates that the number of Installations, A-Kits, and B-Kits.

• Total Installs: 308

• Total A-Kits: 303

• Total B-Kits: 276.33

Quantities updated on Pricing Matrix to 275 Aircraft (273 Aircraft + 2 Prototype Aircraft= 275)

Summary of Example 2:

This indicates that if the contractor extends pricing for all years in the Pricing Matrix, they will be evaluated on 308 installations, but only 276.33 B-kits.

This also favors a contractor that has higher B-Kit costs in comparison to Installation costs as Installation costs are multiplied by 308 whereas B- Kits are only 276.33. This type of weighting within the TEP has not been previously identified within Section L and Section M.

The SOW indicates no sparing for A-Kits (Section 4.6, Page 34), and lists the number of production A-Kits at 271 (per Table 4 in the SOW). Those numbers do not align with the pricing matrix, which will give a Total Evaluated Price on 303 A-Kits.

Example 2 highlights question 4 listed above.

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing

Example 3: Average sub-CLINs within Installations and Kits regarding timing alignment

1. Contractor schedule supports Production A-Kits and B-Kits starting in Year 3 (Option 2) – (Schedule shown below)

2. Contractor schedule supports Installation Beginning in Year 4 (Option 3) – (Schedule shown below)

3. Each LRU has a cost of $0.80 and each Installation has a cost of $0.80

4. Pricing escalation based on economic factors is assumed at 0% per year for this example.

Government Response Question #9:

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing

The pricing matrix could then be filled out in either of the following methods:

Ex3. Method 1:

1. Pricing is filled out in each year that the contractor schedule supports.

2. No pricing is extended for years in which the contractor cannot support the requested A-Kit or B-Kit or

Installation.

3. All deliveries and services must be performed within the CLIN’s Delivery Period specified within Section F in the Solicitation.

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing

Ex3. Method 2

1. Pricing is extended to the government in both the years in which the contractor can support the requested A-Kit or B-Kit or Installation and also in years prior to the year(s) within which the work can be performed or completed.

2. Assumption: The Delivery Period within the Solicitation Section F for the given sub-CLIN is tied to the award of funds, but not to completion of scope and/or delivery of the associated hardware/LRUs.

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing assumptions would need to be specified in the Price Volume III, as IAW Section M, 6.4.5.

Summary of Example 3:

Note that Method 1 and Method 2 result insignificantly different Total Evaluated Price values. This is tied to the way the CLINs are averaged in the pricing matrix and tied to the offeror’s understanding of the government’s intent.

While Method 2 provides the government the most flexibility, by extending a price to the Basic Year and Option 1, it also increased the Total Evaluated Price, thereby disincentivizing the contractor from providing the government the additional flexibility of being able to order in earlier years.

The government intends that Offerors provide pricing IAW the Solicitation and Pricing Matrix. Any pricing

This example illustrates Questions 2, 3, and 5.

Question 10: There appears to be errors in the TEP by CLIN formulas for CLIN X005 and X012. Both are not picking up Option 4 in the formula. Please verify the correct formula.

Government Response Question #10:

Corrections have been made to the attached Amendment 2 Pricing Matrix