SE4 - Attachment 14 - Price Risk Math Model 26 MAR 2018.pdf

N00039-18-R-0060

Attachment 14

****THIS ATTACHMENT IS FOR INFORMATIONAL PURPOSES ONLY. OFFERORS ARE

NOT REQUIRED TO RESPOND TO THIS ATTACHMENT****

Price Risk Math Model

EXAMPLE Task Order RFP Source Selection Plan Criteria

The following source selection criteria are provided as an example of one of the Task Order RFPs that may be issued under the contract resulting from this RFP. The criteria are intended to mitigate and prevent a “race to the bottom” price competition mentality in the competitive task order environment under the Ashore Global C4ISR Installation Multiple Award Contract (also referred to as the Sea

Enterprise 4 MAC). This is accomplished by assigning risk to an unreasonably low proposed price using the concept described below.

Title: (TBD)

Section L - Instructions, Conditions and Notices to Bidders

Offerors shall submit proposals addressing the following instructions and conditions:

FACTOR 1 – Past Performance (No Action required from offerors)

Past Performance will be evaluated based on the most recent CPARs for the previous contract year under the GIC, though in accordance with FAR 15.305(a)(2), the Government may consider past performance information from any other appropriate source, such as the Past Performance Information Retrieval

System (PPIRS) or customer questionnaires. If the offeror’s Past Performance information is unavailable or the offeror has no record of relevant Past Performance, the offeror will receive an "Unknown

(Neutral)" rating.

COST/PRICE:

For each JID identified by a Government tracking number, the contractor shall provide an Installation

Cost Estimate Worksheet that provides total estimated Installation Design, Installation Production and

System Turnover Costs. For each of these three sets of totals, the Worksheet shall provide the subtotals for Labor Hours, Labor Costs, Material Costs, Travel Costs and Other Direct Costs. The contractor shall provide this information using the SEII Cost Estimate Spreadsheet (CES) provided as part of the base contract. Offerors shall also input the proposed cost per JID into the MOD Tracker. The contractor cover letter may demonstrate a commitment to use local labor and confirm for the evaluation that the proposed travel is reasonable and not unrealistically low.

The spreadsheet shall provide at a minimum the following items:

1. Direct labor, including labor categories, hours, rates and total. Offerors and any proposed subcontractors shall explain the basis for proposed direct labor rates (i.e., current and actual payroll data, salary surveys, etc.).

a. Burden build up shall be provided for each labor category.

b. Additionally as part of the Cost Proposal Submissions, offerors and proposed subcontractors shall provide their most current Indirect Rates and provide the basis for the proposed rates.

Offerors shall also provide copies of their most recent Forward Pricing Rate Proposals

(FPRP), Forward Pricing Rate Agreements (FPRA), and/or Provisional Billing Rates (PBRs).

To the extent that the proposed rates differ from the most current FPRP, FPRA and/or PBR the offeror shall provide a detailed explanation. Offerors and proposed subcontractors shall also provide their actual incurred indirect rates for the most recent three year period.

Additionally, offerors shall provide the most current Defense Contract Audit Agency

(DCAA)/Defense Contract Management Agency (DCMA) Accounting, Estimating, Purchasing systems to the Contract Specialist NAME/name@navy.mil. If documentation of approval is not available, then provide the documentation showing when the rate approval was requested from DCAA/DCMA.

c. Offeror’s shall provide copies of quotes and verification of competition for proposed vendors and subcontractors.

2. Other Direct Costs (ODCs).

a. Travel proposed costs shall be fully documented including destination, number of people, number of days, airfare, per diem, car rental and other charges and the basis for the rates.

b. Material in excess of the micropurchase threshold per FAR 2.101 must be itemized.

Other materials shall be categorized as “BOM” items (total cost) or “Other Materials”

(total cost).

c. Equipment must be identified as Information Technology (IT) or non-IT. All IT equipment must be itemized. Non-IT equipment in excess of the micropurchase threshold per FAR

2.101 must be itemized. All other equipment not identified above needs only a total cost.

d. Other, as required by the proposed task/delivery order.

3. Subcontractors. Subcontractors need only submit total cost with labor categories and hours to the prime contractor. Costs, with the same level of detail as submitted by the prime contractor for the task/delivery order, shall be submitted directly to the Government by the subcontractor.

4. Consultants. Consultants need only submit total cost with labor categories and hours to the prime contractor. Costs, with the same level of detail as submitted by the prime contractor for the task/delivery order, shall be submitted directly to the Government by the subcontractor.

a. A brief statement describing the effort being performed by each subcontractor.

b. Subcontractors are to be identified under ODCs only

5. Request for approval of unapproved subcontractors shall be submitted with the offeror’s proposal in order to receive consent prior to award. The request shall include all documentation required by contract clause 52.244-2 “Subcontracts”. The Government considers the following services miscellaneous subcontractors, and can be proposed as ODCs, and are not subject to consent under contract clause 52.244-2:

a. Scaffolding Services

b. Crane Services

c. Gas Free Services

d. Paint Touchup Services

e. Abatement Services

f. Decking Services

g. Rigging Services

h. Piping Services

i. Ventilation Services

j. NDT Services

k. Weight Testing for lifelines Services

l. Lagging Services

m. Paint Analysis Services

n. Staffing Agencies Services

o. Milling, Machining and Alignment Services

6. Offerors shall provide copies of quotes and verification of competition for proposed vendors and miscellaneous subcontractors in accordance with the offeror’s approved purchasing system procedures.

a. Offerors shall include in its cost proposal a brief statement describing the effort being performed by each miscellaneous subcontractor, and the hours being proposed for that vendor or miscellaneous subcontractor for the purposes of evaluation.

b. Miscellaneous subcontractors are to be identified under ODCs only.

7. Other Information.

a. A statement that the cost estimate is based upon a completion type task order and the anticipated completion date of the delivery/task order.

Offerors shall submit a “Cost Brief”, not to exceed 2 pages, to support their cost estimate. The Cost Brief shall include assumptions used to develop the cost estimate, efficiency savings, make-or-buy decisions that significantly impact costs, travel vs. local labor force and other decisions comprising the “basis of estimate”. Empirical data and actual cost histories will support bidders cost decisions more strongly than subjective descriptions. This item is not an evaluation factor on its own and will not be rated. The Cost

Brief may be used by the Government to aid in determining the level of price risk and in deciding if clarifications or discussions are needed to complete the award decision.

Section M - Evaluation Factors for Award

(a) It is the intention of the Navy to award one TO as a result of this solicitation in accordance with FAR

16.505. Award will be based on a Streamlined Best Value (SBV) determination with TTOM analysis, which provides that the award will be made to that offeror whose proposal is most advantageous to the

Government under the selection criteria set forth in this Section M. The task order resulting from this solicitation will be awarded to that responsible offeror whose offer conforming to the solicitation, is determined to provide the “best value” to the Government. Such offer may not necessarily be the proposal offering the lowest cost/price or receiving the highest rating.

(b) Proposals will be rated on the evaluation factors listed below. Although elements and sub-elements are not weighted, they are equally important. It should be noted that cost is not a weighted factor. As the equality of the proposals in terms of evaluation factor ratings increases, so will the importance of cost in the evaluation. When the offerors within the competitive range are considered essentially equal based on the evaluation factor ratings, cost may become the determining factor for award. In summary, trade-offs between the evaluation factors and cost will be made, and the extent to which one may be sacrificed for the other is governed only by the tests of rationality and consistency with the established evaluation factors.

(c) Merits of the Offer: The Government will determine the merits of each offer on the basis of acceptability. The acceptability determination will be made prior to evaluation of the evaluation factors.

Proposals determined to be unacceptable may not be further evaluated.

The Government will determine the acceptability of each offer, on a pass or fail basis, by evaluating the consistency of the offeror’s proposal with the terms and conditions of the TORFP. Additionally, the offeror shall meet the “Gate” requirements for “Competitive Price” and “Low Offeror Risk” listed below in order to be determined acceptable. An offer will be determined to be acceptable when it meets the requirements for “Competitive Price” and “Low Offeror Risk” and manifests the offeror’s agreement, without exception or imposition of additional conditions, to the terms and conditions of the TORFP, including all attachments and documents incorporated by reference. An offeror’s failure or refusal to consent to any of the terms and conditions of the TORFP, imposition of additional conditions, or any material omission may constitute a deficiency which may render the offer unacceptable. An offeror’s failure or refusal to meet the requirements for “Competitive Price” and “Low Offeror Risk” may constitute a deficiency which, if not cured through discussions or clarifications may render the offer unacceptable. If an offer is determined unacceptable, the proposal may not be further evaluated. If a

"Cost Brief" demonstrates the proposed price would not increase risk, then that offer may be considered acceptable, and may be further evaluated. If the “Gate” requirement is not met or substantiated, offerors will be notified timely, and the proposal will be removed from further consideration; no cost evaluation will be performed. The Government reserves the right to change the terms and conditions of this TORFP by amendment at any time prior to the source selection decision.

(i) Competitive Price – This acceptability criteria is an evaluation of the percentage difference between the offeror's evaluated price and the calculated average price of: the proposed price by all offerors and the

Independent Government Estimate (IGE). The weighting of the IGE for the calculated average price for this TORFP is one. The Government has established a percentage of 50% as the determining factor for this “Gate”, meaning that if an offeror's evaluated price exceeds this established percentage, then the offeror’s proposal may be considered to be not competitive for this requirement. Based on the result of this “Gate” assessment, the Government may decide to enter discussions, or the proposal may be eliminated from award consideration.

(ii) Low Offeror Risk - This acceptability criteria is an evaluation of the percentage difference between the offeror's evaluated price and the calculated average price of: all remaining offerors after the

“competitive price” assessment and the Independent Government Estimate. The weighting of the IGE for the calculated average price for this TORFP is one. The Government has established a percentage of 25% as the determining factor for this “Gate”, meaning that if an offeror’s evaluated price exceeds this established percentage, then the offeror’s proposal may be considered to be unacceptably high risk. An offeror may pass the gate assessment if the proposed price exceeds the competitive price percentage and the rationale is evaluated to be justified. Based on the result of this “Gate” assessment, the Government may proceed with the evaluation, seek clarifications, enter discussions, or the proposal may be eliminated from award consideration.

(d) The evaluation factors listed below are in descending order of importance. When combined, the non-cost (technical) factors are significantly more important than cost.

Factor 1 – Past Performance

The Government will evaluate each offeror’s proposal as follows:

The past performance evaluation will result in an assessment of the offeror’s probability of meeting the

TORFP requirements(See Past Performance Rating Charts). The past performance evaluation will consider each offeror’s demonstrated recent and relevant record of performance in supplying products and services that meet the requirements of this TORFP. There are two aspects to the past performance evaluation. The first is to evaluate how relevant a recent effort accomplished by the offeror is to the effort to be acquired through the source selection. The second aspect is to determine how well the contractor performed on prior experiences. This quality assessment will be made on the basis of CPARS under this contract, though in accordance with FAR 15.305(a)(2), the Government may consider past performance information from any other appropriate source, such as the Past Performance Information Retrieval

System (PPIRS) or customer questionnaires. Each experience considered will receive a performance confidence assessment rating based on the evaluated quality and relevance ratings. Relevance for each offeror’s CPARs under the GIC will be considered “Very Relevant”. At the Factor level, one performance confidence assessment rating will be assigned for each Offeror based on the aggregate of the individual experience performance confidence assessment ratings. If the Offeror’s Past Performance information is unavailable or the Offeror has no record of relevant Past Performance, the Offeror receive a "neutral" rating.

Cost/Price:

The Government will confirm that the offeror input its proposed cost per JID into the MOD Tracker.

Failure to comply may render the offer unacceptable.

Proposals that are found to be not reasonable may be removed from further consideration for award.

Evaluation of Cost Realism

(a) The Government will evaluate the reasonableness of proposed costs in accordance with FAR subpart

15.4 and the applicable cost principles in FAR Part 31. In addition, the Government will perform a cost realism analysis of offers to 1) verify the offeror's understanding of solicitation requirements, 2) assess the degree to which proposed costs accurately reflect the effort described in the technical proposal, 3) identify apparent inconsistencies with specific solicitation requirements such as effort levels and 4) assess the realism of proposed rates (direct and indirect) against DCAA audited rates, DCMA recommended rates, and/or competitive rates previously proposed for similar labor categories under the SEA Enterprise

II contract. The Contracting Officer reserves the right to limit detailed cost analyses to proposals that have been evaluated as technically acceptable.

(b) Proposed costs may be adjusted, for purposes of evaluation, based on the results of cost realism analysis. The resulting realistic cost estimate will be used as the most probable cost in the evaluation. Fee will not be adjusted. Because, in a competitive environment, an Offeror is incentivized to propose the lowest possible price, downward cost realism adjustments will generally not be made. However, when cost realism analysis indicates that a proposed cost is unrealistically low, an upward adjustment may be made based on the Government's best estimate of the cost the Offeror will incur for that cost element. If an offeror's proposed indirect rates are not supported by stable recent rate histories and sound cost and business projections, the Government reserves the right to evaluate the offeror's indirect costs at a realistic rate or rates determined by the Contracting Officer.