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(b) Assigning agency representatives with relevant operational experience to advise competing contractors as necessary in developing performance and other requirements for each candidate system as tests and tradeoffs are made.

(c) Concentrating activities of agency development organizations, Government laboratories, and technical management staffs during the private sector competition on monitoring and evaluating contractor development efforts, and participating in those tests critical to determining whether the system candidate should be continued. 2-81, 133, 189

Chapter 5

Choosing a Preferred System

7. Limit premature system commitments and retain the benefit of system-level competition with an agency head decision to conduct competitive demonstration of candidate systems by:

(a) Choosing contractors for system demonstration depending on their relative technical progress, remaining uncertainties, and economic constraints. The overriding objective should be to have competition at least through the initial critical development stages and to permit use of firm commitments for final development and initial production.

(b) Providing selected contractors with the operational test conditions, mission performance criteria, and lifetime ownership cost factors that will be used in the final system evaluation and selection.

(c) Proceeding with final development and initial production and with commitments to a firm date for operational use after the agency needs and goals are reaffirmed and competitive demonstration results prove that the chosen technical approach is sound and definition of a system procurement program is practical. (d) Strengthening each agency's cost estimating capability for:

(1) Developing lifetime ownership costs for use in choosing preferred major systems

(2) Developing total cost projections for the number and kind of systems to be bought for operational use

(3) Preparing budget requests for final development and procurement.

2-83, 143, 189

8. Obtain agency head approval if an agency component determines that it should concentrate development resources on a single system without funding exploration of competitive system candidates. Related actions should: (a) Establish a strong centralized program office within an agency component to take direct technical and management control of the program.

(b) Integrate selected technical and management contributions from in-house groups and contractors.

(c) Select contractors with proven management, financial, and technical capabilities as related to the problems at hand. Use costreimbursement contracts for high technical risk portions of the program.

(d) Estimate program cost within a probable range until the system reaches the final development phase. 2-84, 143, 189

Chapter 6

System Implementation

9. Withhold agency head approval and congressional commitments for full production and use of new systems until the need has been reconfirmed and the system performance has been tested and evaluated in an environment that closely approximates the expected operational conditions.

(a) Establish in each agency component an operational test and evaluation activity separate from the developer and user organizations. (b) Continue efforts to strengthen test and evaluation capabilities in the military services with emphasis on:

(1) Tactically oriented test designers (2) Test personnel with operational and scientific background

(3) Tactical and environmental realism (4) Setting critical test objectives, evaluation, and reporting.

(c) Establish an agencywide definition of the scope of operational test and evaluation to include:

(1) Assessment of of critical performance

characteristics of an emerging system to determine usefulness to ultimate users

(2) Joint testing of systems whose missions cross service lines

(3) Two-sided adversary-type testing when needed to provide operational realism (4) Operational test and evaluation during the system life cycle as changes occur in need assessment, mission goals, and as a result of technical modifications to the system.

2-86, 166, 190

10. Use contracting as an important tool of system acquisition, not as a substitute for management of acquisition programs. In so doing: (a) Set policy guidelines within which experienced personnel may exercise judgment in selectively applying detailed contracting regulations.

(b) Develop simplified contractual arrangements and clauses for use in awarding final development and production contracts for demonstrated systems tested under competitive conditions.

(c) Allow contracting officials to use priced production options if critical test milestones have reduced risk to the point that the remaining development work is relatively straightforward. 2-86, 171, 190

11. Unify policymaking and monitoring responsibilities for major system aquisitions within each agency and agency component. Responsibilities and authority of unified offices should be to:

(a) Set system acquisition policy.

(b) Monitor results of acquisition policy. (c) Integrate technical and business management policy for major systems.

(d) Act for the secretary in agency head decision points for each system acquisition pro

gram.

(e) Establish a policy for assigning program managers when acquisition programs are initiated.

(f) Insure that key personnel have long-term experience in a variety of Government/industry system acquisition activities and institute a career program to enlarge on that experience. (g) Minimize management layering, staff reviews, coordinating points, unnecessary procedures, reporting, and paper work on both the

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Chapter 4 Acquisition

5. Encourage agencies to use headquarters procurement staff personnel in the conduct of on-the-job training of field procurement personnel to (a) implement techniques adapted to specific field activity needs and (b) identify possibilities for procurement innovation and transfusion. 3-30, 102

6. Provide statutory authority and assign to the Office of Federal Procurement Policy responsibility for policies to achieve greater economy in the procurement, storage, and distribution of commercial products used by Federal agencies. Until statutory authority is provided and until such responsibility is assigned to the Office of Federal Procurement Policy, the following actions should be taken:

(a) Establish reasonable standards to permit local using installations to buy directly from commercial sources if lower total economic costs to the Government can be achieved. However, decentralization of items for local purchase should not be permitted to affect adversely centralized procurement and distribution management required for purposes such as mobilization planning, military readiness, and product quality assurance.

(b) Develop and implement on an orderly basis industrial funding of activities engaged in interagency supply support of commercial products and services, to the fullest practical extent, so that (1) determination and recoupment of the true costs for providing such products and services will be facilitated, and (2) efficiency in the use of resources will be fostered.

(c) Evaluate continuously the efficiency, economy, and appropriateness of the procurement and distribution systems on a total economic cost basis at all levels, without prejudice to mobilization reserve and other national requirements.

3-32, 102; 4-206

7. Require that consideration be given to the direct procurement of products made in the United States from sources available to overseas activities when such sources are costeffective. 3-38, 102

8. Authorize primary grantees use of Federal sources of supply and services when: (a) The purpose is to support a specific grant

program for which Federal financing exceeds 60 percent,

(b) The use is optional on the grantee, the Government source, and, in the case of Federal schedules or other indefinite delivery contracts, on the supplying contractor, and (c) The Government is reimbursed all costs. 3-39, 102; 4-206

9. Require that grantor agencies establish regulatory procedures for assuring appropriate use of the products or services and computation of total costs for Government reimbursement. 3-39, 103

10. Assign responsibility for monitoring implementation of this program and its socioeconomic effects to the Office of Federal Procurement Policy. 3-39, 103 [One Commissioner abstained from voting on recommendations 8, 9, and 10.] 3-39, 103

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cies to procure ADPE on a cost-effective basis. 3-48, 103 14. Develop and issue a set of standard programs to be used as benchmarks for evaluating vendor ADPE proposals. 3-51, 103 15. Change the late proposal clause regarding ADPE to conform to other Government procurement practices. 3-51, 103

16. Assign responsibility for consistent and equitable implementation of legislative policy concerning food acquisition to the Office of Federal Procurement Policy or to an agency designated by the President. 3-54, 103

17. Establish by legislation a central coordinator to identify and assign individual agency responsibilities for management of the Federal food quality assurance program.

3-54, 103; 4-206

18. Encourage procuring activities, when it is deemed in the best interests of the Government, to purchase supplies or services from public utilities by accepting the commercial forms and provisions that are used in the utilities' sales to industry and the general public, provided the service contract provisions are not in violation of public law. 3-61, 103

19. Review transportation procurement techniques to determine whether more innovative procurement methods are warranted when alternative sources and modes are available. 3-61, 103

PART E

ACQUISITION OF

CONSTRUCTION AND

ARCHITECT-ENGINEER

SERVICES

Chapter 2

Architect-Engineer Services

1. Base procurement of architect-engineer services, so far as practicable, on competitive negotiations, taking into account the technical competence of the proposers, the proposed concept of the end product, and the estimated cost of the project, including fee. The Commission's support of competitive negotiations is based on the premise that the fee to be charged will not be the dominant factor in contracting for

factor

professional services. The primary should be the relative merits of proposals for the end product, including cost, sought by the Government, with fee becoming important only when technical proposals are equal. The practice of initially selecting one firm for negotiation should be discouraged, except in those rare instances when a single firm is uniquely qualified to fill an unusual need for professional services. 3-115, 149; 4–206, 207

2. Provide policy guidance, through the Office of Federal Procurement Policy, specifying that on projects with estimated costs in excess of $500,000 proposals for A-E contracts should include estimates of the total economic (lifecycle) cost of the project to the Government where it appears that realistic estimates are feasible. Exceptions to this policy should be provided by the agency head or his designee. 3-115, 149

Dissenting Position

Dissenting Recommendation 1. The procurement of A-E services should continue to be based on a competitive selection process as outlined in Public Law 92-582, which focuses on the technical competence of interested prospects. Solicitations of a price proposal and negotiations as to price should be undertaken only when the best qualified firm has been ascertained; if mutual agreement cannot be reached, the next best qualified firm should be asked for a price proposal, followed by negotiation; and if necessary, the process should be repeated until a satisfactory contract has been negotiated. [Offered in lieu of Commission recommendations 1 and 2.] 3-121, 149

3. Consider reimbursing A-Es for the costs incurred in submitting proposals in those instances where unusual design and engineering problems are involved and substantial work effort is necessary for A-Es to submit proposals. 3-115, 149

4. Repeal the statutory six-percent limitation on A-E fees. Authorize the Office of Federal Procurement Policy to provide appropriate policy guidelines to ensure consistency of action and protection of the Government's interest.

3-122, 149; 4-207

PART F

FEDERAL GRANT-TYPE ASSISTANCE PROGRAMS

Chapter 3

Proposed Changes

1. Enact legislation to (a) distinguish assistance relationships as a class from procurement relationships by restricting the term "contract" to procurement relationships and the terms "grant," "grant-in-aid," and "cooperative agreement" to assistance relationships, and (b) authorize the general use of instruments reflecting the foregoing types of relationships. 3-162, 176; 4-207

2. Urge the Office of Federal Procurement Policy to undertake or sponsor a study of the feasibility of developing a system of guidance for Federal assistance programs and periodically inform Congress of the progress of this study. 3-168, 176

PART G

LEGAL AND ADMINISTRATIVE REMEDIES

Chapter 2

Disputes Arising in Connection
With Contract Performance

1. Make clear to the contractor the identity and authority of the contracting officer, and other designated officials, to act in connection with each contract. 4-12, 82

2. Provide for an informal conference to review contracting officer decisions adverse to the contractor. 4-13, 82, 207

3. Retain multiple agency boards; establish minimum standards for personnel and caseload; and grant the boards subpoena and discovery powers. 4-20, 82, 207 4. Establish a regional small claims boards system to resolve disputes involving $25,000 or less. 4-22, 82, 207

5. Empower contracting agencies to settle

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