Research and Development Contracts

Joseph MarshallProcurement Analyst, Division of Acquisition Policy and Evaluation

OALM

2015 NIH Regional Seminar – San Diego, CA

• R&D contract spending at the NIH• Contracts vs. Grants• R&D contract examples• Where to look for contract opportunities• The award process

Contents

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• Contracting offices are organized to service one or more I/Cs.

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Consolidated Operations Acquisition Centers (COAC) Institutes / Centers Included

CC CC

NCI NCI, NCCIH

NHLBI NHLBI, CSR, NIAMS, NIDCR, NIBIB, NHGRI

NIAID NIAID

NICHD NICHD, NIAAA, FIC

NIDA NIDA, NINDS, NIMH, NIA, NCATS

NIEHS NIEHS

NITAAC NITAAC

NLM NLM, CIT, NIDDK

OLAO NEI, NIDCD, NIGMS, ORS, OD, NINR, NIMHD

ORF NIH Facilities

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COAC Total Obligations R&D Obligations % R&D

CC $87 $0.0063 0.01%NCI $886 $586 66.14%NHLBI $365 $217 59.45%NIAID $698 $416 59.60%NICHD $224 $47 20.98%NIDA $424 $133 31.37%NIEHS $147 $71 48.30%NITAAC $98 $0 0.00%NLM $555 $2 0.36%OLAO $270 $9 3.33%ORF $341 $0 0.00%TOTAL $4095 $1481.006 36.17%FY14 contract spending estimates with obligations in millions. Figures do not include spending from government purchase cards or blanket purchase agreements.

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Contracts vs. Grants

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CONTRACTS•To acquire goods or services for the direct use or benefit of the government.•Government has a greater degree of control and monitoring.•Governed by large body of statutes, regulations and policies:

• Competition in Contracting Act (CICA)

• Federal Acquisition Regulations (FAR)

• HHS Acquisition Regulations (HHSAR)

GRANTS•To provide assistance to accomplish a public purpose.•Less government control than a contract.•Governed by a separate body of law.

Overlap: human subjects and animal research; financial conflicts of interest; salary rate limitations; cost principles

• Usually cost type• Payment typically made on a monthly basis• Government may fully fund the contract at award or

funding may be divided based upon the government’s requirement.

• Deliverables (e.g. monthly & annual reports; small business subcontracting reports; information security).

• Contracting Officer & Contracting Officer’s Representative

R&D Contracts

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• Therapeutics against pathogens• Vaccine development (e.g. ebola vaccine)• Animal research support (e.g. animal model development)• Protocol development• Clinical research studies• Reagent development• Clinical data coordination• Biologic specimen repository

Examples of NIH R&D Contracts

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Where to look: FedBizOpps

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Where to look: HHS Procurement Forecast

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• Acquisition Planning & Market Research• Solicitation• Proposal Evaluation

• Technical/Peer Review• Cost• Past Performance

• Negotiation• Source Selection

R&D Contracts – Award Process

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• Define requirement– Concept clearance for R&D contract projects– Develop statement of work (SOW) & deliverable requirements– Prepare independent government cost estimate (IGCE)

• Market research– Mechanisms: Request for Information (RFI); Sources Sought Notice– Who can do the work?

• Are there small businesses that can do the work? • Contract structure

– Fixed price; cost; hybrid?– One or multiple awards? (IDIQ?)– Funding: type of appropriation; non-severable or severable; base and options?– Period of performance

• Evaluation Criteria: Technical, Cost, Past Performance• Source Selection Method: Tradeoffs?

Acquisition Planning & Market Research

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• Posted on FedBizOpps for a minimum of 45 days• Types of solicitations:

– Request for Proposals (RFP) for defined requirements– Broad Agency Announcement (BAA) for areas of interest– SBIR Omnibus for research topics

• Competition– Full and Open or Limited– Small Business Set Aside

• Pre-Proposal Questions & Answers and Conferences• Amendments• Proposal Submission: Technical & Business Proposals

Solicitation

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• Technical proposals reviewed by NIH staff prior to release to peer review committee.

• 75% of peer review group members must not be government employees.

• Peer review group does not see business proposal.• Effect of page limitations (check the solicitation)

Proposal Evaluation: Peer Review

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• Proposal evaluated based on the technical criteria stated in solicitation.– Examples: Understanding of the Project; Technical Approach;

Management Plan; Personnel Qualifications; Facilities– Numerical scores– Peer review committee

• Scientific Review Officer chairs the committee. CO & COR attend review sessions but are not members of the technical review committee.

• Members provide scores/ratings and comments on strengths, weaknesses, deficiencies and technical acceptability.

• SRO prepares written minutes of the review.

Proposal Evaluation - Technical

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• For R&D contracts, offerors usually need to provide details on: labor; subcontracts; consultants; travel and other direct costs; fringe benefits; overhead or other indirect costs and profit (where applicable).

• COR & CO review the proposed costs and compare it with the IGCE and with other proposals.

• Costs must be realistic and reasonable.• Common mistakes: salary rates exceed limitations; profit

margins exceed limitations; options not priced; travel costs exceed rate limitations; unallowable costs

Proposal Evaluation - Cost

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• Offerors provide references for similar work.• Government may obtain information from any

source (PPIRS; past performance questionnaires).• Variety of rating methods available, though only 1

will be used.• If there is no relevant past performance available,

the offeror may not be evaluated favorably or unfavorably.

Past Performance Evaluation

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• Competitive Range Determination• “Discussions”

– Government must tell offerors all deficiencies and significant weaknesses in the proposal and adverse past performance information.

– Government can also negotiate price.– Offeror has opportunity to revise its proposal.

• Distinct from “clarifications”– Offeror responds to information requests from the

government but does not have an opportunity to revise the proposal

Negotiation

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• Tradeoff– Appropriate when it may be in the best interest of the Government

to consider award to other than the lowest priced offeror or other than the highest technically rated offeror.

– Example language:• Selection of an offeror for contract award will be based on an evaluation of

proposals against three factors. The factors in order of importance are: technical, cost, and past performance. Although technical factors are of paramount consideration in the award of the contract, past performance and cost/price are also important to the overall contract award decision. All evaluation factors other than cost or price, when combined, are significantly more important than cost/price. The Government intends to make an award(s) to that offeror whose proposal provides the best overall value to the Government.

Source Selection

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Tradeoff Example

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Technical Ranking

Evaluation Score

Offeror Proposed Cost Cost Ranking

1 95 ACME, Inc. $2,000,000 2

2 85 MYOB & Co. $1,750,000 1

If ACME, Inc. is selected for award, the Government will have to justify spending more money for the extra cost of the proposal over MYOB & Co. If the Government selected MYOB & Co. for award, it would have to explain why ACME Inc.’s higher technical merit is not worth the additional cost.

Assume that both offerors have similar past performance evaluations.

Tradeoffs

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Not all selections require a trade-off. If a proposal has the highest technical rating and the lowest cost, a tradeoff is not required. You would select that proposal. (Again, assume past performance is similar).

Technical Ranking

Evaluation Score

Offeror Proposed Cost Cost Ranking

1 95 ACME, Inc. $1,500,000 1

2 75 MYOB & Co. $2,000,000 2

Also, you would not need to perform a tradeoff if proposals receive equal technical evaluations. In that case, cost may be the deciding factor. (Assuming past performance is similar).

Technical Ranking

Evaluation Score

Offeror Proposed Cost Cost Ranking

1 85 ACME, Inc. $1,000,000 2

1 85 MYOB & Co. $900,000 1

References

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• FedBizOpps: www.fbo.gov

• HHS Procurement Forecast: procurementforecast.hhs.gov

• Federal Acquisition Regulations: www.acquisition.gov

• HHS Acquisition Regulations: http://www.hhs.gov/grants/contracts/contract-policies-regulations/hhsar/index.html

• Peer Review Regulations: 42 CFR Part 52h

• NIH Manual Chapters: http://oma1.od.nih.gov/manualchapters/scripts/mcs/browse.asp

• NIH Office of Acquisition and Logistics Management: oalm.od.nih.gov