1. Research and Development Contracts Joseph Marshall Procurement Analyst, Division of Acquisition Policy and Evaluation OALM 2015 NIH Regional Seminar – San Diego, CA

2. R&D contract spending at the NIH Contracts vs. Grants R&D contract examples Where to look for contract opportunities The award process Contents 2

3. Contracting offices are organized to service one or more I/Cs. 3 Consolidated Operations Acquisition Centers (COAC)Institutes / Centers Included CC NCINCI, NCCIH NHLBINHLBI, CSR, NIAMS, NIDCR, NIBIB, NHGRI NIAID NICHDNICHD, NIAAA, FIC NIDANIDA, NINDS, NIMH, NIA, NCATS NIEHS NITAAC NLMNLM, CIT, NIDDK OLAONEI, NIDCD, NIGMS, ORS, OD, NINR, NIMHD ORFNIH Facilities

4. 4 COACTotal ObligationsR&D Obligations% R&D CC $87$0.00630.01% NCI $886$58666.14% NHLBI $365$21759.45% NIAID $698$41659.60% NICHD $224$4720.98% NIDA $424$13331.37% NIEHS $147$7148.30% NITAAC $98$00.00% NLM $555$20.36% OLAO $270$93.33% ORF $341$00.00% TOTAL $4095$1481.00636.17% 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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8. Contracts vs. Grants 8 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

9. 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 9

10. 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 10

11. Where to look: FedBizOpps 11

12. Where to look: HHS Procurement Forecast 12

13. Acquisition Planning & Market Research Solicitation Proposal Evaluation Technical/Peer Review Cost Past Performance Negotiation Source Selection R&D Contracts – Award Process 13

14. 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 14

15. 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 15

16. 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 16

17. 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 17

18. 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 18

19. 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 19

20. 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 20

21. 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 21

22. Tradeoff Example 22 Technical Ranking Evaluation Score OfferorProposed CostCost Ranking 195ACME, Inc.$2,000,0002 285MYOB & Co.$1,750,0001 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.

23. Tradeoffs 23 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 OfferorProposed CostCost Ranking 195ACME, Inc.$1,500,0001 275MYOB & Co.$2,000,0002 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 OfferorProposed CostCost Ranking 185ACME, Inc.$1,000,0002 185MYOB & Co.$900,0001

24. References 24 FedBizOpps: www.fbo.govwww.fbo.gov HHS Procurement Forecast: procurementforecast.hhs.govprocurementforecast.hhs.gov Federal Acquisition Regulations: www.acquisition.govwww.acquisition.gov HHS Acquisition Regulations: http://www.hhs.gov/grants/contracts/contract- policies-regulations/hhsar/index.htmlhttp://www.hhs.gov/grants/contracts/contract- policies-regulations/hhsar/index.html Peer Review Regulations: 42 CFR Part 52h42 CFR Part 52h NIH Manual Chapters: http://oma1.od.nih.gov/manualchapters/scripts/mcs/browse.asp http://oma1.od.nih.gov/manualchapters/scripts/mcs/browse.asp NIH Office of Acquisition and Logistics Management: oalm.od.nih.govoalm.od.nih.gov