1. Contracting Officer Podcast Slides
Knowledge & Insights From Contracting Officers

2. What is a Follow-on Contract?
Episode 038
What is a Follow-on Contract?
Original Air Date: August 2, 2015
Hosts: Kevin Jans & Paul Schauer

3. Formatting notes
Hyperlinks: Blue font indicates hyperlinks – presentation must be in ‘Slide Show’ mode to activate the link
Red bold font indicates a point of emphasis
Green bold font indicates CO’s personal comment or perspective

4. Introduction
Purpose of this podcast: To discuss why sole source follow-on contracts have pros and cons
Industry wants to sole source the follow-on contract
They do not want to re-compete
Happy users also want to sole-source
FAR does not easily allow this. Why not and what are the advantages and disadvantages?

5. Introduction “Follow-on contract” means:
New, noncompetitive procurement placed with an incumbent contractor,
Either by a separate new contract or by a supplemental agreement
To continue or augment a specific program, where such placement was necessitated by prior procurement decisions. 
Example: Award of major weapon system production contract to the developer, when award to any other source would duplicate costs to Government that are not expected to be recovered through competition.

6. Introduction
Do not confuse “follow-on” with other reasons why you are considering a sole-source justification
Many times “substantial duplication of cost…not expected to be recovered” is the key
But sometimes, intangibles lead to costs that are not included in these calculations

7. When does the Follow-on Contract happen?
Acquisition Time Zones
(from Podcast Episode 003)
Requirements Zone
Market Research Zone
RFP Zone (proposal zone)
Source Selection Zone
Execution Time Zones
(from Podcast Episode 084)
Kick Off Zone
Performance Zone
Re-compete Zone
Wrap-up Zone

8. Sole-source Considerations
Pros
Continuity
Experience
No transition/start-up costs
Cons
Apathy
Escalation of prices
Continuity (no innovation, improvement, reason to change)
Must justify fair and reasonable price

9. Why are Follow-on Contracts important?
“…a logical follow-on” – Phrase commonly used to explain CO’s intent to make Sole Source award to incumbent contractor
Do not go into it blindly
Competing may save money (almost assuredly)
Little opportunity to maximize innovations and efficiencies
“Greening” of the workforce – Over time, replace expensive experienced labor with newer, inexperienced (and less experienced) personnel

10. Why are Follow-on Contracts important?
Competing may cost money (rare occasions)
Inefficiencies at start-up, must be learned through performance
New winner may have trouble meeting staffing requirements at proposed prices
New awardee may not understand the entire job
Ensure complete requirements are described in the RFP

11. Why Should Government Care?
Sole Source may be the “logical” choice but FAR 6.3 does not allow that
Sole Source may mean that industry does not look hard enough at efficiencies, innovations, change
Competition is time-consuming and expensive
Must do thorough market research, write a J&A that gets approved

12. Why Should Government Care?
Competition may not solve your problems with the incumbent
Prevent “buying in” with solid, thorough Sections L & M
Cost/Price Realism, Reasonableness, Completeness
Understand that the incumbent proposal is limited by their knowledge of what it takes to actually do the work….
competitors may make wild leaps of faith

13. Why Should Industry Care?
Must be prepared in advance to protect your work
Help customer justify Sole Source decision
Biggest advantage is a happy customer
What if you really do not understand the problem and win anyway?
What if you beat the incumbent and the customer did not want change?
Uphill battle to be viewed as successful

14. Why Should Industry Care?
What if you bid so low that you can not make the customer happy?
Price to win or price to execute?
Ever heard of past performance?
That’s nothing compared to the reputation that is spread by word of mouth

15. Summary
A Sole Source follow-on may seem “logical” but may not be the best strategy
Consider the pitfalls and what you stand to gain, or lose, through competition
Industry: a happy customer looks for reasons to avoid a competitive follow-on

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