Cablegate: Review of "the American Place" Rfp

VZCZCXYZ0000
OO RUEHWEB

DE RUEHJA #0104/01 0260022
ZNR UUUUU ZZH
O 260022Z JAN 10
FM AMEMBASSY JAKARTA
TO SECSTATE WASHDC IMMEDIATE 4339

UNCLAS JAKARTA 000104

SIPDIS

FROM AMBASSADOR HUME TO U/S MCHALE, U/S KENNEDY; U/S BURNS, A/S
CAMPBELL
DEPT. FOR EAP/MTS, EAP/PD, R FOR W.DOUGLAS
NSC FOR D.WALTON

E.O. 12958: N/A
TAGS: AMGT KPAO AFIN ASEC OEXC ABLD ID

SUBJECT: REVIEW OF "THE AMERICAN PLACE" RFP

REF: A) 1/22/10 E-MAIL FROM WHITAKER TO OSIUS AND ANDERSON; B)
JAKARTA 2074

1. As follow-up to our January 21, 2010, teleconference, we are
pleased to quickly respond in detail to all of the issues and
concerns raised in ref A's A/LM/AQM report. We believe that this
high priority project must be funded and implemented given the USG's
strategic interest in Indonesia. Breaking new public diplomacy
ground for the 21st century requires flexibility, creativity and a
"whole of government" approach, and we feel our initiative has all
of that. But time is of the essence. We only have until March 15
to sign the contract. With your immediate funding, we will succeed
in time for a possible POTUS visit and create an effective venue
that will support the President's evolving comprehensive partnership
with Indonesia.

2. In these interests, Mission has entrusted the procurement to
USAID which has conducted the procurement according to USG legal
requirements. State A/OPE has indicated through AID/W that they are
prepared to execute the MOU necessary for the conclusion of this
procurement. In this regard, Jakarta's answers to all of the
issues/concerns raised by A/LM/AQM follow:

A/LM/AQM/IP (Ann Truitt, 1/9/2010)

(1)Observation: "The problem is, in my opinion, the contracting
methodology, and the specifics of the evaluation scheme are "old
school" and inconsistent, and fail to capture the desired result of
this important new initiative."

Response: The Contracting Officer is provided the authority to
exercise his/her discretion in the selection of the approach
(Federal Acquisition Regulation (FAR) Subparts 15.1 [Source
Selection Processes and Techniques] and 16.1 [Types of Contracts])
which will result in the most effective procurement of a contractual
requirement while providing the greatest incentive for the
contractor to efficiently and economically attain the objectives of
the program. This election in this particular instance was made in
full consultation with the U.S. Embassy and was jointly determined
most appropriate for this initiative. The design of the
Government's requirements was also accomplished in accordance with
FAR Part 11 [Describing Agency Needs] where the Contracting Officer
determined the Government's requirement to be "contractible".

(2)Observation: "The scope is too broad. The RFP combines both
overall concept development, and then the execution of said concept.
This is the classic "having the fox guard(ing) the hen-house"
scenario that rarely results in a good outcome for the Government."

Response: The RFP did per FAR Subpart 15.2 [Requests for Proposals]
appropriately state the Government's requirements with sufficient
detail and clarity for prospective offerors to prepare and submit
compliant and complete proposals as well for the resultant awardee
to satisfactorily perform the contract requirements while meeting
the Government's requirements and providing for appropriate
administration of the contract under FAR Part 42. A pre-proposal
conference was conducted as provided for under FAR Subpart 15.2
[Contract Administration] where the Government made an extensive
effort to review the RFP and make prospective offerors aware of the
nature of the Government's requirement, its content and expected
levels of contract performance as well as the how to complete and
submit a proposals. Amendments were issued subsequent to the
pre-proposal conference per FAR Subpart 15.2 [Requests for
Proposals] to formally record the Government's responses to
questions which arose during the pre-proposal conference and provide
additional information.

The Contracting Officer did not deem the provisions of FAR Subpart
9.5 [Organizational and Consultant Conflicts of Interest] to apply
to this procurement nor USAID's guidance under Contracting
Information Bulletin 99-17 [Organizational Conflict of Interest] as
the design of the requirement and its execution would not lead to
conflicting roles which might create bias in a contractor's judgment
nor provide a competitive advantage. The Contracting Officer's
consideration of the elements prescribed under the applicable
regulatory guidance found that no conflict of interest would arise
in the solicitation of or the performance of the Government's
requirement.

(3)Observation: "the scope includes the disparate skill-sets of
construction/facility fit-out, design of public diplomacy strategy,
and implementation to the detailed level of hiring personnel and
operating the American Place. These disparate areas of expertise
cannot reasonably be expected to be performed by most contracting
firms. The US has several very large and sophisticated firms that
might be able to pull it off, but even that would be a performance
risk."
Response: The Contracting Officer determined adequate market
research was conducted by the U.S. Embassy (FAR Part 10 - Market
Research) which established that adequate qualified sources exist
having the potential capacity and capability (FAR Subpart 9.1 -
Contractor Qualifications) to obtain or to provide the resources
required under the Government's requirements. Attendance at the
pre-proposal conference was comprised of 53 individuals representing
31 firms from throughout Southeast Asia with both local and
expatriate staff. The resultant proposals represented a mix of
local and international firms, to include the United States, which
partnered under their proposals.

Construction and fit-out are not requirements of the RFP; rather,
the requirement is to liaise with the project location's
construction contractor (provided by the location's leaser) and
assist the Government in coordinating and evaluating the leaser's
architect's and construction contractor's execution to assure
compliance with the Government's requirements.

While the RFP requires that, "The Contractor must propose and will
be responsible to successfully execute an overall strategy," the RFP
continues to state that such must, "effectively and innovatively
meet(s) the Program Objectives described in Section II." Section II
of the RFP requires in the contractor's performance that it:

"develop(ing) an innovative concept for the American Place and
subsequently create(ing) the plan for implementation and taking the
necessary steps, in full consultation with the U.S. Embassy in
Jakarta to execute the concept and provide the subsequent day-to-day
management requirements of The American Place, to include ongoing
development of programs and exhibits in conjunction and with the
approval of the U.S. Embassy.

The basic objectives of The American Place are to develop the
U.S.-Indonesian relationship through achievement of the following:

--Improving awareness, changing attitudes, and ultimately improving
the image the Indonesian public has of the United States and the
American people.
--Creating a more accurate understanding of a diverse and vibrant
America for Indonesian communities.
--Reducing skepticism held towards the American people.
--Creating an opportunity for true dialogue through understanding
our audiences and providing opportunities to discuss and learn.
--Promoting U.S. higher education.
--Promoting US technology."

Given such, the contractor will not "design" public diplomacy
strategy.

Finally, the project staff requirements specified in the RFP
(Section C.III.A.5) are considered to be present in the labor
market, accessible, complementary in their application under the
contract, and of a proper mix for the initiative.

(4)Observation: "I note nothing in the document that articulates
that this is a DOS program -- all references, clauses, and terms and
conditions are unique to USAID contracts."

Response: As USAID is acting as the procurement agent for the U.S.
Embassy Jakarta for this initiative under the request of the
Ambassador, this procurement is being conducted in accordance with
the State/USAID Joint Management Council procedures for which State
Cable 75695 clarified that programmatic procurements will be made by
USAID. As such, USAID procurement procedures are applied as well as
USAID procurement guidance as well as those of the Federal
Acquisition Regulation.

This procurement was thus undertaken as a "whole of government"
initiative of the U.S. Embassy Jakarta. The RFP oover letter is
clear in this context starting, "The United States Government, as
represented by th United States Agency for International
Developmnnt (USAID) Mission to Indonesia, is seeking proposl(s,"
while Section B.1 of the RFP states, "that iill serve as the public
face and the public platform for the United States Embassy in
Indonesia... The statement of work included in the RFP (Sectio C)
is replete with clear references to the inita tive being a U.S.
Embassy Jakarta program for which the Embassy's role is distinctly
outlined in the execution, implementation and management of the
program and the resultant contract.

(5)Observation: "a very glaring problem that could easily lead to
an 'impossibility of performance' argument by a contractor is on
page 12, where the contractor is instructed to provide weekly
reports on American Place attendance, 'which must never drop below
1500 per week.' The number of people that visit American Place is
not in the control of the contractor! And yet, it is a prominent
requirement of the RFP. A fine-tooth review of the rest of the
document may yield other such examples."

Response: The Government's requirements were designed with the
knowledge that the venue (location) for the project will be in a
major mall in central Jakarta; a city with a population of over 13
million. The requirement for the number of visits per week was
quantified with this knowledge and of the flow of traffic through
the city's malls. This requirement, thus, was considered consistent
with FAR Subparts 11.1 [Describing Agency Needs] and 11.4 [Delivery
or Performance] as well would be addressed under the provisions of
FAR Subpart 42.3 [Contract Administration] by the Contracting
Officer in concert with the Contracting Officer's Technical
Representative (COTR) as contract performance progresses. This
latter element is emphasized in the RFP, Section III.A.6.
Communications, wherein, "The Contractor must maintain dialogue with
the COTR throughout design and implementation to address and
coordinate the timely resolution of all technical questions before,
during and after implementation."

No further comments are provided on this element in the absence of
the specifics as to the "fine-tooth review."

(6)Observation: "the evaluation scheme is very antiquated--DOS
hasn't used this type of evaluation scheme in years, if ever.
First, on page 49 the cost proposal is included as part of the
"Technical Proposal," which is illogical and violates every
principle of federal contracting there is! It is also "weighted":
tech approach is 30 percent meeting milestones is 25 percent;
corporate "creative" capacity (not sure what that is or how you
would evaluate that) is 15 percent; staff and key personnel is 10
percent; past performance is 10 percent; and cost is 10 percent.

This evaluation scheme is contradictory to the last paragraph in
Section M of the document that says the award will result in "best
value" decision... when you weight cost, it is not/not best value in
contracting terms! And if cost is being weighted, a 10 percent rank
of importance could explain why the proposed winner is 50 percent
over the R budget - at 10 percent, there is little or no incentive
for industry to consider reasonable costing."

Response: The Contracting Officer is provided the authority to
exercise his/her discretion in the identification of the award
evaluation factors (FAR Subpart 15.3 - Source Selection, Evaluation
Factors) for which those included in the RFP were deemed to
represent the elements which are considered key to the source
selection decision (FAR Subpart 15.3 - Source Selection, Evaluation
Factors). This discretion includes the rating method (FAR Subpart
15.3 - Source Selection, Proposal Evaluation).

The weighting of the evaluation factors, however, demonstrated that
factors other than cost are significantly more important than the
source selection based on the request of the U.S. Embassy. Cost and
cost realism, though, were considered an imperative and integral
element of these evaluation factors and thus included as a scored
factor (FAR Subpart 15.4 - Contract Pricing, Proposal Analysis
Techniques).

Given that this procurement is being conducted as a negotiated
procurement under FAR Part 15 [Contracting by Negotiation], the
Government will apply the policies of FAR Subpart 15.4 [Contract
Pricing] for contract pricing as well as those of FAR Subpart 15.3
[Source Selection] for exchanges or discussions (negotiations) which
will result in the best value award.

ELSO (Tim Farrell, 1/10/2010)

(1)Observation: "The RFP has planning, administration, design and
construction services within the SOW. Fit-out of leased space would
fall under construction services. Also, the same firm can't design
then perform the construction."

Response: The RFP does not require the contractor to construct or
fit-out the project's location; this is to be accomplished by the
location leaser's contractor. Additionally, the RFP does not
specify that a registered or licensed architect or engineer is
required to perform the design services. Section C.III.A.2 of the
RFP states:

2. Site Evaluation and Fit-Out: Based on the approved Commercial
Plan, the Contractor will evaluate the site identified for The
American Place with respect to scope of work required to implement
the plan. The Contractor will identify and propose an architect or
space planner as a subcontractor to the Contractor to assist in
refining the scope of the project and develop the
construction/fit-out plans which must be approved by the U.S.
Embassy COTR. The Contractor will evaluate and recommend approval
or disapproval of the architect's preliminary work plan and
schedule, and detail and confirm costs according to the budget
strategy envisioned in the Overall Strategy. The Contractor will
coordinate with the landlord of the leased space and oversee the
fit-out of the acquired space and ensure completion according to a
negotiated schedule which is compliant with the contract performance
timeline incorporated herein and the COTR approved Commercial Plan.

The related award evaluation criteria of the RFP states:

A. TECHNICAL PROPOSAL

1. Technical Approach : (30 points)

Demonstrated sound and logical approach to the preparation for,
execution of and successful management and long term maintenance of
project management programs of a duration and similar nature to that
of The American Place. Demonstrated creativity in the concept for
the physical design and fitting of The American Place as well as the
conduct of programs which will attain the outreach objectives of
this project. Ability to establish a public focal point which will
best serve the interests and goals of the U.S. Embassy in opening
and operating The American Place.

(2)Observation: Section C. II. PROGRAM OBJECTIVES. The Contractor
(also hereinafter referred to as the "Project Manager") will be
charged with designing and implementing the project of The American
Place in Jakarta Indonesia, as well as subsequent administration and
staffing. This will include developing an innovative concept for the
American Place and subsequently creating the plan for implementation
and taking the necessary steps, in full consultation with the U.S.
Embassy in Jakarta to execute the concept and provide the subsequent
day-to-day management requirements of The American Place.

Determining the concept, the design, staffing, and day to day
management appears to have a conflict of interest. Design and
staffing could be proposed in a manner most beneficial to the
contractor. This is also difficult to compute as a fixed-price.

Response: Please refer to Response (2) under A/LM/AQM/IP comments
above.

(3)Observation: CLIN 0001B. Site Fit Out. Contractors are asked to
provide a fixed price for the space fit-out. However, the actual
space to be used is not identified. No specs or standards are
provided for the fit-out. See RFP below:

F.4. PLACE OF PERFORMANCE
The place of performance will be Jakarta, Indonesia and a commercial
location which will be specified following award of the contract.

Response: The pre-proposal conference clarified, and it was
documented in a subsequent amendment to the RFP, that the space for
the venue would be 500 to 700 square meters.

(4) Observation: Section C. The contractor is asked to propose a
budget strategy. The USG should have prepared an Independent
Government Cost Estimate (IGE). See below:

SECTION C: III. "The proposals submitted must effectively and
efficiently achieve all of these objectives and demonstrate the
Contractor's ability to meet the timeline, as well as propose a
budget strategy to meet the ultimate objective of a formal "hard
opening."

Response: The U.S. Embassy has prepared an Independent Government
Cost Estimate (IGCE).

(5) Observation: Section C. Part IV. Contract Performance Timeline.
This needs to be shown in the number of days after award of the
contract. It currently states "Presentation of Commercial Plan on
Sept. 16, 2009." Without knowing the award date this is not
possible. Timeline should have had a line for "Approval of space,"
"Plans by USG," and a "Notice to Proceed."

Response: The American Place initiative was undertaken with the
specific direction to establish an operational program by September
11, 2009, so as to allow the formal opening of the venue in concert
with the POTUS visit which was anticipated in September 2009.
Accordingly, the Contract Performance Timeline was established to
meet this mandate and the sequence of events prescribed in the RFP
as well as emphasized during the pre-proposal conference as outlined
below. USAID committed itself to the award of the contract by
September 11, 2009. (Footnote: USAID was prepared to make the award
on September 11, 2009, as requested.)
--Close of acceptance of proposals, August 18, 2009
--Targeted contract award, September 11, 2009
-- Soft Opening of The American Place, November 1, 2009
-- Hard Opening of The American Place, November 16, 2009

The "Approval of the Space Plan" was an element of the Timeline
prescribed in Section C of the RFP as "Presentation of Commercial
Plan," etc., along with the corresponding completion date. As
indicated above, these and other dates were prescribed in the RFP,
reviewed during the pre-proposal conference, and would have been
committed to under the contract award to meet the POTUS visit date.
These dates included the following contract accomplishments:
--Presentation of Commercial Plan, September 16, 2009
--Submission of Approved Specifications for Required Equipment,
September 18, 2009
--Submission of Proposed Architect or Space Planner Subcontractor,
September 18, 2009
--List of Proposed Staff (Other Than "Key Personnel") Submitted for
Approval, September 21, 2009
--Fit-Out of Space Begins, September 21, 2009
--Submission of Plan for Initial Project Programs and Activities,
September 25, 2009
--Training for Proposed Staff Begins, October 12, 2009
--Soft Opening of American Place, November 1, 2009
--Formal ("Hard") Opening of The American Place, November 16, 2009

As this requirement does not meet the definition of construction
(FAR Subpart 2.1 - Definitions] and, thus, would not be procured as
a construction contract (FAR Part 36 - Construction Contracting), a
"Notice to Proceed" is not required for the contactor to commence
work under the contract; rather, the bilaterally executed contract
award will serve this purpose.

(6)Observation: Section C. Part III. (2). Site Evaluation and
Fit-Out: This part of the SOW requires an architect. A/E services
have a whole set of FAR requirements not addressed in RFP. Don't
see how you can fix-price this work when the contractor is asked to
refine the scope of the project.
"Based on the approved Commercial Plan, the Contractor will evaluate
the site identified for The American Place with respect to scope of
work required to implement the plan. The Contractor will identify
and propose an architect or space planner as a subcontractor to the
Contractor to assist in refining the scope of the project and
develop the construction/fit-out plans which..."
Response: Please refer to Response (1) above.

(7)Observation: Evaluation Factors for Award. The cost proposal is
only given 10 points (10 percent) as an evaluation factor. This is
inconsistent with the award of a firm-fixed-price contract. This is
a FAR 15 solicitation. Evaluation of cost at 10 percent does not
appear to be "Best Value" for USG in accordance with FAR 15.101.

Response: Please refer to Response (6) under A/LM/AQM/IP comments
above.

(8)Observation: L.10 Instructions for Preparation of the Cost
Proposal. A cost proposal format should have been included for the
offerors. Firms are asked to propose prices in accordance with
Section B. A detailed cost proposal format should have been
required. Not sure how you can compare offerors cost proposals if
there is not a format used by all offerors.
Response: The Contracting Officer deemed that Section L.10 of the
RFP provided sufficient specific directions (per FAR Subpart 15.2.
Solicitation and Receipt of Proposals, Requests for Proposals) as to
the offerors' preparation of cost proposals to permit the
evaluation, to wit:

"(a) The Offeror's cost proposal must address all aspects of the
contract's scope of work and be presented according to the Contract
Line Items specified in Section B of this solicitation. Within the
Offeror's presentation, the Offeror will clearly depict those costs
related to the categories of: start-up/capital expenses, development
of equipment and technology needs, and ongoing administrative
expenses (salaries, infrastructure, etc.). Proposed salaries for
staff must be broken down into categories of personnel, including:
Home Office Project Administrator (In-Country), Site Manager, Site
Assistant Manager, Full Time Staff, AV/Computer Staff, Cleaning and
Security Staff.

(b) The Offeror's cost proposal is to be supported by information
which will provide sufficient detail so as to allow a complete
analysis of each line item cost. This presentation is to include a
complete breakdown of the cost elements associated with each line
item and those costs associated with any proposed subcontract,
consultancy or sub agreement (provide separate breakdown) for each
year of the Contract."

4. Conclusion: Our response to A/LM/AQM's comments indicate that
there is no barrier to moving forward, nor anything that would
impede a proper award contract. With the CR over, now is the time
to approve FY2010 funding for the American Place. Every day of
delay degrades our capacity to produce the best venue and program in
time for a potential launch by the President. The proposal is ready
for Washington's approval and funding. We have secured an extension
until March 15, and, as soon as the Department approves funding, the
contract can be signed and work can begin.

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