GUIDELINES FOR THE PREPARATION OF SPECIFICATION, SELECTION AND ACQUISITION OF ADP SYSTEMS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89B00552R000700060026-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 19
• Document Creation Date: December 14, 2016
• Document Release Date: November 15, 2002
• Sequence Number: 26
• Content Type: REGULATION

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GUIDELINES FOR
THE PREPARATION OF
SPECIFICATION, SELECTION AND ACQUISITION
OF ADP SYSTEMS
A. PURPOSE
This handbook provides guidance and assistance to personnel involved in the ADP
procurement process. Although the information is not all-inclusive and should not be
considered an exhaustive checklist, it describes acceptable practices and procedures
derived from actual ADP procurement experience.
B. BACKGROUND
1. Congress granted to the General Services Administration (GSA) the sole
authority to procure:
a. Automatic Data Processing Equipment (ADPE)
b. Proprietary Software
c. Maintenance Services
d. ADPE Supplies
e. ADPE Services.
2. The Agency is required to comply with the Federal Property Management
Regulations as published by GSA concerning the procurement of ADPE and services.
The statutory basis for such regulations, PL 89-306, applies Government-wide and
supersedes the application of the Agency's authorities in this area under PL 81-110,
the Central Intelligence Agency Act of 1949.
3. GSA delegated authority to the Agency "in respect to the lease, purchase,
and/or maintenance of ADPE and related items when required for intelligence infor-
mation processing, communications, or intelligence operations." This delegation of
procurement authority becomes void if the Agency does not follow certain procedures
prescribed by GSA.
4. Procurement Note No. 73, dated 23 January 1974, assigns the responsibility
for all ADP-related procurement to the Automatic Data Processing and Engineering
Section, Contracts Management Branch, Procurement Division, OL
(ADP/ES/CMB/PD/OL). Headquarters Regulation (HR) 1-14J assigns to Director
of Joint Computer Support the responsibility of reviewing and coordinating proposals
for the acquisition of computer programs and equipment.
5. To ensure compliance with the Delegation of Procurement Authority (DPA),
the Agency has adopted this handbook as a guide.
6. When seeking competition, the Agency must prepare its solicitations in con-
formance with the content and format of the "Solicitation Document for ADP
Systems." An accompanying document to be issued to industry with the Solicitation
Document is the "General Instructions to Offerors Governing Proposal Preparation."
7. In addition to this handbook, the following issuances are important to the
ADP procurement process.
a. The applicable procurement regulations, e.g., Federal Procurement
Regulations (FPR) or Armed Services Procurement Regulations (ASPR).
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b. Federal Management Circular (FMC) 74-5 which provides policies and
procedures relating to the selection and acquisition of ADPE.
c. Part 101-32 of the Federal Property Management Regulations (FPMR).
(1) FPMR 101-32.2 sets forth the requirements and procedures govern-
ing the use of existing Government ADP facilities on a shared basis.
(2) FPMR 101-32.3 provides the policies and procedures relating to the
reutilization of Government-owned and leased excess ADPE.
(3) FPMR 101-32.4 sets forth specific policies and procedures relating
to the procurement and contracting for ADPE, software, and maintenance services.
In addition, this FPMR Subpart identifies some mandatory clauses which must be
used in solicitations for ADPE and related items.
(4) FPMR 101-32-403-5 provides policies and procedures governing
the sole source procurement of ADPE.
d. The Standard Solicitation Document for ADP Systems and accompany-
ing document for offerors, entitled "General Instructions to Offerors Governing
Proposal Preparation" are designed to achieve a practicable and useful degree of uni-
formity in ADP procurements. These documents are available on request to
ADP&ES/CMB/PD/OL.
8. Before preparing a Document, user components should be aware that GSA
has executed a number of contracts for ADP supplies and hardware which may be
used in lieu of a solicitation. Some of these contracts constitute mandatory sources
of supply.
Examples are contracts for teleprocessing, magnetic tape, disk drives, tape
drives, disk packs and computer memory, among others. It should also be noted that
these mandatory contracts and the articles covered thereunder change from year to
year.
However, if some machines for an ADP system are acquired from requirements
contracts, it may affect the prime contractor responsibility for the system. In some
instances the use of such contracts may relieve the vendor of all prime contractor
responsibilities, including systems integration.
9. The following is a checklist for use in preparing ADP solicitations. It is not
all-inclusive, but touches the high spots only. Subject to availability of personnel,
OJCS and Procurement Division/OL will assist user offices with any of the items con-
tained herein.
a. Is the objective of the Solicitation Document clear'?
b. Are the required standards, such as ASCII code, specified?
c. Are the mandatory requirements clearly stated?
d. Is each of the desirable features clear, and are supportable dollar values
established?
e. Are the requirements for a benchmark demonstration or operational
capability demonstration clear? Are they adequate to demonstrate the required
capability?
f. Are the evaluation criteria clear?
g. Is the basis for award, including the basis for evaluating desirable
features, clear?
h. If there are unusual or limiting features in the Solicitation Document, are
they clearly stated?
i. Is a systems life stated? (One must be.)
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j. Is the method of lease/purchase analysis stated?
k. Does the material reflect compliance with:
(1) FMC 74-5: Management, acquisition and utilization of automatic
data processing (ADP). (See paragraph C, D, E, F)
(2) OMB Bulletin 60-6 with respect to studies preceding the acquisi-
tion of ADPE. (See paragraph C)
paragraph E)
procedures.
(3) FPMR 101-32.2 with respect to ADP resources.
(4) FPMR 101-32.3 with respect to reutilization of ADPE. (See
(5) FPMR 101-32.4 with respect to procurement policy and
(6) FPMR 101-32.13 with respect to implementation of Federal Infor-
mation Processing Standards Publications (FIPS PUBS) in Solicitation Documents.
(7) FPMR 101-35.1 with respect to communications.
1. FMC 74-5 and OMB Bulletin 60-6 require that the Agency make certain
preliminary studies before a procurement action can take place where the anticipated
purchase price will exceed $100,000 or the anticipated monthly rental will exceed
$2500. Below this dollar level procurement files should be documented to include
appropriate management justification and approval.
The systems studies must include a determination that the use of ADP is essen-
tial. Such determinations should be preceded by, and based upon, the results of well-
documented studies, which provide adequate factual basis for concluding (1) that the
functions or processes for which the ADPE can be used are essential to perform; and
(2) that the systems, procedures, and methods to be employed in performing these
functions or processes have been designed to achieve the highest practicable degree of
effectiveness with optimum efficiency and operational economy. A carefully
documented ADPE systems study would normally include the following:
a. Definitive indications of the benefits that are expected to accrue from the
proposed system that cannot otherwise be attained and justification for these benefits
in terms of economic gains or improved management effectiveness.
b. A general description of the data processing needs of the activity in rela-
tion to the basic mission of the activity.
c. Workload and employment statistics describing the magnitude of the ac-
tivity's problem.
d. A chart depicting the organizational effect of ADPE on the activity, as
well as showing the location of the proposed data processing function.
e. Flow charts supplemented by clear and precise narrative indications of
the nature and scope of each application. There should be included, for each
application, the following:
(1) A description of the contents and proposed outputs.
(2) A description of the content and source of all input data.
(3) Record lengths and number of records.
(4) Processing frequencies.
f. Narrative descriptions of those present systems which correspond to the
proposed applications.
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g. Detailed comparative cost data for the proposed system, adjusted by im-
provements developed in the course of the study.
h. Indication of personnel implications in terms of reduced or augmented
staffing needs.
i. Indications of the availability of and expected costs of site preparations.
j. A projected schedule should be provided covering plans for equipment
selection, detailed application development, personnel training and orientation and
site preparation, installation, transition, and attainment of normal operations.
k. Indications that consideration was given to locating or obtaining equip-
ment which could be shared with other components in the Agency or with other agen-
cies.
1. All factors which might have a bearing upon top management's decision,
including problems or disadvantages.
D. PRESENTATION OF REQUIREMENTS FOR ADPE
Systems specifications are to be designed to ensure free competition among equip-
ment manufacturers.
The methods of presenting requirements are data systems specifications (i.e.,
workload data), equipment performance requirements and a combination thereof.
1. DATA SYSTEMS SPECIFICATIONS
The preferred method for describing requirements is by means of a data systems
specification. This method includes: (a) the delineation of the objective which the
system is intended to accomplish, and (b) the data processing requirements underlying
that accomplishment. The latter includes:
a. thruput requirements
b. file description, record size, etc.
c. transaction volume and descriptions
d. card and printer I/O volumes
e. terminal I/O volumes
f. information on sequence requirements
g. timing or turnaround restrictions, etc.
The advantage of such a workload description is that it allows each vendor to con-
figure his system to best meet the requirements. Thus, Vendor A can propose a
different mix of tapes, disks, and memory than Vendor B.
2. EQUIPMENT PERFORMANCE REQUIREMENTS
The equipment performance requirements approach, while less desirable than the
workload description, can be used with fairness, if done intelligently and carefully.
This method involves specifying minimum performance requirements for each item;
e.g., memory cycle time, disk size and speed, tape speeds, printer speeds, etc.
However, if the specifications are not chosen very carefully, this method invariably
results in vendor bias. In addition, such a method does not take into account the fact
that Vendor A may perform the workload with a faster printer and a slower tape
system than specified. However, if the solicitation specifies performance rates which
fall within the range of most vendors and measures system performance with a
benchmark, a fair and equitable procurement should result.
3. COMBINED WORKLOAD AND PERFORMANCE SPECIFICATIONS
The most common method of presenting requirements is to use a combined
approach, whereby certain requirements are specified in terms of workload and others
in terms of equipment performance requirements.
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E. GSA's EXCESS LIST
A determination must be made that nothing on GSA's "excess" list can fulfill the
office requirements. The Chief, ADP&ES/CMB/PD/OL has the "excess" lists from
GSA.
Users of computer equipment should periodically review GSA's "excess" lists to
determine if any of their needs can be satisfied by equipment declared excess by other
Federal agencies. This includes both new requirements and requirements now satis-
fied by leased equipment. Requests for excess shipment are usually serviced on a first-
come first-service basis, but the using offices can get a head start if GSA is notified in
advance of Agency needs.
GSA has established a list of ADPE requirements for which demand may be poten-
tially satisfied from excess or exchange/sale ADPE when reported.
Using components should notify OL/PD/ADP&ES of requirements or "wants"
when these requirements are first recognized if they could be potentially satisfied by
equipment declared excess by other agencies. OL/PD/ADP&ES will then notify
GSA of the "wants." Want list requirements are automatically canceled six months
from the date they are established. They are renewable, however, if the requirement is
not satisfied and the equipment is still desired.
F. POSSIBLE UPGRADE
An evaluation must be made of the possibility of upgrading the present system ver-
sus procuring a replacement system.
The selection of new ADPE to replace and upgrade equipment on-hand is fre-
quently possible within the same or a new product line of the vendor supplying the
existing equipment. Usually such new equipment is compatible with existing equip-
ment and offers a better cost-performance ratio than is currently being achieved.
These replacement possibilities, often advanced by unsolicited proposals, generally
appear attractive on the surface. However, several factors should be evaluated before
making a decision to proceed with the replacement. These include:
1. If the replacement is to be made without a competitive evaluation, it is a sole-
source procurement and subject to the regulations governing sole-source
procurements.
2. If the replacement is being contemplated because of a workload that is causing
a saturation of existing facilities, other actions should also be considered. They are: (1)
revalidate the workload and data processing requirements to determine if a reduction
can be effected, and (2) determine the possibility of improving the performance of ex-
isting facilities through program modifications, rescheduling, or the selective replace-
ment of software or peripheral devices which offer greater efficiency or lower cost. By
making such improvements, it may be possible to streamline the current process to
equal or exceed the improvement achieved through complete replacement of the
equipment.
3. The use of alternate commercial sources of supply (such as leasing companies)
or alternate methods of contracting for the existing equipment (such as the purchase
of leased equipment), might result in equally significant cost/benefit improvements.
The mere availability of equipment within the incumbent vendor's product line
which is compatible with the installed equipment and which may offer a better
cost/performance ratio is not, therefore, a sufficient sole-source justification. The
policy objectives of defining system specifications as the basis for selection to en-
courage free competition among qualified suppliers, and of making the selection on
the basis of capability and overall cost, apply in these cases as they do in the initial
selection. Decisions reached in this regard should be properly documented, including a
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statement of the anticipated cost/benefit improvements against which actual results
can be analyzed.
G. PERFORMANCE VALIDATION
Depending upon the size and complexity of the user's requirement, Agency com-
ponents must specify either or both of the following methods of performance valida-
tion in the solicitation document.
1. BENCHMARK DEMONSTRATION
a. A known portion of the workload which is representative of the entire
workload and consists of a mix of benchmark programs, data and output results, is
provided to those offerors who specifically request the benchmark package. This
should assist offerors in judging the scale and complexity of equipment and software
necessary to complete the user's workload.
b. Each responsive offeror must demonstrate his capability to run these
representative programs successfully. Since it is normally not practicable to require
each offeror to test the entire data system, the importance of selecting appropriately
representative programs cannot be over emphasized. These benchmark programs
should be written in a standard higher level programming language; e.g. (ANSI
FORTRAN or ANSI COBOL) and should be capable of being processed during a
single half-day benchmark demonstration. Ordinarily, properly selected benchmarks
will demonstrate that the offeror's proposed system contains adequate memory and
input/output devices, that the throughput speeds are sufficient to do the entire job,
and that the software proposed is operative and adequate. The benchmark demonstra-
tion will provide timing data upon which to base timing validations. Therefore, the
user must equate each of the benchmarks to a portion of the total workload so that
proper extension can be made.
2. OPERATIONAL CAPABILITY DEMONSTRATION
When it is not feasible to benchmark the complete proposed configuration, the user
may require the offeror to perform an operational capability demonstration (i.e.,
functional demonstration) on those devices or components which are not part of a
benchmark demonstration. This operational capability demonstration should be
designed to prove that all proposed items meet the required capabilities and that they
operate efficiently as an integral ADP system.
H. SYSTEMS LIFE EVALUATION COSTING FOR ADPE
GENERAL-A good comparative cost analysis is essential to the ADP procure-
ment process. To use this technique properly, it is necessary to bring together all costs
that arise during the stated systems life. In addition, the following points must be con-
sidered: systems life, present value discount methodology, residual value, and the
various procurement methods available.
1. SYSTEMS LIFE
FMC circular 74-5 requires that the systems (items) life be established by the
Government based upon requirements and stipulated in the Solicitation Document.
The "systems or items life" means a forecast or projection of the period which begins
with the installation of the systems or items and ends when the need for such systems
or items has terminated. Systems or items life is not synonymous with actual life of
the equipment.
2. PRESENT VALUE DISCOUNT METHODOLOGY
The present value discount methodology as set forth herein formalizes a single dis-
count rate of 10 percent for all Federal agencies. The single rate is approximately the
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long-run opportunity cost of capital in the private sector. Under this concept, the
payments made over time will be adjusted to reflect the present value of those
payments as of the date of contract award. Therefore, "all expenses" incurred while
waiting for equipment delivery or incurred after installation during the stated life of
the system must be adjusted to reflect present value. "All expenses" includes not only
the offeror's prices (equipment, software, and support) over the systems life but also
predetermined in-house expenses for ADPE installation and operation.
The following formula is to be used in calculating present value cost:
Expected
Monthly
Cost
X
Discount
Factor =
for 10%
Present
Value
Cost
The end-of-month discount factors for 10% are as follows:
Month
Factor
Month
Factor
Month
Factor
Month
Factor
1
.992
089
31
.781
752
61
.616
009
91
.485
406
2
.984
240
32
.775
567
62
.611
136
92
.481
566
3
.967
454
33
.769
432
63
.606
301
93
.477
757
4
.968
729
34
.763
345
64
.601
505
94
.473
977
5
.961
066
35
.757
306
65
.596
746
95
.470
227
6
.953
463
36
.751
315
66
.592
025
96
.466
507
7
.945
920
37
.745
371
67
.587
342
97
.462
817
8
.938
436
38
.739
474
68
.582
695
98
.459
155
9
.931
012
39
.733
624
69
.578
085
99
.455
523
10
.923
647
40
.727
821
70
.573
512
100
.451
919
11
.916
340
41
.722
063
71
.568
975
101
.448
344
12
.909
091
42
.716
351
72
.564
474
102
.444
797
13
.901
899
43
.710
683
73
.560
008
103
.441
278
14
.894
764
44
.705
061
74
.555
578
104
.437
787
15
.887
686
45
.699
483
75
.551
183
105
.434
324
16
.880
663
46
.693
950
76
.546
822
106
.430
888
17
.873
696
47
.688
460
77
.542
496
107
.427
479
18
.866
784
48
.683
013
78
.538
205
108
.424
098
19
.859
927
49
.677
610
79
.533
947
109
.420
742
20
.853
124
50
.672
249
80
.529
723
110
.417
414
21
.846
375
51
.666
931
81
.525
532
111
.414
112
22
.839
679
52
.661
655
82
.521
375
112
.410
836
23
.833
036
53
.656
421
83
.517
250
113
.407
586
24
.826
446
54
.651
228
84
.513
158
114
.404
361
25
.819
908
55
.646
076
85
.509
098
115
.401
162
26
.813
422
56
.640
965
86
.505
071
116
.397
989
27
.806
987
57
.635
894
87
.501
075
117
.394
840
28
.800
603
58
.630
863
88
.497
111
118
.391
786
29
.794
269
59
.625
873
89
.493
179
119
.388
617
30
.787
986
60
.620
921
90
.489
277
120
.385
543
3. RESIDUAL VALUE
Usually, the computer system at the end of its stated life still has some value to the
Government. This value may reflect the fact that the initial using activity may keep
the system longer than planned or some other Government activity may reutilize the
hardware.The future lease payments saved, as well as the resale value of the equip-
ment at the end of the stated systems life, affect residual value. The residual value
varies with each activity. However, for general purpose equipment it is expected that
after a five-year systems life the equipment should still be worth approximately 20-30
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percent of the purchase price, and after eight years about 10 percent. The following
formula can be used to determine residual value:
Present Value
Purchase Price* X % X discount factor = Residual Value
for last month of
systems life
Any procurement option (e.g., Purchase, Lease-to-Ownership, etc.) that results in
the Government owning the system(s) will have the residual value deducted from the
systems life cost for evaluation purposes.
4. PROCUREMENT METHODS
Systems life costing should be calculated for each procurement method offered. Ex-
amples of the plans currently being offered are:
a. PURCHASE
Outright purchase after installation and acceptance of equipment.
b. LEASE
(1) Lease with Purchase Option
Lease with option to purchase after predetermined intervals of time. The purchase
price is usually reduced by subtracting rental credits as set forth in the offeror's
proposal. Purchase option credits greater than 100 percent of monthly charges will not
be considered in evaluating offers for award.
(2) Long Term Lease
Such plans may provide multi-year leasing at determinable prices where the agency
exercises a renewal option at the end of each fiscal year.
(3) LeaseTo-Ownership Plan or Lease With Title Transfer Plan
A plan whereby title transfers after payment of months of rental, but usually
with no obligation, or less obligation, to continue to lease than in (4) below. Normally,
title transfer does not occur in less than six years.
(4) Installment Purchase Plan
A plan whereby the Government exercises an option to purchase the equipment
upon payment of months of payments. It is frequently offered as a fixed term
installment plan usually for 36 or 60 months in which the Government either is
granted title immediately, or title is passed at the end of the contract.
Normally, an installment purchase plan cannot be consummated using annual
appropriations.
Care should be taken during negotiations to ensure that the Government retains
accrued credits and/or equity under any of the plans in 4.b above should the require-
ment cease or funds no longer be available. It is desirable to negotiate for the transfer
of accrued credits to GSA should this case arise, so that GSA can find another user
and retain the equity and any purchase option credits. At least a 90 day transfer plan
should be available. The negotiator also has to be careful that equipment discon-
tinuance is not hampered by restrictions on when the equipment can be dropped from
the plan, or restrictions on the adding of new equipment. Ideally, the contract should
contain no penalties for cancellation at the end of each fiscal year. It is imperative,
however, that statutory "anti-deficiency" restraints be considered before entering into
any multi-year lease or installment plan contracts.
*Including the operating software, if priced separately (i.e., unbundled) from the equipment purchase
price, and if a-perpetual license has been obtained by the Government. Instead of the straight purchase
price, the sum of all invoice payments to be made to the contractor may be used as the basis for this
calculation.
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Caution should be exercised in entering into a contract under the plans outlined in
4.b.(3) and 4.b.(4) above, because often the problems of ownership, such as risk of loss
or damage, taxes, and insurance, immediately fall on the Government and are avoided
by the contractor. These plans offer profit advantages to the contractor when he can
pass these costs and risks on to the Government. Accordingly, since the offeror does
not have to include such contingencies in his pricing, commensurate price reductions
must be a part of the negotiation objectives under these conditions.
1. ECONOMIC ANALYSIS
The comparative cost analysis of the alternative methods of acquisition should be
followed with great care and precision. Frequently, the same vendor will not be low on
both lease and purchase plans. Exhibits A thru D on the following pages show ex-
amples of different lease and purchase plans, as computed under the present value
discount methodology. In addition, if no purchase funds or insufficient purchase funds
are available, but outright purchase appears to be the most economical procurement
method, the matter should be forwarded to GSA in accordance with the provisions of
FPMR 101-32.403-4 for a determination as to whether the ADP Fund can be used.
EXHIBIT A
ADPE SYSTEMS LIFE COST BY FISCAL YEAR
I. Lease basis with-
option-to purchase
(option exercised at
the end of 18 months)
a. Lease (including
maintenance)
1st 12 months ... $156,000 $156,000
b. Lease (including
maintenance)
13th month thru
18th month ..... $78,000 78,000
c. Purchase Price .. 610,000 610,000
d. Purchase option
credit of 80% of
rentals paid
($234,000 x 80%) (187,200) (187,200)
e. Maintenance of
Gov't-owned
Equipment
2nd year (6 mos.-
$14,835) ....... $14,835 14,835
3rd year .......... $29,670 29,670
4th year .......... $29,670 29,670
5th year .......... $29,670 29,670
6th year .......... $29,670 29,670
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Total a thru e ..... $156,000 $515,635 $29,670 $29,670 $29,670 $29,670 $790,315
Adjustment Factor 1.00 .909091 .826446 .751315 .683013 .620921 .564474
--- - - - - - - - - - - - - - - - - - - - - - - - - ---
Adjusted Total .... - $141,818 $426,144 $22,292 $20,265 $18,423 $16,748 $645,690
Less Residual Value
($610,000 x 20% x .564474) 68,866
$576,824
REMARKS ON EXHIBIT A
1. The present value cost is determined by using a discount rate of 10 percent
carried to six decimal places and assumes end-of-year costs. The discount factor for
the last month of each year was used (i.e., 12 mos.=.909091; 24 mos.=.826446; 36
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mos.=.751315; 48 mos.=.683013; 60 mos.=.620921; 72 mos.=.564474) for the sam-
ple analysis. In an actual economic analysis, agencies should use the end-of-month
discount factors shown in Section H of this handbook.
2. Six year systems life.
3. Residual Value was determined as follows:
Present Value
Discount Factor
Purchase Price for last month
of systems life
$610,000 X 20% X .564474
Residual
Value
4. The solicitation document should clearly state how the purchase option will be
evaluated for the purpose of award (e.g., in this exhibit, the option is exercised at the
end of 18 months).
EXHIBIT B
ADPE SYSTEMS LIFE COST BY FISCAL YEAR
1. Purchase Basis:
a. PurchaseCost ....
$610,000
$610,000
b. Maintenance of
Govt.-owned
Equipment.
I st year (9 mos.-
after 90 day
guarantee).......
$22,253
22,253
2nd year ........
$29,670
29,670
3rd year.........
$29,670
29,670
4th year.........
$29,670
29,670
5th year.........
$29,670
29,670
6th year.........
$29,670
29,670
----
----
----
----
----
----
----
-----
Total a-b ........
$610,000
$22,253
$29,670
$29,670
$29,670
$29,670
$29,670
$780,603
Adjustment Factor
1.00
.909091
.826446
.751315
.683013
.620921
.564474
----
----
----
----
----
----
---
-----
Adjusted Total ......
$610,000
$20,230
$24,521
$22,292
$20,265
$18,423
$16,748
$732,479
Less Residual Value
(610,000 x 20% x.564474)
($68,866)
REMARKS ON EXHIBIT B
1. The present value cost is determined by using a discount rate of 10 percent
carried to six decimal places and assumes end-of-year costs. The discount factor for
the last month of each year wasused (i.e., 12 mos.=.909091; 24 mos.=.826446; 36
mos.=.751315; 48 mos.=.683031; 60 mos.=.620921; 72 mos.=.564474) for the sam-
ple analysis. In an actual economic analysis, agencies should use the end-of-month
discount factors shown in Section H of this handbook.
2. Six year systems life.
3. Residual Value was determined as follows:
Present Value
Purchase Price Discount Factor
for last month
of systems life
$610,000 X 20% X .564474
Residual
Value
Aft
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EXHIBIT C
ADPE SYSTEMS LIFE COST BY FISCAL YEAR
1. Lease to ownership
plan (Title transfer
at the end of six years)
Lease $12,000/month
including maintenance
a. 1st year ........
b. 2nd year .......
c. 3rd year ........
d. 4th year ........
e. 5th year ........
f. 6th year ........
----
Total a-f .........
Adjustment Factor 1.00
---
$144,000
$144,000
$144,000
144,000
$144,000
144,000
$144,000
144,000
$144,000
144,000
$144,000
144,000
---
----
----
----
----
----
----
$144,000
$144,000
$144,000
$144,000
$144,000
$144,000
$864,000
.909091
.826446
.751315
.683013
.620921
.564474
- - - - - - - - - - - - - - - - - - - - - - - - ---
Adjusted Totals ... - $130,909 $119,008 $108,189 $ 98,354 $ 89,413 $ 81,284 $627,157
Less Residual Value
($610,000 x 20% x.564474) ($ 68,866)
Total Cost ........ $558,291
REMARKS ON EXHIBIT C
1. The present value cost is determined by using a discount rate of 10 percent
carried to six decimal places and assumes end-of-year costs. The discount factor for
the last month of each year was used (i.e., 12 mos.=.909091; 24 mos.=.826446; 36
mos.=.751315; 48 mos.=.683013; 60 mos.=.620921; 72 mos.=.564474) for the sam-
ple analysis. In an actual economic analysis, agencies should use the end-of-month
discount factors shown in Section H of this handbook.
2. Six year systems life.
3. Residual Value was determined as follows:
Present Value
Discount Factor Residual
for last month Value
of systems life
$610,000 X 20% X .564474 = $68,866
1. Straight 6 year
lease $1 1,000/month
including maintenance
a. 1st year ..........
b. 2nd year ..........
c. 3rd year ..........
d. 4th year ..........
c. 5th year
f. 6th year ..........
Total a-f ............
Adjustment Factor. .
Adjusted Total
EXHIBIT D
ADPE SYSTEMS LIFE COST BY FISCAL YEAR
$132,000
$132,000
$132,000
132,000
$132,000
132,000
$132,000
132,000
$132,000
132,000
$132,000
132,000
---
----
----
----
----
----
----
$132,000
$132,000
$132,000
$132,000
$132,000
$132,000
$792,000
1.00
.909091
.826446
.751315
.683013
.620921
.564474
---
----
----
----
----
----
----
$120,000
$109,091
$ 99,174
$ 90,158
$ 81,962
$ 74,511
$574,896
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REMARKS ON EXHIBIT D
1. The present value cost is determined by using a discount rate of 10 percent
carried to six decimal places and assumes end-of-year costs. The discount factor for
the last month of each year was used (i.e., 12 mos.=.909091; 24 mos.=.826446; 36
mos.=.751315; 48 mos.=.683013; 60 mos.=.620921; 72 mos.=.564474) for the sam-
ple analysis. In an actual economic analysis, agencies should use the end-of-month
discount factors shown in Section H of this handbook.
2. Six year systems life.
3. Straight six year lease: residual value not applicable.
SUMMARY SHEET OF EXHIBITS A-D
AS COMPUTED UNDER THE PRESENT
VALUE DISCOUNT METHODOLOGY
A.
Alternative Methods of
Acquisition Depicted
Lease basis with option
Systems Life Cost
Exhibits A-D
S576,824
B.
to purchase (option
exercised at the end
of 18 months)
Purchase Basis
5663,613
C.
Lease to ownership plan
S558,291
D.
(Title transfer at the
end of six years)
Straight Six Year Lease
S574,896
The exhibits are designed to depict the alternative methods of acquisition using the
present value discount methodology. No attempt has been made in these exhibits to
identify all costs associated with the acquisition of ADPE. In an actual economic
analysis, cost to the Government includes not only the vendor prices (equipment
software, support) over the system life, but also predictable inhouse expenses to
ADPE installation and operation.
J. COMPETITIVE ACQUISITION OF ADPE
1. SUBMISSION TO PROCUREMENT DIVISION, OL
The requesting component should provide to D/OJCS for concurrence a copy of
the preliminary studies or a letter certifying that the studies have been completed.
(List titles, dates, and locations.) The component also should provide specifications
covering its requirements with a list of vendors who might be capable of bidding. After
receiving the concurrence of D/OJCS, OL/PD/CMB/ADP&ES will solicit
proposals from potential contractors.
2. PRESENTATION OF REQUIREMENTS
(See Section D of this handbook which discusses data systems specification, equip-
ment performance requirements, and combined workload and performance
specifications.)
3. INSTRUCTIONS FOR THE PREPARATION OF PROPOSALS
Solicitations should be prepared in conformance with the content and format of the
"Solicitation Document for ADP systems." An accompanying document to be issued
to industry with the Solicitation Document is the "General Instructions to Offerors
Governing Proposal Preparation" and all proposals submitted must conform to these
instructions.
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The "General Instructions to Offerors Governing Proposal Preparation" and
"Solicitation Document for ADP Systems" are lengthy documents. They have been
put in the OJCS Time-Sharing System utilizing SCRIPT and are available to re-
questing components for copying into the P-space. This will enable them to write in
their own mandatory and desirable specifications in accordance with their re-
quirements. Contact ADP&ES/CMB/PD/OL for assistance.
4. COST INFORMATION
Attachment II of the Solicitation Document contains instructions for the submis-
sion of price tables in sufficient detail to allow complete analysis. Although use of
these tables is optional, they should be used to the maximum practical extent.
5. EVALUATION FACTORS
To enable an offeror to prepare a proposal properly, the Solicitation Document
must identify all the evaluation factors which are to be considered. In addition to the
mandatory requirements, desirable features will be included where applicable. (See
paragraph N. 11. of this handbook for illustrations.) No factors other than those set
forth in the Solicitation Document as evaluation criteria will be used in the evaluation
of proposals. In this regard, the Comptroller General has determined that it is im-
proper to use evaluation factors which are not revealed to all offerors. In addition, in
those instances where the award may be made on a basis other than "lowest overall
cost," it must be clearly stated in the Solicitation Document along with the criteria
and methodology to be used in selecting the successful offeror.
6. EVALUATION OF TECHNICAL PROPOSALS
a. The technical proposals (along with a copy of the Solicitation Document)
received by the Contracting Officer will be forwarded to the requesting component
technical staff for evaluation. The cost data portion will be retained by the
Contracting Officer for evaluation by the cost team. The technical staff must evaluate
each proposal in strict conformity with the evaluation criteria of the RFP to deter-
mine whether each of the Government's mandatory requirements are met. In the case
of desirable features, the technical evaluators must perform their evaluation in ac-
cordance with the evaluation criteria established and made known in the Solicita-
tion Document.
b. The technical staff on behalf of the Contracting Officer, will be responsi-
(1) Validating the technical features of the proposal.
(2) Ensuring that all offerors understand the Government's re-
quirements.
(3) Preparing all technical responses to questions from offerors.
(4) Determining whether offerors meet the mandatory requirements
that are not contingent upon successful benchmark tests, if such tests are to be part of
the evaluation process. The technical staff will then recommend to the Contracting
Officer whether any proposal that is rated unacceptable might be considered accept-
able upon the furnishing of proposal revisions or clarifying data and the Contracting
Officer will be so informed.The Contracting Officer will arrange for the submission of
proposal revision or clarifying data in writing, and furnish it to the technical eval-
uators.
(5) Scheduling the benchmark demonstration and/or operational
capability demonstration in conjunction with the offerors who meet the mandatory re-
quirements.
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(6) Conducting the benchmark demonstration and/or operational
capability demonstration and reporting the results to the Contracting Officer with
recommendations as to the acceptance or nonacceptance of the offeror's performance.
7. NEGOTIATIONS
a. The Contracting Officer, in cooperation with technical personnel, will
point out to each responsible offeror the ambiguities and uncertainties, if any, in his
proposal.
The offeror should then be given a reasonable opportunity to support, clarify, cor-
rect, or revise his proposal as may result from the negotiations. Careful judgment
should be exercised in determining the extent of discussions with the offeror. The time
available, the expense and administrative limitations, and the size and significance of
the procurement should all be considered in deciding on the type, duration, and depth
of the discussions. Also, it is in the best interest of the Government to inform the
offeror when it is apparent that an offeror can reduce the cost of his proposal (e.g.,
such as eliminating unnecessary hardware from the configuration).
b. It is essential to the competitive procurement process that all information
contained in offerors' proposals be maintained in strict confidence. In no event during
the evaluation period should any offeror be told the number of proposals received,
prices, cost ranges, or the Government's cost estimate. No discussions with any
offeror relative to any aspect of the procurement will be held without the prior con-
currence of the Contracting Officer.
c. In order to properly terminate negotiations, the Contracting Officer will
advise each responsible offeror in writing of the specified date and time of the closing
of negotiations and that any revisions to their proposals should be submitted by that
date. After the closing of negotiations and the receipt of any revisions, the Contracting
Officer will select for award the proposal which offers the lowest overall cost (price
and other factors considered) to the Government for satisfying all requirements for
the stated life of the systems. For further elaboration on the conduct of negotiations
and the selection of offerors for negotiations and award, refer to FPR 1-3.9804 and 1-
3.805.
8. AWARD NOTICE AND DEBRIEFING
After award of contract to the successful offeror, the unsuccessful offerors should
be notified promptly in writing and, if requested, will be provided with an oral debrief-
ing and a copy of the contract.
K. PLANNING YOUR ADPE PROCUREMENT
Installing an ADP System involves a large number of discrete steps beyond the ac-
tual procurement of the ADP System. These include:
Training of the professional staff
Systems design
Programming
Implementation of the System
Parallel operations
Installing communications
Site preparations
etc.
In addition to the above, the requesting components should allow for the normal
operation of the ADP procurement cycle as a part of the entire process of system
planning and implementation. In this regard, and for a variety of reasons, the time
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spans for specific elements of the procurement cycle can vary makedly between
procurements. The Contracting Officer will attempt to minimize procurement cycle
times as much as possible by overlapping phases of the cycle where feasible.
L. USE OF "STANDARD SOLICITATION DOCUMENT FOR ADP
SYSTEMS" AND DOCUMENT ENTITLED "GENERAL INSTRUCTIONS TO
OFFERORS GOVERNING PROPOSAL PREPARATION"
The "Standard Solicitation Document for ADP Systems" and the "General
Instructions to Offerors Governing Proposal Preparation" are designed for use in all
negotiated ADP systems procurements and should be used to maximum practicable
extent for all other negotiated ADP equipment procurements. The format and the
clauses set forth in PART I, Section E Part II, Section G of the solicitation document
have been arrived at after extensive negotiations with industry.
1. STANDARD SOLICITATION DOCUMENT FOR ADP SYSTEMS
For systems procurements, the following degrees of uniformity will apply to the
respective Sections of the Standard Solicitation Document:
Part I, Sections A through D: It should not be necessary to revise the con-
tents of these Sections for any ADP system procurements since. these provisions are
required either as a matter of law or regulation and generally are applicable to all
government contracts of this type.
Part I, Section E: Use of clauses E.3.1, Option to Extend the Term of the
Contract, and E.3.2, Option for Increased Quantity, will be in accordance with
FPMR 101-32.408-5.
The clauses in Section E were developed through extensive negotiations with in-
dustry. Space has been provided in the appropriate clauses to provide components the
flexibility needed to state their needs by filling in the blanks with percentages, time,
etc. Accordingly, use of these clauses is recommended and encouraged when they
meet the components' requirements. However, with the exception of E.3.1 and E.3.2,
the clauses in this section may be modified as necessary to ensure that the solicitation
adequately reflects the component needs. In those instances where it is necessary to
modify these clauses, with the exception of filling in the blanks, each clause must be
clearly identified so as to direct industry's attention to the new language. Normally,
this should be done in a cover letter to the solicitation.
Part II, Sections F and H: Components will use these sections to depict their
mandatory specifications and desirable features. The numbering system should be
consistent with the other Sections in the Solicitation Document (e.g., F. I., F.1.1.,
F.l.1.1., etc.; or H. I., H.1.1., H.1.1.1., etc.).
Part II, Section G: The standard format and clauses, which are provided,
should be used whenever they are appropriate to describe mandatory support re-
quirements. Space has been provided to fill in specific percentages, dollar values, time
requirements, etc. The component may also add or modify clauses in Section G, if
necessary, in order to present its requirements.
Part III, Attachments I, II, III, IV: All attachments in this part should be
tailored to the component requirements. However, the Glossary (Attachment I),
which is provided, is standard and the definitions contained therein should not be
changed or deleted. Additional definitions may be added as required.
2. GENERAL INSTRUCTIONS TO OFFERORS GOVERNING PROPOSAL
PREPARATION
It should not be necessary to revise these instructions for any ADP system
procurement.
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M. COST PROGRAM
The cost program which is cited in the Attachment II of the Solicitation Document
and documentation pertaining thereto, was developed by the Department of the Navy,
ADPESO, Washington, D.C. 20376 and is available from ADP&ES/CMB/PD/OL.
1. PURPOSE
This program is provided to assist in the price analysis by performing the tedious
computations involved in producing the Installation Summary Price Tables. The
program can be used by both the offerors to generate the tables for their proposals and
the procuring agency to verify the proposals that are submitted.
2. SCOPE
The program should be used in the procurement of ADP systems and to the max-
imum practicable extent in all other ADP equipment procurements.
3. LIMITATION ON LIABILITY
This program is provided at no charge upon request. The Department of the Navy
assumes no responsibility for any results obtained from the use of this program.
4. GENERAL DESCRIPTION
The program is written in FORTRAN and may contain non-ANSI standard
statements. Control cards are used to set up report headings and the size of the matrix
to be used. The matrix consists of up to 45 rows, each reflecting a cost item in the
proposal, and up to 120 columns, each representing one month in the systems life,
beginning on the contract award date. Depending on the memory size of the machine
used to run the cost program, the limits of 45 and 120 may be varied by changing the
source code. Multiple matrices can be produced from a single run of the program. The
data for each matrix is grouped together and read into the program, adding the data
value to the matrix element (or elements) specified in the card. When all of the data
cards are read for a given matrix, the computation of subtotals, totals, and adjusted
(by present value discount factors) totals is performed and the matrix is printed. This
sequence is repeated until all data cards are processed. Additional information
regarding the format of control cards and date cards, input data sequence, output
reports, error messages and run procedures is included in the documentation men-
tioned above.
N. GUIDANCE ON SPECIFIC SUBJECTS IN THE "STANDARD
SOLICITATION DOCUMENTS FOR ADP SYSTEMS"
(All references below are to the subject document.)
1. REFERENCE PARAGRAPH D.19.
With regard to the use of hardware and/or software monitors, the Federal Com-
puter Performance Evaluation and Simulation Center (FEDSIM), operated by the
Department of the Air Force under a delegation of authority from GSA, is authorized
to aid Federal agencies in the use of these and other tools which measure the utiliza-
tion of components within an ADP system.
FEDSIM has considerable expertise in this area and Federal agencies are encour-
aged to use the FEDSIM as the single point of contact with industry concerning the
installation or attachment of ADPE hardware and/or software monitors.
They perform all performance evaluation and simulation services on a cost-
reimbursable basis. The mailing address is: Department of the Air Force, Federal
Computer Performance Evaluation and Simulation Center (FEDSIM), Washington,
D.C. 20330.
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2. REFERENCE PARAGRAPH E.4.
The warranty exclusion and limitation of damages clause may be modified to meet
an agency's requirements by inserting, after the words "In no event," "except as
stated"; when so modified the specific paragraph or clause identification must follow.
3. REFERENCE PARAGRAPH E.6.2.
An agency may require a return of the benchmark demonstration and must deter-
mine whether this provision is necessary to its specific procurement.
4. REFERENCE PARAGRAPH E.7.
When a procurement warrants the use of the liquidated damages clause, the
Contracting Officer must use the utmost discretion to ensure that the provisions of
FPR 1-1.315-2 are complied with. The rates and duration of liquidated damages
should be considered on a case-by-case basis.
5. REFERENCE PARAGRAPH E.8.1.
Significant cost advantages may result by using the second Period of Rental clause
which states that the Government will not discontinue rental of the equipment during
any fiscal year except at the end of the systems life. This should be carefully weighed
against the option to discontinue at any time, which generally will carry a cost in the
contract. This is a matter of the component requirement and judgment.
6. REFERENCE PARAGRAPH E.8.2.
The component should not arbitrarily choose unlimited use versus limited use un-
less it is actually a user requirement. There may be a heavy cost associated with un-
limited usage of the system.
7. REFERENCE SECTION F.
Along with mandatory specifications, all applicable clauses from FPMR 101-32.13
regarding compliance with Federal Information Processing Standards Publications
must be included in Section F.
8. REFERENCE PARAGRAPH G.1.
The following illustrations are provided as a guide to Agency components in
depicting their existing facilities in paragraph G.1.
EXISTING FACILITIES
The proposed equipment must fit within the spaces provided. A scaled diagram of
the ADPE installation showing existing equipment, power panels, and com-
munications terminal area should illustrate whether ample space is available. Equip-
ment requiring operator attention (e.g., consoles, tape drives, etc.) must be located in
space "A." "Clean" equipment (e.g., main frames, disk system, etc.) must be located
in space "B." "Dirty" peripheral equipment (e.g., card punches, printers, etc.) must
be located in space "C."
AVAILABLE POWER
Total available power is given below with a breakdown of the quantities available at
each breaker panel. If more power is required, the contractor's additional re-
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quirements for power should be shown as part of his submission in Section K. Ex-
amples are:
90 KVA 208V, 3 phase, 60 HZ
Panel PD: 3 breakers, 15A.
Panel PN-1: 3 breakers, 20A.
Panel PW: 3 breakers, 30A.
7 breakers, 15A.
Panel PX: 3 breakers, 15A.
13 KVA 208V, 1 phase, 60 HZ
Panel PI: 6 breakers, 15A.
Panel PJ: 6 breakers, 15A.
37 KVA 15V, I phase, 60 HZ
Panel PD: 2 breakers, 20A.
4 breakers, 15A.
Panel PX: 1 breaker, 15A.
AVAILABLE AIR CONDITIONING
Total available air conditioning is given below. Plenum minimum design
temperature is 55 deg. F. Room design temperature is 72 deg. F. with a relative
humidity range of 40-60 percent. If more air conditioning is required, the contractor's
additional requirements for power should be shown as part of his submission in Sec-
tion K. Examples are:
Plenum Air: 160,000 BTU/HR.
Chilled Water: 241,000 BTU/HR.
FLOOR AREA
The flooring is the available area remaining unused in the scaled diagram refer-
enced above in EXISTING FACILITIES. Normal ADP flooring is 24-inch raised
floor consisting of 24-inch square removable panels. The total available space should
be stated in square feet.
ACCESS DOORS
State the dimensions of equipment space access doors. Examples are:
Space "A": 69 inches x 833/4 inches
Space "B": 93 inches x 96 inches
Space "C": 691/2 inches x 106'/8 inches
69 inches x 833/4 inches
9. REFERENCE PARAGRAPH G.4.14.3.
Significant cost advantages may result by using the second discontinuance clause
which states that the Government will not discontinue maintenance in the middle of
any fiscal year. This should be carefully weighed against the option to discontinue at
any time, which generally will carry a cost in the contract. This is a matter of the
user's requirement and judgment.
10. REFERENCE PARAGRAPH G.6.
Paragraph G.6. may be modified by a component depending upon its ADP re-
quirement. The component will specify the manuals and program descriptions
necessary to meet its requirements. Examples are: Manuals-Systems and Methods,
Programming, Installation Physical Planning, Operator; Program Descrip-
tions-Operating System, COBOL Compiler, FORTRAN Compiler, PL/I Com-
piler, BASIC Compiler, Communications Software, Sort and Merge Utility.
The contractor may have the right to identify proprietary items and to restrict the
use and distribution thereof.
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11. REFERENCE SECTION H.
The requesting component should include all desirable features in this section and
indicate the dollar value to the Government for each as shown in the following il-
lustrations:
a. PROCESSOR BACKUP
Description-Backup of both processor subsystems accomplished by
component redundancy (if main processor and preprocessor have identical program
logic and instruction repertoire, component redundancy in the context above exists).
Dollar Worth to the Government-$106,420
b. RANDOM ACCESS INPUT DATA
Description-Time-critical data will be randomly accessible in modules
not larger than three million bits each in the Extremely High Capacity On-Line
Storage.
Dollar Worth to the Government-$9,480
c. COMMUNICATIONS FORTRAN
Description-Contractor provides ANSI compatible FORTRAN com-
piler.
Dollar Worth to the Government-$6,000
COST OR PRICING DATA REQUIREMENTS
When it is determined in accordance with Federal Procurement Regulation (FPR)
41 CFR 1-3.807-3 that cost or pricing data is required, the appropriate clauses re-
quired by 41 CFR 1-3.814 including the certification of such data pursuant to 41 CFR
1-3.807-4 as well as clauses required by FPR Temporary Regulation 27 and
supplements thereto, should be incorporated into the Solicitation Document.
19
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