All About Contracts

 

David Kosub:                     Hello and welcome to NIH’s All About Contracts! I’m your host, David Kosub with the NIH’s Office of Extramural Research. And you heard me right, we’re talking about contracts today. We’re flipping the script away from grants, and we’re going to hear everything you need to know about contracts – what they are, how to find them, what NIH uses them for – all that good stuff.

And I’m pleased to say that we have with us Mr. Brian O’Laughlin, he’s with the Office of Acquisitions at the National Institute on Drug Abuse. Now we also have Mr. George Kennedy, he also is in the Office of Acquisitions but at the National Institute of Allergy and Infectious Diseases. I appreciate you all being here.

 

George Kennedy:             Thank you for having us.

 

David Kosub:                     Perfect. So, George, I’m going to start with you. Tell us a bit about what are contracts here at NIH and how do we use them?

 

George Kennedy:             I think that’s a great place to start a conversation about contracts, right, is the definition. You know, you talk about a contract, you think about contracts that we interact with on a daily basis and in your daily life, and it’s really that mutually binding legal relationship that we’re talking about.

So for a federal contract, what we’re doing is we’re capturing that legal obligation in the form of a written document. You know, we’re talking about the government acquiring services or supplies from the community. So that relationship really is defined by a contract document. It explains the extent to which and what the expectations are for the delivery of those supplies and services, and defines the responsibilities for the government paying for the receipt of those supplies and services.

Great, so we usually talk about grants here – how to find them, how to apply for them, what you need to know about them – on this podcast series, but since we’re focusing on contracts today, Brian, could you tell us a little bit about how contracts are fundamentally different than grants?

 

Brian O’Laughlin:             Yes, so thank you David. Contracts are very much different than grants, and also very different than any cooperative agreement as well. Grant is primarily an assistance mechanism used to help get things in the public domain related to the things that we’re interested in here at NIH as the largest health-making organization, cause, prevention, further research and dissemination of any activities we do here – grants assist that.

In contracts, the government defines a very specific need that it wants to procure. The end result is for the direct use and benefit of the government, and for that it goes down a completely different process than the grant-making process.

We even used different terminology, for example, in grants you put in an application to try to secure funding, for contracts it’s a proposal and there’s a request for proposal process that you go through. In addition, the government generally identifies its need internally and then competes for that work, versus the grants side where ideas can come from a variety of sources.

David Kosub:                     So you mentioned direct use and benefit for the government for these contracts, what exactly might we be acquiring through a contract? 

George Kennedy:             When you think acquisition, what first comes to mind are the types of items that you may be acquiring in your own home, right. We’re going out and we’re purchasing a lot of things that support the research that takes place at NIH.

As your listeners are probably keenly aware, we have the clinical center and we use acquisitions to acquire the supplies and the services that support the healthcare and the staffing and the supplies that are associated with the lab environment, a lot of the research that is taking place.

But I think what we really want to focus on today is talking about the research and development activities that we acquire through contract. Some specific examples from my own institute, we use contracts to acquire everything from clinical trials, to vaccine and therapeutic development.

We also use contracts and different mechanisms and types of contracts, which we’ll discuss a little bit later, to acquire high volume, high throughput things such as assay testing. So it really does run the gamut of activities associated with research and development. Not just limited to the grant mechanism but contracts are used for that as well.

David Kosub:                     So talking a little bit more about the different types of contract mechanisms, can we go a little bit deeper into that?

Brian O’Laughlin:             Absolutely. When we’re involved in research and development acquisition, it’s often hard to fix the outcome. If we could guarantee the curing of any sort of disease out there or any major health problem, we would pay anything to do that almost.

So, often times we can only reimburse for efforts, so we do something called cost-reimbursement contracting where we’re reimbursing a company or university’s efforts to complete the statement of work and objectives, and provide deliverables, often a technical report, that hopefully advances the science.

If it is a specific item, such as a piece of equipment, an MRI machine, or various supplies for the clinical center, those we can fix prices and we lock in to something called a fixed-price contract.

And then there’s an additional mechanism that allows various types, both types (cost reimbursement and fixed price), it’s called indefinite delivery indefinite quantity contract, or IDIQ, where we come to an agreement with one or multiple vendors on a framework, to describe it, and then we issue task orders against it when we have a very specific and identifiable need.

George Kennedy:             Yeah, depending on what type of contract we’re talking about, the form of what’s being delivered to the government can change too. So contracts are very specific in terms of identifying what the government is acquiring.

In some cases, you’ve heard us refer to supplies and services, you can imagine it takes on quite a few forms. I referred to vaccine and therapeutic development, so I mean pretty clearly the end goal is the delivery of a vaccine or a therapeutic. When we talk about assay testing, we’re really looking at results., and you have those results and the data being delivered in the form of reports.

But we also have situations to where the deliverable really is the manpower, it’s the effort associated with the research, and we call those level of effort contracts. So, what’s being delivered to the government is the manpower, the boots on the ground if you will.

David Kosub:                     Great, so if our researchers out there would like to apply for some of these contracts how do they find them?

Brian O’Laughlin:             Well we do our best to get the word out there, but any contract that’s over $25,000 has to be publicly put in the system for awards management, SAM.gov. In addition, we advertise it on our website, on each IC’s website, which we should point out that with the various 27 IC’s here at NIH it’s a great idea to try to target where your research is, but we try to put it on the institute’s website. And we also use the NIH Guide for Grants and Contracts for research and development opportunities to announce publicly.

George Kennedy:             Brian, I think those were really good points that you were sharing. Do you think there’s anything else the community might find helpful regarding how we advertise our contract solicitations?

Brian O’Laughlin:              Well thanks, George. I would advise the community to start early in the process by familiarizing themselves with Sam.gov (formerly FedBizOpps), because we have to do a lot of formal steps early in the process to identify who’s out there in the community that can do this, call it formal market research activities.

And so public postings that we put out there are called sources sought notices, small business sources sought notice, sometimes requests for information to learn about who is out there, all eventually leading to something called pre-solicitation announcement, which is basically a requirement announcement, and these announcements are used to identify what organizations are out there, versus individuals, it’s important to note that difference. Contracts are eventually with specific groups, often not a sole principal investigator, it’s a team, it’s a university, it’s an organization, a non-profit, and we’re trying to identify those early in the process because it shapes our acquisitions strategy and approach, and eventually lead to an award.

David Kosub:                     So let’s say someone went to the guide for grants and contracts, they checked your websites, all that good stuff, and they found a solicitation that they were interested in applying for. Do you have any recommendations on what someone should focus on when reviewing the solicitations, when they’re putting their proposals together?

George Kennedy:             So transparency being a big part of and an underlying element and driving factor in acquisitions, we do our best to place all of the information that would be necessary for responding to a contract solicitation in that solicitation document itself.

The important pieces of information that you’re going to look for as a potential offeror, is what is it that the government is requiring. Those take the form of requirements written into a statement of work. That’s really the description of what the government is expecting to get out of that work. That’s closely associated with deliverables and reporting requirements, that are going to be spelled out in that solicitation.

An important thing to keep in mind is that acquisitions are tailored to the specific need of that government for that solicitation, so it’s going to be very explicit, and it’s going to be very specific. Less so than perhaps a grant project, that may have an overarching overall objective that’s being addressed.

Brian O’Laughlin:             And in addition to what it is the government wants and its need as George described, I always advise organizations to look at the evaluation criteria that are specified in the announcement. It’s important early in the process to understand how your proposal will be evaluated, what is the government interested in, and how will it measure your proposal when you spend all that time and resources to put together an offer for the government.

In addition, every announcement will have contact information of the contracting office, so that they can walk you through the different information in the solicitation, now we have to be very careful that we give the same information to every interested organization, but they are there to be a resource to the community.

David Kosub:                     So going further, how are proposals for R&D contracts reviewed here?

George Kennedy:             So review of contract proposals I think is an important thing to discuss today because it is different in a lot of ways than the review of grant applications.

But one thing that is consistent and is a primary part of the review of research and development proposals here at NIH is the use of peer review. It is a statutory requirement that prior to awarding a research and development contract, that proposals be reviewed and deemed acceptable by a scientific review group. And that’s very similar to what your audience may be familiar with in terms of submitting grant applications.

But one important distinction to understand is that scientific review group, that peer review group, is being brought together to review the proposals associated with that specific solicitation. So as Brian points out, it’s really critical in providing a strong proposal to understand what it is the government is requiring, and understand through those evaluation criteria how your proposal is going to be evaluated.

David Kosub:                     Alright, well let’s say an offeror gets one of these contracts, what kinds of things do they need to be thinking about for compliance?

George Kennedy:             Before moving on to post-award, I think part of the conversation about review is an important part of what I would like to discuss, is that peer review is actually just one component of the review of a contract proposal. And while it is an important part of the review, equally important is the review of the business capabilities associated with an offeror’s proposal.

So solicitations specifically identify what it is the government is going to evaluate in an offeror’s proposal, and it generally consists of three elements: the technical response, that’s going to be reviewed by the peer review group, the business response, which takes the form of a cost or business proposal, where the contracting office, the office of acquisitions is going to look at all the elements of cost that are submitted supporting the efforts being proposed by an offeror, as well as performance history. 

We want to ensure that any awards are being made not only to the most appropriate organization that has the strongest technical response, but that we’re also getting the best value for the government taxpayer’s dollar.

David Kosub:                     So jumping back to an offeror gets the contract, what should they be thinking about for compliance?

Brian O’Laughlin:             In terms of compliance, if they haven’t spent some time looking at everything within the four corners of that contract, that’s where I’d always advise that they start because the contract will explicitly list out when deliverables are due, when reports are due, when progress is supposed to be reported on.

In addition the contract will have named the contracting officer’s representative, the main program official that oversees the day to day activities, and is often the first point of contact for any organization performing a contract. So they’ll want to make sure that they touch base with that individual as well as if any kick off meeting is required

They will also want to look through the section of the contract that details how they get paid, because any group wants to figure out how they’ll get reimbursed for the work being performed under the contract. And there will be a section that specifies the administrative procedures related to that.

And then George and I always make sure we take the opportunity to preach the importance of communication during performance. That, when you win a contract it’s not, ok just here go off and run with it, you’re going to want to be in communication with both the program and contracting office throughout performance to identify any issues related to completing the final terms of that contract.

David Kosub:                     And before we go do you have any final thoughts about contracts 101 that you’d like to leave with our audience?

George Kennedy:             Well, I’d just like to take the opportunity to emphasize that the contract mechanism is something that NIH really does make use of in acquiring research and development. While NIH is primarily a grant-making organization, contracts do represent a significant part of our portfolio, and these are opportunities I fear the research community isn’t always aware of. So I’m glad to see that we’re using this opportunity to help get the word out that NIH takes advantage of contracting mechanisms to acquire research and development.

I’d also like to emphasize, as we’ve touched on in a few different places today, that transparency really does play a part in contracting throughout the process. I’d urge the listeners to go to SAM.gov and the institute websites because we advertise all posting requirements as Brian alluded to. Those solicitations are going to explain specifically what it is the government is interested in, how the government is going to go about evaluating those proposals prior to an award, and also notify the community as to who the successful awardee is at the end of the process. So transparency really is an important part of government acquisitions.

David Kosub: Thank you very much Brian and George. Greatly appreciate the opportunity. Definitely consider checking out the various resources mentioned for more on contract opportunities available to you and reach out to staff at the NIH institute or center for which your research most closely aligns. This has been David Kosub with NIH’s All About Contracts. Thank you!