DRAFT RFP - Landing Gear Collaborative Supply Chain Integration II

This posting is to share information from a question asked by an interested party along with the Government response: Contractor Comments/Recommendations Upon reviewing the draft solicitation again, it was realized clause C09 was added with a cap of 50%. The Federal Reserve Economic Data (FRED) Producer Price Index for Industries (PPI) PCU33641333641372 for Other Aircraft Parts and Equipment Manufacturing: Aircraft Landing Gear for Civilian and Military Aircraft is a real, reasonable, quantitative reflection of current and past market conditions. The PPI is derived from consolidating hundreds of thousands of economic data time series from scores of national, international, public, and private sources. Placing a ceiling cap on a publicly maintained PPI based on real economic data would render the price paid by the government unreasonable and unfair. Accordingly, it is recommended that clause C09 and H-001 of the LGCSCI II solicitation be amended as follows: Clause C09: Remove section (d) of contract clause C09 in its entirety (including subsections (d)(1) and (d)(2)). Clause H001: Remove section 2(c) in its entirety. Remove the last two and a half sentences from 2(d) where it currently states “… , but the payment is capped. The 50% cap on this H-clause adjustment is $515 (50% of the $1,030 escalated forging price). Therefore, the Government's maximum payment would be $515.” GOVERNMENT RESPONSE Clause C09: The intended PPI index for the CSCI2 effort is PCU3364—3364-- as shown in (b)(1) of the C09 clause in the most recent draft RFP document. Per the attached language at (d), the upward ceiling does not apply to this index. As a result, the language regarding a cap does not apply in (d), (d)(1), or (d)(2). An error was made on the most recent draft by including a % cap for an index below the six-digit level. The language is slightly counterintuitive as it relates to the index numbering, but PCU3364—3364—is considered “above the six-digit level.” NOTE: The “Instructions” tab on the TEP Worksheet will be updated to reflect PCU3364—3364—for the final RFP. Clause H-001: The government believes the clause as written to supplement the C09 is adequate to account for most forging price fluctuations that may be encountered. The forging price that bidders will provide with their proposals for each unit requiring a forging will be escalated each year in accordance with the C09 clause. That escalated forging price (in the year delivery order was issued) will be used as the baseline for any forging cost price adjustments. As such, the forging baseline will theoretically increase with the PCU3364—3364—index over time and provide an initial degree of protection against broad market inflation. With a layer of escalation already applied to the forging price, the clause can then adjust to account for any additional unforeseen spikes in forging costs. The 50% cap identified within the H-001 clause is designed to create a shared-risk environment. The cap allows the government to maintain some level of budget predictability while still offering substantial financial relief for extraordinary cost increases provided the conditions are met in section 3 of the clause.