18 Contract Management June 2015
Contract Management June 2015 19
A s a contracts professional, from time to time you must answer a question, resolve an issue, explain something, or make a decision based on language in the Federal Acquisition Regulation (FAR) or in a contract. On those occasions, you may have to document the basis for your answer, resolution, explanation, or decision so as to prove that it was consistent with the terms of the FAR or the contract and that it was reasonable. In other words, you will have to make an argument for the record. On other occasions, perhaps in a negotiation or a meeting to resolve a potential dispute, someone might offer an argument to you in support of some proposition, and you will have to assess the soundness of his or her thinking on the matter. the major and minor premises; said to follow from them (e.g., Therefore, Socrates is mortal ). The syllogism was developed by the Greek philosopher Aristotle and described in his work, Prior Analytics, which he wrote circa 350 B.C.E. That work is one of six of his treatises on logic that are collectively known as the Organon, which means tool in classical Greek. 1 Although logic has progressed considerably since Aristotle, the syllogism remains an essential tool of sound thinking. 2 Surprisingly, it seems that most persons have not received formal education in syllogistic argument and do not routinely use it in their work. That is ironic in the case of acquisition, because the syllogism provides the underlying structure for the determinations and findings (D&F) required by the FAR: Determinations and Findings (D&F) means a special form of written approval by an authorized official that is required by statute or regulation as a prerequisite to taking certain actions. The determination is a conclusion or decision supported by the findings. The findings are statements of fact or rationale essential to support the determination and must cover each requirement of the statute or regulation. 3 By argument, I mean a rational discussion in which people try to persuade one another. There are many ways to persuade, and there is often more to it than logic, but logic is the foundation of sound argument, and one of the most powerful tools of logic is the syllogism. What is a syllogism? As used in this article, a syllogism is a deductive argument comprised of an ordered set of three related propositions, each centered around a premise (which is a declarative sentence that asserts something about something): A major premise A general rule, principle, or fact (e.g., All men are mortal ). A minor premise A specific fact (e.g., Socrates is a man ). A conclusion The logical consequence of the relationship between 20 Contract Management June 2015
The findings in a D&F are premises; the determination is a conclusion. AN EXAMPLE OF A SYLLOGISTIC ARGUMENT Suppose that a contracting officer has issued a change order under a construction contract. The contractor thinks that the change order is not valid and that he or she does not need to comply. The contracting officer asks the contractor to explain its reasoning. The contractor replies with three statements, as follows: Under the changes clause in our contract, you can issue a change order only to make changes that are within the general scope of this contract. The change order that you ve issued requires us to do work that is outside of the general scope of the contract. The contract is for a small animal shelter. You want to change it to an apartment building, which would be much larger, much more complex, require more specialty labor and more equipment, take much longer to complete, and cost much more. Therefore, you cannot issue the change order. The contractor has made a syllogistic argument. The major premise is the rule in the contract clause under which the issue must be resolved. The minor premise is the pertinent facts that relate to the rule, and is accompanied by explanatory assertions. The conclusion is the proposed resolution of the issue: You cannot issue the change order. Is the conclusion true? THE CONCEPTS OF VALIDITY AND TRUTH There are two important concepts in a syllogistic argument: 1) validity and 2) truth. Arguments may be valid or invalid. It is a rule of syllogistic reasoning that an argument is valid when the conclusion follows from the premises that is, when the conclusion would be undeniable if the premises were true. Premises may be true or false. Another rule of a syllogistic argument is that a conclusion is true if it is based on a valid argument and if the premises of the argument are true. An argument can be valid, but its conclusion false, if one of the premises of the argument is false. 4 Consider the following syllogistic argument: Major premise All small animals are birds. Minor premise The animal in the backyard is small. Conclusion Therefore, the animal in the backyard is a bird. That argument is valid, because if the premises were true, then the conclusion would also be true. However, the major premise is false (not all small animals are birds), so the conclusion is also false based on the terms of the argument. It might be true on other grounds, such as if the animal in the backyard was, in fact, a bird. But you would not persuade any thinking person of the truth of that conclusion based on the premise that, All small animals are birds. Think back to the change order example previously mentioned. With respect to the contractor s major premise, it is undeniably true that the changes clause lets the contracting officer order changes only if they are within the general scope of the contract. 5 So, a change outside the general scope of the contract would not be authorized under the clause. It would be a cardinal change, which would be a breach of contract. The contractor s argument is valid. But is it true? The truth of the contractor s conclusion depends on the truth of the contractor s minor premise, which is that the change is outside the general scope. That has not been proven. General scope of the contract is a term of art and a very complex idea that is based on case law. 6 More information and Contract Management June 2015 21
analysis is needed in order to determine whether the change is, in fact, outside the general scope of the contract. The contractor will have to make an argument about that. The major premise of that argument would be a statement of the case law rule about what constitutes an out-of-scope change. The minor premise would be a description of the characteristics of the change that the contracting officer wants Surprisingly, it seems that most persons have not received formal education in syllogistic argument and do not routinely use it in their work. to make. The conclusion would depend on the application of the major premise to the minor premise. ANOTHER EXAMPLE Now, suppose that you work for a company that does not have much experience with U.S. federal government contracts. The company has decided to sell its services to the Department of Defense and is about to embark on the negotiation of a contract. The sales team has met with the government s contracting officer, who told them that the company will have to submit certified cost or pricing data with their proposal, update it during negotiations, and, after agreement on price, certify that the data they submitted were accurate, complete, and current as of the date of the agreement. Since they were new to government contracting, the sales team asked the contracting officer to explain. The contracting officer told them to read the rules in FAR 15.403 and 15.406-2. The idea is entirely new to them and they are shocked. The sales team comes to you and asks you to explain this certified cost or pricing data business. How do you explain something like this to people who are not familiar with government contracting rules and procedures? The answer is that you: Make a syllogistic argument based on the rules in the FAR and the facts, Show the team that your premises are true, and Show them that the conclusion is unavoidable. Refusing to submit certified cost and pricing data would likely kill the deal. In contracting, when arguing syllogistically based on a rule in the FAR or a term of a contract, the major premise is a plain English statement of the applicable rule or contract term. The minor premise is a statement of the pertinent facts of the particular case. The conclusion reflects the application of the rule or contract term to the facts. Now, let s consider how to explain the requirement to submit certified cost or pricing data to the sales team. The first step in explaining is to do your homework. Find the rule that governs the issue. Research discloses that the rule about submitting certified cost or pricing data is in FAR 15.403-4, which states, in pertinent part: The contracting officer shall obtain certified cost or pricing data only if the contracting officer concludes that none of the exceptions in 15.403-1(b) applies. The threshold for obtaining certified cost or pricing data is $700,000. Unless an exception applies, certified cost or pricing data are required before [t]he award of any negotiated contract (except for undefinitized actions such as letter contracts). 7 That rule raises four questions regarding the facts of the matter: Do any of the exceptions in FAR 15.403-1(b) apply? Will the value of the contract exceed $700,000? Will the contract be a negotiated contract? Will the contract be an undefinitized action? 22 Contract Management June 2015
Let s take each question in turn. Do Any of the Exceptions in FAR 15.403-1(b) Apply? There are five exceptions in FAR 15.403-1(b): When prices will be based on adequate price competition, When prices are set by law or regulation, The beauty of the syllogism is that it provides a framework for critical thinking, which is self-evaluative thinking. When the contract is for a commercial item, When a waiver has been granted, and/or When the negotiation is for the modification of a contract for a commercial item. In this case, the contract will be awarded without competition. The prices will not be set by law or regulation. The contract will not be for a commercial item. The head of the contracting activity has rejected a request for a waiver. The negotiation will not be for a modification of a contract. Will the Value of the Contract Exceed $700,000? The contract is for a service. The price for the base period is expected to be about $200,000. The contract will include two options to extend the period of performance. The price of the first option is expected to be about $250,000. The price of the second option is expected to be about $300,000. The sales team argues that the option prices should not count, because it is not certain that the government will exercise any of them. They point out that the contract will be worth only about $200,000 at the time of award. However, you point out that FAR 1.108(c) states that option prices must be included when applying a dollar threshold. Thus, the contract price is expected to be $750,000, which exceeds the threshold for submission of certified cost or pricing data. Will the Contract be a Negotiated Contract? FAR 15.403-4(a)(1)(i) applies the requirement to submit certified cost or pricing data to any negotiated contract. The Scope section of FAR Part 15 states: A contract awarded using other than sealed bidding procedures is a negotiated contract. The prospective contract in question will be awarded using negotiated procedures, not sealed bidding procedures, so it will be a negotiated contract. Finally, Will the Contract be an Undefinitized Action, such as a Letter Contract? The FAR does not define undefinitized action. However, the contract will be with the Department of Defense, and the Defense FAR Supplement (DFARS) defines undefinitized contract action as follows: Undefinitized contract action means any contract action for which the contract terms, specifications, or price are not agreed upon before performance is begun under the action. Examples are letter contracts, orders under basic ordering agreements, and provisioned item orders, for which the price has not been agreed upon before performance has begun. For policy relating to definitization of change orders, see 243.204 70. 8 The prospective contract is not an undefinitized contract action, because the parties will agree upon contract terms before performance begins. Contract Management June 2015 23
A well-constructed syllogism boils an argument down to its essentials and makes it easier to understand, discuss, and evaluate. which it is based are several pages long and complex. In acquisition, well-constructed arguments tend to be simple and concise. Those qualities are attained through thorough research, systematic analysis, and effective paraphrasing. We can test the argument for validity and each of the premises for truth in order to verify the truth of the conclusion: Does the conclusion follow from the premises? Would the conclusion be undeniable if the premises are true? If so, then the argument is valid. Assuming that the argument is valid, is the major premise true? Is the minor premise true? If so, then the conclusion must be true. When you put true premises to work in valid syllogistic arguments, you will be making logical deductions and will be thinking and arguing rationally. Having ascertained the pertinent facts, you might explain the situation to the team with the following argument: Major premise FAR 15.403-4 says that the contracting officer must obtain certified cost or pricing data when: No exception applies, The contract is expected to exceed $700,000, The contract will be negotiated, and The contract will not be an undefinitized action. Minor premise The facts are: None of the exceptions apply, The contract is expected to exceed $700,000, It will be a negotiated contract, and It will not be an undefinitized action. Conclusion Therefore, the contracting officer must obtain certified cost or pricing data before awarding the contract. Note that the argument is very simple and concise, despite the fact that the rules on SYLLOGISTIC REASONING PROVIDES A FRAMEWORK FOR CRITICAL THINKING You can use syllogistic argument as the foundation for price negotiation memoranda, source selection decision documents, justifications for other than full and open competition, requests for equitable adjustment and claims, contracting officer final decisions, and many other kinds of conclusive documentation. The beauty of the syllogism is that it provides a framework for critical thinking, which is self-evaluative thinking. Critical thinking entails evaluating your thought process while engaged in it, testing your arguments for validity, and verifying that your premises are true. Syllogistic reasoning also provides a framework for effective discussion. The participants in the discussion can focus on the argument: Is it valid? They can then focus on the premises: Are they true? A 24 Contract Management June 2015
well-constructed syllogism boils an argument down to its essentials and makes it easier to understand, discuss, and evaluate. THE MARK OF A LEARNED PROFESSIONAL The ability to reason using syllogistic argument and to construct, use, analyze, evaluate, and critique arguments is the mark of a learned professional. It is an essential skill in the contracting profession, and contracting professionals should argue syllogistically when trying to decide, explain, and persuade. Justice Antonin Scalia and Bryan Garner, an expert in English usage and editor of Black s Law Dictionary, have written: Leaving aside emotional appeals, persuasion is possible only because all human beings are born with a capacity for logical thought. It is something we all have in common. The most rigorous form of logic, and hence the most persuasive, is the syllogism. 9 There is much more to syllogistic argument than I have covered in this article, and there is much more to argument than syllogistic argument. For a good, basic discussion of argument, see Anthony Weston, A Rulebook for Arguments, fourth ed. (2009); for more about syllogistic argument, see Robin Smith, Aristotle s Logic, The Stanford Encyclopedia of Philosophy (Spring 2014 Edition). CM ABOUT THE AUTHOR VERNON J. EDWARDS is a former contracting official with the U.S. Air Force and the U.S. Department of Energy. He is the author of books and numerous other publications on contracting, and is a monthly contributor to The Nash & Cibinic Report, which is published by Thomson Reuters. Send comments about this article to cm@ncmahq.org. ENDNOTES 1. Aristotle, The Organon: The works of Aristotle on Logic (2012), Roger Bishop Jones (ed.). 2. See William Kneale and Martha Kneale, The Development of Logic (1962). 3. FAR 1.701. 4. Copi, Cohen, and McMahon; Introduction to Logic, 14th ed. (2011): 27 31. 5. See paragraph (a) of the changes clause for construction contracts (FAR 52.243-4). 6. See Nash and Feldman, Government Contract Changes, 3rd ed. (2007): 4:2 4:8. 7. FAR 15.403-4. 8. DFARS 217.7401(d). 9. Antonin Scalia and Bryan A. Garner, Making Your Case: The Art of Persuading Judges (2008): Section 22, Think syllogistically. This article is merely an introduction to a rich, complex, fascinating, and rewarding topic. Join BVTI at NCMA 2015 World Congress 26 JULY SUNDAY Come to Booth 515 and get a frst hand look at ValuePath - our of-the-shelf, full-life cycle acquisition software that powers the IC ARC and DHS Acquisition Forecast System (APFS) 703.229.4200 info@bvti.com 28 JULY TUESDAY 27 JULY MONDAY Visit with BVTI in Booth 515 Meet with our Acquisition and Forecast Experts Meet with our Audit, Big Data and Pricing Compliance Experts Now Hiring Acquisition and Program Management Specialists Contract Management June 2015 25