Is there anything illegal in pursuing an acquisition/contracting strategy through full and open competition where the government specifies: a) the funding (e.g. $10M/year for 5 years) to hire a fully funded (hours are not at issue) software development team, b) the schedule (deliveries required every 12 months), and c) a prioritized list of requirements (that is most likely more than can be delivered in the 5 s/w releases)?
With cost and schedule being fixed the key source selection criteria would be the capability delivered, size and make-up of the fully funded team, and past performance. Ideally the contract type would be Firm Fixed Price (vs Cost Plus) to keep bidders from promising unrealistic/unachievable capability deliveries.
A cost-reimbursement type contract may in fact be most suitable, as the ability of prospective offerors to fulfill the Government's requirement at a fixed price appears doubtful. Your requirement almost sounds as if it could be suitable for a firm-fixed-price, level-of-effort type contract (FAR 16.207), but the dollar value and nature of your requirement is too far removed from the intent of the FAR for use of a FFP-LOE contract. You state that a cost-reimbursement contract type is not preferred because you don't want offerors to propose "unrealistic/unachievable capability deliveries." This concern would be addressed by the cost realism analysis that must be performed for all cost-reimbursement contracts. Please see FAR 15.305(a)(1) for more on how cost realism analysis can be used to address your concern.
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