Best Value is a process used in competitive, negotiated contracting to select the most advantageous offer by evaluating and comparing factors in addition to cost or price. It allows offerors flexibility in selection of their best proposal strategy through tradeoffs which may be made between the cost and non-cost evaluation factors. It should result in an award that will give the Government the greatest or best value for its money. It is the preferred source selection methodology, having been given renewed vigor since Executive Order 12931 was issued on 13 October 94. The Executive Order directs executive agencies to "place more emphasis on past performance and promote best value rather than simply low cost in selecting sources for supplies and services".
Best Value has become a centerpiece of acquisition reform policy. It is inextricably linked with sweeping changes in our specification/standards reform and use of Past Performance Information. Collectively, these AR elements allow the offeror great flexibility in proposing and assessing the value of cost/technical tradeoffs. The overall intent is to stimulate innovative thinking and techniques, obtain technology breakthroughs, and reduce life-cycle costs.
From an acquisition reform perspective, the changes program managers are expected to integrate into their existing acquisition process are matters of degree which:
- allows greater offeror proposal flexibility,
- assumes greater risk in tech/cost tradeoffs,
- expands the use of best value into areas other than cost reimbursable R&D and systems acquisitions, and
- encourages greater tailoring of source selection factors/subfactors to the instant procurement and less use of boilerplate provisions in sections L and M of the RFP.
Additionally per OFPP Best Practices Guide of May 95, "the use of past performance as an evaluation factor in the contract award process makes the awards (de facto) 'best value' sections." It should be noted that the Navy led the way in this innovation in 1989 by employing a methodology for "greatest value source selection" of firm-fixed-price supplies in which cost and past performance were the only award factors (see NASUP Red-Yellow-Green program(Nov 94); and the OFPP past performance guide of May 95).
Application of Best Value to Large/Complex/Sensitive Procurements
Source selection criteria must be relevant, measurable and firm, and lend themselves to evaluation and application in a manner that will be fair to those being evaluated. The criteria should not only rate what the contractor tells us but should also evaluate the contractor independently. The criteria can be used to trade-off internal Government objectives, such as payment of an additional amount for substantially better performance, or selection of a technical solution that has a higher probability of success even though it may not represent the lowest initial cost. Potential offerors must be told what they will be rated against, and the Government must consistently apply these evaluation criteria.
Application of Best Value to Smaller Dollar Higher Volume Purchases
The major concerns about using Best Value in this environment appear to be, can it be done quickly, is it fair, and can it be defended if challenged? The answer to all of the above is yes. The key is automation and standardization of evaluation factors. The offerors must know what the factors are, and the factors must then be applied in a fair and equitable manner. One specific system in use by NAVSUP is the RED/YELLOW/GREEN computerized vendor identification system. The technique uses a traffic light approach to select vendors by screening potential offerors against a Navy quality assurance data base. Before a buyer awards a contract, the system advises the color of the offeror and provides award instructions. While there is an initial time investment in developing a reliable data base, from the buyer's view point, the process is user friendly and has no impact on PALT. Best of all, the Government obtains greater value for its procurement dollar because it can eliminate or at least make an informed decision before award is made to a vendor with a poor quality history.
Application of Best Value to Service Contracting
As in the case of large/complex/sensitive procurements, formal or semi-formal source selection procedures can be employed depending on the exact size of the procurement. Due to the extremely competitive nature of the industry, this class of contracts especially lends itself to a Best Value approach. Since severe competitive pressure has encouraged some vendors to promise more than they can deliver, it is particularly useful to compare actual performance with promised or bid performance on earlier or similar contracts. Did the contractor deliver the quality of work he promised? Was the contract executed in a timely manner? And was cost adequately controlled? With respect to the proposed effort, are proposed costs realistically estimated? Are salaries consistent with experience for the area? Do they raise questions about the ability of the contractor to perform as proposed, and thus, put the Government at risk? Using a Best Value approach, these criteria can be compared and contrasted for each offeror to determine the overall greatest value for the Government.
Difference Between Price Only Method and Best Value
The Price Only Method is often used for non-complex routine requirements where work can be fully and easily described. Price, or price after a verification that the contractor can provide what is technically required, is the only relevant criterion. All past performance/capability/quality issues are addressed via FAR 9.1 responsibility determinations and no tradeoffs of price or other factors is employed. In Best Value selection of sources, there are trade-off criteria and, so long as they are relevant, measurable, and subject to differentiation, these can be whatever management wants them to be. Criteria must be disclosed to potential offerors and must be evaluated in a fair manner.
Do's and Don'ts of Best Value Selection
Do:
Keep all "players" informed. Tell them in the solicitation exactly what you are going to evaluate them on and then follow through.
Insure supporting data is reliable.
Document your decision, if you cannot provide proof if challenged you may end up in trouble.
Don't:
Do not use Best Value methods to eliminate a non-responsible contractor. Best Value techniques are designed to differentiate between many acceptable contractors to determine which one would be best for a particular acquisition. If you think a particular vendor may not be responsible, handle that contractor using traditional FAR 9.1 methods.
Do not use too many factors for trade-off analysis. Too many factors may be as bad as too few factors. Be sure to select those factors that are important to the procurement, but don't choose so many that they fail to meaningfully discriminate among offerors.
What to Look For?
Good performance-based SOWs and Specifications, and effective methodology for assessment of relevant offeror past performance. In the absence of this, "best value" is only lip-service, as there is no room/leverage provided for tradeoffs. Look for these in the RFP before assessing the details of best value proposal and evaluation criteria provided in sections L and M of the RFP.
A section M which clearly indicates to offerors the intended "best value" nature of the source selection. Samples referenced below indicate several acceptable approaches which should be carefully tailored to the instant procurement, not applied as boilerplate.
Correlation of Sections L and M, SOW and Specification. Best value can be achieved in the face of ambiguous or inconsistent provisions. See RFP Internal Consistency.
Application of Cost as and Independent Variable (CAIV) to ensure that best value cost/technical tradeoffs give appropriate weight to cost, treating it as more than a consequence of the selected technical approach. See CAIV.
Inclusion of offerors' IPT past performance as an evaluation subfactor, since this will play an increasingly larger role in best value determinations.
What to Look Out For?
Too many evaluation factors which often result in unintended dilution. Effective best value determination relies on a limited set of meaningful discriminators that do not descend into obscure levels of granularity (e.g., reiterating all aspects of the SOW and specification as individual evaluation factors/subfactors). See RFP Internal Consistency and NAVSUPINST 4900.72 for more detailed discussions.
Low relative weight assigned to past performance. While its value should be tailored to the individual procurement, it must be significant, and should normally be weighted at least as much as any other non-cost evaluation factor. It is a central acquisition reform principle that source selections must place greater weight on past performance empirical data and commensurably less on the technical/management proposal writing skills in determining best value.
The presence of detailed "how to" direction in the SOW and specification. This indicates the absence of a good performance-based requirement, limits offeror flexibility in designing solutions, constrains cost/tech tradeoffs, is contrary to CAIV, and is unlikely to produce a "best value" result. Similarly, overly detailed requirements in Section L and the SOW for the content of particular management plans has the same effect.
Boilerplate provisions in Sections L and M. Best value determination demands on a clear understanding of relevant technical and cost factors.
