A recent GAO report highlights the fact that when a solicitation and procurement strategy prioritize (1) capabilities and the quality or level of service to be procured over (2) the dollars to be paid, government contracting, project, and source selection personnel are forced to earn their paychecks. In these situations, two or more proposals, with potentially vast differences, must be comparatively analyzed for overall and incremental value, with solicitation requirements serving as a baseline, and government employees must decide which proposal provides the best value to the government.
On October 28, 2010, GAO followed through on the mandate in Section 845 of the National Defense Authorization Act for Fiscal Year 2010 and reported on the Defense Department’s use of the best value tradeoff process in source selections during March through October 2010. GAO focused on difficulties and challenges faced by government officials in making and supporting source selections when factors other than cost or price (e.g., technical approach, past performance, small business utilization) are designated as having more importance, when combined, than cost or price factors. DOD relies heavily on this approach in situations involving high-dollar, competitive contract awards. The GAO report notes that government used this approach 95% of the time during FY 2009 in situations involving competitively awarded contracts involving an obligation of $25 million or more.
In theory, the government’s use of a best value tradeoff analysis should provide the critical element of flexibility to decision makers. That is, the decision to pay Contractor A a higher price for good and services than that offered by Contractor B is an acceptable one, if doing so yields the best value to the government.
In practice, the use of a best value tradeoff process places government officials in the position of having to exercise business judgment. And, perhaps most important, the process forces the government to articulate and document its reasons, with very specific references to information gained from offerors during source selections, for deciding that the government’s best interest are served by paying either (1) more dollars for more capability or service, or (2) less dollars for less capability or service. Interestingly, GAO found that DOD officials selected the lower priced option nearly as often as it selected the highest rated, but more costly, proposal.
GAO’s report underscores the importance of growing a DOD Acquisition Workforce (including 6,400 anticipated new hires over the next few years) that has the guidance, skills, and business judgment to maneuver the best value tradeoff process properly and successfully. And GAO would know, considering the continuing failures by the federal acquisition workforce to perform tradeoffs and determine best value. Here are two recent examples.
This past summer, in Powersolv, Inc., B-402534, Jun. 1, 2010, 2010 U.S. Comp. Gen. LEXIS 234, GAO sustained a protest because the Federal Railroad Administration utterly failed to engage in a tradeoff process when it selected for award the proposal of a higher priced, higher rated proposal for database support services. After the protestor pointed out that no tradeoff analysis was done to justify payment of a 10% price premium, the agency scrambled unsuccessfully to find documents that would have shown consideration, with specifics from features of contractor proposals, of whether the higher price was worth it.
Likewise, in Systems Eng’g Int’l, Jul. 20, 2010, 2010 CPD ¶ 167, GAO sustained a protest in a procurement for power system maintenance services because EPA took an unacceptable short-cut in the best value tradeoff process and only considered the top two qualitatively rated offers out of ten received. In this instance, EPA failed to consider the lower priced offers. GAO noted that, even though the protester’s offer was marked low as “Marginal” in non-price factors under consideration, the offer nonetheless should have been considered in the best value tradeoff process, because it was the least expensive quote.
These decisions, and GAO’s recent report, suggest that the federal acquisition workforce is going to continue to be held accountable for the best value decisions it makes and that it may well be money well spent for the government to devote more significant resources to hiring individuals with the sound business judgment and experience required to make effective best value tradeoff decisions for major acquisitions.