Encourage Best Value Procurement Background Determining the successful competitor for a government contract requires a full assessment of available information. The award of a contract to a supplier based on lowest price alone can be a false economy if there is subsequent default, late delivery, or other unsatisfactory performance resulting in additional contractual or administrative costs. It is essential that all vendors are treated fairly in the competitive process. However, the needs of a vendor should not supersede those of the taxpayers and federal agencies. Competent, costefficient suppliers provide the best value to the government. While it is important that government purchases be made at a reasonable price, this should not require that an award be made to a supplier solely because the supplier submits the lowest offer.1 There are two basic methods of procurementsealed bid and negotiation. When sealed bid procedures are used, there is a public bid opening and the award must be made to the responsible offeror submitting the lowest offer based on price and pricerelated factors (e.g., transportation charges). When the negotiated method of procurement is used, however, the government has considerable latitude in structuring the procurement and can consider both price and other factors (e.g., technical capabilities, qualifications of key personnel, etc.) in selecting the contractor. Agencies have broad discretion in selecting factors to be considered, but must always consider price or cost to the government. Allowing for the possibility of selecting other than the lowest offeror does not mean buying a Cadillac or buying supplies or services beyond the government's minimum needs. It simply means considering value differences between offers such as past performance records, quality of proposed solutions, and cost differences, and then choosing the best overall value. It means permitting the consideration of all factors when buying goods and servicesthe way smart buyers in business make tradeoff decisions to determine best value. The benefits of making best overall value source selection decisions can result in improved mission performance and lower lifecycle costs. It can also help to encourage vendors to provide their best products and services to the government. When a procurement is structured to consider both price and other factors in making the selection to provide the greatest value to the government, it is often referred to as a "best value" procurement. The average person makes purchases on the basis of best value or greatest value every day. For example, if brand A batteries cost $1.00 and last 10 hours, and brand B batteries cost $1.50 but last 20 hours, the average person would consider brand B to be the best value. Federal regulations provide for awards based on the greatest value and cite examples where the approach can be used.2 Examples cited are in the acquisition of research and development, professional services, or costreimbursement contracts. However, the process outlined in the Federal Acquisition Regulation for greatest value or best value procurements is complex and requires far more time and resources than other types of procurements. As a result, many procurement officials feel more comfortable awarding contracts based on lowest cost rather than best value. Need for Change Many federal agencies rely heavily on support from contractors to accomplish agency missions. Unless the contractors share an agency's commitment to quality, the agency cannot improve the quality of service provided to taxpayers. The government must find ways to reward contractors who perform and remove from the federal acquisition system those who do not. Acquisition strategies designed to support and foster the quality revolution need to be promoted and used to the fullest extent. The federal government faces many problems implementing this quality revolution in the procurement process. Even though the federal regulations clearly state that a prospective contractor must demonstrate that it is responsible, many contracting officers feel that the burden of proof is instead theirs. Contracting officers are often reluctant to reject offers from contractors who have a poor past performance record or who otherwise do not appear to be capable of performing. The reluctance is, in part, due to the fear of being secondguessed by reviewers, protests, or other legal action.3 Agencies do not always consider innovative ways to include quality considerations, such as past performance, when developing acquisition strategies. There needs to be a total rethinking and redefining of what best value means and how it can be used in all types of procurement strategies. This includes not only negotiated procurements that use price and other factors, but also other negotiated and sealed bid procurements. In the area of "greatest value" or socalled "best value" procurement, many protests before the General Accounting Office (GAO) or the General Services Board of Contract Appeals (GSBCA) have identified the need to train the procurement workforce on when and how to effectively use the technique in source selection. In addition, a survey of Federal Acquisition Regulation (FAR) users conducted by the General Services Administration (GSA) indicates that the FAR coverage on source selection or use of the greatest value needs to provide better guidance, but not detailed or prescriptive regulations.4 Several agencies (e.g., the Defense Logistics Agency, GSA, and the National Aeronautics and Space Administration) have undertaken efforts to streamline the source selection process, share information on best practices, and educate contracting personnel on when and how to use the process effectively. Despite these efforts, the federal procurement workforce, as a whole, needs further training on the use of source selection techniques. Endnotes 1. 48 CFR 9.103(c). 2. Subpart 15.6 of the Federal Acquisition Regulation, 48 CFR 15.6. 3. See "PROC16: Promote Excellence in Vendor Performance" in this report. 4. FAR Improvement Executive Committee, FAR Improvement Project Report (October 1992), p. 16.
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