Authorize a Two Phase Competitive Source Selection Process Background Federal law requires executive agencies to evaluate sealed bids and competitive proposals based solely on the factors specified in the solicitation. In the case of competitive proposals, the law requires that the government conduct, before award of the contract, written or oral discussions with all responsible sources submitting proposals within the competitive range, considering only price and other factors included in the solicitation. In certain negotiated procurements, the requirement to consider price in establishing the competitive range and include all proposals with a reasonable chance of being selected for award creates problems for both prospective offerors and the government. This is especially problematic for contracts that require an offeror to perform a substantial amount of design work in order to prepare its proposal. For example, in designbuild construction procurement, it is very costly for prospective offerors to compete because they must do a considerable amount of the design work before they can price their proposal. Under a designbuild construction contract, the contractor is responsible for designing and constructing the building or other public work. This differs from the traditional approach, where a contract is awarded to an architectengineer firm that designs the project, and after the design is complete, separate bids for construction are solicited and a contract is awarded. When the government uses a designbuild approach, contractors often complain of the high cost to compete for such projects and urge the government to use a twophase process that would focus on qualifications and concepts in the first phase and limit competition in the second phase to a specified number of contractors. This would control a contractor's expenses in the first stage and assure those contractors that do incur the expense in the second phase that they have a realistic chance of being selected for the award. Need for Change Executive agencies and departments involved in contracting for designbuild construction projects, lease construction projects, prototype production, or other similarly complex projects where the cost of preparing and submitting a proposal is significant would benefit by using a twophase process. It is similar to the commercial practice of "shortlisting," where the best quality firms are chosen upfront, and only then asked to engage in a more detailed technical and price competition. The twophase process would also permit more efficient use of government personnel by allowing them to focus on the detailed proposals of the most qualified offerors and expedite the selection, evaluation, and award process. Such limited competition should ensure reasonable prices while offering the government a range of designs or approaches to satisfying the government's requirement. This would benefit both prospective contractors and the government. This process would shorten the lead time for such procurements, reduce costs, and provide for more timely fulfillment of the customers' needs. The regulations and case law related to the establishment of the competitive range currently preclude the government from predetermining the number of offerors considered to be within the competitive range. The government is required to see what the market produces and then determine which offerors, when evaluated against the factors specified in the solicitation, have a reasonable chance of being selected for award. In a tight economic market with limited commercial activity, there can be intense competition for government contracts. For example, it is not uncommon for the government to receive more than 25 offers on major designbuild construction projects. Often the offers are from wellqualified local firms and national real estate developers, and the final competitive range includes several offerors that have submitted outstanding proposals. Negotiating with all offerors in the competitive range requires a substantial amount of time, resources, and costs for the government and the offerors. If the government continues to use the current process, it will discourage some of the best offerors from competing because they are becoming more and more reluctant to expend the physical resources and costs when faced with unlimited competition for the award. If competition is limited in the second stage, the offerors would be more likely and willing to expend the resources because they would feel that they have a realistic chance of getting the award. Endnotes 1. The Federal Property and Administrative Services Act of 1949 (41 U.S.C 303b), and the Armed Services Act (10 U.S.C. 2305(b)).
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