Winning Best-Value Solutions
(Trade-offs, LPTA & the new
VATEP) for Pricing to Win
Breakout Session #: A10
Dr. Michael Santens, CPCM & Fellow, PMP
Date: Monday, July 25
Time: 11:15am-12:30pm
Overview
•
•
•
•
•
Purpose
Background
Changes
Best Value Continuum
Value Adjusted Total Evaluated
Price(VATEP)
• Summary
Background
• Update to March 2011, DoD Source Selection
Procedures, incorporates BBP 2.0 taskings
– Better define value in “best value” competitions
– When Lowest Price Technically Acceptable is
used, define Technically Acceptable to ensure
needed quality
• Decision made to review entire SSP
• Reviewed by the Services, DLA, DTRA, MDA,
DAU, USD(AT&L), OGC and PEO/PM Focus
Groups, etc.
– Over 500 comments and recommendations
received
Purpose
Provides the DoD procedures for
conducting competitively negotiated
source selections and outlines a common
set of principles and procedures for
conducting such acquisitions in
accordance with applicable statutes and
regulations
Use of DoD Source Selection
Procedures
DoD Source Selection Procedures, 31 Mar 2016,
are applicable to all acquisitions:
• Conducted as part of a major system acquisition program
• Competitively negotiated FAR 15 acquisition with an estimated
value greater than $10M
• FAR 12.6, Streamlined Procedures for Evaluation and
Solicitation for Commercial Items over $10M, when FAR 15,
source selection procedures, not FAR 13 SAP, are used
Waivers:
•
•
Over $1B require written permission from DPAP
Below $1B approved by Senior Procurement Executive (SPE)
Exceptions to DoD SSP
Competitively negotiated procurements except
those using:
• FAR 8.4, Federal Supply Schedules;
• FAR 12, Acquisition of Commercial Items if used in conjunction
with FAR 13, Simplified Acquisition Procedures;
• FAR 13, Simplified Acquisition Procedures;
• FAR 14, Sealed Bidding;
• FAR 16.505(b)(1) Orders under multiple award contracts – Fair
Opportunity
• FAR 35.016, Broad Agency Announcements
• FAR 36.6, Architect-Engineer services; and
• 15 USC, Section 638 – Small Business Innovative Research
(SBIR),
SB Technology Transfer Research and SB Technology Transfer
Changes
• Expands roles and responsibilities of SST
• Adds roles of legal counsel, other advisors,
Program Manager (PM) and Requirements
Owner (RO)
• Changes to evaluation rating tables
• Adds evaluation tables for LPTA and Small
Business ratings
• Updates statutory and regulatory references
• Updates and adds new definitions
Source Selection Team Structure
Best Value Continuum
Best Value Continuum
• SSP describes processes and techniques to
design acquisition strategies suitable for:
–
–
–
–
Lowest Price Technically Acceptable
Subjective Tradeoff
Value Adjusted Total Evaluated Price
Combination of methods
• Carefully consider and use the approach that
is most appropriate for the acquisition
Best Value Continuum
Lowest Price Technically
Acceptable
•
Use for commercial or non-complex supplies or
services
–
–
•
Appropriate when:
–
–
–
•
Best value is expected to result from selection of technically
acceptable proposal with the lowest cost
Gov’t would not place any value on supply or service
exceeding the threshold/minimum requirement
Requirements are well defined;
Risk of unsuccessful performance is minimal and
There is no value, need or willingness to pay for higher
performance
All factors other than Cost/price are evaluated on an
“acceptable” or “unacceptable” basis
LPTA Rating Charts
Cost Risk and Contract Type
Gvmt
CPFF
Greatest Risk to
CPIF CPAF
Uncertain technical
requirements, labor and
material costs indeterminable
FPI(F)
KTR
FPAF
Technical requirements
defined, fair and reasonable
prices determinable
Technical Risk
FFP
New Procedures (4/1/16)
and Δ (Changes)
Applicable to all FAR Part 15 competitive
acquisitions over $10 million (1.2, P 1)
Applied to all FAR Part competitive
acquisitions over the SAT
Price only evaluations are subject to the new
procedures (P 2 – no longer listed as an
exception)
Competitions with price as the only
evaluated factor were exempted
FAR 12.6 Streamlined procedures are exempt only
if used in conjunction with FAR Part 13; NOT
exempt if used in conjunction with Part FAR 15.
(1.2.2, P 2)
All acquisitions using FAR 12.6 were
previously exempt from use of DoD
Source Selection Procedures
Waivers (approval to deviate from these
All waivers, regardless of dollar value,
procedures): Solicitations below $1 billion – Senior required approval of Director, DPAP.
Procurement Executive (SPE) (Mr. Beebe) $1
billion or more – Director, DPAP (1.2.4, P 2)
New Procedures (4/1/16)
and Δ (Changes)
Use of the new SSPs shall be considered for
Orders under multiple award (Fair
orders under multiple-award (Fair Opportunity)
Opportunity) contracts were
acquisitions greater than $10 million. (1.2.3, P 2) previously exempt.
SSA for acquisitions over $100 million must be
appointed by the Agency head (will likely be
delegated to HCA) and shall be other than the
KO. (1.2, P 1)
Expands information on evaluation team
members and responsibilities, e.g., technical
team, cost/pricing team, small business team,
and past performance team responsibilities are
delineated. (PP 5-16)
Competitive Range Determination
Documentation is required to include the criteria
used for determining the competitive range and
an analysis explaining what will be discussed
with each offeror. (3.5, P 32)
No appointing authority specified.
Over $100 million SSA shall be other
than KO.
No change to policies/procedures.
Contents of CRDs not addressed.
(Policy is researching alternatives to
these additional documentation
requirements.)
New Procedures (4/1/16)
and Δ (Changes)
Technical Ratings (Table 2A, P 25)
Technical Risk Ratings (Table 2B, P 25)
Combined Tech/Risk Ratings (Table 3, P 26)
Technical Acceptable/Unacceptable Ratings
(Table C-1, P C-2)
Small Business Ratings/Descriptions (P 30)*
Source Selection Plans approved May
1 or later must reflect the new rating
descriptions. You can add further
elaborating information to basic rating
definitions, but you cannot alter the
basic definitions.
Performance Confidence Assessment – SSA may
determine that a rating of “Substantial
Confidence” or “Satisfactory Confidence” is
worth more than a “Neutral Confidence” (3.1.3.3,
P 28)
Previous guidance only referred to
FAR 15.305 which states if past
performance is not available, the
offeror may not be evaluated favorably
or unfavorably.
Technical Ratings (Table 2A, P 25)
Technical Risk Ratings (Table 2B, P 25)
Combined Tech/Risk Ratings (Table 3, P 26)
Technical Acceptable/Unacceptable Ratings
(Table C-1, Page C-1)
Small Business Ratings/Descriptions (P 30)*
Source Selection Plans approved May
1 or later must reflect the new rating
descriptions. You can add further
elaborating information to basic rating
definitions, but you cannot alter the
basic definitions.
New Procedures (4/1/16)
and Δ (Changes)
Not addressed previously.
Beneficial aspects of the awardee's
proposal (those that affected the
evaluation in the awardee's favor)
must be incorporated into the contract
and the RFP must advise offerors of
same. (3.12, P36)
Value Adjusted Total Evaluated Price
(VATEP) is a tradeoff source selection
process that adjusts proposed prices
to reflect the value placed on better
performance (for evaluation purposes
only). (Appendix B)
This process is new and
optional. Agencies are trying
to implement these
procedures and guidance.
Subjective Tradeoff
•
Use for commercial or non-complex supplies or
services
– Best value is expected to result from selection of other
than the lowest priced or other than the highest
technically rated offeror
– Gov’t place any value on supply or service exceeding the
threshold/minimum requirement
• Appropriate when:
– Less well defined requirements, more developmental
work;
– Greater performance risk and
– Technical or Past Performance considerations may play a
more dominant role that cost/price
• All evaluation factors and subfactors that will affect
award will be rated using technical and risk rating
tables
Technical Rating Chart Changes
Technical Rating Chart Changes
Technical Rating Chart Changes
Value Adjusted Total
Evaluated Price (VATEP)
• Monetizes different levels of performance corresponding
to minimum (threshold) and maximum (objective)
performance/capabilities for “valued requirements”; not
extra credit for exceeding the maximum
• RFP identifies percentage or dollar amounts assigned to
valued requirements (downward adjustment)
–
–
Enables offerors to determine if additional cost of offering better
performance will put them in a better position in the source
selection
Provides SST the ability to assign a monetary value to the higher
rated technical attributes, removing some of the subjectivity from
the evaluation
VATEP is a structured technique for objectivizing how some (or
all) of the requirements would be treated in the tradeoff process
Value Adjusted Total
Evaluated Price (VATEP)
Appropriate when:
• Decision should consider operational benefits, risk and
affordability
• Requirement(s) have valued threshold and objective
performance/capabilities
• Government is willing to pay more for above minimum
performance or capabilities
• An affordability cap may be established
VATEP Tradeoff Scenario
2
5
VATEP Example
TEP = Total Evaluated Price
TPP = Total Proposed Price
Value Adjusted Total Evaluated
Price (VATEP)
•
VATEP can be used in conjunction with any
source selection process by combining:
Objective criteria (Acceptable/Unacceptable);
• Subjective criteria (color/adjectival ratings); and
• Valued requirements with associated TEP
adjustment
•
•
•
Adjustment for evaluation purposes only
Contract awarded at final total proposed price
RFP must clearly state how the factors will be evaluated
The SSDD shall be an assessment of the proposals
against all source selection criteria in the RFP
Summary
• Overall process unchanged
• Clarified roles and procedures
• Added VATEP to the BV
continuum
The only constant in DoD
acquisition is change!
Contact Information
[email protected]
(703) 805-3776
Dr. Michael Santens, CPCM &Fellow, PMP
Defense Acquisition University
Contract Management Department
Capital And Northeast Campus
Fort Belvoir, VA
2
9
Back up Slides
VATEP Definitions
•
Affordability Caps – Approved cost constraints for MSAs determined by
the resources a DoD component can allocate, which provides a threshold for
procurement & sustainment costs that cannot be exceeded. For other
procurements, this is the approved funding for a given acquisition
•
Excesses - elements of the proposal that have exceeded mandatory
minimums (in ways that are not integral to the design) whose removal and
corresponding price decrease may make an offeror's proposal more
competitive
•
Objective - (or objective (maximum) as used in DoD SSP) the value of an
attribute that is applicable when a higher level of performance delivers
significant increased operational effect, or decreased operational risk, if it can
be delivered below the affordability cap. The objective value is the desired
operational goal that is achievable but may be at a higher risk in cost,
schedule, and technology
•
Threshold - (or Threshold (minimum) as used in DoD SSP) the minimum
acceptable value of an attribute that is considered achievable within the
available cost, schedule, and technology at low-to-moderate risk.
Performance below the threshold value is not operationally effective or
suitable or may not provide an improvement over current capabilities