Where best-value meets low price
When does a best-value competition become about the lowest price?
That’s not the question discussed in the Government Accountability Office decision on a recent bid protest, but it is what I kept thinking about as I read it. The answer to the question really is: it depends. Let me explain.
Cherokee Nation Technology Solutions was the incumbent on a project to support the Air Force with environmental restoration and military munitions response programs at Lackland Air Force Base in Texas.
When the contract came up for a recompete, the company faced off against AGEISS Inc. AGEISS won the contract and after its debrief Cherokee filed a protest.
The three-year contract was competed on best value, with price being the least important factor. Technical scores and past performance would carry the most weight.
The two companies had the same scores in risk rating for technical capability and understanding and for the technical rating and risk rating for personnel and team qualifications. Past performance also was rated the same.
The one difference was that Cherokee’s received a Good for its technical rating under technical capability and understanding while AGEISS scored an Acceptable.
At this point you’d think that Cherokee had the advantage but its price of $12.4 million was about $1 million higher than AGEISS’ $11.4 million bid.
The Air Force contracting officer decided that the $996,000 difference didn’t justify the benefits of Cherokee’s higher-rated technical proposal.
In its protest, Cherokee argued that its technical proposal should have been assigned multiple strengths during the evaluation. Same with its past performance – it should have been rated higher.
Likewise, Cherokee claimed that the best-value tradeoff by the Air Force wasn’t proper. It was inconsistent with the solicitation’s evaluation scheme, which said that non-price factors were more important than price.
But GAO sided with the agency saying that source selection officials have “broad discretion” in how they conduct their best-value tradeoffs especially when the selection process is well-documented, which GAO found to be the case.
With this decision, it seems to be that companies have two choices; they have to have an exceptional technical proposal that justifies a higher price. They can’t be good to someone else’s acceptable and expect to pay extra for that.
The other choice -- even if it is a best-value procurement – is focusing on having the lowest price.
I think that’s the problem Cherokee ran into here. Their technical proposal was better than AGEISS, but it wasn’t $1 million better. AGEISS, on the other hand, had a technical proposal that the Air Force was comfortable with, and that they thought would meet their needs. The proposal also was $1 million cheaper than the competitor. And when you are talking proposals in the $11.4 million to $12.4 million range, that’s significant.
So, when is it about best value, and when is it about low price?
If you are very confident in your technical proposal, then you can succeed with a higher price, but if you know your proposal is just equal to or only a little better than your competitor, you are probably better off focusing on price.
Posted by Nick Wakeman on Jun 04, 2015 at 9:33 AM