What does best value really mean?
As we’ve moved past the era of lowest price, technical acceptable contracting, the government has increasingly relied on best-value procurements.
But that hasn’t been a perfect solution because we’ve started to notice inconsistencies in the way best-value is implemented. Inconsistencies might be too strong a word, but you’ll get what I mean later.
LPTA was simple: from the pool of bidders that met the technical requirements, the bidder with the lowest price won. You might not like it, but it’s hard to win the argument. You are stuck with either saying the technical solution bid by your competitor isn’t good enough or that the price is unreasonable. Both are hard thresholds to clear.
But now we see some differences in how best value is applied. Two recent protest decisions highlight the issue for me.
One involves a $1 billion Veterans Affairs Department contract that went to Booz Allen Hamilton. They had the highest technical rating but also the highest evaluated price. GAO upheld the award to Booz Allen saying that VA could justify the premium it would pay Booz Allen. The premium was more than 20 percent.
The second contract is a protest of a $50 million Navy award to Science Applications International Corp. SAIC had a lower technical score and a lower price than Raytheon. But its competitor, Raytheon had higher technical scores and a higher price by 15.7 percent. Raytheon’s technical score was “Outstanding” with 23 strengths and one weakness, whereas SAIC was rated “Acceptable” with nine strengths and seven weaknesses.
But the Navy went with the lower priced SAIC and said the higher technical scores for Raytheon didn’t justify the higher price.
The solicitations for both the VA contract and the Navy contract said technical scores were more important than price. So paying a premium was in the mix.
Yet we have two contracts with completely opposite results.
GAO in its review of the contracts found that both the VA and the Navy could justify their decisions so the protests were denied.
I’m not sure what the answer is or whether there is anything that should be done, but it seems that the definition of “best value” can vary widely from one customer to the next.
The main lesson at this point remains to know your customer and understand what they want. You need to determine what their sensitivity to pricing is and mostly what best value means to them.
You also need to make sure that they understand the value that you bring to them, regardless of price, and why they may need to pay a premium to get that value.
And of course, once they decide to pay the premium, you had better deliver. Always deliver.
Posted by Nick Wakeman on Oct 15, 2019 at 10:01 AM