Sequence of conducting evaluation: Can you evaluate Price first and then Past Performance?

[govt2310]

I believe that an agency can evaluate Price first, and the Past Performance, as long as the solicitation announced that this is what the agency intends to do.

A colleague asked, But how can we establish Price Reasonableness if we don't know an offeror's Past Performance? What happens if, Offeror A is found to have a Reasonable Price, and then the Past Performance evaluation reveals that Offeror A has Unacceptable Past Performance?

[Guest Vern Edwards]

FAR Part 15 does not specify a particular order of evaluation. Unless agency or local policy dictates otherwise, you may consider evaluation criteria in any order you like.

An offeror with poor past performance still might offer a fair and reasonable price, in which case you might have to trade off past performance against price, accepting the risk of poor performance in order to get a chance to pay a lower price. That would be a judgment call.

[govt2310]

FAR Part 15 does not specify a particular order of evaluation. Unless agency or local policy dictates otherwise, you may consider evaluation criteria in any order you like.

An offeror with poor past performance still might offer a fair and reasonable price, in which case you might have to trade off past performance against price, accepting the risk of poor performance in order to get a chance to pay a lower price. That would be a judgment call.

I, too, do not see anything in FAR Part 15 that explicitly, affirmatively requires an agency to evaluate proposals against certain Evaluation Criteria in a specific order or sequence. However, there are GAO decisions that imply that there is a specific order or sequence.

For example, when a CO tries to evaluate for Price Reasonableness by using Adequate Price Competition, the GAO has held that a Technically Unacceptable proposal cannot be used to establish Price Reasonableness. Therefore, the proposals would have to be evaluated for Technical first, in order to know which proposals are Technically Unacceptable, and therefore could not be used in the Price Evaluation.

So my real question is, would "Past Performance" be considered a "Technical" evaluation factor for this purpose, and therefore, the agency would be required to evaluate PP first, before going on to evaluate Price?

Here is the GAO info:

There is a GAO decision called “To Akin, Gump, Strauss, Hauer & Feld,” B-177847, Jul. 10, 1973 (a really old case), where the protester was Texas Instruments. The awardee was General Dynamics (GD).

Here is the link:

http://www.gao.gov/products/482465

TI argued that there was adequate price competition and should have won the award. GAO wrote:

“For the following reasons, we agree with Government’s position that adequate price competition did not exist in the circumstances. The clear import of the TEP report is that GD’s initial proposal was technically unacceptable . . . Since only one offeror, TI, submitted a fully acceptable offer, the criteria of adequate price competition set forth in FPR 1-3.807-1( (1) . . . .at least two responsible offerors who can me the Government’s requirements – were not met.”

Well, the FPR no longer exists. But the exact same language appears in the FAR as follows:

FAR 15.403-1(c )(1) defines “Adequate Price Competition” as existing when “Two or more responsible offerors . . . submit priced offers that satisfy the Government’s expressed requirement . . .”

AND

in Lifecycle Construction Service, LLC, B-406907, Sep. 27, 2012, GAO said:

While the CO and the source selection official assert that the median represented the “fair market pricing,” they also acknowledge that three of the price coefficietns used to establish that benchmark were, themselves,sunreasonably high, and several others were proposd by offeros/proposal that were determined to be unacceptable or ineligible for award. Accordingly, in our view, the median could not reasonably be relied upon as a valid benchmark for comparison.”

[Guest Vern Edwards]

I told you what I think and why I think it. I still think it and for the same reason.

Obviously, however, if the solicitation is set up so that you logically have to evaluate "technical" first, then you would have to evaluate technical first. However, in an LPTA source selection you might decide to evaluate the technical acceptability of only the lowest priced offeror, in which case you would evaluate price first.

If you're doing a lowest-price technically acceptable source selection, and if you make past performance a factor in determining technical acceptability, then guess what? Past performance is a technical factor.

And don't cite old (1973) GAO decisions unless you know what you're doing. The law and the regulations about adequate price competition were different in 1973. Don't even read decisions that old unless you know what you're doing and you're writing an historical article.

[Guest Vern Edwards]

Actually, in most source selections in which I participated, which were large dollar value and very formal, the evaluation was conducted by separate teams (panels), which conducted concurrent evaluations. There would be a technical team, a management team, and a cost or price team, and they would do their work separately and concurrently.

[govt2310]

Say a solicitation contains a Past Performance Adjectival Rating Scale as follows:

Excellent

Good

Fair

No Confidence

Neutral

Say the solicitation is for a Fixed-Price contract, and the evaluation basis is Best Value (Tradeoff). Say there are only three evaluation factors: Technical Approach, Price, and Past Performance. Say the solicitation said that Price would be evaluated for Price Reasonableness. Assume the solicitation is silent on Price Realism Analysis (note, GAO has previously held that, if a solicitation for a fixed price contract is silent on whether a Price Realism Analysis will be performed, then the agency cannot conduct a Price Realism Analysis).

EDITED on 7/15/2014 at 10:09 AM TO ADD THIS PARAGRAPH:

Say further that, the solicitation puts offerors on notice of the evaluation process/sequence: that TECHNICAL will be evaluated first. If any proposals are found TECH UNACCEPTABLE, they will NOT be evaluated further. Only the technically acceptable proposals will move on to be evaluated for Price. Then, only the proposals with fair and reasonable price will move on to be evaluated for Past Performance.

Based upon this fact pattern, would Past Performance be considered a "technical" factor, thereby requiring the agency to evaluate Past Performance before evaluating for Price?

And therefore, if Offeror A's price was used to establish ADEQUATE PRICE COMPETITION in the Price Analysis, and then subsequently, Offeror A got a Past Performance Rating of NO CONFIDENCE, would the agency have to go back and redo the Price Analysis, this time leaving out Offeror A's price proposal/total price?

[joel hoffman]

I believe that an agency can evaluate Price first, and the Past Performance, as long as the solicitation announced that this is what the agency intends to do.

A colleague asked, But how can we establish Price Reasonableness if we don't know an offeror's Past Performance? What happens if, Offeror A is found to have a Reasonable Price, and then the Past Performance evaluation reveals that Offeror A has Unacceptable Past Performance?

I sense the possibility that Vern is discussing points concerning the order of evaluating the price- past performance - technical factors (EDIT: when conducting trade-off process) and Govt2310 might be discussing a stepped or multi- phased evaluation process that could eliminate a proposal based upon price without performing a PP or technical evaluation. I may be wrong but, govt - are you asking particulars concerning the order of evaluation or are you exploring this to apply to a phased/stepped procedure?

With regard to determining price reasonableness or basing reasonableness upon competition among proposals received, I can see where a price would depend upon the degree of compliance with the requirements but also depends upon the degree of flexibility allowed and whether the acquisition allows for betterments and/ or other trade off advantages that might provide additional value, such as lower life cycle costs but higher first cost or additional capability or performance of a product or facility, for example.

When I was the non-voting professional advisor or SS monitor on construction and design-build projects I always tried to use the knowledge gained in the technical evaluation to assist in or perform the price evaluation. I think that the price team must have an awareness of the non-price proposals and the evaluation to make some correlation with pricing as well as differences between price proposals.

Edit: I was snail typing the above on the iPhone while Govt2310 posted the above response. I withdraw my question for govt 2310

[govt2310]

Joel Hoffman:

I edited the Fact Pattern above to try to answer your question.

[Guest Vern Edwards]

"Technical" is not a formal or defined term. Generally, it is taken to mean "non-price" or "other than price". I cannot say whether in your scenario past performance would be considered a "technical" factor. Given that you name the factors, my guess is that it would simply be referred to as "past performance." However, since you expressly state that "only proposals with fair and reasonable price will move on to be evaluated for past performance," I think there will be no issue -- you plan to evaluate price before you evaluate past performance.

I suspect that you have a real situation on your hands that worries you and that your worry is that you will get a protest. I don't know how to help you, and I have to confess that your approach -- ask a question, then add information and ask the same question in a slightly different way, then do it again -- is annoying me. So I'm going to drop out of this thread. Maybe someone else will have more patience with you.

Say a solicitation contains a Past Performance Adjectival Rating Scale as follows:

Excellent

Good

Fair

No Confidence

Neutral

Say the solicitation is for a Fixed-Price contract, and the evaluation basis is Best Value (Tradeoff). Say there are only three evaluation factors: Technical Approach, Price, and Past Performance. Say the solicitation said that Price would be evaluated for Price Reasonableness. Assume the solicitation is silent on Price Realism Analysis (note, GAO has previously held that, if a solicitation for a fixed price contract is silent on whether a Price Realism Analysis will be performed, then the agency cannot conduct a Price Realism Analysis).

EDITED on 7/15/2014 at 10:09 AM TO ADD THIS PARAGRAPH:

Say further that, the solicitation puts offerors on notice of the evaluation process/sequence: that TECHNICAL will be evaluated first. If any proposals are found TECH UNACCEPTABLE, they will NOT be evaluated further. Only the technically acceptable proposals will move on to be evaluated for Price. Then, only the proposals with fair and reasonable price will move on to be evaluated for Past Performance.

Based upon this fact pattern, would Past Performance be considered a "technical" factor, thereby requiring the agency to evaluate Past Performance before evaluating for Price?

And therefore, if Offeror A's price was used to establish ADEQUATE PRICE COMPETITION in the Price Analysis, and then subsequently, Offeror A got a Past Performance Rating of NO CONFIDENCE, would the agency have to go back and redo the Price Analysis, this time leaving out Offeror A's price proposal/total price?

"Technical" is not a formal or defined term. Generally, it is taken to mean "non-price" or "other than price". I cannot say whether in your scenario past performance would be considered a "technical" factor. Given that you name the factors, my guess is that it would simply be referred to as "past performance." However, since you expressly state that "only proposals with fair and reasonable price will move on to be evaluated for past performance," I think there will be no issue -- you plan to evaluate price before you evaluate past performance.

I suspect that you have a real situation on your hands that worries you and that your worry is that you will get a protest. I don't know how to help you, and I have to confess that your approach -- ask a question, then add information and ask the same question is a slightly different way, then do it again -- is annoying me. So I'm going to drop out of this thread. Maybe someone else will have more patience with you.