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QUESTION:

Can an agency just make award to the highest-rated, highest-priced proposal without explaining the "tradeoff"?

I saw a recent GAO decision that makes me wonder about this. In Green Earthworks Construction, Inc., B-410724 et al., Feb. 2, 2015, the Air Force issued a solicitation for abatement services for hazardous materials.

Here is the link to the GAO decision:

http://www.gao.gov/assets/670/668348.pdf

The RFP stated that there were only TWO EVALUATION FACTORS: PAST PERFORMANCE and PRICE. Although it did not use the phrase "Performance Price Tradeoff (PPT)," it appears that this was some variation on PPT. The proposals would be ranked from low to high for price. Price analysis would only be conducted on the "lowest-priced proposals." Next, the agency would evaluate for Past Performance. If the lowest-priced proposal also received a "Substantial Confidence" PP rating, then award would be made to that offeror, Otherwise, the PP assessment would continue, beginning with the next lowest-priced proposal, until an offeror with a substantial confidence rating was identified. If that didn't work out, then the SSA was to determine whether additional higher-priced groups of proposals should be considered and to then conduct a "best-value tradeoff."

Green Earthworks challenged the source selection decision. GAO denied that challenge, finding that the awardee, All Phase, merited award under the stated terms of the solicitation: All Phase was the only proposal among the lowest-priced group that received a substantial confidence rating:

Offeror A, Somewhat Relevant/Satisfactory PP, $2,450,362.00

Green Earthworks (Protester), Somewhat Relevant/Limited confidence PP, $2,487,585.86

All Phase (Awardee), Very Relevant/Substantial Confidence PP, $2,917,515.93

It appears that GAO is saying, no tradeoff was necessary because the RFP said that award would go to the proposal with Substantial Confidence. GAO wrote, "Additionally, to the extent the SSA made a tradeoff decision, we find the source selection decision here to be reasonable." Then GAO goes on to cite FAR 15.308 ("Source selection decisions must be documented, and include the rationale and any business judgments and tradeoffs made or relied upon by the SSA"). However, if you search for the RFP No. FA4620-14-R-B002, it actually shows the RFP was not done under FAR 15, but rather, it was a FAR Part 13 Simplified Acquisition.

Link to the solicitation on FBO:

https://www.fbo.gov/?s=opportunity&mode=form&id=cdce9fdbdd905d584d9fee2ea7911ba1&tab=core&_cview=1

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Yes.

The solicitation was clear, wasn't it? And the agency followed the solicitation? That's good!

Any protest on the evaluation approach should have been raised before proposals were due. Are you wondering if the GAO would have sustained a protest on the evaluation approach if the protest had been filed before the date set for receipt of proposals?

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Govt2310 writes, "It appears that GAO is saying, no tradeoff was necessary because the RFP said the award would go to the proposal with Substantial Confidence."

I don't read the decision as suggesting that the SSA did not conduct a trade-off in deciding among the lowest priced offerors. Rather, the decision states, "In the award decision, the SSA specifically determined that All Phase's 'substantial confidence' past performance outweighed the cost savings associated with the lower proposed prices of other offerors." In other words, the SSA considered all offers lower in price to the awardee's and found the higher confidence warranted the price premium in each case.

As to the absence of a trade-off between the successful offeror and any higher priced offeror with the same past performance confidence rating (not the issue in the protest, since the protester proposed a lower price), the RFP seems to elevate the rating (which is simply an aid to decision-making) to a high level. The RFP is essentially saying that no increase in confidence (above the minimum necessary to achieve the highest rating) would ever be worth any price premium. I express no opinion as to whether this would withstand GAO scrutiny if the terms of the solicitation were protested prior to the deadline for receipt of proposals. That said, I don't know off the top of my head what regulation it violates.

Edit: If I'm reading the solicitation properly, the offers considered under the trade off is bounded on the low end of price by the lowest priced proposal and can be (or ended up being) bounded at the high end of price by the lowest priced proposal to receive a past performance rating of "Substantial Confidence." The SSA then conducts a trade among those offers.

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Govt2310 writes, "It appears that GAO is saying, no tradeoff was necessary because the RFP said the award would go to the proposal with Substantial Confidence."

I don't read the decision as suggesting that the SSA did not conduct a trade-off in deciding among the lowest priced offerors. . . . "

Jacques,

The GAO decision says, "Additionally, to the extent the SSA made a tradeoff decision, we find the source selection decision here to be reasonable." My concern is, why didn't the GAO attorney simply write, "The SSA made a tradeoff decision, and we find it reasonable"? Why say, "to the extend the SSA made a tradeoff decision"? That seems to imply that there was no tradeoff, and that was ok, because the solicitation said that award would go to the offeror with "Substantial Confidence" and reasonable price.

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Jacques,

The GAO decision says, "Additionally, to the extent the SSA made a tradeoff decision, we find the source selection decision here to be reasonable." My concern is, why didn't the GAO attorney simply write, "The SSA made a tradeoff decision, and we find it reasonable"? Why say, "to the extend the SSA made a tradeoff decision"? That seems to imply that there was no tradeoff, and that was ok, because the solicitation said that award would go to the offeror with "Substantial Confidence" and reasonable price.

govt2310, this is a commercial item/service best value acquisition, but not a Trade-off process under Part 15. see ADDENDA TO 52.212-2 - BASIS FOR CONTRACT AWARD

This is a competitive best value source selection in which competing offerors past performance will be evaluated on a basis approximately equal to price..

.

From paragraph D.:

...if the overall lowest priced offeror is judged to have a Substantial Confidence past performance rating, that offer represents the best value for the Government and the evaluation process will stop with that initial group of offers. Award shall be made to the lowest priced offeror without further consideration of any other proposals.

From paragraph E (Bold added):

"In the event that the Government does not make an award pursuant to paragraph D above, the Government reserves the right to award a contract to other than the lowest priced offeror if the offeror is judged to have a performance confidence assessment of Unknown Confidence or higher. If the lowest priced offeror is not judged to have a Substantial Confidence performance assessment, the results of the confidence assessment of the next lowest priced offeror will be reviewed. The process will continue (in order by price) until an offeror is judged to have a Substantial Confidence performance assessment or until all offerors within that group have been reviewed. If no offerors within that group receive a Substantial Confidence rating, the Source Selection Authority shall determine if additional groups of offers should be evaluated. The Source Selection Authority would then make an integrated assessment best value award decision.

I don't see where a "trade-off decision" under Part 15 is required, but rather some type of "integrated assessment best value award decision". Perhaps that was what the GAO was alluding to in the "to the extent..." comment.

The solicitation also said that they could award to a firm with confidence assessment of "Unknown Confidence" or higher.

It would seem that the KO had some flexibility but also that the KO should also consider the price differences to some degree in his/her decision, since it did state that "competing offerors past performance will be evaluated on a basis approximately equal to price."

The whole basis of award Paragraph appears to be poorly written, confusing and not totally coordinated

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Govt2310:

I think the GAO decision is clear that the SSA did conduct a trade-off that included a subset of all offers; namely, all offers lower in price than the apparent successful offeror. I suspect that the language, "to the extent the SSA made a tradeoff decision" relates to the fact that the SSA, consistent with the terms of the solicitation, did not conduct a tradeoff among any offers higher in price than the lowest price offer that received the highest past performance rating, "Substantial Confidence." The protester did not have a higher price than the apparent successful offeror, so there is no way the government's failure to evaluate higher price offers could have resulted in prejudice to the protester. So, even if the GAO attorney found the source selection technique objectionable, that wasn't a protest allegation before him.

Joel:

I think when the decision is talking about a "best-value tradeoff," it is simply quoting the solicitation. See first full paragraph on page 2. While you may find fault with the reference to FAR 15.308 on the bottom of page 9 of the decision, I hope you do not disagree with the sentence that preceded the citation; namely, that even for commercial items, 'source selection decisions must be documented and include the rationale and any business judgments and tradeoffs made or relief upon by the source selection authority.'

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.

Joel:

I think when the decision is talking about a "best-value tradeoff," it is simply quoting the solicitation. See first full paragraph on page 2. While you may find fault with the reference to FAR 15.308 on the bottom of page 9 of the decision, I hope you do not disagree with the sentence that preceded the citation; namely, that even for commercial items, 'source selection decisions must be documented and include the rationale and any business judgments and tradeoffs made or relief upon by the source selection authority.'

Jacques, I couldn't find the term "best-value trade-off" in the solicitation at https://www.fbo.gov/utils/view?id=928f9e488ce1c2470d452af513ab6ea9

I only found the term "best value". Indeed there are a few references to Part 15 in the solicitation, but I didn't see "trade-off". The evaluation and basis of award paragraphs described the process. Paragraph E under ADDENDA to 52.212-2, describes the method to select the contractor if the lowest priced proposal didn't have a "substantial confidence" rating under the past performance assessment process described in the solicitation. At most, the last sentence alludes to some type of "integrated best value assessment" in the event that award couldn't be made to a firm within the initially selected increment of firms established by ranking price in some type of increments.

The price evaluation method is not too clear to me or as to what is considered to be the limit of reasonableness or how to skip over a firm within the price ranking when looking for a firm with a substantial confidence assessment.

52.212-2

(a) ...Past Performance is approximately equal to Price when being evaluated.

( b ) Options. The Government will evaluate offers for award purposes by adding the total price for all option CLINs to the total price for the Base CLIN of this requirement. The Government may determine that an offer is unacceptable if the option CLIN prices are significantly unbalanced. Evaluation of option CLINs shall not obligate the Government to exercise the option CLIN(s).

ADDENDA to 52.212-2

This is a competitive best value source selection in which competing offerors past performance will be evaluated on a basis approximately equal to price. By submission of its offer in accordance with the instructions provided in clause 52.212-1, Instructions to Offerors, the offeror accedes to the terms of this RFP and all such proposals shall be treated equally except for their prices and past performance.

A. PRICE. Initially, the proposals will be ranked according to the total proposed price identified on the Pricing Schedules. For the purpose of efficiency, offers will be logically grouped into increments, from lowest to highest in total price and the price analysis will begin with the lowest priced group of offers. After determining that the individual line items are reasonable, the proposed line item pricing will be added to confirm the total amount for each offer. At this point the past performance evaluation of the lowest priced group of offers will be evaluated.

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Guest Vern Edwards

The real question is why didn't the CO call the protester to ask for the missing information about its past performance. It gave that protester a "limited confidence" rating based at least in part due to a lack of info. This was a simplified acquisition. The rules in FAR 15.306 did not apply. The government might have saved $429,930 if the CO has asked the protester for more info.

Aren't we broke? Didn't we shut the government down a while ago? Doesn't DOD need money? Wasn't there a small project sitting on a shelf somewhere that could have been paid for with the extra money? Does anyone doubt that a buyer in the commercial sector would have called or emailed to ask for the missing info before deciding to pay a higher price?

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The real question is why didn't the CO call the protester to ask for the missing information about its past performance. It gave that protester a "limited confidence" rating based at least in part due to a lack of info. This was a simplified acquisition. The rules in FAR 15.306 did not apply. The government might have saved $429,930 if the CO has asked the protester for more info.

Aren't we broke? Didn't we shut the government down a while ago? Doesn't DOD need money? Wasn't there a small project sitting on a shelf somewhere that could have been paid for with the extra money? Does anyone doubt that a buyer in the commercial sector would have called or emailed to ask for the missing info before deciding to pay a higher price?

Agree.

I also don't quite understand why this service for asbestos and lead abatement and demolition is considered to be a "commercial item" ("commercial" service) other than for convenience of the solicitation and award process.

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Not surprising for an organization that told everyone that the contract f9r the new tanker is "fixed price" without explaining that it is really Fixed-Price Incentive. Then Boeing promptly announced within a few months of award that there would a multi-hundred million dollarr overrun for the first four planes. I'm guessing that the company's share of the overrun was - at that time - considered worth it if it kept Airbus out of the U.S.*

Didn't the AF also once consider buying the C-130 J as a commercial item?

*Perhaps the last laugh goes to Airbus. They decided to build an aircraft assembly plant in Mobile, AL. anyway to produce planes for commercial sales. The projected production is much larger than the Tanker contract would have been.

Sorry for rambling on about my former Service. My own organization is apparently responsible for perhaps the largest case of a broken up criminal corruption ring of government and contractor employees that involved bribes, kickbacks, etc.

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Not going back to GEC regarding their past performance is part of the "because I don't have to" mentality of Federal contracting. Our contract specialists are encouraged to make awards without discussions because it is faster, risk adverse, and good enough. Yet, I am hard pressed to think of an industry where accepting the first offer is considered a good business practice.

I would like to point out that abatement and demolition services are routinely procured as commercial items by DOD. FBO is rife with these types of acquisitions. It is faster and reduces the amount of information needed from the prospective contractor. It is essentially the same circumstances as determining the C-130J a commercial item. The Air Force did not just consider buying the C-130J as a commercial item... the Air Force bought them from Lockheed Martin as a commercial item. The DOD IG released a scathing report about it (here: http://www.dodig.mil/audit/reports/fy04/04-102.pdf):

"The Air Force used a commercial item acquisition strategy that was unjustified. The Air Force bought the C-130J as a commercial item needing minor modification. The contracting officer did not support the basis for his decision. Even if the commercial derivative is substantially the same aircraft as the C-130J, the fact that Lockheed Martin has been unable to design, develop, or deliver the contracted C-130J aircraft for 8 years casts serious doubt on the commercial nature of the purchase. The increase in costs [more than double] to acquire the C-130J aircraft shows that the Government, not Lockheed Martin, bears the risk for the development of the C-130J aircraft. Even though Lockheed Martin has sold previous C-130 models commercially and currently offers the commercial derivative of the C-130J for commercial sales, there have been no sales of the C-130J commercial derivative aircraft (the L-100J)."

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Joel,

My point is a simple one. When read as a whole, the solicitation seems to contemplate a type of trade-off between past performance and price (if the lowest priced offer does not receive a "Substantial Confidence" past performance rating). The solicitation provides, "Past performance is approximately equal to Price when being evaluated." (Why state the relative importance is there is no potential for a trade?) Likewise:

* "This is a competitive best value source selection in which competing offeror's past performance will be evaluated on a basis approximately equal to price."

* Proposals shall be treated equally except for their prices and past performance

* The evaluation scheme provided for multiple past performance ratings (not merely, pass or fail)

* The "Government reserves the right to award a contract to other than the lowest priced offeror if the offeror is judged to have a performance confidence assessment of "Unknown Confidence" or higher."

* "The Source Selection Authority would then make an integrated assessment best value award decision."

I don't think the solicitation requires that, in order to be eligible for award, an offeror must receive a past performance rating of "Substantial Confidence." If it did, a lot of the language of the solicitation makes no sense. Rather, I think that the field of offers that must be considered in the trade-off consist of all of the lowest priced offers, and that once an offer receives a "Substantial Confidence" rating, the field of offers to be considered in the trade-off analysis is set.

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Guest Vern Edwards

I don't have a problem with thinking of demolition and abatement as a commercial item. That kind of service is routinely purchased in the commercial sector. The problem is that the FAR Part 12 clause set is not suitable for such a service, just as it is not suitable for construction services. They must be tailored to reflect the terms used in commercial contracts for the service, which I'm willing to wager include a changes clause. There are procedures in Part 12 for such tailoring.

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Guest Vern Edwards

When read as a whole, the solicitation seems to contemplate a type of trade-off between past performance and price (if the lowest priced offer does not receive a "Substantial Confidence" past performance rating).

I don't think that's right. Here's what the solicitation said, on pages 19 and 20:

Initially, the proposals will be ranked according to the total proposed price identified on the Pricing Schedules. For the purpose of efficiency, offers will be logically grouped into increments, from lowest to highest in total price and the price analysis will begin with the lowest priced group of offers... If the lowest priced offeror is not judged to have a “Substantial Confidence” performance assessment, the results of the confidence assessment of the next lowest priced offeror will be reviewed. The process will continue (in order by price) until an offeror is judged to have a “Substantial Confidence” performance assessment or until all offerors within that group have been reviewed. If no offerors within that group receive a “Substantial Confidence” rating, the Source Selection Authority shall determine if additional groups of offers should be evaluated. The Source Selection Authority would then make an integrated assessment best value award decision.

Emphasis added.

In other words, if the lowest priced offeror was not rated substantial confidence, the agency would work its way through the lowest-priced group until it found an offeror that was, at which point it would make the award. If none in the lowest-priced group was rated substantial confidence, the agency might then do a tradeoff analysis ("integrated assessment") or something else.

It was a simplified acquisition. Nothing wrong with that approach.

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I'm not sure I understand how the agency would determine the successful offeror under Vern's interpretation. If the only time an "integrated assessment" is to occur is if no offer is rated "Substantial Confidence," does that mean the government is required to award to an offeror who is rated "Substantial Confidence," regardless of whether that higher confidence is worth the price premium? What makes up the "lowest priced group"?

So, given my interpretation and Vern's interpretation, I wonder whether the GAO would consider the solicitation ambiguous, and whether it would have considered that ambiguity patent or latent. Regardless, I hope government folks responsible for drafting solicitations take to heart the need for clarity in drafting.

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Guest Vern Edwards

Jacques:

The language of the RFP is pretty plain. It says:

If the lowest priced offeror is not judged to have a “Substantial Confidence” performance assessment, the results of the confidence assessment of the next lowest priced offeror will be reviewed. The process will continue (in order by price) until an offeror is judged to have a “Substantial Confidence” performance assessment or until all offerors within that group have been reviewed.

What don't you understand about that?

As for how the agency will determine who is and is not in the lowest price "increment," the RFP says they'll do it "logically." What do you want -- an algorithm? They'll use judgement, as they are entitled to do under the law. How's that different from determining a competitive range under FAR 15.306( c ) or its predecessors? Really, all they have done is said that they'll award to the lowest-priced, technically acceptable among the lowest priced increment, with the standard for technically acceptability being "substantial confidence."

You're doing worse than nitpicking. I don't think the RFP is unclear, and I think the agency did a good job of conducting a simplified acquisition, except for failing to make a telephone call or sending an email about the protester's past performance information. The commercial items issue is nothing. The called it that so they could use Subpart 13.5.

What the protester should have done is protested that they should have been referred to SBA for a certificate of competency, on grounds that anything less than "substantial confidence" was effectively a determination of unacceptability/nonresponsibility.

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  • 1 month later...

QUESTION:

Can an agency just make award to the highest-rated, highest-priced proposal without explaining the "tradeoff"?

I saw a recent GAO decision that makes me wonder about this. In Green Earthworks Construction, Inc., B-410724 et al., Feb. 2, 2015, the Air Force issued a solicitation for abatement services for hazardous materials.

Here is the link to the GAO decision:

http://www.gao.gov/assets/670/668348.pdf

The RFP stated that there were only TWO EVALUATION FACTORS: PAST PERFORMANCE and PRICE. Although it did not use the phrase "Performance Price Tradeoff (PPT)," it appears that this was some variation on PPT. The proposals would be ranked from low to high for price. Price analysis would only be conducted on the "lowest-priced proposals." Next, the agency would evaluate for Past Performance. If the lowest-priced proposal also received a "Substantial Confidence" PP rating, then award would be made to that offeror, Otherwise, the PP assessment would continue, beginning with the next lowest-priced proposal, until an offeror with a substantial confidence rating was identified. If that didn't work out, then the SSA was to determine whether additional higher-priced groups of proposals should be considered and to then conduct a "best-value tradeoff."

Green Earthworks challenged the source selection decision. GAO denied that challenge, finding that the awardee, All Phase, merited award under the stated terms of the solicitation: All Phase was the only proposal among the lowest-priced group that received a substantial confidence rating:

Offeror A, Somewhat Relevant/Satisfactory PP, $2,450,362.00

Green Earthworks (Protester), Somewhat Relevant/Limited confidence PP, $2,487,585.86

All Phase (Awardee), Very Relevant/Substantial Confidence PP, $2,917,515.93

It appears that GAO is saying, no tradeoff was necessary because the RFP said that award would go to the proposal with Substantial Confidence. GAO wrote, "Additionally, to the extent the SSA made a tradeoff decision, we find the source selection decision here to be reasonable." Then GAO goes on to cite FAR 15.308 ("Source selection decisions must be documented, and include the rationale and any business judgments and tradeoffs made or relied upon by the SSA"). However, if you search for the RFP No. FA4620-14-R-B002, it actually shows the RFP was not done under FAR 15, but rather, it was a FAR Part 13 Simplified Acquisition.

Link to the solicitation on FBO:

https://www.fbo.gov/?s=opportunity&mode=form&id=cdce9fdbdd905d584d9fee2ea7911ba1&tab=core&_cview=1

I noticed this yesterday while perusing simplified acquisition procedures, which probably would have answered the original question. 👼

13.106-2 ( b ) (4) For acquisitions conducted using a method that permits electronic response to the solicitation, the contracting officer may

(i) After preliminary consideration of all quotations or offers, identify from all quotations or offers received one that is suitable to the user, such as the lowest priced brand name product, and quickly screen all lower priced quotations or offers based on readily discernible value indicators, such as past performance, warranty conditions, and maintenance availability; or

(ii) Where an evaluation is based only on price and past performance, make an award based on whether the lowest priced of the quotations or offers having the highest past performance rating possible represents the best value when compared to any lower priced quotation or offer.

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