Is Price an Evaluation Factor?

[cdhames]

I realize it may seem evident but I'm somewhat confused. I was reading through FAR 12.602(a) and it reads as such:

(a) When evaluation factors are used, the contracting officer may insert a provision substantially the same as the provision at 52.212-2, Evaluation-Commercial Items, in solicitations for commercial items or comply with the procedures in 13.106 if the acquisition is being made using simplified acquisition procedures. When the provision at 52.212-2 is used, paragraph (a) of the provision shall be tailored to the specific acquisition to describe the evaluation factors and relative importance of those factors.

This seems to imply an option not to use evaluation factors, which seems straightforward enough; but in the absence of evaluation factors, what is there to evaluate? I assume this part of the FAR means to imply that if other factors are used in lieu of just Price, then you can go ahead and use xx provision. It gets more confusing under FAR 12.301©:

When the use of evaluation factors is appropriate, the contracting officer may--

Here again FAR Part 12 seems to imply evaluation factors are not always used. I'm even less confident that Price is to be understood as an Evaluation Factor, and should just be it's own little thing.

However.

In FAR Part 13, Price is commonly referred to as a Factor. (I assume Factor, and Evaluation Factor to be synonymous but maybe I'm wrong?)

FAR 13.106(a)(2):

When soliciting quotations or offers, the contracting officer shall notify potential quoters or offerors of the basis on which award will be made (price alone, or price and other factors ...

FAR 13.106.2( B )(3)

If using price and other factors ...

FAR 12 seems to imply Price alone isn't an Evaluation Factor; and FAR 13 seems to do the exact opposite. So which is it?

Should I assume that when using Price alone, that no evaluation exists, and therefore the use of Evaluation Factors is irrelevant?

[Guest Vern Edwards]

This seems to imply an option not to use evaluation factors, which seems straightforward enough; but in the absence of evaluation factors, what is there to evaluate? I assume this part of the FAR means to imply that if other factors are used in lieu of just Price, then you can go ahead and use xx provision. It gets more confusing under FAR 12.301©:

* * *

Here again FAR Part 12 seems to imply evaluation factors are not always used. I'm even less confident that Price is to be understood as an Evaluation Factor, and should just be it's own little thing.

* * *

FAR 12 seems to imply Price alone isn't an Evaluation Factor; and FAR 13 seems to do the exact opposite. So which is it?

Regulations don't imply things. They say or they don't. FAR Part 12 isn't implying anything. You are inferring things based on the relative adverb "when."

Now, when might a CO not need evaluation factors?

When she is conducting a sole source acquisition.

[cdhames]

Vern,

Thanks for the reply.

I guess my point is that we have the FAR specifically calling out procedures for when Evaluation Factors are used; and yet it doesn't clearly define what an Evaluation Factor is (granted the provision may be used). Why say Evaluation Factor when a phrase like competitive procedures would fit better, if the intent is to distinguish between sole source and competition? I will give your reply some thought.

[metteec]

An evaluation factor is any material consideration that the source selection authority weighs when making his or her award decision.

GAO has routinely held that price is an evaluation factor that agencies must consider for every evaluation, including commercial items purchased. See Cyberdata Technologies, Inc., B-406692 (Aug. 8, 2012) where GSA attempted to award a BPA without considering a Vendor's price in its best value trade off determination.

GAO held "under the FAR, price is the one factor that, at a minimum, must always be considered when determining best value for purposes of establishing a BPA under the FSS ... we have previously held that a best value analysis necessarily encompasses consideration of an offerors price or cost since, to be meaningful, a best value determination requires a weighing of the value and benefits associated with a firms approach against their associated cost to the government. Ultimately, GAO sustained the protest because "the agency's elimination of technically acceptable quotations, such as Cyberdatas, without consideration of their price, was inconsistent with the requirement that price be considered in a best value analysis.

Price and quality have historically been the two required evaluation factors. As a bit of trivia, in 1781, the Contental Congress appointed Robert Morris as the U.S. Army's first superintendent of finances. Morris took a radical approach to acquire revolutionary supplies. He publicized notices in newspapers seeking sources for food, clothing, and munitions at the most favorable price and meeting a certain quality. Morris called this the "cheapest, most certain, and consequently the best mode of obtaining those articles which are necessary." By today's standard, this was our modern day LPTA. For contrast, in 1793, in a British army contract, Mr. Merry, the Chief Examiner of Army Accounts, was awarded the contract to supply coal to the Gibralter Garrison because of his close relationship with the king (Knight, Sustaining the Fleet, 1793-1815: War, the British Navy and the Contractor State).

Thank goodness that price is a mandatory evaluation factor.

[Guest Vern Edwards]

An evaluation factor is any material consideration that the source selection authority weighs when making his or her award decision.

* * *

Thank goodness that price is a mandatory evaluation factor.

Two objections to those comments:

(1) the definition of evaluation factor is tautological, and

(2) the law should be changed so that price need not always be an evaluation factor.

Better definition: An evaluation factor is an attribute (feature, quality, or characteristic) of an offeror or of its offer that contributes value to the government by its presence or its absence. (The first phase of proposal evaluation is determining how much of each factor is present in an offeror or in its offer.)

Price is not always a good factor, because considering it might prompt an offeror to propose an unsupported or unrealistic amount. Thus, for example, when selecting a contractor for the design and development of a weapon system, an IT system, or for other kinds of long-term complex services for which there is a high level of cost uncertainty, it might be better to select the contractor on the basis of its qualifications and/or ideas and leave price to be negotiated one-on-one, after selection, and under conditions that would promote settling on a realistic amount after airing of all performance issues and sources of risk. That approach would be similar to the architect-engineer selection process, and it would be appropriate to apply it to certain other acquisitions. That's why I argue a change to CICA.

This is 2015, not 1781, and we're buying very different kinds of stuff than they did in the 18th Century.

[Boof]

Price is irrevalent on large, complicated multiple award IDIQ service contracts. The price is determined in the task order competitions. Yet due to the FAR, we waste time setting up elaborate pricing schemes to be evaluated that everyone knows don't mean anything. And then we get protested on the meaningless price evaluation. (not meaningless to a losing offeror) Duh!

[metteec]

Hi Vern, can you elaborate on the definition that you provided? I would have thought you were describing a strength. An evaluation factor is a metric or standard to which the source selection authority compares the offer's "attributes... that contributes value to the government from their presence or absence" in a risk-based analysis.

[Guest Vern Edwards]

An evaluation factor is what I said it is. It is something an agency wants, some quality of an offeror, like experience or favorable past performance or understanding of the work, or of its offer, such as acceptability, proposed product reliability, proposed date of delivery, or skill of proposed key personnel. You seem to like abstract terms like "metric" or "standard," but those are just substitutes for "factor" and do not explain what a factor is. A factor is some feature, quality, or characteristic that you want, because it contributes value through its presence, or don't want, because its presence detracts from value. Risk is a consequence of the degree to which attributes are present or not.

When you state the evaluation factors in the solicitation, you state what qualities you want in the offeror and in its offer. When you make tradeoffs, you tradeoff some of one quality in order to get more of another.

Once you have identified the factors -- the qualities you want in the offeror and in its offer -- you must then develop a scale on which to measure each, so that you can determine and state the degree to which each factor is present or absent.