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An agency is looking to award multiple BPAs under a federal supply schedule using a multi-step selection process. Here are the evaluation factors: 

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Factor 1 - Past Experience

Factor 2 – Technical Approach

Factor 3 – Management Approach

Factor 4 – Coding Challenge exercise

Factor 5 – Price

Here is the evaluation process:

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Multi-Step Evaluation

The Government intends to use a three step approach to evaluate offers under FAR 8.405-3, as follows:

(1) First Step Consideration. The Government will consider all offerors using Factor 1. Those offerors rated as “high confidence” for Factor 1 will be invited to advance to the second step consideration. If necessary to provide for adequate competition in the second step, the Government may select one or more offers rated as “some confidence” for Factor 1 to proceed to the second step consideration.  The Government will determine the appropriate number of Offerors for Step 2 that is most beneficial to the Government.  No additional considerations will be given to the small business size standard of any offeror at this step.

(2) Second Step Consideration. The Government will continue its consideration by evaluating Factors 2 and 3. The Government intends to select offerors based on a trade-off of Factors 1, 2, and 3 to proceed to the third step consideration. For this step, all three factors are of relatively equal importance.  No additional considerations will be given to the small business size standard of any offeror at this step.

(3) Third Step Consideration. The Government will continue its consideration by inviting coding challenge exercises (Factor 4) and evaluating Factor 5, Price. The Government intends to select the best value offers for BPA awards, based a trade-off of Factors 1, 2, 3, 4, and 5. For this step, all five factors are of relatively equal importance, and the non-price factors (when combined) are more important than the price factor.  BPA awards made in the third step will be on a non-set-aside basis (ie unrestricted) and open to small and/or large businesses.

Set-Aside Portion BPA Awards

After all Non-set-aside awards have been made in Step 3, the Contracting Officer will negotiate with eligible small business concern offerors who were selected to continue to Step 3, but did not receive a BPA award on a non-set-aside basis.  These offerors must represent as a small business under the NAICS code of the COMET BPA.

  The Government will make additional small business BPA awards using the same best value tradeoff process among the remaining Step 3 small business concerns offerors.  The amount of non-set-aside awards will be at the Government’s discretion.

I note that Factor 5 - Price - is considered only in Step 3.

I also note the FAR coverage of BPAs:

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8.405-3 – Blanket Purchase Agreements (BPAs).

(a) Establishment.

(1) Ordering activities may establish BPAs under any schedule contract to fill repetitive needs for supplies or services. Ordering activities shall establish the BPA with the schedule contractor(s) that can provide the supply or service that represents the best value.

(2) In addition to price (see 8.404(d) and 8.405-4), when determining the best value, the ordering activity may consider, among other factors, the following:

I believe the the agency must evaluate Price in Steps 1 and 2 as well as in 3.

Thoughts?

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FAR 8.405-3(a)(2) does seem to require considering price when making the best value decision, but in your case, the best value decision will be made in Step 3 where price is considered.  If you will answer the following questions, we will be better able to address your question.

QUESTION 1:  Why do you think price must be evaluated in Step 1 and Step 2 (and again in Step 3)?

QUESTION 2:  What is your role in the procurement?  [contracting officer, reviewer, observer, prospective offeror...]

QUESTION 3:  Is the solicitation already on the street?

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1 hour ago, ji20874 said:

QUESTION 1:  Why do you think price must be evaluated in Step 1 and Step 2 (and again in Step 3)?

Twenty years ago, the GAO issued a decision against Commerce for its failure to consider price while making an “initial screening” via oral presentations without considering price. After Commerce conducted the oral presentations, it reduced the competitive field to the offerors that were deemed highly competitive (i.e., attended oral presentations).

The GAO stated that 

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…, we disagree with the agency that it could ignore price in its initial screening evaluation. Cost or price to the government must be included in every RFP as an evaluation factor, and agencies must consider cost or price to the government in evaluating competitive proposals. /12/ 41 U.S.C. Sec. 253a(c)(1)(B) (1994); FAR Sec. 15-304(c)(1); S.J. Thomas Co., Inc., B-283192, Oct. 20, 1999, 99-2 CPD Para. at 3.

This requirement means that an agency cannot eliminate a technically acceptable proposal from consideration for award without taking into account the relative cost of that proposal to the government. SCIENTECH, Inc., B-277805.2, Jan. 20, 1998, 98-1 CPD Para. 33 at 7.

Kathpal Technologies, Inc.; Computer & Hi-Tech Management, Inc.; B-283137.3; B-283137.4; B-283137.5; B-283137.6; Dec 30, 1999.

While the BPAs are awarded under the FAR 8.4, not FAR 15.3, procedures, both 8.405-3 and 15.304 require consideration of price in every best value determination or source selection. I believe GAO would apply the principle set out in Kathpal decision to the BPA source selection.

1 hour ago, ji20874 said:

QUESTION 2:  What is your role in the procurement?  [contracting officer, reviewer, observer, prospective offeror...]

Observer.

1 hour ago, ji20874 said:

QUESTION 3:  Is the solicitation already on the street?

A draft RFQ has been issued by GSA.

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Re:  Question 1.  In much more recent history, the GAO ruled that it was not necessary to consider price in every phase of a multi-phase acquisition.  A key difference between them and now is that no competitive range is being formed.  I can’t cite the case right now, but this suffices for this discussion.  

Re:  Question 2.  I have seen this downselect process a number of times, including a few with protests to the GAO, with no objections.

Re:  Question 3.  If any prospective offer or objects, they will be able to raise their objection.

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19 minutes ago, ji20874 said:

 I can’t cite the case right now, but this suffices for this discussion.

You may be correct, but I must see the GAO decision to be persuaded. Please provide the cite.

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Do you realize that while you wrote the following--

  • "both 8.405-3 and 15.304 require consideration of price in every best value determination or source selection"

you seem to actually be insisting--

  • "both 8.405-3 and 15.304 require consideration of price in every best value determination or source selection [step of a multiple-step evaluation process]"

There is a stretch between these.  I don't know how one reaches from the first to the second.

The GAO decision in Sevatec, Inc. et al., B-413559.3 et al, Jan. 11, 2017, and the Court of Federal Claims decision in Octo Consulting Group, Inc. v. United States, 117 Fed Cl. 334 (2014), both indicate that your stretch is error.  Perhaps these can persuade.

Why is it essential that you be persuaded, when you aren't a participant in the acquisition?  Can it be sufficient that the contracting officer and others involved in the process, along with the prospective offerors, are satisfied with the approach?  In light of the Guiding Principles for the Federal Acquisition System in FAR 1.102, it seems to me that we must allow others to practice in a way that might differ from our own preferred practices.

 

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36 minutes ago, ji20874 said:

The GAO decision in Sevatec, Inc. et al., B-413559.3 et al, Jan. 11, 2017, and the Court of Federal Claims decision in Octo Consulting Group, Inc. v. United States, 117 Fed Cl. 334 (2014), both indicate that your stretch is error.

Does this observation on the decision affect your conclusion?

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Next, the GAO addressed the need to consider price. GAO noted that in a tradeoff process, the agency cannot so minimize the impact of price as to make it a “nominal evaluation factor.” However, this solicitation involved no comparison of an offeror’s price relative to the benefits of its proposal. GAO concluded that here, the “relatively low importance of price in an evaluation scheme that does not contemplate tradeoffs” was unobjectionable. Further, because the selection process considered the price of every awardee and rejected those firms that lacked fair and reasonable pricing, GSA has satisfied the requirement to consider price to the government.

GAO’s ruling in Servatec was consistent with the earlier Court of Federal Claims ruling in Octo. There, the protester challenged the award of 43 contracts in the One Acquisition Solution for Integration Service-Small Business (“OASIS”). The solicitation appeared to be very similar to Servatec, and stated that “The best value basis for awards will be determined by the Highest Technically Rated Offerors with a Fair and Reasonable Price.” [] “Once the top 40 and/or top 20 highest scored offerors have been evaluated and validated, the [GSA] will then check to verify that these offerors have proposed fair and reasonable pricing [or eliminate them].”

The protester alleged that GSA failed to consider price, but the Court disagreed and denied the protest. It noted that even if its price had not been considered, Octo had already been eliminated from the competition, and there was no requirement to consider its price. The government had properly not conducted a price evaluation of those offers that failed to meet the technical threshold set in the solicitation.

The court further noted that if the solicitation had called for a traditional tradeoff analysis, it “could have been arbitrary and capricious not to consider price” but under the circumstances the evaluation was reasonable.

TAKEAWAYS: Agencies are now permitted to use a non-tradeoff evaluation scheme based solely on technical merit and fair and reasonable pricing. Offerors may be eliminated from consideration regardless of price, if they are technically not in the highest “bracket” set forth in a solicitation.

http://publiccontractinginstitute.com/gao-approves-new-best-value-method-highest-technically-rated-with-fair-and-reasonable-price-court-of-federal-claims-agrees/

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Any assertion that price must be considered in every step in a multi-step evaluation process is also proven false by the FAR-approved process of two-step sealed bidding, where price is not considered in the first step.  See FAR subpart 14.5.

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deleted.  This is apparently a BPA action under established FSS under 8.404 and 8.405.

 

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35 minutes ago, ji20874 said:

Any assertion that price must be considered in every step in a multi-step evaluation process is also proven false by the FAR-approved process of two-step sealed bidding, where price is not considered in the first step.  See FAR subpart 14.5.

Years ago, I did a number of 2 step procurements. The FAR 14 2 step process is an equivalent of the LPTA process. It does not involve a trade off.

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2 hours ago, ji20874 said:

Any assertion that price must be considered in every step in a multi-step evaluation process is also proven false by the FAR-approved process of two-step sealed bidding, where price is not considered in the first step.  See FAR subpart 14.5.

ji,  that is a stretch.  The two-step sealed bidding procedure has long required that those firms who submit ACCEPTABLE technical proposals in step one are allowed to compete in step two.  There is no provision for shortlisting those firms in 14.5.  

And, (as distinguished between 14.5 and the schema in this thread) price is the discriminator among conforming offers (technical and bid prices)  in Step two to select the apparent winner. There is no trade-off between higher quality or qualifications and price.

In two-step sealed bidding, the government goes through the responsibility determination before awarding a contract to the lower bidder with an ACCEPTABLE technical proposal.

“14.503-2   Step two.

(a) Sealed bidding procedures shall be followed except that invitations for bids shall—

(1) Be issued only to those offerors submitting acceptable technical proposals in step one.”

There is little relevance between the two acquisition methods. 

 

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I  misread the initial post.  It said that an agency is using the FSS to establish multiple BPA’s (blanket purchase agreements).  

 

 

 

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For some acquisitions, a down-select process can work well.  I have seen it done many times, with much success. 

It allows offerors to save on bid and proposal costs, because they only have to develop complete proposals (including complete pricing) if they make it to the second step (of a two-step process).  And offerors who don't make it to the second step get their bad news sooner, and can focus on other opportunities.

It also saves the Government time, because the detailed evaluation and tradeoff can be done for fewer offerors, rather than a complete evaluation of every offeror.

If price is the least important factor, and if good market research has been done, it can make sound business sense to leave the price evaluation to the last step, among only those offerors who have made it through the down-select process to the last step.  A practice (such as a down-select) is permissible under the guiding principles in FAR 1.102 when it uses sound business judgment and is otherwise not prohibited anywhere.

If a contracting officer is uncomfortable with a down-select process, he or she doesn't have to use it.  But if a contracting officer thinks it makes sense, and all the other players in the process are okay with it, then I'm also okay with it.

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21 minutes ago, ji20874 said:

If price is the least important factor, and if good market research has been done, it can make sound business sense to leave the price evaluation to the last step, among only those offerors who have made it through the down-select process to the last step.  A practice (such as a down-select) is permissible under the guiding principles in FAR 1.102 when it uses sound business judgment and is otherwise not prohibited anywhere.

If a contracting officer is uncomfortable with a down-select process, he or she doesn't have to use it.  But if a contracting officer thinks it makes sense, and all the other players in the process are okay with it, then I'm also okay with it.

Based upon GAO decisions, if your source selection process is trade off, it appears you cannot down-select without considering price in each step.

 

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1 hour ago, ji20874 said:

For some acquisitions, a down-select process can work well.  I have seen it done many times, with much success. 

It allows offerors to save on bid and proposal costs, because they only have to develop complete proposals (including complete pricing) if they make it to the second step (of a two-step process).  And offerors who don't make it to the second step get their bad news sooner, and can focus on other opportunities.

It also saves the Government time, because the detailed evaluation and tradeoff can be done for fewer offerors, rather than a complete evaluation of every offeror.

If price is the least important factor, and if good market research has been done, it can make sound business sense to leave the price evaluation to the last step, among only those offerors who have made it through the down-select process to the last step.  A practice (such as a down-select) is permissible under the guiding principles in FAR 1.102 when it uses sound business judgment and is otherwise not prohibited anywhere.

If a contracting officer is uncomfortable with a down-select process, he or she doesn't have to use it.  But if a contracting officer thinks it makes sense, and all the other players in the process are okay with it, then I'm also okay with it.

The FSS holders don't appear to be saving any bid and proposal costs here, if they have to develop complete technical and price proposals with their initial submissions.

Note that there are 2 trade-off evaluation processes involved, although step 1 might result in a small short-list.

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1 hour ago, napolik said:

 

Based upon GAO decisions, if your source selection process is trade off, it appears you cannot down-select without considering price in each step.

 

Is this a "source selection" process?  

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Joel,

Even though the example in the original posting uses the word "tradeoff" in the Second Step Consideration, it seems to me the GAO has been careful to use the term "tradeoff" only in price/technical tradeoff situations.  I think we should follow that lead, and I think the use of the word "tradeoff" in this example (in the Second Step Consideration) is an improvident use of the word.  In the FAR, tradeoff is used only in a price versus technical setting.  In the example in the original posting, the price/technical tradeoff occurs only in the Third Step Consideration.

You're right that a downselect works best when offerors are allowed to submit proposals piecemeal, such as Step 1 proposals from all interested offerors followed by Step 2 proposals from those who are the highest rated from Step 1.  The example in the original posting is not a multi-step submission process; rather, it seems to be a multi-step evaluation process where offerors submit complete proposals and the Government only evaluates pieces as it goes along.  I'm okay with that approach, where price is considered only in the last step and only for those offerors who make it to the last step.

napolik,

Multi-step acquisitions are becoming more common, with consideration of price and price/technical tradeoff in the final step.  I am personally aware of more than a dozen recent multi-step acquisitions where price was submitted in the second or final step, and none of them were protested for this reason (even though the competitive pools contained very sophisticated/savvy/litigious vendors) (this includes Part 15 source selections as well as ordering under Parts 8 and 16).

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23 minutes ago, joel hoffman said:

Is this a "source selection" process?  

Yes, in a generic sense. The process of selecting a source encompasses IFBs, RFPs, and RFQs and leads to the awards of contracts, purchase orders, BPAs, and delivery or task orders.

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18 minutes ago, ji20874 said:

napolik,

Multi-step acquisitions are becoming more common, with consideration of price and price/technical tradeoff in the final step.  I am personally aware of more than a dozen recent multi-step acquisitions where price was submitted in the second or final step, and none of them were protested for this reason (even though the competitive pools contained very sophisticated/savvy/litigious vendors) (this includes Part 15 source selections as well as ordering under Parts 8 and 16).

I haven't seen them, so I cannot confirm or deny the non-evaluation of price in a tradeoff procurement. All I know is the GAO decision (i.e. Kathpal Technologies, Inc.; Computer & Hi-Tech Management, Inc.; B-283137.3; B-283137.4; B-283137.5; B-283137.6; Dec 30, 1999) and the 2017 Public Contracting Institute article.

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napolik,

It's important to not mix case law pertaining to FAR 15 with 8.4.  I don't see this as a FAR 15 procurement where price must be considered in reducing the number of offerors like a competitive range determination.

It seems to me the agency is describing their process to consider and select Schedule holders for BPA awards.  There's no requirement to consider price until agencies get to making their best value selection decisions.  This looks like a process to narrow down the consideration of Schedule number to a manageable number

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GAO has held that Kathpal Technologies and similar cases apply to procurements that use a best value tradeoff approach and thus DO apply to GSA schedule order procurements conducted under FAR Subpart 8.4.  See Cyberdata Technologies, Inc., B-406692, August 8, 2012.  Here is the relevant section of that decision:

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GSA’s “Downsizing” Decision Improperly Ignored Prices

As discussed above, there is little dispute in this record that Cyberdata was excluded from the competition without consideration of its price.  Vendors were specifically advised that the agency “will downsize the quotations to the most favorably evaluated quotations based on the technical quotation only.”  RFQ amend. No. 1, Questions and Answers, at 2.  In addition, the best value determination, submitted as part of the agency report, indicated that in fact “[p]ricing was not used in determining the top twelve (12) most technically favorable quotations.”  Best Value Determination at 1.  Likewise, the contracting officer reports that “[t]he Government used the overall technical ranking to determine which twelve [v]endors would be invited to deliver oral presentations.”  CO’s Statement at 3.

The FAR, however, requires with regard to creating BPAs under the FSS that: “[o]rdering activities shall establish the BPA with the schedule contractor(s) that can provide the supply or service that represents the best value.”  FAR § 8.405-3(a)(1).  Further, the FAR indicates with regard to establishing a BPA that “n addition to price (see 8.404(d) and 8.405-4), when determining best value, the ordering activity may consider [various other enumerated factors.]”  FAR § 8.405-3(a)(2).  Thus, 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.

Moreover, we have previously held that a best value analysis necessarily encompasses consideration of an offeror’s price or cost since, to be meaningful, a best value determination requires a weighing of the value and benefits associated with a firm’s approach against their associated cost to the government.  See TtEC-Tesoro, JV, B-405313, B-405313.3, Oct 7, 2011, 2012 CPD ¶ 2 at 9.  In a best value procurement, it is the function of the source selection authority to perform a tradeoff between price and non-price factors, that is, to determine whether one proposal’s superiority under the non-price factor is worth a higher price.  Even where, as here, price is stated to be of less importance than the non-price factors, an agency must meaningfully consider cost or price to the government in making its selection decision.  See e-LYNXX Corp., B-292761, Dec. 3, 2003, 2003 CPD ¶ 219 at 7.  Thus, before an agency can select a higher-priced proposal that has been rated technically superior to a lower-priced but acceptable one, the decision must be supported by a rational explanation of why the higher-rated proposal is, in fact, superior, and explaining why its technical superiority warrants paying a price premium.  See Coastal Environments, Inc., B-401889, Dec. 18, 2009, 2009 CPD ¶ 261 at 4.

Here, the agency’s elimination of technically acceptable quotations, such as Cyberdata’s, without consideration of their price, was inconsistent with the requirement that price be considered in a best value analysis.  See System Eng’g Int’l, Inc., B-402754, July 20, 2010, 2010 CPD ¶ 167 at 5 (protest sustained where record shows that agency in best value procurement performed tradeoff between two higher-rated, higher-priced quotations, but did not consider the lower prices submitted by other lower-rated but technically acceptable vendors); Coastal Environments, Inc., supra (protest sustained where agency conducted a tradeoff between the two highest-rated, highest-priced proposals, but did not consider the lower prices offered by other lower-rated, but technically acceptable offerors); Kathpal Tech., Inc.; Computer & Hi-Tech Mgmt., Inc., supra, at 9 (agency cannot eliminate a technically acceptable proposal from consideration for award without taking into account the relative cost of that proposal to the government).  We therefore sustain the protest on the basis that GSA failed to evaluate quotations consistent with the FAR requirement that BPAs established with FSS contractors must provide the supply or service that represents the best value.  FAR § 8.405-3(a).

 

 

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  • 2 weeks later...

Civilian,

Don’t get hung on on that decision because it’s not the same.  In that case the government used a down selection process once proposals were revived.  Here we’re looking at a way to consider which GSA Schedule contractor to consider.  It’s the agency established FAR 8.4 ordering scheme

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Formerfed:

I don't think you're reading the decision correctly.  The solicitation included a downselection process that allowed proposals to be eliminated in the first step of the evaluation without any consideration of price.  GAO found that approach to be inconsistent with the requirement in FAR Subpart 8.4 for agencies to make award based on best value. 

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Civilian and napolick,

I apologize for my misreading this and my responses.  I’m wrong in what I said pertaining to this.  

I’m aware of a current agency procurement and assumed we were talking about it.  Now I see they aren’t the same.  In the one I was thinking of, the agency published and issued an RFI seeking past performance, methodology and tools used for Agile development.  They planned on evaluating using factors and they select a manageable number of sources to consider further.  In essence, they had a process that helped decide which GSA Schedule holders to consider further.  They next sent an RFQ for pricing and simulateously had companies perform a mini two week scrum type sprint development exercise and evaluated the code produced.  They plan on selecting a few for BPA award.

I don’t believe the way this is worded they are the same.  I read more into this that there is and confused it with another.  Sorry about my wrong assumption and bad posting.

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