1. Source Selection Procedures
Update for the Procurement Division of the National Defense Industrial Association
October 12, 2016
1/2/2019

2. Overview Purpose Background Document Structure Major Changes
Applicability and Waivers
Best Value Continuum
LPTA
Subjective Tradeoff
VATEP
VATEP Example
1/2/2019

3. A Guide to Help You Think
Purpose
Provides the DoD procedures for conducting competitively negotiated source selections
a.k.a
A Guide to Help You Think
1/2/2019

4. Background
Updates March 2011 Source Selection Procedures (SSP) to incorporate Better Buying Power initiatives
Better define value in “best value” competitions
When Lowest Price Technically Acceptable (LPTA) is used, define Technically Acceptable to ensure needed quality
Encourage industry participation
Decision made to review entire document
Reviewed by USD(AT&L), DoD OGC, Service representatives, PEO/PM Focus Group, other Defense Agencies, DARS
1/2/2019

5. Document Structure Chapter 1 – Purpose, Roles, and Responsibilities
Applicability
Waivers
Best Value Continuum
Source Selection Team Roles and Responsibilities
Chapter 2 – Pre-Solicitation Activities
Peer Reviews and Market Research
Source Selection Plan
Develop Request for Proposals
Chapter 3 – Evaluation and Decision Process
Evaluation Activities
Documentation of Initial Evaluation Results
Award without Discussions
Competitive Range Decision Document
Discussion Process
Documentation of Final Evaluation Results
Best Value Decision
Source Selection Decision Document
Debriefings
Integrating Proposal into Contract
Chapter 4 – Documentation Requirements
Chapter 5 – Definitions
Appendix A – Debriefing Guide
Appendix B – Tradeoff SSP
Appendix C – LPTA SSP
1/2/2019

6. Major Changes Adds appendix on Tradeoff Source Selection Process
Refines technical acceptability criteria when using LPTA
Includes best practices obtained through peer reviews
Encourages hybrid and tailored source selections
“There is simply no end to the level of complexity we are willing to drive into any source selection.” --Richard Ginman
1/2/2019

7. Major Changes (Cont’d)
Modifies Rating Methodologies within FAR constraints
“Strengths” applicable to evaluation of technical approach, not risk
“Weaknesses” applicable to evaluation of risk, not technical approach
Better defines descriptions of adjectival ratings
Reduces redundancy
Easier for evaluators to distinguish between ratings
1/2/2019

8. Major Changes (Cont’d)
PREVIOUS RATINGS
Table 2. Technical Ratings (Separate)
Color
Rating
Description
Blue
Outstanding
Proposal meets requirements and indicates an exceptional approach and understanding of the requirements. The proposal contains multiple strengths and no deficiencies.
Purple
Good
Proposal meets requirements and indicates a thorough approach and understanding of the requirements. Proposal contains at least one strength and no deficiencies.
Green
Acceptable
Proposal meets requirements and indicates an adequate approach and understanding of the requirements. Proposal has no strengths or deficiencies.
Yellow
Marginal
Proposal does not clearly meet requirements and has not demonstrated an adequate approach and understanding of the requirements.
Red
Unacceptable
Proposal does not meet requirements and contains one or more deficiencies and is unawardable.
UPDATED RATINGS
Table 2A. Technical Rating Method
Color
Rating
Adjectival Rating
Description
Blue
Outstanding
Proposal indicates an exceptional approach and understanding of the requirements and contains multiple strengths.
Purple
Good
Proposal indicates a thorough approach and understanding of the requirements and contains at least one strength.
Green
Acceptable
Proposal indicates an adequate approach and understanding of the requirements.
Yellow
Marginal
Proposal has not demonstrated an adequate approach and understanding of the requirements.
Red
Unacceptable
Proposal does not meet requirements of the solicitation and, thus, contains one or more deficiencies and is unawardable.
1/2/2019

9. Major Changes (Cont’d)
PREVIOUS RATINGS
REQUIRED FOR SEPARATE TECHNICAL/RISK EVALUATION
Table 3. Technical Risk Ratings
Rating
Description
Low
Has little potential to cause disruption of schedule, increased cost or degradation of performance. Normal contractor effort and normal Government monitoring will likely be able to overcome any difficulties.
Moderate
Can potentially cause disruption of schedule, increased cost or degradation of performance. Special contractor emphasis and close Government monitoring will likely be able to overcome difficulties.
High
Is likely to cause significant disruption of schedule, increased cost or degradation of performance. Is unlikely to overcome any difficulties, even with special contractor emphasis and close Government monitoring.
UPDATED RATINGS
REQUIRED FOR SEPARATE OR COMBINED TECHNICAL/RISK FACTORS.
Table 2B. Technical Risk Rating Methods
Adjectival Rating
Description
Low
Proposal may contain weakness(es) which have little potential to cause disruption of schedule, increased cost or degradation of performance. Normal contractor effort and normal Government monitoring will likely be able to overcome any difficulties.
Moderate
Proposal contains a significant weakness or combination of weaknesses which may potentially cause disruption of schedule, increased cost or degradation of performance. Special contractor emphasis and close Government monitoring will likely be able to overcome difficulties.
High
Proposal contains a significant weakness or combination of weaknesses which is likely to cause significant disruption of schedule, increased cost or degradation of performance. Is unlikely to overcome any difficulties, even with special contractor emphasis and close Government monitoring.
Unacceptable
Proposal contains a material failure or a combination of significant weaknesses that increases the risk of unsuccessful performance to an unacceptable level.
1/2/2019

10. Major Changes (Cont’d)
PREVIOUS RATINGS
Table 1. Combined Technical/Risk Ratings
Color
Rating
Description
Blue
Outstanding
Proposal meets requirements and indicates an exceptional approach and understanding of the requirements. Strengths far outweigh any weaknesses. Risk of unsuccessful performance is very low.
Purple
Good
Proposal meets requirements and indicates a thorough approach and understanding of the requirements. Proposal contains strengths which outweigh any weaknesses. Risk of unsuccessful performance is low.
Green
Acceptable
Proposal meets requirements and indicates an adequate approach and understanding of the requirements. Strengths and weaknesses are offsetting or will have little or no impact on contract performance. Risk of unsuccessful performance is no worse than moderate.
Yellow
Marginal
Proposal does not clearly meet requirements and has not demonstrated an adequate approach and understanding of the requirements. The proposal has one or more weaknesses which are not offset by strengths. Risk of unsuccessful performance is high.
Red
Unacceptable
Proposal does not meet requirements and contains one or more deficiencies. Proposal is unawardable.
UPDATED RATINGS
Table 3. Combined Technical/Risk Rating Method
Color
Rating
Adjectival
Description
Blue
Outstanding
Proposal indicates an exceptional approach and understanding of the requirements and contains multiple strengths, and risk of unsuccessful performance is low.
Purple
Good
Proposal indicates a thorough approach and understanding of the requirements and contains at least one strength, and risk of unsuccessful performance is low to moderate.
Green
Acceptable
Proposal meets requirements and indicates an adequate approach and understanding of the requirements, and risk of unsuccessful performance is no worse than moderate.
Yellow
Marginal
Proposal has not demonstrated an adequate approach and understanding of the requirements, and/or risk of unsuccessful performance is high.
Red
Unacceptable
Proposal does not meet requirements of the solicitation, and thus, contains one or more deficiencies, and/or risk of unsuccessful performance is unacceptable. Proposal is unawardable.
1/2/2019

11. Major Changes (Cont’d)
Expands discussion of Source Selection Team (SST) Roles and Responsibilities
Adds/Expands roles of legal counsel, program manager, and requirements owner
Adds Small Business ratings table if Acceptable/Unacceptable rating is not used
Updates statutory and regulatory references
Updates/adds definitions
1/2/2019

12. Applicability and Waivers
All acquisitions
Conducted as part of a Major Systems Acquisition Program
Competitively negotiated FAR Part 15 with est. value > $10M
1/2/2019

13. Applicability and Waivers (Cont’d)
Applicability (Continued)
Exceptions
FAR subpart 8.4
FAR Part 12
Only if Part 12 is used solely in conjunction with parts 13 and 14, and
Not used with FAR subpart 15.3
FAR Parts 13 and 14
FAR subpart (b)(1), Orders under MACs—fair opportunity (recommended for orders > $10M)
FAR subpart , BAA
FAR subpart 36.6, A&E services, and
15 USC, Section 638, to solicit and award SBIR, SBTTR, and SBTT acquisitions
1/2/2019

14. Applicability and Waivers (Cont’d)
Greater than $1B - written approval by Director, Defense Procurement and Acquisition Policy
Less than $1B – written approval by Services Procurement Executive (SPE)
SPE may set lower internal dollar thresholds as appropriate
1/2/2019

15. Best Value Continuum Low Price
Greater Relative Importance of Cost or Price Lesser
Lesser Importance of Non-Cost Factors Greater
Lowest Price Technically Acceptable (LPTA) Source Selection Process
DoD Source Selection Procedures,
Appendix C
Tradeoff Source Selection Process
described in DoD Source Selection Procedures, including Appendix B
Mix and match tradeoffs:
Low Price
Technical
Technical Risk
Past Performance
Cost or
Price
Non–Cost
Factors
Small Business Participation
Cost/Price
1/2/2019

16. Best Value Continuum (Cont’d)
SSP describes processes and techniques to design acquisition strategies suitable for specific circumstances, including:
LPTA
Tradeoff
Subjective tradeoff
Value Adjusted Total Evaluated Price (VATEP) with monetized adjustments
Carefully consider and use the approach that is most appropriate for the acquisition
These are not the only source selection processes available on the best value continuum
1/2/2019

17. Best Value Continuum (Cont’d)
Limit evaluation criteria to critical user requirements regardless of source selection process used
Clearly state requirements
Consider use of a compliance matrix with clear, objective requirements
Consider use of hybrid processes / tailoring (“Acceptable/Unacceptable” evaluation for non-critical requirements)
1/2/2019

18. LPTA Use for commercial or non-complex supplies or services
Best value expected to result from selection of technically acceptable proposal with lowest cost
No additional value placed on a supply or service exceeding the Government’s threshold (minimum requirements)
1/2/2019

19. LPTA (Cont’d) Appropriate for
Well-defined requirements
Minimal risk of unsuccessful performance
No value, need, or willingness to pay for higher performance
All factors other than cost or price are evaluated on an “Acceptable” or “Unacceptable” basis
Source Selection Plan must clearly describe minimum requirements used to determine technical acceptability
1/2/2019

20. Subjective Tradeoff
Relative importance of all evaluation factors and significant subfactors identified in RFP
SSA must consider cost and risk of selecting one proposal over another, consistent with evaluation criteria
Analysis must be meticulously and fully documented in the Source Selection Decision Document
Appropriate when placing a quantifiable value on performance above threshold is not in Government’s best interest.
1/2/2019

21. VATEP
Monetizes different levels of performance corresponding to threshold (minimum) and objective (maximum) performance/capabilities for “valued requirements”
Must consider impact on affordability
Establish affordability cap over which an offeror may not be eligible for award
VATEP is merely a structured technique for objectivizing how some (or all) of the requirements would be treated in the tradeoff process and then communicating that to offerors in the RFP
1/2/2019

22. VATEP (Cont’d)
Awarded contract must reflect all above-minimum performance/capability levels for which evaluation credit was given
Applies to all tradeoff processes, not just VATEP
Can be used in conjunction with any source selection process
Can combine objective criteria (Acceptable/Unacceptable), subjective criteria (color/adjectival ratings), and valued requirements with associated downward TEP adjustment
1/2/2019

23. VATEP (Cont’d)
RFP identifies percentage or dollar amount assigned to valued requirements
Allows offeror to determine if additional cost of offering better performance will improve their competitive position
No extra credit for exceeding objective (maximum)
Assigns a monetary value to higher rated technical attributes, removing some subjectivity from evaluation
Downward TEP adjustment is for evaluation purposes only
Contract is awarded at Total Proposed Price
Offerors must propose to meet all minimum requirements to be eligible for award
1/2/2019

24. VATEP (Cont’d)
Requiring Office needs to define the value of higher performance/capability
Which above threshold requirements are truly of substantial benefit?
How are they valued relative to each other in absolute terms (dollar value or percentage)?
Consider operational benefit, risk, and affordability which may warrant a potentially higher price
1/2/2019

25. Price is what you pay. Value is what you get.
VATEP (Cont’d)
Not every requirement can/should be monetized
Must understand and determine which requirements are truly discriminators
Limited number of valued requirements to ensure inclusion of only highly valued performance/capabilities
RFP should
Clearly state that non-monetized factors will be evaluated based on relative importance to other factors in accordance with the RFP
Address treatment of incremental solutions
Price is what you pay. Value is what you get.
—Warren Buffett
1/2/2019

26. VATEP (Cont’d) Procedures
Step 1 – Determine acceptability of proposal and establish competitive range (or award without discussions)
Step 2 - Determine if proposal meets any valued requirements. If so, adjust TPP for each valued requirement in accordance with RFP.
TPP less all adjustments = Total Evaluated Price (TEP)
TEP used for evaluation purposes only
Step 3 – Award to the offeror whose proposal represents the best value based on evaluation criteria set forth in the RFP
Contract awarded at offeror’s final TPP, not TEP
1/2/2019

27. VATEP Example
RFP identifies two valued requirements and affordability cap:
Range (minimum/threshold is 200 nm, maximum/objective is 225 nm); valued up to $20
Risk (minimum/threshold is Moderate risk rating, maximum/objective is Low risk rating); valued up to $20
Affordability cap is $1300
Offeror A: Acceptable for all minimum requirements; TPP is $1000
Offeror B: Acceptable for all minimum requirements; TPP is $990
Offeror C: Acceptable for all minimum requirements; TPP is $1015
Offeror D: Unacceptable for one minimum requirement; TPP is $975. Not in competitive range
Offeror E: Acceptable for all minimum requirements; TPP is $1350 and above the affordability cap. Not in competitive range
1/2/2019

28. VATEP Example
Offeror A: TPP $1,000; proposal meets maximum for valued requirement for range ($20 adjustment)
$1,000 - $20 = $980 TEP
Offeror B: TPP $990; proposal meets maximum for valued requirement for risk ($20)
$990 - $20 = $970 TEP
Offeror C: TPP $1015; proposal meets maximum for valued requirements for range ($20) and risk ($20)
$ $20 - $20 = $975 TEP
SSA awards to the offeror whose proposal represents the best value to the Government based on evaluation criteria set forth in RFP
1/2/2019

29. The bitterness of poor quality remains long after the sweetness of low price is
forgotten.
—Benjamin Franklin
1/2/2019