The Best Value Source Selection Debate Tradeoff or LPTA

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2 The Best Value Source Selection Debate Tradeoff or LPTA Breakout Session A09 Lyle Eesley, Fellow, Senior Consultant, Reed Integration John Dobriansky MS, MBA, CPCM, Fellow, Date: July Time: 11:30am 12:45pm

3 Outline Acquisition process overview Industry s concerns they are our partners Available Best Value Techniques LPTA done right Trade Off done right Recommendations 2

4 Acquisition Process Mission Requirement 1. Form the Team Leadership Support Build the Team 2. Review Current Strategy Conduct Historical Analysis Define Stakeholder & Customer needs Plan Mission Result 7. Performance Management Build & Manage Relationship Assess Performance Execute QA Reps Cont. Specialist Resource Mgt Stakeholders Proj. Mgr PCO & COR Legal Small Business 6. Execute Strategy Users Select Right Contractor Award Contract Roll out strategy Tech SMEs HQ 3. Market Research Analyze Market Practices Identify Suppliers 4. Requirements Definition Develop Requirements Roadmap Draft PWS and QASP 5. Acquisition Strategy Business Strategy Source Selection Strategy Develop 3

5 Industry Concerns Not opposed to use of LPTA, it s the application of it. Fears that use of LPTA driven by budget issues, policy, not the nuances of the specific acquisition Application on highly complex, poorly defined requirements not justified Quality may suffer at the expense of price 80% of the problem with contracts is poorly written requirements 4

6 Both techniques are Best Value FAR: Best Value Continuum Trade Off LPTA Specs Part number Clear Reqs Low Risk Price LPTA? Trade Off Complex Reqs Design Options Analysis Higher Risk Technical Solution Simpler Complex 5

7 Best Value Continuum FAR the relative importance of cost or price may vary in acquisitions where the requirement is clearly definable and the risk of unsuccessful contract performance is minimal, cost or price may play a dominant role in source selection. the less definitive the requirement, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection. 6

8 Best Value Continuum Lowest Price Technically Acceptable appropriate when best value is expected to result from selection of the technically acceptable proposal with the lowest evaluated price. 7 7

9 Best Value Continuum LPTA non-price factors/subfactors may include the following: Technical: assess whether the offeror s proposal will satisfy the Government s minimum requirements. may include technical approach, key personnel and qualifications, facilities, and others. The team shall evaluate the offeror s proposal against these requirements to determine whether the proposal is acceptable or unacceptable Past Performance: unless waived by the PCO Trade Offs are NOT permitted Binary Choice 8

10 Best Value Continuum Tradeoff Process appropriate when it may be in the best interest of the Government to consider award to other than the lowest priced offeror or other than the highest technically rated offeror. 9 9

11 Best Value Continuum Trade Off appropriate when it may be in the best interest of the Government to consider award to other than the lowest priced offeror or other than the highest technically rated offeror. 10

12 Both techniques are Best Value FAR: Best Value Continuum Trade Off LPTA Specs Part number Clear Reqs Low Risk Price LPTA What should drive your decision?? Trade Off Complex Reqs Design Options Analysis Higher Risk Technical Solution Simpler Complex 11

13 Acquisition Strategy is a team decision Team must be considered: Knowledge of Mission Requirements and Stakeholder expectations Risk assessment Market analysis Ability to define a clear, concise requirement Contract type Fixed Price or Cost Type Strength and experience of your acquisition team PM, CO, COR, Evaluators Experience in developing effector evaluation factors Experience making cost/price realism determinations 12

14 Source Selection done right All source selections need to be tied to mission Market and Risk assessments Solid Requirements documents Contract type Past Performance Technical and Business Risk Political risk high profile major systems 13

15 Source Selection done right Keys to success Well developed acquisition package Well defined requirement and performance standards Evaluation factors tailored to address the key elements of the acquisition An experienced evaluation team 14

16 Source Selection done right Trade off or LPTA what drives the decision on which approach? Fear of protests LPTA easier to defend Budget concerns Perceptions of policy direction Contract types Both can be effective, but they must be executed well 15

17 Getting LPTA right Setting the Technical Factors bar? It unwise to pay too much, but its worse to pay too little. When you pay too much, all you lose is a little money. When you pay too little, you risk losing everything because what you bought is incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot: it cannot be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better. John Ruskin ( ) 16

18 LPTA Evaluation Factors Team must define the right minimum level of technical acceptability Evaluation Factors and standards must be rigorous to obtain proposals that provide sufficient proposal detail to enable evaluation teams to make a fair assessment of the contractors ability to perform the requirement Must address key performance requirements and risk areas 17

19 LPTA done poorly Requirement: The contractor shall conduct long-term analyses supported by (M&S), other software tools, requirements, and compliance document when necessary. These analysis shall require responses approximately in 6-12 months. The types of analysis are shown in attachment A Proposal: Using MS Excel spreadsheets, contractor assigns weights based on outside expert SME assessment to factors that contribute to accomplishing some action (e.g., sensor detection). These results are then rolled up into 0-100% metrics, indicating achievement of the goals. Source: TASC Nov 2012 The challenge of applying the PLTA process to procurement of complex services 18

20 LPTA done right What the customer was hoping for in contractor proposals: Contractor will collaborate with stakeholders including outside experts, operators, warfighters, and others to collect requirements, document current systems, and identify threats. Contractor then leverages best-of-breed offthe-shelf tools and augments with organically developed M&S tools to evaluate current/modified systems, new concepts, enabling technologies, operating concepts, and infrastructure. Capability assessments of as-is and to-be architectures against identified requirements and guidance lead to identification of gaps and shortfalls as well as a quantification of impacts to the end users. Material and non-material solutions are evaluated to determine the best alternatives to resolve the identified shortfalls for a selected mission area. These alternatives are then assessed for cost versus technical performance measures (TPMs) to identify best-value solutions for programmatic consideration.. So What s the problem here? Source: TASC Nov 2012 The challenge of applying the PLTA process to procurement of complex services 19

21 LPTA done right Orginial requirement was poorly stated A more clearly defined requirement might say: The contractor shall employ a comprehensive, quantitative architecting analysis framework to ensure consistent and repeatable analysis of architectures. The contractor shall identify performance gaps and other shortfalls at the engineering, engagement, mission, and campaign levels. The contractor shall model and assess material and non-material concepts that close architectural shortfalls, including concepts proposed by outside experts, Government labs, industry, and other sources. In the absence of viable concepts, the contractor shall propose appropriate concepts to close gaps and resolve shortfalls. The contractor shall collaborate with the community -- forming working groups and conducting technical interchange meetings as appropriate -- to gather and confirm analysis assumptions (e.g., threat definition, requirements interpretation, CONOPS) to feed modeling and cost estimation.. Source: TASC Nov 2012 The challenge of applying the PLTA process to procurement of complex services 20

22 Trade Off done right When more flexibility is needed in assessing technical approaches vs. price Incorporate those elements of a contractors proposal that led to their selection into the contract 21

23 Trade Off done right Acquisition strategy your ticket to success Government needs a top notch solution Mission requirements demand it Define scope as required capabilities 22

24 Trade Off done right Acquisition strategy your ticket to success You the Government customer how much are you going to budget upfront for an innovative, superior solution? Successful best value trade off source selections are accomplished by teams not silos Must build the right team to be successful program management, contracting officer, skilled proposal evaluator and subject matter experts? 23

25 Trade Off done right Best value trade off success Evaluate strictly to well written evaluation factors in the solicitation (Section M) Thoroughly document the evaluation Use words that accurately reflect the proposal against the evaluation factors and standards Thoroughly document the source selection Can you support a 20% higher price for a superior technical solution? 24

26 What s the best approach? It all depends Both require a clearly stated requirement (SOW or PWS) that conveys to industry the depth of the requirement Both require an experienced acquisition team LPTA may limit alternative or out of the box solutions because of focus on price, what are your stakeholders desires? 25

27 What s the best approach? It all depends LPTA Technical Evaluation factors must reflect the complexity of the requirement Contractor proposals must contain sufficient detail on how they will perform the tasks More complex requirements will require a higher level of proposal detail Complexity and risk will determine the height of the technical acceptability bar. 26

28 Recommendations Either approach requires the team to: Do it Right Need a Culture of Team Work Teams that can build requirements and business strategies based on a thorough analysis of: Supported mission Market and Risk assessments Solid Requirements documents Contract types Past Performance 27

29 Recommendations (cont) Even in tight budgetary times appropriate use of best value trade off may cost the government significantly less over the program life cycle. What best supports the Mission, Stakeholders and tax payers 28

30 Conclusion Questions and Discussion 29