Beauty contest or drawing straws?

This article is about the debate over negotiated best value versus lowest price technically acceptable ("multi-step") competitive bidding. The subplot is whether one source selection method necessarily determines a more optimal outcome. If all facts, past, present and future, were known, best value would be a no-brainer, but best value has not insulated government from cost overruns or less than optimal contractor performance.

OFPP lets DOD deal with pricing complexities first

the Office of Federal Procurement Policy looks to DOD's experience for guidance on the balance of price against value in contract awards, [as revealed by] Joe Jordan, OFPP administrator, at a recent breakfast hosted by the Coalition for Government Procurement. “The bottom line is it’s just a tough area, because you’ve got tricky incentives,” Jordan said.

Generally speaking, he said industry likes best-value procurements. They allow companies to propose higher prices, since officials will consider other evaluation criteria beyond price. On the other hand, the government is pushing low price and not always fully analyzing the entire lifecycle of a project, Jordan said. Both sides have good arguments, so the contracting officer's judgment is the final arbiter.

“It’s always a challenge with the overburdened acquisition workforce, but I think we’re at a place where we need to do some more analysis, having some more conversations with industry and agencies, especially the Department of Defense, to figure out exactly where equilibrium lies,” Jordan said.

Industry experts have been increasingly concerned that federal officials have developed a lowest price technically acceptable attitude for their procurements.

Larry Allen, president of Allen Federal Business Partners, said “They [DOD] seem happy with the drive to low price and uninterested in whether it may be misapplied in some circumstances.”

In his speech, Jordan said both the lowest price technically acceptable and the best value procurements have their place. He emphasized that he isn’t choosing one over the other.

“Do both, but do them at the right time,” he said.

Read more at the link to the article above.

The problem is that no one can predict the future. One method gives the procurement officer a warm fuzzy feeling at the time the bid is awarded, in the belief that "best value" has been achieved. The other gives the procurement officer cover from second-guessing score keepers of her career. But either method can, and too often does, yield to buyer's remorse when the winning bidder hits the road.

Buyers like to find comfort in dealing with proven bidders with known track records, thus tend to favor "best value" and its "old boy" network of quantifiable "past performance". But multi-step must also be made only after the responsibility of the bidder is determined, so I tend to suspect that the presumed reliability of "past performance" is a red herring, deflecting the process away from competition from newcomers, erecting unnecessary obstacles to market entry.

It's a case of choosing a winner by beauty contest (best value) or drawing straws (lowest price technically acceptable). Only time will tell which method truly gives the government what it actually seeks at the most optimal cost over the life cycle, through an efficient source selection process.

And there is no "right time" to make that choice before the ultimate facts are known.