What is a tradeoff analysis?

A tradeoff process is 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. The solicitation should state whether all evaluation factors other than cost or price, when combined, are significantly more important than, approximately equal to, or significantly less important than cost or price.

When using this process, a tradeoff analysis must be performed to determine the best overall offer, which permits tradeoffs among cost or price and non-cost factors and allows the government to accept other than the lowest-priced proposal, based on the factors and criteria being used. The perceived benefits of the higher-priced proposal must merit the additional cost, and the rationale for the tradeoffs must be documented in the file by the CO.

The CO, assisted by technical and pricing personnel, performs the tradeoff analysis and must ensure that the scoring or ratings are reliable and valid and that they are based solely on RFP evaluation factors and the agreed-upon methodology from the non-price evaluation factors. Proposals should not be scored or rated against each other. To support the scoring or ratings, the COR should provide the following documentation:

The basis for evaluation of proposals

Analysis of the proposals' strengths and weaknesses against each technical evaluation factor and subfactor

A summary, matrix, or quantitative rating or score of each technical proposal in relation to the best possible score

A summary of findings.

What are negotiation objectives?

As stated earlier, the TEP should also include in its report any recommended technical negotiation objectives to better meet the government's requirements. These objectives are derived from the technical evaluation and provide the CO with insight about which areas of each proposal need to be negotiated to serve the government's interests. For example, one proposal might have a great, even unique, technical approach, but the offer-or's proposed price is too high. The CO's objective should then be to try to negotiate a lower price and still benefit from the better technical approach. Or the opposite could be true: A proposal might have a low price, but the offeror's technical approach is lacking in some respect. In this case, the CO would identify the proposal's deficiencies during negotiation and give the offeror an opportunity to improve its technical proposal.

Evaluating Past Performance

What is past performance, and how is it used to evaluate contractors?

Refer to FAR 42.15 for policies and responsibilities for recording and maintaining contractor performance information.

The Federal Acquisition Streamlining Act (FASA) was signed into law by President Clinton on October 13, 1994 (P.L. 103-355). Congress acknowledged that it is both appropriate and relevant for the government to consider a contractor's past performance in evaluating whether that contractor should receive future work. Section 1091 of FASA states:

Past contract performance of an offeror is one of the relevant factors that a contracting official of an executive agency should consider in awarding a contract.

It is appropriate for a contracting official to consider past contract performance of an offeror as an indicator of the likelihood that the offeror will successfully perform a contract to be awarded by that official.

FASA requires the administrator of the Office of Federal Procurement Policy (OFPP) to "establish policies and procedures that encourage the consideration of the offerors' past performance in the selection of contractors." Specifically, the act requires the establishment of:

Standards for evaluating past performance with respect to cost (when appropriate), schedule (i.e., how well the contractor has adhered to the delivery schedule for past contracts), compliance with technical or functional specifications, and other relevant performance factors that facilitate consistent and fair evaluation by all executive agencies

Policies for the collection and maintenance of information on past contract performance

Policies for ensuring that offerors are afforded an opportunity to submit relevant information on past contract performance, including performance under contracts entered into by the executive agency concerned, by other agencies, by state and local governments, and by commercial customers, and that such information is considered by the government

A period for which past performance information may be maintained.

OFPP's Past Performance Guide states:

To select a high quality contractor, commercial firms rely on information about a contractor's past performance as a major part of the evaluation process. The government, on the other hand, for large contracts attempts to select a quality contractor by analyzing elaborate proposals describing how the work will be done and the management systems that will be used to ensure good performance. The current practice allows offerors that can write outstanding proposals, but may not perform accordingly, to continue to "win" contracts when other competing offerors have significantly better performance records, and therefore offer a higher probability of meeting the contract requirements.

Settling for inexpensive mediocrity hardly seems in the taxpayers' best interest if an agency determines that it can get better overall value by doing business with a higher-priced supplier with an excellent track record.

When the government demands high quality services as a requirement for future business opportunities, as does the private sector, competition will intensify and result in higher-quality service by contractors.

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