Considerations When Making Government Contracts

¶ … regulatory requirements the SSA must consider in making a source selection decision?

According to the formal Department of Defense Source Selection Procedures (2008), in general, there are two processes which can be observed when engaging in source selection regarding government contracts. The first, the Tradeoff Source Selection Process (FAR 15.101-1) permits a "tradeoff between non-cost factors and cost/price and allows the [U.S.] Government to accept other than the lowest priced proposal or other than the highest technically rated proposal to achieve a best-value contract award" (DOD Source Selection Procedures, 2008, p.1). It uses a standard economic cost-benefit analysis approach similar to a SWOT analysis of strengths and weaknesses of the different bids. In other words, in some instances, there might be a very low bid but the quality of the materials and record of the bidder might be unacceptable; on the other hand there might be a bid from a contractor with an impeccable reputation but at a very high cost. The TSSP allows for the selection of a different bidder entirely, a bid which is cheaper than the contract offered by highest bidder although the selected bidder has a higher-quality record but a lower price than the most expensive bidder.

Another, equally acceptable alternative is the Lowest Price Technically Acceptable (LPTA) source selection process (FAR 15.101-2). This process is used when the main objective is to find a proposal which meets minimal standards of technical acceptability at the lowest possible price (DOD Source Selection Procedures, 2008, p.1). A combination of both approaches can be used when selecting multiple source components for the same project. However, regardless of the chosen approach, "agencies are required to utilize the standardized rating tables" of the DOD (DOD Source Selection Procedures, 2008, p.1)

Q2. What type of justification, if any, is required to support a SSA's decision to award a contract to a higher priced offer?

When a contractor is selected, regardless of the price, a specific form must be filled out. A different standardized rating table is used for a tradeoff evaluation. "The Technical Evaluation Worksheet ... provides space for evaluators to list the proposal's strengths, weaknesses, and deficiencies to support the rating you have given the proposal" ("How the government evaluates a proposal," 2015). Questions which arise may include "why pay 10% more, and what does the Government get for the price differential" ("How," 2015). This process is used to offer a way to analyze how cost decisions may be weighed against non-cost-based factors, "resulting in an overall 'individual' or 'cross-talk based' recommendation that considers both technical and cost aspects of the proposal" ("How," 2015). While both LPTA and TSSP require forms to justify the resultant decision, these forms are separate and tradeoff-related decisions due to non-cost factors cannot be made using an LPTA form. LPTA decisions are made solely based upon a cost comparison between bidders, so long as the bidders meet minimal technical standards.

Q3. How have the legal authorities ruled on SSA Decisions where the higher priced offer is challenged?

In general, the courts have given great leeway to the government in making selections between different bidders, including the government's choice to take lower-quality bids that are priced lower than competing offers. "The agency's decision to choose a lower priced and more technically inferior proposal is a business decision that GAO tends not to question. Unless you can show that the agency failed to follow the solicitation criteria, you bid protest may not be fruitful" (Watson 2015). This is the reason for standardized evaluation criteria and the need to fill out specific forms when explaining the choice of a proposal. Particularly with non-LPTA decisions, appealing the choice of a bid can be challenging, given that the decision is made based upon tradeoffs. Other factors may include quality and the bidder's past record to make the argument that the lowest cost bid was not technically acceptable. For example, although a bid may be low, if the bidder's previous record indicates delays and problems with quality, ultimately it may be concluded in the long run that this will result in higher overall costs to the government and/or safety concerns which could obviate the cost savings. And even with a decision-based technically on costs, it has been observed that "the government generally creates rules to allow it to go outside the basic requirements" (Watson 2015).