Source Selection Decision
Prior to contract award, ensure the selection decision:
- Is based on a comparative analysis of the proposals;
- Is consistent with stated evaluation factors and subfactors; and
- When tradeoffs are permitted, considers whether or not perceived benefits are worth any price premium.
Make the decision on a rational basis and set it forth in an independent, defensible document. Consistent with the solicitation, after the team has completed the evaluation of the individual proposals, the source selection authority compares competing proposals to each other.
When using the lowest price lowest price technically acceptable process, the source selection authority compares proposals on the basis of cost or price alone and selects the offeror with the lowest evaluated cost/price meeting the acceptability requirements for all factors and subfactors.
When using the tradeoff process, the source selection authority compares proposals on the basis of cost/price, technical or other noncost ratings, and how its strengths, weaknesses, and risks will impact the specific objectives of the acquisition. The source selection authority may request the evaluators to conduct comparative analyses of proposals and make a recommendation concerning the source selection. The source selection authority will use all the information on the proposals and evaluation to make an independent judgment of the best value.
Consistent with the solicitation, the possible outcomes of this comparison are:
- The proposal with the superior noncost merit is the lowest cost/price proposal. In this case award should be made to the offeror submitting the proposal with the lowest evaluated price or cost.
- The proposals may be determined to be essentially equal in terms of noncost factors. In this case also, award should be made to the offeror submitting the proposal with the lowest evaluated price or cost.
- When the proposal with the lowest evaluated price or cost is other than the proposal(s) with higher noncost merit, the source selection authority must perform a cost/technical tradeoff analysis to decide whether the technical superiority of the other proposal(s) warrants payment of the additional price or cost.
Making the Cost/Technical Tradeoff Analysis
Ratings are merely guides for decision making. The source selection authority is responsible for independently determining whether noncost advantages are worth the cost/price that might be associated with a higher rated proposal. The decisive element is not the difference in ratings, but the source selection authority's rational judgment of the significance of that difference, based on an integrated comparative assessment of proposals.
When making the cost/technical tradeoff leading to the selection decision, there is no "magic" formula. The cost/technical tradeoff and the source selection decision, which must be consistent with the solicitation, require that the source selection authority exercise reasonable business judgment in selecting the offeror for contract award. The information considered should include an analysis of the following:
- The proposals' total evaluated price or cost.
- The significance of the differences in the noncost ratings as indicated by each proposal's strengths, weaknesses, and risks. The strengths, weaknesses, and risks for each factor must be considered in light of the relative importance of each factor stated in the solicitation.
In performing a tradeoff, consider following steps such as these to arrive at a rationale decision that can be well documented:
- Compare the proposal differences that surfaced during your evaluations;
- Define these differences and analyze their impact on performance objectives;
- Make paired comparisons, comparing each proposal to each of the others;
- Assess the best mix of cost and noncost benefits and determine whether the strengths of higher rated proposals are worth the price premium.
It is essential to document cost/technical tradeoff judgments with detailed narrative explaining the relevant facts and supporting rationale. Mere statements of conclusion based on ratings or scores alone are not acceptable. The cost/technical tradeoff documentation must explicitly justify a price premium regardless of the superiority of the selected proposal's technical or noncost rating. This justification is required even when the solicitation indicates that noncost factors are more important than cost/price. The justification must clearly state what benefits or advantages the Government is getting for the added cost/price and why it is in the Government's interest to expend the additional funds.
Where it is determined that the noncost benefits offered by the higher priced, technically superior offeror are not worth the price premium, an explicit justification is also necessary. In this case, the documentation must clearly show why it is reasonable in light of the significance of the differences to pay less money for a proposal of lesser technical merit.
To determine which proposal provides the best value, the source selection authority must analyze the differences between competing proposals. This analysis must be based on the facts and circumstances of each acquisition and must be consistent with the solicitation.
This analysis ensures a disciplined and documented process for an integrated comparison of proposals and a rational basis for the source selection authority's ultimate decision.
Documenting the Proposal Comparison
Documentation explaining the final results of the evaluation should be prepared for the source selection authority to use in making the selection decision. This documentation should include the technical and/or past performance evaluation results, the cost/price evaluation, and the comparative value analysis, if applicable, for each proposal in the competitive range. The documentation should also include other considerations such as the results of negotiations. For more complex source selections, this is accomplished by means of a formal report that is provided to the source selection authority. For less complex source selections, the documentation may be included as part of the Price Negotiation Memorandum. It should be simple but concise and should cross-reference rather than repeat information in existing documents as much as possible (e.g., the source selection plan, evaluation team consensus report). The analysis and comparisons in this documentation should be used as an aid to the source selection authority's judgment - not as a substitute for judgment.
The documentation may contain:
- Introductory information such as:
- Data about the source selection plan.
- The basis for award and evaluation factors and subfactors.
- Participants in the evaluation process.
- Solicitation requirements.
- The number of offerors solicited.
- The offerors who responded and those in the competitive range.
- A summary of each proposal within the competitive range.
- Comparative analyses of both cost and noncost factors of the proposals within the competitive range. The factors and subfactors evaluated should be discussed, first individually and then comparatively. The comparative cost analysis should explain the reasonableness, realism, and rationale of each offeror's price or cost proposal. Each proposal's major strengths, weaknesses, risks, as well as the details and results of the tradeoff analysis should be included.
- A discussion of the overall impact of significant risks associated with each proposal within the competitive range. This discussion may address, for example:
- Technical risks inherent in the offeror's proposed approach.
- Degree of confidence in the realism of the offeror's cost or price proposal taking into consideration technical and schedule risk.
- Production risks relating to new technologies and overall production competence.
- Performance risks relative to the offeror's record of recent and relevant past performance.
- A summary of the comparative analyses, expressed in brief statements, of the issues considered significant to the source selection authority's decision. If requested by the source selection authority, a selection recommendation would be included.
Documenting the Selection Decision and Awarding the Contract
Documentation setting forth the decision rationale must be prepared to support the source selection authority's decision. The selection statement must be a stand-alone document which succinctly and accurately provides rationale for the selection. It should explain how the successful proposal measured up against other offerors based on the evaluation factors and subfactors in the solicitation. It should also explain the tradeoff judgments, including benefits associated with additional cost. This document becomes part of the official contract file and can even be released, provided that any information exempt under the Freedom of Information Act (FOIA) is not released. This can ease the debriefing process by showing offerors who request a debriefing the rationale and logic used by the source selection authority.
After the source selection authority has signed the selection decision document, the contracting officer may execute and distribute the contract.