Selecting and Weighting Evaluation Factors and Subfactors
You must clearly state in the solicitation and source selection plan all the evaluation factors and subfactors that you will consider in making the source selection and their relative importance or weight. These factors and subfactors inform offerors of all the significant considerations in selecting the best value source and the relative importance the Government attaches to each of these considerations. Offerors should understand the basis upon which their proposals will be evaluated and how they can best prepare their proposals. The evaluation factors will be cost, past performance, and non-cost, by nature.
Structure evaluation factors and subfactors and their relative order of importance to clearly reflect the Government's need and facilitate preparation of proposals that best satisfy that need.
A multi-disciplined team chooses the evaluation factors and subfactors based on user requirements, acquisition objectives, perceived risks, and thorough market research. Thorough research of the market helps the team identify the capabilities of different industry sectors and where those capabilities are most likely to differ among potential offerors. The team then selects only those factors that will help differentiate among offerors and surface the most advantageous offer.
Evaluation factors and subfactors must be limited to those areas which will reveal substantive differences or risk levels among competing offers.
- Cost Factors
The Competition in Contracting Act (CICA), as implemented in the FAR, requires that price or cost to the Government be included as an evaluation factor in every source selection.
The relative importance between cost or price and the non-cost factors must also be reflected in both the solicitation and the weights or priority statements in the source selection plan. However, cost/price is not numerically scored in the evaluation of proposals, because of possible distortions that can result when arbitrary methods are used to convert cost/price into scores.
Cost-related factors and considerations will vary depending on the type of contract. Regardless of contract type, reasonableness must always be a consideration, as the FAR requires that contracts be awarded only at prices or costs that are fair and reasonable. Cost realism plays an important role in many source selections. A cost realism analysis is an independent review of each offeror's cost proposal to determine if specific estimated proposed cost elements are realistic for the work to be performed, reflect a clear understanding of the requirements, and are consistent with the unique methods of performance and materials in the offeror's technical proposal.
Cost realism must be considered when a cost reimbursement contract is anticipated. Under a cost type contract, the proposed cost estimates may not be valid indicators of final actual costs which the Government will be obligated to pay. For this type of contract, a cost realism analysis is performed and used to determine the probable cost of performance for each offeror. Selection decisions should be based on these probable cost estimates. Significant differences between proposed and most probable costs may signal increased performance risks.
Cost realism may also be considered for fixed price incentive contracts or, in exceptional cases, for other fixed price type contracts especially when there are concerns that offerors may try to "buy in" or where other complexities of the acquisition could result in misunderstanding the requirements. In such cases, a cost realism analysis may be useful for determining if there is a significant risk of future performance because of unrealistically high or low prices. However, proposed fixed prices are not adjusted for cost realism during the evaluation.
The solicitation must clearly state what costs will be evaluated. These costs may include costs for the basic effort only, basic plus all options, or costs incurred as a result of acquiring or owning an item, (e.g., transportation, life cycle costs). The solicitation should also clearly indicate to offerors how the cost factor will be evaluated.
- Past Performance
The caliber of a contractor's performance on previous contracts shall be included as an evaluation factor in competitively negotiated acquisitions unless the contracting officer documents why it would not be appropriate for the specific circumstances of the acquisition. A thorough evaluation of past performance, to include information that is outside of the offerors' proposals, serves to ensure that awards are made to good performers rather than to just good proposal writers.
- Non-Cost Factors
Non-cost evaluation factors address the proposal's technical and performance efficiency. These factors may include such considerations as technical approach and capabilities, management approach and capabilities, past performance and personnel qualifications. Technical factors must be developed specifically for each acquisition, taking into consideration the particular objectives and requirements of the acquisition. These factors should be those discriminators which are determined after thorough market research as most likely to reveal substantive differences in technical approaches or risk levels among competing offers.
The source selection team has broad discretion in determining the technical evaluation factors and subfactors, their relative importance, and the way in which they will be applied.
However, too many factors and subfactors can lead to a leveling of ratings, in which the final result may be a number of closely rated offers with little discrimination among competitors. It is not the number of non-cost factors that is critical, but having the right factors.
Basic requirements for non-cost evaluation factors are:
- A reasonable expectation of variance among offers in that area.
- A variance that you can measure either quantitatively or qualitatively.
- The factor must be a true discriminator.
An evaluation factor should be chosen only if your requirements warrant a comparative evaluation of that area. The simplest way to assess a potential evaluation factor is to ask: "Will superiority in this factor provide value to the Government and is the Government willing to pay more for that superiority?"
Best Practices
Selecting the right evaluation factors is one of the most important decisions you will make in designing your evaluation process. We are often faced with the triple problems of less time, less funds, and fewer available personnel to devote to source selections. If you do not concentrate on what is important in selecting the best value offeror you could end up with a large evaluation team wasting a lot of time and effort looking at issues that do not differentiate between offerors and a weak evaluation that does not give the source selection authority the information needed to make a good selection.
There are certain factors that you must consider in any competitive source selection. Price/cost is an automatic factor that you always have to consider. You also have to consider past performance in your evaluation process unless the contracting officer documents why it is not appropriate for the specific circumstances of the acquisition . From here you add other factors and subfactors that are important to deciding which is the most advantageous offer. Remember, not everything that the offeror has to do under the contract is really a discriminator that will help you decide which offer will result in the best value. Consider what you are buying and what will really discriminate between offers.
How to select the additional factors/subfactors? Consider the following methodology:
- Research the market for what you are buying and your probable universe of offerors.
- Form a team and brainstorm critical factors and subfactors.
- Select only those factors and subfactors likely to surface the most advantageous offers.
- Define the key discriminators and prioritize the list.
- Get source selection authority approval of the list of factors/subfactors.
- Clearly and concisely tell offerors in the solicitation what the factors/subfactors are and their relative importance.
- Listen carefully to industry feedback from presolicitation exchanges to see if your choices are right. If necessary, change the factors/subfactors before solicitation.
Weighting the Factors and Subfactors
After determining the evaluation factors and subfactors, their relative importance to each other must be established. The relative importance of factors and subfactors must be consistent with the stated solicitation requirements. If their relative importance does not accurately reflect the Government's requirements and objectives, the source selection authority may later award to an offeror whose proposal may not be most advantageous to the Government. As a general rule, the higher the technical or performance risk, the greater the emphasis on non-cost factors. The relative importance between all non-cost factors combined and cost or price must also be described using the terms significantly more important, approximately equal, or significantly less important. This relative ranking must be reflected in both the solicitation and the weights or priority statements in the source selection plan.
The relative importance of evaluation factors and subfactors is usually established by priority or tradeoff statements, numerical weighting, or a combination of these.
- Priority or tradeoff statements would relate one factor to others. For example, in a priority statement, the cost/price factor may be said to be slightly more important than a non-cost factor called "performance risk" but slightly less important than a non-cost factor called "technical merit." This method allows the source selection authority more flexibility for tradeoff decisions between the non-cost factors and the evaluated cost/price.
- Numerical weighting would involve assigning relative importance to the factors and subfactors using points or percentages for each factor and subfactor.
Although numerical weights may be used in making the tradeoff analysis and decision the weights themselves may, but need not be disclosed in the solicitation. If you do not disclose the numerical weights themselves in the solicitation, they must be described in terms of priority or tradeoff statements.
Cost/price as an evaluation factor is never scored or rated as part of the evaluation. But, just like all the other factors and subfactors, cost/price has to be weighted to indicate its importance relative to the other evaluation factors and subfactors and the overall evaluation. The weight given to cost/price reflects its relative importance in selecting the best proposal for award. The circumstances of your particular acquisition will indicate how important cost/price is in satisfying your requirement.