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evaluation criteria are related to both the best-value award 3.4 Implementing the Proposed
algorithms and the rating (scoring) system. Best-Value Procurement
Table 3.5 shows how the four elements of best-value pro- Method
curement can be brought together in a cogent manner that
allows the owner to develop a best-value procurement method- Figure 3.5 is a flow chart that illustrates the process by which
ology systematically on a project-by-project basis. When used an agency would implement best-value procurement. The
in conjunction with the best-value project screening and selec- process is designed to be project-specific and stems from the
tion system, this framework will permit state agencies to create output of the project screening and selection process that was
a standardized procurement policy for best-value projects. used to pick a given project to be delivered using best-value
BV Project Project Selected for
Screening BV Award
and Selection
Process
Project Selected for Use Meets
BV Award Project Technical
Complexity Criteria Low-
Bid BV Award
Simple Algorithm
Benefits from BV
Procurement Complex
Identified in
Screening
Use Cost-
Barrier to Technical
Subjective Tradeoff BV
Award? Award
No
Algorithm
Qualifications
Benefits
Quality Yes
Enhancement
Benefits Use Value
Time Savings Unit Price
Benefits BV Award
Algorithm
Cost Savings
Benefits
Select BV
Qualifications
Parameter &
Criteria Select BV BV Award Algorithm
P.0 P.5 Design Selected
and/or Q.0 Alternate
Parameter Select BV
& Criteria Schedule
D.0 D.2 Parameter
& Criteria Select BV
B.0 Cost
Parameter Based on Selected Best-
& Criteria Value Award Algorithm
A.0 Move to Flow Charts Shown
in Figures 3.2, 3.3, & 3.4,
and Skip Screening Steps
Select Project BV
Parameters &
Evaluation Criteria
Figure 3.5. Implementing best-value procurement flowchart.
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procurement. Note that Section 3.5 discusses the screening evaluation criteria identified in the screening process and
and selection process in detail. develop appropriate evaluation standards for each crite-
In essence, the best-value procurement process involves a rion. A modified satisficing or adjectival rating system
series of decisions that are constrained by the best-value pro- would then be established. The criteria associated with the
curement framework. It tracks through the following series qualifications and quality parameters would form the
of steps: basis for the best-value RFQ. The remaining parameters
and criteria would be published in the RFP.
1. Having identified those potential benefits that may be 6. The process would follow that shown in Figure 3.3. Once
accrued by delivering a project by best-value procurement, the Step 2 evaluation of those proposals that remain in the
the owner then lists those benefits and identifies the specific competitive range after Step 1 is completed, the selection
best-value parameters that are appropriate to the project panel would conduct the cost-technical tradeoff, could
from the list of potential parameters shown in Table 3.2. elect to proceed with discussions and final proposals
2. For each of the appropriate parameters, the relevant eval- followed by re-evaluation, and would select the proposal
uation criteria are selected. There will always be a cost that offered the greatest value to the agency.
parameter with evaluation criteria in the final set. If the 7. If there are legal, institutional, or political barriers to using
schedule is fixed by the agency, then no schedule parame- cost-technical tradeoff on a relatively complex project, the
ter will be selected, but, if the contractor is allowed to pro- logical alternative is value unit price. Development of this
pose some element of the schedule, then it will also be procurement is the same as described in the previous para-
included. This set forms the foundation on which the graph except that the owner must develop a formula to
remainder of the procurement is built. compute the best-value unit price. As previously stated,
3. Next, the best-value award algorithm is selected based on there are a number of possible formulae that have been
project characteristics. Project complexity must be con- successfully used by transportation agencies across the
sidered because it will impact the choice of award algo- country that could be adopted or adapted by the procur-
rithms. ing agency for this step. However, the research team
4. If the project is a relatively simple and technically straight- believes that the weighted criteria formula shown in Table
forward job, then the simplest best-value award algorithm, 3.3 is the most flexible approach to determining the best-
meet technical criteria--low bid, is a logical choice. If the value unit price, and allows the owner the ability to control
owner is concerned about project quality, the process may most completely the relationship between the mathemat-
involve prequalification or shortlisting or could allow the ical outcome and the project's requirements. Therefore,
owner to factor in its own costs into the selection decision. this formula is recommended. The impact of using the
The previously identified parameters and evaluation other formulae will be demonstrated in the next section of
criteria make up the set that is published in the best-value this report.
solicitation (see Figure 3.2). A measurable standard is 8. The process would follow that shown in Figure 3.4. Once
developed for each best-value evaluation criterion, and a the Step 2 evaluation is completed for those proposals that
satisficing ("go/no-go") rating system is established. The remain in the competitive range after Step 1, the evalua-
project is then advertised and awarded in accordance with tion panel would compute the value unit price and award
the process described in Figure 3.2. the project to the proposal that best satisfied the formula's
5. If the project's scope of work is judged to be complex, objective decision criterion. Again, the procurement
then the owner must decide whether it will use the cost- process could include the opportunity for discussions and
technical tradeoff or value unit price award algorithm. As final proposals, if permitted by enabling legislation and
previously stated, cost-technical tradeoff gives the owner deemed advisable by the procuring agency.
maximum flexibility in its best-value award decision, and
experience of federal agencies indicates that its use results The final point concerning implementing the proposed
in better decisions and also reduces the potential for bid best-value procurement method deals with the owner's learn-
protests based on improper application of the published ing curve. The research team's personal experience in apply-
evaluation plan. However, legislatures may be reluctant ing best-value procurement techniques in the federal sector
to allow agencies to use this algorithm due to the major and with design-build best-value awards in state highway
paradigm shift from the conventional design-bid-build agencies leads it to believe that each agency will decide on an
procurement process. For the same reason, agencies may optimum process for delivering best-value projects only after
be reluctant to use this process even if legal authorization a number of best-value projects are completed. Thus, it needs
exists. An owner that has authority to use this process and to be recognized that the procurement method proposed
is interested in doing so would take the parameters and in this report provides a theoretical basis to which an agency
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can add its personal legislative and institutional constraints, · The owner will allow a maximum of 150 days for this job,
thus producing a customized method that fits its market and and the contractor most propose its own detailed schedule
its mission. for completing the project in the stipulated period. This
schedule essentially consists of identifying the dates on
which each of the major chip seal sections will be shot,
Illustrative Examples
because this project is not continuous and involves four
This somewhat complex process is best illustrated by different highways.
examples. Three examples are provided to allow the reader to
see the dynamics of each of the proposed best-value award Table 3.6 shows the results of the technical criteria evalu-
processes. ation for five typical contractor proposals for this project.
One can see that two of the five firms were eliminated for not
having met one or more of the technical criteria. In both
Meets Technical Criteria--Low-Bid Award
cases, their price proposal was returned unopened. Of the
Algorithm Example
three remaining firms, Firm C had the lowest price proposal.
Starting with the simplest award algorithm, meets techni- Two points should be noted about allowing the competitors
cal criteria--low bid, a hypothetical chip seal project will be to select from two predetermined binder/aggregate combi-
introduced. The project's details are as follows: nations. First, it does not make this a design-build project.
The agency is neither allowing the contractor to design the
· The owner restricts the competition to prequalified chip final product nor is it shifting any performance liability with
seal contractors that have completed at least three previous the product selection. Second, the owner's engineer obvi-
projects in the state. ously felt that either of these alternatives would furnish a sat-
· Safety is to be measured using the standard that the firm must isfactory product. By allowing the contractor to make the
have a Workers' Compensation Insurance Rate Modifier of selection, the agency is creating an environment in which a
1.00 or lower. contractor can base the bid and the schedule on the alternate
· The owner lists two types of allowable binder and aggregate with which it has the most, and perhaps the best, experience.
combinations: AC15-5TR binder with precoated grade 3 This would be directly reflected in the bid price and
aggregate and CRS-2P binder with uncoated grade 3 aggre- the schedule.
gate. The contractors must state in their proposal which The next two award algorithms require a more complex
combination they intend to use to be technically responsive. evaluation plan and a more involved evaluation process.
· The owner requires that a quality management plan be Hence, a more detailed example has been developed to illus-
submitted based on the contractor's binder-aggregate trate the dynamics of the cost-technical tradeoff and value
choice that complies with the minimum standards unit price best-value award algorithms. An example project
shown in the state standard specifications for chip seal was found in the Florida DOT procurement policy guide
projects. (FDOT 1996). It furnishes enough basic information to
Table 3.6. Best-value evaluation results for hypothetical chip seal project with
meets technical criteria--low-bid award algorithm.
Price
Firm Prequal. Safety Binder/Agg. Quality Plan Time
Proposal
GO/ GO/ GO/ GO/
Proposed
Proposed NO NO- Proposed NO Proposed NO- 150 max
Modifier
GO GO GO GO
A AC15-5TR Meets
3 projects GO 0.97 GO GO GO 150 $2,859,890
w/precoat G3 specs
B NO AC15-5TR Does not NO-
2 projects 0.87 GO GO 150 Bid returned
GO w/precoat G3 meet specs GO
C Meets
9 projects GO 0.91 GO CRS-2P w/G3 GO GO 150 $2,832,489
specs
D NO- Meets
4 projects GO 1.03 CRS-2P w/G3 GO GO 150 Bid returned
GO specs
E AC15-5TR Meets
3 projects GO 0.95 GO GO GO 150 $2,840,049
w/precoat G3 specs
Firm C is the winner. Lowest bid with all GOs.
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Table 3.7. Best-value selection on example project (FDOT 1996).
Technical Price
Firm Score Time Proposal
A 92 450 $11,880,000
B 86 460 10,950,000
C 76 500 9,850,000
D 74 500 9,760,000
E 68 500 9,700,000
allow the process to be demonstrated. The author will fill in · The DOT was specifically concerned about the following
hypothetical information where actual project information qualifications issues: the qualifications of the quality control
is not known. The project was a reconstruction of an exist- engineer, the qualifications of the superintendent, the num-
ing suburban highway. The majority of the work is the recon- ber of similar projects the firm had successfully completed
struction of the pavement. Table 3.7 shows the project in the region using similar mix designs, the level of small
proposal data that comes from the FDOT example project. business utilization, and the firm's safety record as measured
To furnish the input necessary to adequately demonstrate by its Workers' Compensation Insurance Modifier.
the proposed procurement processes, the following hypo- · This project was screened and selected as a good candidate
thetical project information is assumed: for best-value procurement because it seemed to have the
potential to accrue benefits in the following areas:
· The DOT was willing to allow the contractors to propose The probability of success was enhanced by the selection
the option of either recycling the millings from the existing of a highly competent and experienced contractor.
asphalt pavement in the project mix or furnishing new hot It had the potential for quality enhancements by com-
mix asphaltic concrete pavement and stockpiling the peting pavement design components.
millings for future use by the DOT. Accordingly, the con- There was an opportunity that an innovative traffic con-
tractor was allowed to propose the type of asphalt binder trol plan could accrue real time savings.
and a mix design that conformed to state specifications. Work zone safety was a particular concern, and the DOT
The RFP stated that "recycling was preferred if quality wanted to ensure that the successful contractor had a
could be maintained at a reasonable cost." This is consid- strong institutional safety program.
ered a design alternate. · The agency published the fact that a proposal must score
· Traffic control was an issue as this road was on the route to a minimum of 70 points in the technical evaluation to be
a major tourist attraction in the area. The DOT desired that considered responsive. A minimally satisfactory proposal
disruption to traffic be minimized if possible. The proposed in each category would receive 50% of the available
traffic control plan was to be furnished in the proposal. points.
· The maximum number of scheduled working days was
500. A daily user cost of $6,000 per day was specified for use The final scores and breakdown of the details of the tech-
in those best-value award algorithms where a value must nical score are shown in Table 3.8. At this point, there is no
be placed on time. need to explain the reasons for the individual scores.
Table 3.8. Best-value selection on example project technical score breakdown.
Totals Technical Score Breakdown
Traffic
Price Tech. Design Control Past
Firm Time Proposal Score Alternate Schedule Plan Quals. Performance Safety
(100) (20) (20) (20) (20) (10) (10)
A 450 $11,880000 92 18 20 17 19 10 8
B 460 10,950,000 86 18 19 17 16 7 9
C 500 9,850,000 76 15 10 15 18 10 8
D 500 9,760,000 74 14 10 16 16 8 10
E 500 9,700,000 68 13 10 15 14 7 9
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Table 3.9. Cost-technical tradeoff best-value selection on example project
technical score/adjectival breakdown.
Totals Technical Score Breakdown
Traffic
Price Tech. Design Control Past
Firm Time Proposal Score Alternate Schedule Plan Quals. Performance Safety
(100) (20) (20) (20) (20) (10) (10)
18 20 17 19 10 8
A 450 $11,880,000 92
best best best best best good
18 19 17 9
B 460 10,950,000 86 16 7
best 2nd best best 2nd best
18 10 8
C 500 9,850,000 76 15 10 15
2nd best best good
16 16 8 10
D 500 9,760,000 74 14 10
good good good best
68 9
E 500 9,700,000 13 10 15 14 7
NR* 2nd best
*NR = not responsive
Cost-Technical Tradeoff Example many ways and no attempt will be made at this point in the
report to cover all the possible outcomes. However, looking at
The proposed version of cost-technical tradeoff involves
Table 3.10, one can arrive at several conclusions that would
the qualitative determination of best value without a direct
influence the evaluation panel's decision:
mathematical comparison of scores. Thus, the scoring results
need to be broken out in a manner that facilitates the discus-
sion of the merits of each proposal and the arrival at consensus · Firm D, the lowest priced proposal, was satisfactory in all
regarding the best value. Table 3.9 demonstrates how the eval- categories and furnished the best safety record and received
uation results can be organized in an adjectival manner. It "good" ratings in traffic control plan, qualifications, and
essentially looks to determine which proposal had the best past experience.
score in each category. It then identifies the second best score. · Firm A is clearly the best proposal having been the best in
To further amplify the results, any proposal that received 80% 5 out of 6 categories. However, its price is $2,120,000 more
of the possible points is also called out as "good." than the low bid.
The results in Table 3.9 are then sorted from lowest respon- · For an additional $90,000, Firm C offers the best past per-
sive bidder. Firm E is eliminated because its technical score formance, the second best qualifications, a good safety
was lower than 70 points and is therefore considered not record, and a slightly better score than Firm D in the
responsive. Table 3.10 shows the reorganized evaluation Design Alternate category. Finally, it furnishes the same
information. schedule as Firm D.
At this point, the evaluation panel must come together and
compare the cost of awarding based on a proposal that is rated Thus, one possible outcome is for the evaluation panel to
higher than the lowest responsive bid. This can obviously go decide that the enhanced proposal offered by Firm C is worth
Table 3.10. Cost-technical tradeoff best-value selection on example project
adjectival comparison with price increment.
Price Price Tech. Past
Firm Proposal Increment Score Des Alt. Sched. TC Plan Quals. Perf. Safety
(over low bid) (100) (20) (20) (20) (20) (10) (10)
16 16 8 10
D $9,760,000 -- 74 14 10
good good good best
18 10 8
C 9,850,000 90,000 76 15 10 15 2nd best best good
18 19 17 9
B 10,950,000 1,190,000 86 16 7
best 2nd best best 2nd best
18 20 17 19 10 8
A 11,880,000 2,120,000 92
best best best best best good
