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73 1. Identification of common objectives and advantages for model specification refers to the AASHTO Guide Specifica- best-value procurement; tions for Highway Construction (AASHTO 1998) where 2. Analysis and allocation of risks in the procurement appropriate. Under each of these sections, options, insertions, process; or alternate approaches are italicized. 3. Involvement of an owner and industry task force in the development and review of proposed legislation or pro- XXX.01 General/Description. posed best-value procurement procedures; and 4. Involvement of owner and industry team in testing the new approach through a pilot or demonstration project. A. The Agency is using a best-value procurement procedure to select the Bidder that will be awarded the Contract. The selection process will take into account the price offering and other factors that the Agency considers essential to Step 5--Pilot projects the successful performance of the work. In addition to Pilot projects are a proven tool for validating and fine-tuning price, best-value parameters will include [insert addi- new practices resulting from research. Using traditional proj- tional best-value parameter(s) based on project objectives ects as a benchmark, pilot projects or programs have been used identified in the project screening process. Parameters may extensively to measure the relative success of new procurement include time, qualifications, quality, design alternates, or and contracting methods. The results of pilot projects, though some combination of these factors aligned with the project in some cases difficult to attribute to one specific cause, have objectives.] served to effectively promote the long-term implementation of B. Refer to Section XXX.05 for the Agency's evaluation plan, new industry practices. It is recommended that an agency criteria, and selection method. champion the use of best-value procurement through a pilot C. This procedure consists of a [insert one-step or two-step] program, partner with industry in testing various best-value procurement process. Refer to Sections XXX.03 and systems, and develop criteria to measure its relative success XXX.05 for detailed requirements. compared with traditional low-bid projects. The project screening and selection tool developed for the implementation of best-value procurement can be used by XXX.02 Definitions and Terms. The following definitions agencies to identify those projects that will make good pilot are added to Section 101.03 Definitions: test beds and will furnish the project performance metrics that can be used to evaluate the results of the local pilot proj- ect program against a baseline of traditional projects. It is A. Best value--a procurement process where price and other essential for the agency to maintain a long-term commit- key factors are considered in the evaluation and selection ment, providing ongoing technical and troubleshooting sup- process to minimize impacts and enhance the long-term port, and adjust and revise procedures as appropriate to performance and value of construction. overcome recognized problems and pave the way for more B. Parameters--categories describing the Agency's procure- widespread implementation. Typically, institutionalizing the ment objectives in terms of cost or time savings, qualifica- process through the development of appropriate governmen- tions, or quality enhancements. Parameters are expressed tal and private support groups or associations, annual con- as cost, time, qualifications & performance, quality, and ventions or meetings, websites, and regular periodicals will design alternates. facilitate long-term support. C. Evaluation Criteria--those factors associated with each best-value parameter that will add value to the procure- ment and will be used to systematically evaluate proposals 3.7 Model Best-Value Specification as part of the evaluation plan. This model specification represents a framework for the D. Rating Systems--a decision system that measures how well development of best-value procurement specifications. This an offeror's response meets the solicitation's requirements. document should be considered a template. To integrate these The system ranges from a relatively simple satisficing or specifications into a proposal, special care must be exercised go/no-go decision to more complex adjectival and direct to ensure compatibility with the agency's standard specifica- point scoring systems. tions, especially the General Provisions. For more complex E. Award Algorithm--methods for combining parameters procurements, it is highly advisable to include separate and evaluation rating systems into an award decision. Instructions to Bidders instead of incorporating procurement Algorithms are described through a formula or a step-by- and award requirements in the standard specifications. This step decision process.

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74 XXX.03 Preparing the Proposal. The following is added to XXX.04 Irregular Proposals. The following is added to the the conditions listed in Section 102.06 conditions listed in Section 102.07 Irregular Proposals, under which proposals are considered If the Agency specifies a one-step process, submit a pro- irregular and may be rejected. posal consisting of [insert description of the required process, evaluation criteria, rating system, and award algorithm]. The proposal includes separate price and technical submissions. A. The proposal fails to meet a minimum standard or Submit price proposals on Agency-supplied forms. For tech- pass/fail requirement. nical proposals, submit a sealed package, containing concise B. When A+B bidding is specified, the proposed number of written material (or drawings) that enables a clear under- days bid to complete the project or listed contract standing and evaluation of technical criteria. Legibility, clar- segments is outside the range specified for the project or ity, and completeness of the responses are essential. Present segment. the Technical Proposal such that the Agency can easily sepa- rate and evaluate each criterion. [Insert specific requirements for technical responses, page limits, and format]. XXX.05 Consideration of Proposals. The following If the Agency specifies a two-step process, the Agency will replaces Section 103.01 Consideration of issue a step-one Request for Qualifications (RFQ) including Proposals. [insert qualifications evaluation criteria, standards, and eval- The Agency will evaluate proposals based on [describe best- uation plan]. Submit a Statement of Qualifications (SOQ) value system including the specified evaluation criteria, award addressing the requirements of the RFQ. If determined to be algorithm, and rating system. Refer to commentary for sum- fully responsive to the qualifications, the Agency will issue a mary table describing evaluation criteria and award algo- step-two Request for Proposal (RFP) to the qualified bidders. rithms]. Considerations: If the proposal consists of price and other The Agency will select the successful proposer based on parameters expressed in terms of an equivalent price, as in the [describe the evaluation plan and method of scoring using a case of A+B bidding, the Agency will limit the submission to a mathematical combination of price and technical score, cost- price proposal form with an explanation of prices for Part B or technical tradeoff, or fixed-price best proposal. The specification other parameters. For A+B bidding, Part A is the total dollar must clearly document the evaluation process, and specify the amount of the unit price bids in the Bid Schedule and Part B method of scoring and computation or qualitative determina- is the number of calendar days that the Bidder will require to tion of the best-value proposal]. substantially complete the project multiplied by the Daily User Considerations: The following are some considerations Cost listed in this special provision. The Bidder shall enter this for Agency personnel when developing a best-value solici- calendar day number on the Bid Schedule in the Proposal tation: Form. The number of calendar days shall not exceed [insert maximum number of days] days or the bid will be considered non-responsive. The Agency will evaluate each bid as the sum The following table includes the recommended best-value of Parts A and B. The successful bid is the lowest combination award algorithm formulas. [Please note that other award of Parts A and B. The Agency will award the Contract in the algorithms are possible. Consult the applicable statutes and amount specified in Part A of the bid. The B time will be the procurement guidelines to determine if a particular award calendar-day time period specified in Part B of the bid. mechanism is required.] BV Award Algorithm Algorithm Variables Meets Technical Criteria-- If T > Tmin, Award to Pmin T = Technical Score Low Bid If T < Tmin, Non-Responsive P = Project Price Value Unit Price (Weighted TS = W1S1 + W2S2 + ... + WiSi + W(i+1)PS TS = Total Score Criteria) Award TSmax Wi = Weight of Factor i Si = Score of Factor i PS = Price Score Qualitative Cost-Technical Similar to above, only no quantitative analysis of Evaluation Panel reaches Tradeoff difference. Award to proposal that has best value in consensus as to which proposal proposed scope. is the best.

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75 The following table includes a recommended framework meeting to answer questions or clarify aspects of an RFP. for combining evaluation criteria with an award algorithm For a best-value procurement involving the consideration and rating system. of complex technical criteria, this initial clarification is The criteria used for technical evaluation, the weighting or even more critical. Additionally, federal law requires noti- relative importance of each criterion (including price), the fication to unsuccessful offerors and allows for pre- or scoring system, and the award algorithm should be clearly post-award debriefings if requested by the offeror. A defined in the solicitation documents. This creates a level debriefing is also strongly recommended for best-value playing field, reduces the uncertainty related to the selec- procurement to further clarify the basis for award, the tion process, and focuses the proposers on what is most selection process, and the rationale for eliminating the important to the agency. offeror, if this was not apparent in the written notification Use selection criteria that are important, add value, and of contract award. relate to desired performance. Selection criteria often include factors that are difficult to assess or do not directly Example 1: Meets Technical Criteria--Low Bid relate to the performance goals of the agency. Use a project screening system to identify key selection criteria that add The final award decision is based on price. Technical pro- value to the procurement process. posals are scored before any cost proposals are reviewed. The If performing a best-value tradeoff analysis to justify award price proposal is opened only if technical proposal is above to other than the lowest priced offeror or other than the the minimum technical score. If it is below the technical highest technically rated offeror, conduct systematic com- score, the proposal is deemed non-responsive, and the price parisons of price and technical criteria. Furthermore, the proposal is not considered. Award will be determined by the rationale for the decision, including benefits associated lowest priced, fully qualified offeror. A generic algorithm and with the additional costs (or reduced costs), must be doc- example follow: umented, but need not quantify the tradeoffs that led to the Algorithm: If T > Tmin, Award to Pmin decision. If T < Tmin, Non-Responsive It is prudent to ask that interested parties submit questions T = Technical Score in advance of the submission stage and hold a pre-proposal P = Project Price Award Algorithm BV Meets Technical Value Unit Price Cost-Technical Parameter and Criteria--Low Bid (Weighted Tradeoff Evaluation Criteria or Low Cost Criteria) (Qualitative) Cost Cost: A.0 X X X Time Schedule: B.0 X X X Qualifications Prequalification: P.0 X Past Project Performance: P.1 X X Key Personnel Experience: P.2 X X Subcontractor Information: P.3 X X Project Management Plans: P.4 X X Safety Record/Plan: P.5 X X X Quality Quality Management: Q.0 X X X Design Alternates Design with Proposed Alternate: D.0 X X Technical Proposal Responsiveness: D.1 X Environmental Considerations: D.2 X X Rating System Adjectival or Modified Satisficing Direct Point Scoring Satisficing

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76 Meets Technical Criteria--Low-Bid Example Technical Score (60 maximum) Offeror (40 minimum) Price Proposal 1 51 $1,400,000 2 53 $1,200,000 3 44 $1,100,000 4 39 NR Example 2: Value Unit Price (Weighted Criteria) Example 3: Qualitative Cost-Technical Tradeoff In the value unit price algorithm, the technical proposal The qualitative cost-technical tradeoff is used by many fed- and the price proposal are evaluated individually. A weight is eral agencies under the FAR. This method relies primarily on assigned to the price and each of the technical evaluation fac- the judgment of the selection official and not on the evalua- tors. The sum of these values becomes the total score. The tion ratings and scores (Army 2001). The final decision con- offeror with the highest total score is selected. A generic algo- sists of an evaluation, comparative analysis, and tradeoff rithm and example follow: process that often require subjectivity and judgment on the part of the selecting official. The figure below depicts the Algorithm: TS W1S1 W2S2 ... WiSi W(i1)PS qualitative cost-technical tradeoff algorithm as described in Award TSmax the Army Source Selection Guide (Army 2001). TS = Total Score The tradeoff analysis is not conducted solely with the rat- Wi = Weight of Factor i ings and scores alone. The selection official must analyze the Si = Score of Factor i differences between the competing proposals and make a PS = Price Score rational decision based on the facts and circumstances of the Value Unit Price Example Technical Score Price Score Total Score Offeror (60 maximum) Price Proposal (40 maximum) (100 maximum) 1 51 $1,200,000 36 87 2 53 $1,250,000 35 88 3 44 $1,100,000 38 82 4 39 $1,000,000 40 79 Lowest priced Award to proposal is the superior YES lowest priced proposal in terms of offeror non-cost proposal NO Proposals are essentially equal in YES terms of non-cost factors NO Award to Conduct offeror that tradeoff represents analysis the best value