"Best Value" Contracting: Talking Points

1. The Traditional Low-Bid Method: Under the traditional low-bid system of contracting, known as sealed bidding, government contracts are awarded to the lowest responsible bidder, but very little investigation is undertaken to determine if a contractor actually qualifies as "responsible." Contracts are primarily awarded on low price alone.
2. Flaws & Limitations of Low-Bid System: It is becoming increasingly evident that awarding projects to the low bidder can result in false economy if there is subsequent default, late deliveries, defective or substandard work, or other unsatisfactory perfonnance. ~ Federal Acquisition Regulation ("FAR"), Section 9.103(c), 48 C.F.R. § 9.103(c). This typically happens when the low bidder lacks the proper resources and/or qualifications to do the job.
3. High Costs of Failed Contracts: Delayed and/or unsatisfactory perfom1ance greatly escalate contract costs and cause serious administrative and logistical problems for contracting agencies. These problems, plus excessive claims and change orders, also common on low-bid projects, translate into "total project" costs far in excess of the original "low bid" quoted Simply stated, if the work is not done right the first time by a qualified reliable contractor, the agency loses.
4. The "Best Value" Alternative: The best value approach allaws contracting officials to closely examine, evaluate and rate contractors on their respective qualifications and performance capabilities and choose the best qualified contractor who offers the best price. The agency still always has the right to choose the low bid --it just can't be forced to accept the low bid when it doesn't offer the best value. A contractor whose price is 1% higher than the low bidder may be worth it if its track record and qualifications are ten times better.
5. Key Evaluation Criteria: Since it permits contracting agencies to more effectively screen bidders, best value can be used to select contractors who present less risk and who are more likely to deliver the best overall value for the government. These results are achieved because contracting officials can consider various performance factors in the bidding process, including:

    Technical Qualifications           Project Planning
    Past Performance                   Quality Control
    Management Personnel               Safety Programs
    Staffing Capabilities              Financial Capability
    Subcontracting Plans
   

6. Beyond Price: When it comes to judging a contractor's ability to successfully deliver a project, there are a lot of factors other than price that come into play. If an agency wants a quality project delivered on schedule and on budget, it is critical to evaluate contractors on the types of "non-price" factors referenced-above.
7. Permitted Under Current Law: Under current procurement law, federal departments and agencies already have the option, when they so determine, to utilize best value contracting procedures as an alternative to sealed bidding. See Federal Acquisition Regulation, Parts 6 and 15.
8. Improving Quality, Cost & Efficiency: In recent years, the President and Congress have encouraged federal agencies to expand the use of best value in an effort to improve quality , cost and efficiency in government contracting, and as a means for reducing waste, fraud and abuse. See 1997 Revisions to FAR, Part 15 pursuant to Federal Acquisition Streamlining Act of 1994 and Executive Order of October 13, 1994.
9. Best Value for Construction & Maintenance: As result of these developments, a number of federal agencies, including the General Services Administration, Navy and Air Force are now utilizing the best value method to improve the delivery of goods and services in their respective contracting programs. More recently, a number of agencies have also begun incorporating this approach into their construction and maintenance contracting programs.
10. Promoting Best Value in the Federal Sector: Notwithstanding the advantages and growing use of best value contracting, the low-bid approach is still dominant in some agencies and/or in some areas. This is most likely due to a lack of knowledge on the part of contracting officials on the availability and benefits of the best value method. Greater use of best value can be attained if interested parties in the contracting comm1ll1ity work together with elected officials to promote the use of this method throughout the federal sector.