Value for Money in the U.S. Federal Government Procurement System

What does the OFPP provide?
What is the only agency exempt from the Federal Property and Administrative Services Act?
What type of acquisition is included in the Federal Property and Administrative Services Act?

Transcription

1 2008/SOM3/GPEG/SEM/011 Value for Money in the U.S. Federal Government Procurement System Submitted by: United States Seminar on Implementation of the Value for Money Non Binding Principle in Government Procurement Lima, Peru August 2008

2 Value for Money in the U.S. Federal Government Procurement System Sarah Loss August 14, 2008 Attorney-Advisor APEC - GPEG Office of General Counsel Lima, Peru U.S. Department of Commerce Objective To provide an overview of how the U.S. Government system is designed to achieve value for money in federal procurements

3 General Principles of the U.S. Procurement System Full and Open Competition: All responsible suppliers are permitted to compete. Agencies may restrict competition only under specified conditions. Fairness: : All potential suppliers must be treated equally and fairly to ensure they have an equal opportunity of winning a contract. Value for Money: Agencies are required to obtain best value to fulfill their procurement requirements. GPEG Definition Value for money is the benefit gained by means of identifying the product or service that provides the most advantage to stakeholders, when considered over the entire procurement cycle from identification of need to disposal of an asset. These advantages include price and cost but also relate to factors beyond these.

4 Two Objectives for Achieving Value for Money Best combination of price and qualitative merit Evolution beyond automatic primary emphasis on price Reduce administrative burden on offerors and government Key U.S. Procurement Laws and Regulations Laws Federal Property and Administrative Services Act (1949) Office of Federal Procurement Policy Act (1974) Competition in Contracting Act (1984) Regulations Federal Acquisition Regulation Supplemental Agency Acquisition Regulations

5 Key U.S. Procurement Laws and Regulations Federal Property and Administrative Services Act (41 U.S.C ) 260) (1949) Governs the acquisition of all property and services by all executive agencies except DOD, Coast Guard, NASA or any agency specifically exempted by statute Established the General Services Administration Best Value one of four stated agency goals Key U.S. Procurement Laws and Regulations Office of Federal Procurement Policy (OFPP) Act (41 U.S.C. 401 et seq.) (1974) Established OFPP to provide overall direction for government-wide acquisition policies, regulations and procedures and to promote economy, efficiency, and effectiveness in the acquisition process

6 Key U.S. Procurement Laws and Regulations Competition in Contracting Act (41 U.S.C. 253) (1984) Requires contracts to be awarded using a full and open competition standard, which means that all responsible suppliers must be allowed to compete. Specific exceptions to the requirement are allowed. Key U.S. Procurement Laws and Regulations Federal Acquisition Regulation (FAR) Procurement regulation that sets out requirements for U.S. executive agency procurement processes. FAR can be accessed at: Supplemental Agency Acquisition Regulations Agencies may also publish their own supplemental procurement regulations to address issues that are unique to their requirements and contracts, such as the Department of Defense s s Defense Federal Acquisition Regulation (DFAR).

7 U.S. Primary Procurement Methods Sealed Bidding (FAR Part 14): Competitive bidding process; awards made to responsible bidder whose bid is responsive and advantageous based only on price and price-related related factors. Negotiated Procurements (FAR Part 15): Contract awards based on both price and non-price factors. Negotiations conducted with most competitive suppliers on price, schedule, technical requirements, and other terms. Single tendering or Sole Sourcing (FAR Subpart 6.3): Agency may select a supplier without full and open competition, if it meets one of the circumstances, set out in regulations. Agency Discretion FAR leaves broad discretion to agency acquisition officials Examples: Federal Aviation Administration the most advantageous solution, determined by examining tradeoffs between cost and other factors, where it is not required the award be made to either the lowest bidder or to the high rated technical solution Naval Air Warfare Center select the most advantageous offer by evaluating and comparing factors in addition to cost or price

8 Recent Evolution of Value for Money in U.S. Government Procurement Executive Order (1994) Federal Acquisition Streamlining Act (1994) Simplified Acquisition Procedures (1994) (FAR Part 13) Clinger-Cohen Cohen Act (1996) FAR Part 15 Revisions (1997) Executive Order Federal Procurement Reform (1994) Increase the use of commercially available items where practicable, place more emphasis on past contractor performance, promote best value rather than simply low cost in selecting sources for supplies and services; Review existing and planned information technology acquisitions and contracts to ensure that the agency receives the best value with regard to price and technology, and consider alternatives in cases where best value is not being obtained.

9 Federal Acquisition Streamlining Act (1994) Expanded use of simplified acquisition procedures threshold increased from $25,000 to $100,000 Reduce unique purchasing requirements Encourage use of commercial items Increased methods for simplified acquisition procedures (Purchase cards ($2,500 or less)) Goal of reducing bid protests with debriefings Required consideration of past performance Simplified Acquisition Procedures (1994) FAR Part 13 Objectives (intended to achieve value for money) Reduce administrative costs Promote efficiency Value under $100,000 Unless commercial item - $5.5 million

10 Simplified Acquisition Procedures Competition to the maximum extent practicable Requires allowing a reasonable time to respond Consider all quotations or offers received Refers to: Blanket purchase agreements Purchase orders Use of purchase cards Clinger-Cohen Cohen Act (1996) 40 U.S.C et seq Requires efficient purchasing of information technology (IT) products and need to take into account: Cost/benefit ratio Expected life of technology Multiple use possibility Incorporate commercial IT in a timely manner

11 FAR Part 15 Revisions (1997) Revised to increase use of value for money Reduce administrative burdens Increase efficiency Require examination of past performance Increase communication among Government and prospective offerors to a procurement Ensure that proposals are evaluated according to stated criteria FAR and Value for Money (or Best Value) Definition of best value FAR 2.101: The expected outcome of an acquisition that, in the Government s s estimation, provides the greatest overall benefit in response to the requirement.

12 FAR and Value for Money FAR Best value continuum Cost or price may be more important when: Cleary definable requirement and/or low risk of unsuccessful contract performance Technical or past performance may be more important when: Requirement less defined and/or greater performance risk FAR and Value for Money: Lowest price/technically acceptable (FAR ) Agency can interpret value for money to mean a technically acceptable proposal at the lowest price If technically acceptable, tender offers ranked only according to price Tradeoffs are NOT permitted

13 FAR and Value for Money: Tradeoffs FAR Tradeoff between price and technical rating to determine best value Appropriate when it may be in the best interest of the Government to consider an award to a supplier offering other than the lowest price or highest technical rating FAR and Value for Money: Using Tradeoff Analysis All evaluation factors shall be clearly stated in the solicitation Shall state how evaluation factors other than cost or price, when combined, are compared to cost or price The tradeoff rationale must be carefully documented for each procurement Purchaser/vendor discussions if questions during tendering process Then evaluation

14 Common Themes When Seeking Value for Money (Evaluation Factors) Innovation Quality Life-Cycle Costs (including cost of acquiring, operating, supporting and disposal) Suitability Common Themes When Seeking Value for Money (Evaluation factors) (cont.) Adaptability for Future Needs Cost is important, but cheapest does not necessarily mean best value Can include a preference for bulk purchases, longer-term contracts Past performance

15 Review of past performance in seeking value for money Office of Federal Procurement Policy Best Practices for Collecting and Using Current and Past Performance Information Chapter 3 agency must compare past performance of competing offerors in order to determine which offers the best relative value to get the best deal for the taxpayer FAR (3)(i) except in a few circumstances past performance shall be evaluated in all source selections expected to exceed the simplified acquisition threshold U.S. Government Tools to Facilitate Value for Money Websites Federal Supply Schedule Central Contractor Registration Past Performance Information Retrieval System (PPIRS) Automated Best Value System Excluded Parties List System

16 Websites Acquisition Central: Provides a one-stop link to all relevant information relating to U.S. federal procurement: Procurement Opportunities: : Lists U.S. federal procurements over $25,000: Federal Supply Schedules (FSS) Federal Supply Schedule (FSS) program: Simplified process for U.S. government agencies to purchase commercial supplies and services. Administered by General Services Administration (GSA). A Commercial Catalog Multiple Awards for Varying Requirements Volume Discount Pricing

17 Central Contractor Registration (CCR) Single point for registration for all companies seeking to do business with the Federal Government Contains essential business information Replaced multiple location registration Suppliers may register on-line, following step-by by-step instructions on this website: Past Performance Information Retrieval System (PPIRS) Web-enabled, enabled, government-wide application providing timely and pertinent contractor past performance information for use in making source selection awards Effective tool to ensure value for money is achieved

18 Automated Best Value System Can be used in conjunction with PPIRS - Defense Logistics Agency (DLA) site to further record performance of vendors doing business with DLA Computerized program to record and keep track of vendor s s past performance Awarded a score to be used as evaluation factor in future procurements Like PPIRS, past performance records key to obtaining value for money Excluded Parties List System (EPLS) Single list of individuals and firms excluded by Federal government agencies from receiving contracts and certain federal financial assistance and benefits Disbarred, suspended or otherwise excluded

19 Conclusion Methods for attaining Value for Money are widely incorporated into U.S. Federal Government procurement system Will continue to evolve Questions??? Sarah Loss Office of General Counsel U.S. Department of Commerce