Informational Guidance

Performance Price Tradeoff (PPT)

July 2005

TABLE OF CONTENTS

Page

1. Introduction...... 2

2. Whento Use PPT...... 3

3. Two Basic PPT Best Value Models...... 4

4. Developing the Solicitation...... 4

5. Proposal Evaluation...... 8

6. Exchanges Between the Government and Offerors...... 12

7. Making the Award Decision...... 14

8. Useful Web Sites...... 15

ATTACHMENTS

Attachment 1 – Sample Section L & M without Technical Proposals

Attachment 2 --Sample Provisions for Acquisition of Commercial Items

Attachment 3 – Sample Section L & M with Technical Proposals

Attachment 4 – Sample Past Performance Questionnaire

Attachment 5 – Sample Individual Technical Evaluation Checklist

Attachment 6 – Sample Performance Confidence Rating Evaluation Matrix

Attachment 7– Sample Rating Team Worksheet

Attachment 8 – Sample Evaluation Notice

Attachment 9 –Sample Source Selection Decision Document

1. Introduction

1.1 Purpose

This guide provides general guidance on the Performance Price Tradeoff (PPT) technique for source selection, explains when and how to use PPT, and provides samples of provisions and documents for use with PPT. Keep in mind that each acquisition is different and the samples may not apply exactly to your situation. The Source Selection Authority (SSA) must exercise good business judgment in planning, executing and documenting a competitive acquisition.

1.2 Background

Representatives from Air Force Materiel Command (AFMC), Air Mobility Command (AMC) and Air Education and Training Command (AETC) developed this Air Force PPT guide by integrating existing guides from their individual commands.

1.3 What is PPT?

The PPT process is a simplified best value source selection strategy that permits a tradeoff between price and performance in reaching the award decision. It applies to both commercial and non-commercial acquisitions.

1.4 What are the Benefits of PPT?

The PPT strategy permits recognition of the good performer and thereby minimizes the risk of awarding to a contractor that will not perform at an acceptable level. A contractor that delivers what the contract requires without extensive follow-up effort is clearly delivering better value than a contractor that charges essentially the same price, yet needs constant surveillance to ensure performance. In short, the PPT process weeds out marginal to unsatisfactory performers in favor of offerors with proven records of providing quality products and/or services on time and at affordable prices. PPT also allows for SSA discretion in awarding to higher rated performers over lower rated performers if the price differential is warranted and considered to be best value.

1.5 Is an Acquisition Plan Required?

Acquisition planning is required for all acquisitions per FAR 7.102(a). Dollar thresholds determine format and content, which are described in DFARS 207.103, AFFARS 5307.104-92 and MAJCOMS supplements thereto. The decision to use PPT should result from advance planning and thorough consideration of all aspects of the requirement and other available acquisition strategies. When applicable, complete the plan and provide to the review office as early in the acquisition process as possible.

1.6 Is a Source Selection Plan Required?

Source selection plans are not required for PPT source selections. However, when the SSA is other than the contracting officer a source selection plan is the recommended way to document the SSA’s establishment of the source selection team and approval of the evaluation factors. MAJCOM and other community advice guidance on the preparation of source selection plans are available in the AFFARS Library – Part 5315 (Source Selection Center).

1.7 Who is the Source Selection Authority?

AFFARS 5315.303 and MAJCOM supplements thereto designate SSA levels for all FAR Part 15 source selections, including PPT actions. The contracting officer is the SSA for acquisitions $10 million and below unless designated otherwise. Over $10 million, the SSA level depends on the type of program (i.e., ACAT, space related, AFPEO/CM portfolio, or “Other Contracting”).

2. When to Use PPT

The PPT process can be used for any competitive negotiated acquisition (including A-76) for which it is unnecessary to distinguish levels of technical merit among the proposals to make an award decision.

2.1 Examples of appropriate PPT acquisitions

Replenishment spares

Non-complex operational contracting acquisitions

Some types of construction contracting

Non-developmental, noncomplex service or supplies

Service contracts with only pass/fail technical requirements

Low technical complexity “build to print” contracts

2.2 When not to use PPT

Sole source buys

Sealed bidding

Technically complex acquisitions

3. Two Basic PPT Best Value Models

3.1 Without technical proposals

This simpler model is structured without the use of technical evaluation factors and submission of technical proposals. The assessment of recent and relevant past performance, resulting in a performance confidence assessment rating, is based on the results of surveys sent to customers identified by the respective offerors and other sources of information available to the contracting officer.

3.2 With technical proposals

The second model includes technical evaluation factors and/or subfactors that must be considered to ensure the offeror can satisfy certain minimum requirements. The factors/subfactors are evaluated on an acceptable/unacceptable, pass/fail, or similar basis. As with the first model, the assessment of recent and relevant past performance, resulting in a performance confidence assessment rating, is based on the results of surveys sent to customers identified by the respective offerors and other sources of information available to the contracting officer.

4. Developing the Solicitation

4.1 Overview

Non-commercial acquisitions must follow the uniform contract format described in FAR 15.204-1. Commercial acquisitions are governed by the format in FAR 12.303. The FAR requires that the government evaluate competing proposals based solely on the factors described in the solicitation. Sections L and M of the RFP describe the information required to be in the contractors offer and sets the ground rules for evaluation. (For commercial acquisitions, the Instructions to Offerors and Description of Evaluation Factors are utilized). These sections form the heart of the solicitation. The basis for nearly all GAO protests stems from not following some aspect of the instruction to offerors or from not following the evaluation factors. It is therefore paramount that solicitations describe clearly and concisely the information required and the evaluation factors, including their relative order of importance. Past performance should be given sufficient evaluation weight to ensure that it is meaningfully considered throughout the source selection process and will be a valid discriminator among the proposals received. [1]

4.2 PPT Models

4.2.1 PPT without Technical Proposals: If the solicitation clearly identifies the product requirements or performance outcome objectives and there are no mandated qualification requirements, (e.g., employee certifications, license requirements, etc.), supplemental information is not needed. Every offeror promising to comply with the terms and conditions in the solicitation is offering something of equal technical merit and is acceptable; conversely, any offeror who does not is unacceptable. Attachment 1 (non-commercial) and attachment 2 (commercial) are examples of this particular PPT strategy.

4.2.2 PPT with Technical Proposals. Technical factors should be used only when mandated performance requirements are identified in the solicitation. Such factors should be simple, easy to identify and evaluate, and be well suited to the use of a checklist to affirm compliance. Structure the checklist on a pass/fail basis to yield a rating of Acceptable/ or Reasonably Susceptible of Being Made Acceptable/Unacceptable, or similar assessment. Attachment 3 is an example of this particular PPT strategy.

4.3 Proposal Preparation Instructions

It is best to develop the proposal preparation instructions (Section L or FAR 52.212-1) concurrent with the development of the evaluation factors. This minimizes the possibility of identifying a technical evaluation factor without commensurate instructions as to information required for evaluation. The solicitation must specifically state what pricing information must be submitted by offerors, how price will be evaluated, and how the total evaluated price will be calculated.

4.4 Past Performance

Past performance information reveals how well the contractor performed work relevant to the type of effort and type of requirement described in the solicitation, and confirms whether the performance is current or recent. Recency and relevancy are two key items involved in the review of offerors past performance. During the early phase of the acquisition, the team should define what is relevant for this effort and how recent the contract performance should be in order to be applicable.

4.4.1 Recency

Current performance will generally have greater impact in the performance assessment than recent performance. Performance that is more recent will usually have more impact than less recent performance. Current is generally defined as performance that is taking place at the present time. Recent is generally defined as performance occurring within the last three years, but the time period can be tailored to fit the circumstances of your acquisition.

4.4.2 Relevancy

To help offerors decide whether to submit a proposal, the solicitation should describe the kind of performance considered relevant to the instant acquisition. “Relevant” means the performance being considered must have a logical connection to the work described in the solicitation. Normally, relevance would include such aspects as the product or service similarity, product or service complexity, contract type, program or lifecycle phase, contract environment, division of company proposing, subcontractor interaction and magnitude. Magnitude is important because it will define not only the scope but project similarity to the instant requirement. In determining relevancy for individual contracts, consideration should be given to the effort, or portion of the effort, being proposed by the offeror, teaming partner, or subcontractor. The evaluation should take into account past performance information regarding predecessor companies, key personnel who have relevant experience or subcontractors that will perform major or critical aspects of the requirement when such information is relevant to the instant acquisition. The following relevancy definitions are examples of general language that can be used, or tailored if appropriate (such as by combining Relevant with Very Relevant):

Very Relevant / Present/past performance effort involved essentially the same magnitude of effort and complexities this solicitation requires.
Relevant / Present/past performance effort involved much of the magnitude of effort and complexities this solicitation requires.
Somewhat Relevant / Present/past performance contractual effort involved some of the magnitude of effort and complexities than this solicitation requires.
Not Relevant / Present/past performance effort did not involve any of the magnitude of effort and complexities this solicitation requires.

4.5 Developing Performance Questionnaires

The sample questionnaire at Attachment 4 is fairly generic and will suffice for many PPT acquisitions; however, it is not necessarily suited for all acquisitions. To maximize the usefulness of the information gathered during the evaluation stage, questions should be tailored to the specific circumstances of each individual acquisition. The questionnaire should include at least one question for each technical factor, if applicable, the price factor, as well as other relevant information. There is certain basic information that needs to be in all questionnaires. For example, the questionnaire should address the offeror’s record for on time delivery, delivery of quality goods and services, and cost control, if applicable,[2] to determine the likelihood of success in performing the solicitation’s requirements. Other areas for consideration are:

(a) The offeror’s record of conformance to contract specifications and standards of good workmanship.

(b) The offeror’s adherence to contract schedules, including the administrative aspects of performance.

(c) The offeror’s history for reasonable and cooperative behavior, commitment to customer satisfaction, timely award and management of subcontracts, and whether the offeror met any applicable subcontracting goals.

Following are some examples of effort/requirement specific questions. The AF Past Performance Evaluation Guide (see paragraph 8.0) has additional guidance and examples on drafting questionnaires for more complex PPT acquisitions. Additional questions can be found within the Contractor Performance Assessment Reporting System (CPARS) Guide in response to filling out the CPAR form (see page A3-7/9).

 Environmental Requirements

 Was the contractor’s performance in compliance with all local, state, and federal laws and regulations?

 Were there any contractor-caused reportable environmental compliance violations?

 Were any fines levied against the owner as a result of contractor noncompliance?

 Did the contractor comply with all applicable OSHA requirements for protection of employees removing asbestos?

 Military Family Housing Maintenance Requirements

 Did contractor consistently respond to service calls within the required time frames?

 Did contractor assign personnel with the required skills (e.g., painting, HVAC, plumbing, etc.) to accomplish the work?

 Did contractor consistently accomplish change of occupancy maintenance within the required time frames and required minimal re-performance of services?

Refuse/Recycling

 Did contractor empty dumpsters in a timely manner to ensure debris did not exceed the capacity of the dumpster?

 Did contractor consistently remove refuse in a timely manner?

 Was the contractor-operated recycling center consistently open for public drop-off of recyclable materials during the contractual required hours of operation?

4.6 Other solicitation requirements

Sections L and M (or equivalent commercial solicitation provisions) must inform offerors that they are required to meet all solicitation requirements, such as terms and conditions, representations and certification, and technical requirements, in addition to those identified as evaluation factors or subfactors. (AFFARS 5315.305(a))

5.0 Proposal Evaluation

The following three approaches to evaluating proposals have proved successful. Selecting the method appropriate for an acquisition depends on many factors; for example, number of proposals anticipated, available resources, funding, and SSA preferences.

Ensure the approach selected is clearly communicated and strictly followed throughout the evaluation process. Use only the criteria identified in the solicitation to determine technical acceptability. ALL criteria must be passed to be considered technically acceptable. Technical evaluators rate the proposals as “acceptable,” “reasonably susceptible of being made acceptable,” or “not acceptable.” Ensure the technical evaluation is properly documented. See Attachment 5 for a sample technical evaluation checklist.

When technical proposals are not required, a proposal can be determined technically acceptable when the offeror states his/her intent to build a part or perform in accordance with the requirements in the solicitation.

See paragraph 6.0,Exchanges Between the Government and Offerors, for an explanation of how proposal weaknesses/deficiencies are identified, documented, and resolved.

5.1Approach #1 - Evaluate Technical, Rank by Price, Assess Performance

Step 1 - Evaluate all proposals for technical acceptability.

Step 2 - Evaluate price reasonableness of all technically “acceptable” or “reasonably susceptible of being made acceptable” proposals, then rank by total evaluated price.

Step 3 - Assess performance confidence for each offeror, or as an optional approach a specified number of lowest priced technically acceptable offerors.[3] SSA does an integrated best value assessment of the evaluated offerors.

5.2Approach #2 - Rank by Price, Evaluate Specified Number for Technical, Assess Performance

Step 1 - Rank all proposals by price.

Step 2 - Evaluate a specified number[4] of the lowest priced proposals for technical acceptability, if applicable, and price reasonableness.

Step 3 - Assess performance confidence for a specified number of the lowest priced technically acceptable offerors. SSA does an integrated best value assessment of the evaluated offerors.

5.3 Approach #3 – Evaluate Technical, Rank by Price, Assess Performance until Proposal rated “High Confidence”

Step 1 - Evaluate all proposals for technical acceptability.

Step 2 - Evaluate price reasonableness of all technically “acceptable” or “reasonably susceptible of being made acceptable” proposals, then rank by total evaluated price.

Step 3 - Evaluate lowest priced offeror’s past performance. If past performance is “High Confidence”, evaluation is complete. If the lowest priced offeror’s past performance is not “High Confidence” evaluate the next lowest priced offeror’s past performance. Continue evaluating next lowest priced offeror’s past performance until an offeror is rated “High Confidence” or until all offerors are evaluated. At this point, the evaluation is complete and the SSA proceeds to the integrated best value assessment of the evaluated offerors.

5.4 Performance Confidence Assessment

5.4.1 Sources of Information

The primary sources of past performance information will be that provided by offerors in the form of specific past and present efforts cited in their proposals. Asking the offeror to submit no more than[5] ten[6] of their most recent and relevant efforts generally provides an adequate sample size.[7] However, the government is not limited to these ten efforts when evaluating past performance. In addition to government sources of information, such as the Past Performance Information Retrieval System (PPIRS)[8] and other DoD databases, information can be accessed from private sources such as Dun and Bradstreet as well as commercial sources.

5.4.2 Objective

The past performance evaluation should take into consideration the most recent data available. The best practice is to select similar efforts that are either just completed or still in progress and have at least one year of performance history. Remember that the purpose of the evaluation is to make a performance confidence assessment of the offeror's ability to perform the effort described in the solicitation. This assessment represents the government’s judgment of the probability of the offeror successfully accomplishing the proposed effort based on the offeror's demonstrated past performance history.

5.4.3 Recency and Relevancy Screening

Upon receipt of the questionnaires, screen the information provided for each of the referenced contracts to make an initial determination of its recency and relevance to the current requirement. The objective of this screening is to remove from consideration those efforts that are not within your definition of recency or are clearly unrelated to the type of effort or requirement sought. If in doubt as to the relevancy of a particular effort provided, ask the offeror to explain why the effort was considered relevant. Before determining a prior contract not relevant, consider whether the information obtained regarding a portion of the work may be used to determine relevancy (i.e., technicalcapability, management responsiveness, multi-tasking capability, proactive process improvements, and ability to handle complex technical or management requirements, etc.). Also, do not hesitate to consult with other members of the PPT evaluation team regarding performance relevancy determinations. Consulting with peers may expose additional areas for consideration. Applying the relevancy definitions consistently is of key importance. Always document the rationale supporting each rating.