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    Government Contracting Database

    Tradeoff – Price/Technical

    In a best value procurement, it is the function of the source selection official to perform a price/non-price factor tradeoff, that is, to determine whether one proposal’s superiority under the non-price factor (or factors) is worth a higher price. A. G. Cullen Construction, Inc., B-284049.2, 2000 CPD ¶ 45 (Comp. Gen. Feb. 22, 2000). Accordingly, where the RFP identifies past performance and price as the evaluation factors, it is the role of the source selection official to determine whether a proposal submitted by an offeror with a better past performance rating is worth a higher price.

    There is no requirement that in making the tradeoff resulting in an award to an offeror with a higher-rated, higher-priced proposal, the SSA provides an exact quantification of the dollar value to the agency of the proposal’s technical superiority. Structural Preservation Systems, Inc., B-285085, 2000 CPD ¶ 131 (Comp. Gen. July 14, 2000); Suddath Van Lines, Inc.; The Pasha Group, B-274285.2, B-274285.3, 97-1 CPD ¶ 204(Comp. Gen. May 19, 1997); Kay and Assocs., Inc., B-258243.7, 96-1 CPD ¶ 266 (Comp. Gen. Sep. 7, 1995). The fact that such a quantification is not required does not mean that the source selection authority has total discretion with no accountability, however. As previously noted, tradeoff determinations must be reasonable and consistent with the stated evaluation criteria, and we will review such determinations to ensure that they were.

    In accordance with FAR 15.101-1 –

    (a) A tradeoff process is appropriate when it may be in the best interest of the Government to consider award to other than the lowest priced offeror or other than the highest technically rated offeror.

    (b) When using a tradeoff process, the following apply:

    1. All evaluation factors and significant subfactors that will affect contract award and their relative importance shall be clearly stated in the solicitation; and

    2. The solicitation shall state whether all evaluation factors other than cost or price, when combined, are significantly more important than, approximately equal to, or significantly less important than cost or price.

    (c) This process permits tradeoffs among cost or price and non-cost factors and allows the Government to accept other than the lowest priced proposal. The perceived benefits of the higher priced proposal shall merit the additional cost, and the rationale for tradeoffs must be documented in the file in accordance with 15.406.

    In a negotiated procurement, where an agency chooses between a higher-cost, higher-rated proposal and a lower-cost, lower-rated proposal, GAO’s review is limited to determining whether the cost/technical tradeoff is reasonable and consistent with the solicitation’s evaluation criteria. MiTech, Inc., B-275078, 97-1 CPD ¶ 208 (Comp. Gen. January 23, 1997); SDA Inc., B-248528.2, 93-1 CPD ¶ 320 (Comp. Gen. Apr. 14, 1993). Where the higher-cost, higher technically rated proposal is selected for award, the award decision must be supported by a rational explanation of why the technical superiority of the higher-cost proposal warrants the additional cost involved, even though, in some cases, the cost may be weighted less heavily than technical and management factors. Lockheed Martin Information Systems, B-292836, 2003 CPD ¶ 230 (Comp. Gen. Dec. 18, 2003); Redstone Technical Servs.; Dynamic Science, Inc., B-25922 et al., 95-1 CPD ¶ 181 (Comp. Gen. Mar. 17, 1995).

    The GAO has held that it will uphold an award to a higher-rated offeror at a higher price where the result is consistent with the evaluation criteria and does not violate procurement statutes or regulations, and the contracting agency reasonably determines that the cost premium involved is justified considering the superiority of the selected proposal. J&J Maintenance, Inc., B-284708.2, B-284708.3, 2000 CPD ¶ 106 (Comp. Gen. June 5, 2000); International Consultants, Inc.; International Trade Bridge, Inc., B-278165, B-278165.2, 98-1 CPD ¶ 7 (Comp. Gen. Jan. 5, 1998). Where a price/technical tradeoff is made, the selection decision must be documented, and the documentation must include the rationale for the tradeoff, “including benefits associated with additional costs.” FAR 15.308. While we generally accord greater weight to contemporaneous evidence, we will consider post-protest explanations that provide a rationale for contemporaneous conclusions, so long as those explanations are credible and consistent with the contemporaneous record. The MIL Corporation, B-297508, , 2006 CPD ¶ 34 (Comp. Gen. Jan. 26, 2006); Jason Assocs. Corp., B-278689 et al., 98-1 CPD ¶ 67 (Comp. Gen. Mar. 2, 1998); ITT Fed. Servs. Int’l Corp., B-283307, B-283307.2, 99-2 CPD ¶ 76 (Comp. Gen. Nov. 3, 1999). Where there is inadequate supporting documentation for a source selection decision, there is no basis for us to conclude that the agency had a reasonable basis for the decision. Jason Assocs. Corp., supra.

    Where a price/technical tradeoff is made, the source selection decision must be documented, and the documentation must include the rationale for any tradeoffs made, including the benefits associated with additional costs. FAR 15.308. It is improper to rely, as the agency did here, on a purely mathematical price/technical tradeoff methodology. Opti-Lite Optical, B-281693, 99-1 CPD ¶ 61(Comp. Gen. Mar. 22, 1999); Teltara, Inc., B-280922, 98-2 CPD ¶ 124 (Comp. Gen. Dec. 4, 1998); General Offshore Corp.-Riedel Co., a Joint Venture, B-271144.2, B-271144.3, 96-2 CPD ¶ 42 (Comp. Gen. July 2, 1996). In this case, the tradeoff is inadequate because, beyond the mechanical comparison of the total point scores, the contracting officer made no qualitative assessment of the technical differences between the offers from Classic and Opti-Lite to determine whether Classic’s technical superiority justified the cost premium involved.

    Updated: September 10, 2017

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