An Assessment of the Role of Technical and Risk Evaluation Factors in Defense Source Selection Decisions

By Templin, Carl R.; Noffsinger, Ken R. | International Journal of Purchasing and Materials Management, Fall 1994 | Go to article overview

An Assessment of the Role of Technical and Risk Evaluation Factors in Defense Source Selection Decisions


Templin, Carl R., Noffsinger, Ken R., International Journal of Purchasing and Materials Management


INTRODUCTION

Whenever the federal government conducts an acquisition for supplies or services, it must do so in compliance with the myriad of laws and regulations that control the contracting process. By and large, the regulatory structure aims to ensure that contracting officers conduct the process in a fair and impartial manner, giving all offerors an equitable opportunity to win the contract.[1] Contracting officers are also required to ensure that the government pays a fair and reasonable price for the supplies or services acquired.[2] The regulatory structure places heavy emphasis on the use of competition, using either the sealed bidding process, which focuses exclusively on price, or competitive negotiation, which can consider other factors as well as price in the award decision.[3]

The competitive negotiation process provides considerable latitude in conducting the acquisition. For example, discussions are permitted if necessary, and the award is made to the offeror whose evaluated proposal best meets the government's needs, considering price and other factors.[4] For the most complex and highly technical acquisitions, the government uses a formal source selection process in which teams of experts establish evaluation criteria and standards that are used to rate and then compare the offerors' proposals.[5] These evaluation criteria are specified in the request for proposal, and instructions are provided to the offerors concerning the information that must be submitted, along with any page limitations that must be observed. At a specified time, experts rate each contractor's proposal against the standards established for the criteria. In some cases, deficiencies are reported to the offerors (known as having "discussions"), and the offerors are permitted to update their proposals. In other cases, the proposals are evaluated without any discussions. Either way, eventually the ratings are provided to the source selection authority, the official designated to make the award decision.

This article focuses on the role and contribution of evaluation criteria in Air Force source selection decisions. The source selection decision is by nature a subjective one, even when the evaluation standards are made as objective as possible. The evaluations demand that judgment and trade-offs must be made (usually between cost, performance, and risk). In Air Force source selections, relative weights of the criteria are usually established and communicated in the request for proposal--but these are usually not quantified, either in the proposal or in the actual source selection. Thus, judgmental factors in the evaluation of the proposals, the comparison of proposals one against another, and the decision by the source selection authority suggest that the process will by nature have considerable subjectivity, especially given the complex nature of the acquisitions.

While the use of technical and risk factors are of primary concern in this research, the potential impact of cost and political factors on the source selection decision cannot be ignored. Cost is the only evaluation factor that must be included in the evaluation criteria. One researcher contends that the source selection process encourages optimistically low cost estimates and does not give enough consideration to past performance.[6] Implicit in this criticism is the assumption that cost plays a dominant role in the source selection process and perhaps distorts or sways the source selection authority's decision.

Politics must also be considered because defense acquisitions involve tax dollars. Some have suggested that the acquisition process in general, and the source selection process in particular, is subject to considerable political pressure.[7] According to one study of participants in the source selection process, political pressure frequently interferes with the exercise of sound business judgment.[8] In reality, though, it is difficult to determine the effect that political influence exerts on a source selection process because such influence is largely hidden. …

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An Assessment of the Role of Technical and Risk Evaluation Factors in Defense Source Selection Decisions
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