Competitive Sealed Proposals CSP

1
Competitive Sealed Proposals(CSP)

• The DBM Perspective on
• HOW TO MAXIMIZE THE BENEFITS
• OR
• TWO OUT OF THREE ISNT ENOUGH

2
The DBM Perspective onHow to Maximize the
Benefits of CSPPresenter

• Joel Leberknight Chief of Procurement, DBM
• State employee for almost 34 Years
• 12 Years with Dept. of Budget
  Management (DBM)
• 30 Years of Procurement Experience
• Has conducted or been actively involved in
  hundreds of CSP procurements collectively worth
  billions of dollars

3
DBM Procurement Role

• On average DBM is responsible for the
• Direct procurement of about 1 billion per year
  in services contracts
• Indirect procurement of about 1 billion per year
  in services contracts entered into by other State
  agencies
• Most of these procurements are done via the
  competitive sealed proposals procurement method

4
Just the Highlights

• In less than an hour I cant adequately cover
• Maximizing the benefits, and
• The many other complexities of CSP
• So just the briefest highlights will be featured
• And we wont get through all the slides today
• A full review of the CSP process will be
  presented in the 3 day CSP course in DBMs 7
  class procurement training curriculum
• Classes will be offered starting in the fall 2009
• But as of yet there is no exact class schedule,
  including when the CSP classes will be presented

5
Flexibility (Advantages) of CSP

• Offerors can correct some flaws that under
  Competitive Sealed Bidding (CSB) would render
  bidders non-responsive
• Within limits, specifications can be changed
  after proposals are received
• Oral presentations and discussions enable
  evaluators to get to know offerors and
  facilitate a thorough understanding of offerors
  proposals
• Through Best and Final Offers (BAFOs) offerors
  can revise their original proposal submissions
• Or, via multiple BAFOs offerors can further
  revise already revised submissions
• BAFOs can be requested for technical factors
  only, the price only, or both technical and
  financial factors

6
More CSP Flexibility

• Through discussions and BAFOs improved proposals
  should be sought from offerors that
• Might be judged as being marginal
• Are also judged to have submitted good proposals
• i.e., the objective of discussions is to get an
  even better offer from all potentially qualified
  offerors than was in their original submission
• The award can be made to other than the lowest
  priced offeror
• To the offeror that is most advantageous to the
  State
• i.e., the offeror judged to have the best
  combination of product and price, or Best Value
• The award is based upon subjective judgment

7
A 2 Edged Sword(It Cuts Both Ways)

• The above described flexibility is both an
  Opportunity and a Responsibility
• An Opportunity to obtain the Best Value
• A Responsibility to exert effort to seek or
  cultivate the Best Value
• Often the best value doesnt happen by chance
• It happens because State personnel set up the
  conditions to get improved offers
• By eliciting information and improved proposals
  from offerors

8
Contradiction

• State personnel can set up the conditions to get
  better proposals by aggressively using passive
  efforts
• This will be explained later
• We cant just tell offerors exactly what they
  should include in proposals
• Other than what is in the RFP
• But we should continually tell them when they are
  not giving us satisfactory information,
  approaches, timeframes, staffing, etc.

9
Flexibility Gone Bad

• Agencies fully understand that under CSP there is
  flexibility not to award a contract to the
  offeror with the lowest price
• In fact, at times agencies seem to exercise this
  flexibility to extremes
• In some CSP procurements it seems that price is
  effectively rendered irrelevant
• This is taking a good thing too far
• Price should be an important award component,
  even under CSP
• In this session Ill try to explain why this
  happens and how to prevent it in the future

10
Sports Analogy 1

• In any sport one team or participant might be
  dominant over another one for much of the game or
  contest
• In such a situation the dominant team/participant
  wants to deliver a knock-out punch so that the
  opponent has virtually no chance of ultimately
  winning the contest

11
Sports Analogy 1 (Contd)

• Conversely the team/participant that is losing
  wants to keep it close
• i.e., avoid getting so far behind there is no
  realistic chance to pull a victory out in the end
• As long as the score is close going into the 4th
  quarter, the later innings, the home stretch,
  etc. there is a chance for the trailing
  team/participant to get hot and grab victory
  from the jaws of defeat

12
CSP Parallel

• By using the processes described in this class
  you are setting up the situation
• Of keeping it close for offerors to improve
  their proposals so they might ultimately win
• But also allowing even an offeror with a good
  initial proposal to land a knock-out punch by
  making its proposal even better

13
Sports Analogy 2

• CSP can be equated to a marathon rather than a
  sprint
• It isnt who gets out of the starting gate the
  fastest
• Who submits the best initial proposal
• Its who crosses the distant finish line first
• Who ultimately provides the best value to the
  State
• The best combination of technical proposal and
  price

14
2 Out of 3 Explained

• There are 2 primary competitive procurement
  methods in Md. procurement
• Competitive Sealed Bidding, and
• Competitive Sealed Proposals
• Each has 3 words in its name
• Agencies understand the competitive sealed
  parts
• But there is not a clear understanding of the 3rd
  part
• The difference between bidding proposals

15
2 Out of 3 Explained (Contd)

• Until there is understanding of the differences
  inherent in these methods
• And how to derive the full benefit of the
  flexibilities listed on the preceding slides
• The benefits of CSP will not be maximized

16
CSP History

• When COMAR Title 21 first became effective on
  7/1/1981 what is now CSP was called Competitive
  Negotiations
• Around 1988 the name Competitive Negotiations was
  changed to Competitive Sealed Proposals
• This was done because in Md. procurement we do
  not really negotiate

17
Negotiations

• To negotiate means that one party makes an offer
  to another party
• Or sometimes multiple parties
• If that offer is unacceptable to the 2nd party,
  the 2nd party usually makes a counter offer
• It tells the 1st party what it wants
• This offer, counter-offer process continues until
  there either is agreement or the negotiations fail

18
Negotiations (Contd)

• In situations when ultimately there is agreement
• Often what is finally agreed to is very different
  from the positions either party started with
• Usually there is compromise by both parties
• Perhaps based upon a series of offers and
  counter-offers

19
We Dont Negotiate

• But in government procurement we dont negotiate
• 1st, typically we are dealing with multiple
  vendors
• 2nd, aside from the specifications in a RFP we
  dont tell vendors exactly what we want see if
  they will comply
• We dont make offers or counter-offers
• Because we dont negotiate the name was changed
  to avoid confusion

20
The Good the Bad

• This name change was good because it eliminated
  the confusion between what true negotiation is,
  versus what we do
• But, the name change was also bad because it
  removed the focus from the essence of competitive
  negotiation, now competitive sealed proposals

21
The Essence of CSP

• The essence of CSP is to seek improvement in the
  proposals of possibly all offerors
• Not just accepting what offerors, including good
  offerors, initially propose
• And, not immediately eliminating offerors with
  deficiencies
• Most agencies understand this concept from the
  price perspective
• They understand that usually offerors should be
  invited to submit a financial BAFO in an effort
  to get a lower price

22
The Essence of CSP (Contd)

• But many agencies procurement personnel dont
  seem to understand this same concept applies to
  offerors technical proposals
• Obtaining improvement in offerors technical
  proposals benefits the State in two ways
• The obvious benefit (result) is there will be
  some increased level of contract performance
• The presumption is that even an offeror that
  submitted a good proposal can improve its
  proposal
• Even if only slightly
• And, sometimes more than slightly

23
The Essence of CSP (Contd)

• But perhaps a not obvious benefit is to keep more
  offerors in the running for the award
• Offerors whose proposals as originally submitted
  might have been determined technically
  unacceptable, potentially can revise them to make
  them acceptable
• Being judged to be technically acceptable means
  these offerors will remain in the competition and
  have their prices opened
• Which means more selection for the agency to
  choose among to arrive at the best value

24
Passive Negotiations

• We dont do this in an active way, such as in
  negotiations, by saying exactly how an offeror
  should change its proposal
• We should do it in a passive way, by saying what
  we dont like or dont understand
• And then allowing the offerors to try again to
  give us something well like better
• And often trying multiple times, improving the
  offer each time
• If at first you dont succeed, try again

25
Thats Not Fair!

• The reaction of many of you to the preceding
  slide is probably summed-up above
• Its not fair to the offerors that submitted good
  proposals to begin with

26
Its Too Much Work

• Another typical reaction is that the process of
  telling vendors their weaknesses and allowing
  revisions, perhaps more than once
• Is too much work
• And, takes too much time to do

27
Why We Think This Way

• The reason for the 2 previously possible
  reactions
• Its unfair
• And, too much time and work
• Likely stems from people letting their
  understanding of Competitive Sealed Bidding (CSB)
  influence how they think Competitive Sealed
  Proposals (CSP) procurements should be conducted

28
Get the Best Deal for the State

• The objective of both CSB and CSP is to get the
  best deal for the State
• In CSB the best deal is the lowest bid
• That is responsive
• From a responsible bidder
• In CSP the best deal is the best value or Most
  Advantageous Offer

29
CSB

• In public procurement what we call CSB has
  existed much longer than what we call CSP
• So the notion of lowest bid wins is widely
  ingrained in peoples minds, including the
  public, vendors and non-procurement State
  personnel
• Many people also understand that the core
  principle of public procurement is Fair and Equal
  Treatment of vendors in competing for public
  awards

30
CSB (Contd)

• Since CSB existed long before CSP
• To a large degree the concept of Fair and Equal
  Treatment of vendors in competing for public
  awards has been framed in the context of what
  that means in CSB
• As stated earlier in CSB the lowest bid wins
• But it is understood that awarding to the lowest
  bidder only makes sense if the bids are
  comparable
• Bids must be apples to apples, not apples to
  oranges

31
Sealed Bid Avoids an Auction

• Another core principle of CSB is that it is not
  an auction
• Vendors get 1 chance to bid
• That is why their bids are sealed and opened
  publicly
• Each vendors submits its best bid and hopes it
  wins
• There is no second chance
• No Second Bite of the Apple

32
Responsiveness

• The words Responsive and Non-responsive came
  into being to indicate if bids are compliant with
  the requirements of the specifications, hence are
  comparable
• Are apples to apples
• Procurement people should know that
• Responsiveness is determined solely on the basis
  of the submitted bid
• Without additional explanation or supplement
• i.e., as the bid came out of the sealed envelope
• Responsiveness doesnt apply to CSP

33
Summary of Key CSB Concepts

• Fair and Equal Treatment
• Responsiveness
• Judged solely on the basis of what is in the
  sealed bid envelope
• Only 1 chance to bid (1 bite at the apple)
• With rare exceptions you cant claim you made a
  mistake and change your bid
• Especially to a price that is now the lowest bid
• Otherwise it isnt fair
• Either because its an auction or,
• There is a risk of the prior bids being leaked

34
A Little Knowledge Can be Bad

• Ive pointed out some of the highlights of CSB to
  illustrate how easy it is for persons who dont
  really understand CSP to incorrectly transfer
  what they know about CSB to CSP
• They incorrectly think offerors that dont get
  their initial proposals right should be judged
  non-responsive
• Based solely upon their initial proposal
• As taken from the sealed envelope
• Otherwise an offeror has 2 bites at the apple
• Which is perceived as unfair

35
From the Past to the Present

• Now that Ive talked about the past
• About CSB
• How it came into being
• Some of its hallmarks
• And, about Competitive Negotiations and CSP
• Lets focus on the primary aim of this class
• Maximizing the benefits of CSP
• i.e., focusing on the difference between bidding
  and proposals
• The 3rd word in the title of the procurement
  methods

36
Question How do You Maximize the Benefits of
CSP?

• Answer
• Change Your Thinking

37
Whose Thinking Needs to Change?

• Procurement Officers
• Program Personnel involved in CSP procurements
• Evaluation Committee members
• Agency Middle Upper Management

38
How Should Thinking Change?

• People need to forget what they know about CSB
  when doing a CSP procurement
• Instead they need to learn and accept
• The Objective of CSP
• To get the best value
• That time and effort are needed to achieve that
  objective

39
Objective of CSP

• Get the best offer for the State (within reason)
• Getting the best reasonably possible offer is
  typically achieved by
• Maximizing the number of offerors responding to
  the RFP
• Fully using the flexibility of the CSP process
  to
• Avoid eliminating offerors for curable weaknesses
  or deficiencies
• Get improved technical and financial offers

40
Less Isnt More

• I sometimes hear agency personnel state that they
  want to save time and effort by only dealing with
  a few, clearly qualified offerors
• To achieve this mistaken objective of minimizing
  their work such persons
• Establish high minimum offeror response
  requirements to hold down the number of offerors
• Eliminate all but the best initial offerors as
  quickly as possible to get to the serious
  contenders
• Quickly open prices
• Then quickly make an award recommendation
• As explained in this class, I dont share that
  perspective

41
Instead, More is Better

• More is better in terms of
• The initial competition
• The number of offerors
• Continuing competition
• More offerors being determined to be technically
  acceptable and having their price proposals
  opened
• The caliber of the competition
• More offerors ultimately judged to have good
  technical proposals
• Its how they finish that counts, not how they
  start

42
Why More Is Better

• Although saving time and effort seems like a
  laudable endeavor
• When it comes to CSP procurements frequently this
  premise is the equivalent of being penny wise
  and pound foolish
• While seeking to maximize competition will likely
  cost thousands of dollars in person hours of work
  by involved State employees
• The potential payoff is hundreds of thousands, or
  millions of dollars of savings
• And/or better performance

43
Getting It Right

• The best way to illustrate that going through the
  effort pays off in the end is to cite real
  examples
• The 4 procurements cited on the following slides
  were done by DHMH over the past 4 years
• 3 of the 4 procurements involved the same
  procurement officer (P.O.)
• In 3 of the 4 procurements the P.O. awarded the
  contract to a different offeror than the
  evaluation committee recommended
• In each instance the agency head (the DHMH
  Secretary) accepted the procurement officers
  decision

44
Getting It Right (Contd)

• All 4 decisions resulted in protests
• 3 of the protests were appealed to the Board of
  Contract Appeals
• The 4th contract award wasnt appealed
• In 2 of the appeals DHMHs decisions were upheld
• In the 3rd situation the BPW approved the
  contract award notwithstanding protest and the
  appellant withdrew its appeal

45
Getting It Right (Contd)

• The P.O. did not accept the evaluation
  committees recommendations, because the P.O.
  decided a different offeror represented the best
  value
• The P.O.s decisions were based upon a much
  greater price difference than the perceived
  technical difference
• In these 3 instances the P.O. went with offerors
  with much lower prices that were still
  technically very capable
• Why the evaluation committees didnt reach the
  same conclusion is perhaps a topic for future
  training

46
Getting It Right (Contd)

• Based upon the preceding litany of overruling
  evaluation committees, incurring protests, and
  fighting appeals at the Appeals Board you may
  wonder what was achieved for all this grief
• The answer collectively over 35 million in
  lower prices
• Judged in the context of 35 million, all the
  other expenses in terms of the time and effort of
  State personnel are trivial

47
Getting It Right (Contd)

• 2 of these procurements happened 3-4 years ago
  and the new vendors have performed very well
  despite their low prices
• In fact in both instances renewal options have
  been exercised with the assessment that the
  vendors are doing a fine job
• 2 of these procurements just happened, with 1
  starting 7/1/2009 and the other to start 9/1/09
• So there is no performance record yet for these

48
Example 1

• Clifton Gunderson vs. Myers Stauffer from 2006
  to perform auditing services for the Medical
  Assistance Program.
• Clifton Gunderson (CG) was the incumbent was
  ranked 1 technically
• Myers Stauffer (MS) was ranked 2 technically
• The rounded off prices were 26.6 million for CG
  and 17.3 million for MS
• The exact price difference was 9,305,130, or 35
  lower

49
Example 2

• ACS vs. PSI from 2005 to provide Enrollment
  Broker Services for the Medical Assistance
  Program
• ACS was the incumbent and was ranked 1
  technically, while PSI was 2nd technically
• The rounded off prices were 47.5 million for ACS
  and 41.9 million for PSI
• The exact price difference was 5,670,139, or 12
  lower

50
Example 3

• IHAS vs. HCA to perform inpatient and outpatient
  audits of payments by the Medical Assistance
  Program to hospitals IHAS was the incumbent and
  was ranked first technically, with HCA ranked 2.
• This contract started on 7/1/09
• The pricing was a of identified overpayments to
  be paid to the contractor
• IHAS quoted a 25 commission rate
• HCA quoted a 12 commission rate
• It is believed this difference will equate to
  over 1 million less for HCA versus IHAS
• A 53 lower commission rate

51
Example 4

• APS vs. ValueOptions to provide a Statewide
  Administrative Services Organization for publicly
  funded mental health services.
• This contract starts on 9/1/09
• APS was the incumbent and was ranked 1
  technically Value Options was 2nd technically
• The rounded off prices were 71.1 million for APS
  and 51.6 million for Value Options
• The exact price difference was 19,443,425, or
  27 lower

52
Using the CSP Process Fully and Conscientiously

• A Quick Resource Guide On How To Do It

53
Maximize the Number of Offerors Responding to the
RFP

• Do outreach to adequately advise potential
  offerors of the availability of the RFP
• Do focused, direct notice in addition to eMM
• Relying exclusively on eMM may cause you to miss
  good vendors
• Minimize Minimum Offeror Requirements
• Perhaps only requirements of law or regulation
• Avoid excessive bond/insurance requirements
• Avoid overly restrictive specifications

54
Easier Said Than Done

• Saying avoid excessive or overly restrictive
  requirements is easy
• Determining what is excessive or restrictive is
  much harder to do
• And, I know many persons believe not having
  minimum offeror requirements, bonds, etc. will
  allow unqualified vendor to submit proposals
• So, how do you learn what to do, or consider, or
  not do when drafting requirements?
• All of the issues on the prior slide and many
  more are extensively covered in the DBM
  procurement training classes

55
Do the 3 Step(The Process, Not the Dance)

• Many years ago when I took a seminar on effective
  writing I was told to
• Tell the reader what I was going to tell them
• Introduce the key points
• Then tell them the information
• Then tell them what I had told them
• Again mentioning the key points
• The rationale for this approach was that
• People learn by repetition
• It will help ensure that even if the details are
  missed or not comprehended the key aspects will
  be understood

56
The CSP 3 Step

• Before the oral presentations (Orals) tell
  offerors the aspects of their proposal that are
  weak, confusing, or not justified
• Tell them whether to reply to these aspects prior
  to the Orals, or at the Orals
• Have the Orals and ensure that the previously
  noted information is addressed
• Allow offerors to provide additional follow-up
  after the Orals
• If despite Steps 1 2 any aspect of offerors
  proposals is still judged to be inadequate

57
The CSP 3 Step (Contd)

• By following this process usually offerors will
  provide additional information or responses
• Very few offerors will fail to make at least some
  attempt to address identified deficiencies
• This is part of the process of eliciting
  additional information from offerors beyond what
  is in their original proposals
• If offerors dont respond they have no excuse if
  they are judged not qualified or not the best
  value
• Even if offerors do respond, the responses still
  may be judged as not being adequate
• But at least the offerors had the opportunity

58
The CSP 3 Step (Contd)

• Hopefully, though, the responses will be judged
  adequate, thereby ensuring the continuation of
  offerors in the competition
• Sometimes, the additional information may even
  result in an offeror being judged to be a star
  performer, although the original submission
  didnt indicate that
• As described shortly, there are reasons why an
  offeror may not originally submit a good
  proposal, but subsequently can and will do so if
  given the chance

59
The CSP 3 Step (Contd)

• Conversely not doing this may result in missed
  opportunities for improved offers, or lower
  prices or both
• Figuratively leaving money on the table
• And may actually prompt a protest when an offeror
  is told it wasnt selected because of an aspect
  that was easily curable by the offeror, or
  misunderstood by the State

60
Do You Do All This with All Offerors?

• Ideally, without going through this process you
  should only eliminate offerors that
• Are clearly incapable of satisfying the
  requirements of the RFP and,
• Have virtually no possibility of becoming capable
  during the timeframe of the evaluation
• i.e., dont seek to eliminate as many offerors as
  possible, as quickly as possible

61
Procurement Conceit

• Frequently we take 6 months or more to draft RFPs
• Then we give vendors 30 days or so to provide
  responses
• We expect the responses to be totally detailed
  and exactly as we direct
• Without regard for
• Competing demands on the vendors
• They may also be responding to other RFPs
• The cost to offerors to respond

62
Offeror Response Costs

• Frequently offerors expend thousands of dollars
  to respond to an RFP
• Sometimes tens of thousands of dollars
• Vendors need to expend their resources wisely in
  deciding which RFPs to respond to how
  extensively to do so
• They may respond minimally if they
• Dont feel they have a good chance at winning a
  particular award
• Recently learned of the RFP
• Are simultaneously responding to multiple RFPs

63
Have Some Understanding

• We should understand that there may be a big
  difference between the amount of effort a vendor
  will devote doing something on speculation
• Something they are not being paid for
• Responding to our RFPs
• Versus how they would perform on a contract they
  are paid to perform
• So a minimal initial response may not mean that a
  vendor
• Has little capability
• Would not fully, or even exceptionally perform a
  contract
• Would not quote a good price

64
Have Some Understanding (Contd)

• The cost to vendors to respond to a RFP (CSP) is
  typically much higher than that of a bid (CSB)
• This is another major difference between CSB and
  CSP
• And why the rules and processes followed for CSP
  are fundamentally different from CSB

65
Keep Offerors Engaged

• By going through the processes described in this
  presentation we tell offerors
• They are still in the running
• Exactly what we need more information about
• And the more effort offerors put into proposals,
  even on an incremental basis
• The more they will continue to be involved and
  buckle down to win to justify their costs to date
• And the more they continue in the running the
  better understanding we will have of their
  strengths and weaknesses

66
Get to Know Offerors

• The more you interact with offerors
• The better you can assess their capabilities and
  commitment
• Especially any you havent dealt with previously
• If you dont have this interaction the offeror
  may be just a name on a proposal
• You likely will be reluctant to take a chance
  with an offeror you dont know well
• You probably will play it safe and go with a
  known (frequently the incumbent) offeror

67
Ignorance Can Be Costly

• Elimination of offerors for technical
  insufficiency without getting to know their
  capabilities has a cost
• We dont know how good they would have been
• We dont know what their price was
• We pay for playing it safe
• Even if such offerors are not eliminated we still
  tend to not select them
• We forego lower prices
• Sometimes substantially lower prices

68
Fully Use the CSP Process

• To use CSP to its full potential we must
• Use the pre-proposal conference as an active
  two-way communication tool
• Encourage questions and suggestions before,
  during after the pre-proposal conference
• Check references
• Hold meaningful discussions with all offerors
• Invite a Best and Final Offer (BAFO) after
  discussions
• More than one BAFO can be invited

69
Hold Meaningful Discussions

• Allow adequate time for discussions
• Be prepared by thoroughly reading proposals
• Note areas of confusion, dislike, or if very good
• Earnestly prepare generic specific questions
• Control the discussions
• Engage the offerors (get them to talk)
• Tell offerors when they are not answering
  adequately
• Ask appropriate follow-up questions

70
Hold Meaningful Discussions (Contd)

• Tactfully let offerors know of any aspect of
  their proposals that are
• Deemed a weakness/not liked
• i.e., anything for which the offeror might be
  downgraded in the final evaluation
• Allow the submission of written follow-up
  information and/or proposal revision via BAFOs
• This affords offerors the opportunity
• To cure or improve upon deficiencies
• For an already adequate proposal to be made better

71

Hold Meaningful Discussions (Contd)

• The ultimate purpose of discussions is to improve
  the technical standing of all, or as many
  offerors as is feasible
• The result should be for agencies to have more
  viable choices for the award recommendation
• Viable choices means more
• Offerors under serious consideration for the
  award
• Opportunity for price to play a significant role
  in the award decision

72
Only the End Result Counts

• One offeror can
• Submit the best proposal at the beginning and,
• Seem to be the sure winner based upon its initial
  technical superiority
• And another offeror may have lots of omissions,
  ambiguities and weaknesses
• And have to make substantial changes to its
  technical proposal

73
Only the End Result Counts (Contd)

• There is no
• Averaging or blending of the original proposal
  and the final proposal
• Consideration of how much one offeror had to
  improve versus any other offeror
• Regard for the amount of effort you had to invest
  to get to this point
• All that matters is that when the time comes to
  make an award selection, which offeror is now
  judged to be the best value
• The most advantageous

74
Fair and Equal Treatment

• Fair and equal treatment in CSP means offerors
  were given the same opportunities
• The same opportunity to
• Cure deficient technical proposals
• Explain their proposals in oral presentations
• For technically qualified offerors to submit BAFOs

75
Fair and Equal Treatment (Contd)

• Fair and equal treatment also means if
  discussions, etc. are held with one offeror, they
  must be held with all offerors
• That have not been formally eliminated
• Told they were eliminated
• Fair and equal treatment doesnt mean
• How many proposal aspects need to be cured by one
  offeror versus another

76
Real-life Parallel Scenario

• You are shopping for a new car and the first
  dealer you visit quotes a very high price
• And also might not have been very friendly
• So you tell this dealer you will do some more
  looking
• You might even say there is no way you will
  purchase there
• But typically you will already have provided your
  name, phone number, etc., just to get the price
  quote

77
Real-life Parallel Scenario (Contd)

• So you go to one or more other dealers in an
  effort to get the best deal
• A good price from a dealer you trust
• You may have eliminated the first dealer from
  consideration and be just about to inform another
  dealer you will purchase there
• When the first dealer calls and quotes a much
  lower price than it did originally
• In fact, its price is now lower than any other
  dealers

78
Real-life Parallel Scenario (Contd)

• Also, the salesperson apologizes, apparently
  sincerely, for the rudeness or lack of attention
  from before
• Do you say?
• Sorry, its too late.
• You had your chance and blew it
• No. I owe it to dealer X to buy from them. They
  quoted me a good price from the start and treated
  me very well

79
Show me the Money!

• Or, do you do the equivalent of the Cuba Gooding
  Jr. character in the Jerry McGuire movie and say,
  Show me the money?
• i.e., it doesnt matter who quoted less
  originally
• Its who is going to charge less now
• For the same vehicle
• With other comparable factors
• Immediate availability
• Cleaned and detailed
• Full tank of gas
• Delivered to your door
• All paper work properly done (Title, loan
  agreement)

80
Show me the Money!

• If you go with the ultimate most advantageous
  offer in real life
• Despite that offer not being the best originally
• Why wouldnt you do the same thing in your State
  job?
• But, even if you personally wouldnt buy from the
  dealer that ultimately offered you the best
  price, you are expected to go with the best value
  in a State CSP procurement

81
Let Price Be Important

• If only 1 or a few offerors are judged to be
  technically competent only this/these offerors
  will be considered for the award
• Even if other offerors are judged to be
  reasonably susceptible of being selected for the
  award, without a cure process they wont be under
  serious award consideration because of perceived
  technical shortcomings

82
Let Price Be Important (Contd)

• This means that the agency will be almost forced
  into accepting whatever price this/these few
  offerors propose
• If the price is reasonable, this is fine
• But if the price is not reasonable, the agency
  doesnt have a legitimate alternative
• The agency has to pay the too high price because
  it is not willing to select an offeror perceived
  as being of lower quality despite a much lower
  price

83
Let Price Be Important (Contd)

• But if through the discussion process other
  offerors improve their proposals so they are
  judged to be better than just marginal
• If the highest technically ranked offerors have
  prices that are judged unreasonably high
• The agency has a real alternative to select a
  lower technically ranked offeror whose lower
  price is determined to more than offset its lower
  technical capabilities

84
Let Price Be Important (Contd)

• And if the highest technically ranked offerors
  are only minimally higher in price
• The award can still be made to one of the highest
  technically ranked offerors
• Because overall it is judged to be the most
  advantageous