New rules that will help Defense Department managers hold public-private job competitions under the "best value" procurement standard are almost ready, a top Defense acquisition official said Tuesday. The new guidance
will clarify the Byzantine process of conducting job competitions according to the best value method, which factors both cost and technical advantages into procurement decisions. While most job competitions are decided by low bid, the Bush administration and many acquisition experts believe that best value provides a better deal for the government. The Defense Department rules aim to clarify how to compare an in-house bid with the bid from a contractor when the two bids are prepared according to different standards. In a best-value competition, private sector firms can put forward bids that exceed the requirements of the scope of work, or performance work statement, when private firms compete against one another for a chance to compete against the government. In contrast, the in-house bid can only fulfill the minimum requirements of the performance work statement under federal outsourcing rules. This means that the private sector firm and in-house team will likely offer different levels of performance, making it difficult to ensure a fair cost comparison. Before the competition can move to its cost comparison phase, both bids must offer a comparable level of performance. If the private bid exceeds the level of performance, Defense will require the performance work statement to be amended to include performance standards of the private sector firm that are relevant to the competition. "You have to find a way to write [the level of performance] as a performance standard so the in-house team can reach for it," Annie Andrews, assistant director of the Pentagon competitive sourcing office, told listeners at a conference sponsored by the A-76 Institute
. "It's a critical part of this guidance." After the performance work statement is revised, Defense officials will change the in-house bid to meet the new performance standards before starting the cost comparison. Defense officials must revise the in-house proposal without borrowing elements from the private sector bid, according to the guidance. For example, if Defense holds a public-private competition to staff a call center, a contractor might propose to answer all calls to the center within 30 seconds, while an in-house team might pledge to answer them in a minute. Under the new guidance, Defense officials could be required to rework their in-house bid so it meets the 30-second response rate-but without simply assuming the in-house team could achieve that response rate with the same number of employees as the private firm. Andrews said that changing the performance work statement during the public-private phase of the competition is not unfair to contractors who lost in the private-private competition. "All we're trying to do is to get the in-house [bid] up to the level of the private sector offer," she said. "The in-house team never had the chance to bid over and above [the performance work statement], because they had to bid to the minimum standards." The guidance should be shared with Defense agencies and formally issued within the next month, said Andrews. Defense will then make the guidance part of the Federal Acquisition Regulation. The Defense guidance is only a first step toward a true best-value procurement approach, said Stan Soloway, president of the Professional Services Council, a contractors association. "It's certainly a start in the right direction, but I think there's a lot more work that needs to be done," said Soloway, who added the congressionally chartered Commercial Activities Panel is looking at ways to make "best value" a standard part of job competitions. The panel is due to report to Congress by May 2002.