6.3  Performance Price Tradeoff (PPT)

See Informational Guidance at IG5315.101-1.

PPT is less complex than AFFARS 5315.3 source selections.  In PPT, the only factor traded off with price is past performance.  Technical factors may be evaluated on a pass/fail basis only but trade off for price is not allowed.  Once technically acceptable proposals are determined, tradeoffs are made between price and past performance evaluation to determine the successful offeror.  For the purposes of the performance price trade-off, past performance can be significantly more important than, approximately equal to, or significantly less important than Price when being evaluated.

This PPT technique is allowed in acquisitions that include an evaluation for technical acceptability as well as negotiated acquisitions for which price and past performance are the only discriminators.  The contracting officer is the source selection authority in PPT acquisitions $10 million and under.  Over $10 million, the SSA depends on whether the program is an ACAT, AFPEO/CM program, or "Other Contracting."  The contracting officer, requirements personnel, and price analyst (if required) usually accomplish the evaluation.  

Examples of negotiated competitive acquisitions where PPT is appropriate:

a.  Replenishment spares

b.  Non-complex operational contracting

c.  Non-developmental, non-complex service or supplies

d.  "Build to print" requirements with low technical complexity

e.  Service acquisition with only pass/fail technical requirements

f.  Some types of construction contracting

Since a technical proposal is not necessarily a requirement of the solicitation, what does technically acceptable mean in an acquisition for replenishment spares?  The team may determine offers are technically acceptable when the proposal submitted complies with the terms and conditions of the solicitation and states the offeror's intent to build a part in accordance with the required drawings.

a.  Prior To Issuance of the PPT Solicitation (RFP).

When the PPT method of source selection is selected, the Government team must make Sections L and M clear with respect to what past performance information the Government will evaluate and the evaluation process.  Attachment 13 contains examples of Sections L and M; however, these examples are for information only.  Write Sections L and M in each RFP based on the specifics of the item or service we will acquire.  For Section L language the Government team must decide what past performance information is required from the offerors, establish the number of contracts allowed, and determine if we will use a questionnaire, and if so, who will send out the questionnaires.  If offerors are required to send out questionnaires, attach a questionnaire, a transmittal letter for the questionnaire, and a sample client authorization letter to the RFP.  Refer to chapter 3 regarding development of Sections L and M.

Request offerors submit recent and relevant past and present performance information that will demonstrate their ability, including their major/critical subcontractors or teaming partners, to perform the proposed effort.  Define what is recent (current and up to three years prior past performance) and one or more definitions of relevant (very relevant, relevant and somewhat relevant) for the instant acquisition in Section M of the RFP.  (See chapter 3 for discussion of relevant and recent).  Clearly state how the performance confidence assessment will be accomplished using the confidence ratings and definitions set forth in MP5315.3 and chapter 3 of this guide.

b.  Past Performance Activities After Receipt of Proposals.

Review past and present performance data furnished by the offerors and determine if data is available on the offerors from other sources.  Review the completed questionnaires, conduct telephone interviews, document the results of the telephone interviews, and fax that documentation to the person interviewed for concurrence/comment.  We highly recommend the past performance team not rely only on the contracts identified by the offeror in making the performance confidence rating.  

The source selection team should determine the Performance Confidence

Assessment for each offeror (See chapter 3 for ratings and definitions) after reviewing all the data obtained.  Clarifications with the offerors may be necessary to provide the offeror an opportunity to address any adverse past performance or clarify the relevancy of the offeror's past performance information.  See chapter 5 for the definition of clarification, communications, discussions and exchanges with offerors after receipt of proposals.

Re-evaluate the performance confidence assessment for each offeror based on the information received from clarifications (if award will be made without discussions) or discussions.  The team will make an integrated past performance price tradeoff assessment of the technically acceptable offerors to determine which offer provides the best value to the Government.  Make the source selection decision in accordance with Section M of the RFP.  Write an award decision documenting any tradeoffs in price for a better performance confidence rating.