1. Best Value Trade-Off Incorporating Value Adjusted Total Evaluated Price (VATEP) Procedures
Michelle M. Currier, DAU
Professor of Contract Management
Katy Hurd, Peggy Smith and Nick Pierce
Infantry Combat Equipment Ground
Combat Element Systems,
Marine Corps Systems Command

2. Definitions VATEP VATEP is an Evaluation Methodology
Source selection evaluation methodology that allows for offeror’s total proposed price to be adjusted (for evaluation purposes only) based on the ‘value’ placed on better performance/capability as identified in the solicitation
Removes some subjectivity from the best value evaluation
Objectivizes trade space between threshold (minimum) and objective (maximum) for specific evaluation criteria by assigning monetary value to them
Communicates to industry the value the Government places on better performance/capability for specific requirements
Not a performance incentive
VATEP is an Evaluation Methodology 2

3. Definitions, cont’d Valued Requirement
Evaluation criteria with defined threshold (minimum) and objective (maximum) with assigned VATEP adjustment value
Evaluated on Acceptable/Unacceptable basis
Offerors must propose at least threshold (minimum) as specified in RFP to be determined Acceptable; not required to propose beyond threshold (minimum)
Downward adjustment to offerors’ total proposed price for above-threshold (minimum) up to objective (maximum) proposal
No additional adjustment for exceeding objective (maximum) established in the RFP 3

4. Definitions, cont’d Valued Requirement, cont’d
Not included in Source Selection Authority’s (SSA’s) tradeoff decision beyond Acceptable rating
Award decision cannot include/consider whether offeror proposed above threshold or not, or how far above threshold
Evaluation credit received through potential for downward adjustment for evaluation purposes, not through tradeoff consideration 4

5. Definitions, cont’d Affordability Cap
Approved cost constraints or funding allocated for the acquisition
Proposals exceeding affordability cap may not or will not be eligible for award (unaffordable)
Source Selection Plan must address decision to use/not use affordability cap with supporting rationale and explain how it will be applied (AFFARS MP5315.3)
RFP must state if proposals exceeding the affordability cap may not or will not be eligible for award 5

6. Definitions, cont’d Adjustment
Reduction of offeror’s total proposed price, for evaluation purposes only, for proposal that is above-threshold (minimum) up to objective (maximum) for valued requirements
No additional adjustment or evaluation credit given for exceeding objective (maximum)
Adjustment value and methodology specified in RFP
Dollars, percentage of proposed price, or formulas 6

7. Definitions, cont’d Total Proposed Price (TPP)
Total value of offeror’s proposal as submitted
Price against which VATEP adjustments are applied for fixed price contracts
VATEP adjustments applied against Probable Cost for cost type contracts
Price at which contract will be awarded
Total Evaluated Price (TEP)
Offeror’s TPP less VATEP adjustments and any other adjustments (calculated IAW the RFP)
Used for evaluation purposes and SSA award decision only

8. Applicability VATEP may be appropriate when
Requirements Owner wishes to optimally balance price and performance/capability beyond threshold (minimum) requirements to maximize achievement of program objectives
Funding available to pay for increased performance/capability beyond threshold (minimum) requirements
Threshold (minimum) and objective (maximum) can be clearly identified and defined and objectively evaluated (Acceptable/Unacceptable)
Value between threshold (minimum) and objective (maximum) can be quantified

9. Roles and Responsibilities
Requirements Owner
Assist with selection of tradeoff methodology
Identify specific, measurable above-minimum performance parameters for VATEP
Determine what the Government is willing to pay for higher quality performance between threshold (minimum) and objective (maximum)
Determine adjustment value assigned to valued requirements for evaluation purposes
Know funding constraints/program budget

10. Roles and Responsibilities, cont’d
Contracting Officer
Business Advisor
Understand and advise Source Selection Team on risks, benefits and drawbacks
Participate in discussions with industry during strategy development
Ensure 100% clear, objective criteria in RFP
Ensure source selection evaluation follows RFP language
Contracting Officer Does Not Determine Adjustment Value

11. Challenges Valued requirements must be objective
Clearly defined threshold (minimum) and objective (maximum)
Evaluated on Acceptable/Unacceptable basis
Threshold = Acceptable
Potential for downward adjustment is the only evaluation credit/consideration given to valued requirements
No “extra credit” for proposing beyond objective (maximum)
Consideration of technical risk
Acceptable/Unacceptable rating definitions do not include consideration of technical risk
Can include risk in assignment of Acceptable/Unacceptable rating if appropriate language included in RFP
Can evaluate technical risk on a standalone basis

12. Challenges, cont’d Quantifying adjustment value Complexity
Difficult to enumerate dollars/percentages between threshold (minimum) and objective (maximum)
Not generally a core competency for Requirement Owners
Industry input during acquisition planning is critical
Gain deeper insight into Government requirement
Assist in defining realistic objectives and adjustments
Drive/achieve greater technical capability or miss optimal technical solutions
Complexity
Multiple valued requirements with different adjustment methodologies increase complexity
No more than two to three valued requirements
Simple adjustment methodologies

13. Challenges, cont’d Valued requirements not part of tradeoff decision
Example: If range is most important but is established as a valued requirement, SSA cannot include it in tradeoff decision
Carefully determine most appropriate methodology for each evaluation criteria
Potential Impact to competition
Offerors may not propose if they believe valued requirements and/or adjustment methodologies favor a specific offeror or put them at a competitive disadvantage

14. Using VATEP
Section L
Request offerors provide proposed level of performance/capability and provide their technical approach
Recommend no more than two to three valued requirements
Missile X
Gov’t Threshold
Gov’t Objective
Offeror Proposal
Range
90 nm min
115 nm
100 nm
Weight
75 kg max
70 kg
72.8 kg
Power
88 GJ min
99 GJ
94 GJ

15. Range (Rounded to Nearest whole Nautical Mile)
Using VATEP, cont’d
Section M
Provide the specific evaluation credit and adjustment methodology for exceeding threshold (minimum) up to objective (maximum) for each valued requirement
Clearly state that no additional evaluation credit is given for exceeding objective
Missile X
Gov’ t Threshold
Gov’t Objective
Proposed Solution
VATEP
Adjustment
Range (Rounded to Nearest whole Nautical Mile)
90 nm min
115 nm
90+ nm $0
95+ nm
($1,000,000)
100+ nm
($3,000,000)
105+ nm
($5,000,000)
110+ nm
($7,000,000)
($9,000,000)

16. Using VATEP, cont’d No Additional Credit Received Beyond Objective
Missile X
Threshold
Objective
Propo sed Soluti on
VATEP
Adjustment
Weight (Rounded to Nearest Tenth of a Kilogram)
75 kg max
70 kg
74-75 kg $0 kg
($1,000,000) kg
($2,000,000) kg
($3,000,000) kg
($4,000,000)
Power (Rounded to the Nearest Gigajoule)
88 GJ min
99 GJ
88 – 90.9 GJ 0%
91 – 93.9 GJ
(1%)
94 – 96.9 GJ
(2%)
97 – 98.9 GJ
(3%)
(4%)
No Additional Credit Received Beyond Objective

17. Using VATEP, cont’d Example
“The Government will select the proposal with the lowest Value Adjusted Total Evaluated Price (VATEP) from among those with Acceptable Past Performance, Acceptable Technical ratings, and Low or Moderate Risk ratings.”
Lowest TEP
Low or Moderate Technical Risk
Acceptable Technical Factor
AWARDEE
Acceptable Past Performance Proposals
All Responsive Proposals

18. Summary VATEP is an evaluation methodology
Requirements Owner identifies valued requirements, thresholds (minimums) and objectives (maximums), and associated value
Offerors must propose Acceptable approach to at least meet specified threshold (minimum)
Potential downward adjustment to TPP is the only evaluation consideration for valued requirements
Valued requirements not included in SSA’s award decision

19. Summary, cont’d Contract awarded at offerors’ final TPP, not TEP
TPP cannot be taken into consideration by SSA
Affordability cap is very important – we can’t buy what we can’t afford
Multiple evaluation methodologies, valued requirements, adjustment methodologies, and numerous evaluation criteria drive complexity

20. How VATEP Really Works….
Team Infantry Combat Equipment, Ground Combat Element Systems
Marine Corps Systems Command
Katy Hurd, Contract Specialist
Peggy Smith, Contracting Officer
Nick Pierce, Requirements Owner

21. Source Selection Strategy
Assign monetized credits to technical factor(s)
Credits are the VALUE of performance to the Government
Value is different than cost or price
Different breakpoints for better performance
Value and number of credits will vary depending on need
Reduce most probable cost by credits earned
FOR EVALUATION PURPOSES ONLY
Contract price not affected by adjustment
UNCLASSIFIED (U)

22. Pre Solicitation Engage with Program Office early
Conduct thorough Market Research
Engage with Industry
Draft solicitation
Industry Day
UNCLASSIFIED (U)

23. Go/No Go Criteria Facility Clearance
National Institute of Justice Testing
Source Selection Samples (Finished Helmets)
Source Selection Samples Meet Threshold Weight
UNCLASSIFIED (U)

24. Evaluation Factors Factor 2: Past Performance
Factor 1: Technical Capability
Subfactor 1: Ballistic and Non-Ballistic Protection
Subfactor 2: Design & Workmanship
Subfactor 3: Manufacturing
Subfactor 4: Government Purpose Rights for Night Vision Device Bracket Hardware Design (if offered)
Factor 2: Past Performance
Factor 3: Small Business Participation
Factor 4: Price
UNCLASSIFIED (U)

25. Section L
Offerors shall submit 94 finished helmets (Source Selection Samples)
22 Smalls/24 Mediums/24 Larges/22 X-Larges
Offerors shall propose a claimed weight for each size finished helmets
Claimed weight:
Will be verified by the Government
Shall meet the threshold weight requirement
Should be shown on the Total Evaluated Price (TEP) Adjustment Table
Should achieve the same percentage of reduction for each size
UNCLASSIFIED (U)

26. Section M Factor 4: Price Total Proposed Price (TPP)
Total Evaluated Price (TEP)
UNCLASSIFIED (U)

27. TEP Adjustment Table UNCLASSIFIED (U) Size TEP Adjustment
Small Weight (lbs)
Medium Weight (lbs)
Large Weight (lbs)
X-Large Weight (lbs)
Unacceptable
N/A
>2.94
>3.06
>3.31
>3.88
Max Acceptable $0
2.94
3.06
3.31
3.88
1% Reduction $5
2.91
3.03
3.28
3.84
2% Reduction
$10
2.88
3.00
3.24
3.80
3% Reduction
$15
2.85
2.97
3.21
3.76
4% Reduction
$20
2.82
3.18
3.72
5% Reduction
$25
2.79
3.14
3.69
6% Reduction
$30
2.76
3.11
3.65
7% Reduction
$35
2.73
3.08
3.61
8% Reduction
$40
2.70
3.05
3.57
UNCLASSIFIED (U)

28. Step 1: Offeror Submits Claimed Weight
UNCLASSIFIED (U)

29. Step 2: Government Verifies Weight is on TEP Table
“In the event an Offeror proposed a claimed weight that is within the TEP Adjustment Table’s parameters but not one of the specified weights on the table, the Government will adjust the claimed weight to the closest weight shows in the TEP Adjustment Table.”
UNCLASSIFIED (U)

30. Step 3: Government Verifies Claimed Weights Achieve the Same % Reduction for Each Size
“In the event the Offeror’s claimed weight reduction for one helmet size is less than any of the other helmet sizes, the Government will adjust the Offeror’s claimed weight reduction to the helmet with the lowest percentage reduction."
Size
TEP Adjustment
Small Weight (lbs)
Medium Weight (lbs)
Large Weight (lbs)
X-Large Weight (lbs)
Unacceptable
N/A
>2.94
>3.06
>3.31
>3.88
Max Acceptable $0
2.94
3.06
3.31
3.88
1% Reduction $5
2.91
3.03
3.28
3.84
2% Reduction
$10
2.88
3.00
3.24
3.80
3% Reduction
$15
2.85
2.97
3.21
3.76
4% Reduction
$20
2.82
3.18
3.72
5% Reduction
$25
2.79
3.14
3.69
6% Reduction
$30
2.76
3.11
3.65
7% Reduction
$35
2.73
3.08
3.61
8% Reduction
$40
2.70
3.05
3.57
UNCLASSIFIED (U)

31. Step 4: Government Verifies Weight of Each Source Selection Sample
Size
TEP Adjustment
Small Weight (lbs)
Medium Weight (lbs)
Large Weight (lbs)
X-Large Weight (lbs)
Unacceptable
N/A
>2.94
>3.06
>3.31
>3.88
Max Acceptable $0
2.94
3.06
3.31
3.88
1% Reduction $5
2.91
3.03
3.28
3.84
2% Reduction
$10
2.88
3.00
3.24
3.80
3% Reduction
$15
2.85
2.97
3.21
3.76
4% Reduction
$20
2.82
3.18
3.72
5% Reduction
$25
2.79
3.14
3.69
6% Reduction
$30
2.76
3.11
3.65
7% Reduction
$35
2.73
3.08
3.61
8% Reduction
$40
2.70
3.05
3.57
UNCLASSIFIED (U)

32. Step 4: Government Establishes a TEP Adjustment for Unit Price Based on % Reduction
Size
TEP Adjustment
Small Weight (lbs)
Medium Weight (lbs)
Large Weight (lbs)
X-Large Weight (lbs)
Unacceptable
N/A
>2.94
>3.06
>3.31
>3.88
Max Acceptable $0
2.94
3.06
3.31
3.88
1% Reduction $5
2.91
3.03
3.28
3.84
2% Reduction
$10
2.88
3.00
3.24
3.80
3% Reduction
$15
2.85
2.97
3.21
3.76
4% Reduction
$20
2.82
3.18
3.72
5% Reduction
$25
2.79
3.14
3.69
6% Reduction
$30
2.76
3.11
3.65
7% Reduction
$35
2.73
3.08
3.61
8% Reduction
$40
2.70
3.05
3.57
UNCLASSIFIED (U)

33. UNCLASSIFIED (U)

34. UNCLASSIFIED (U)

35. Award & Post Award Contract awarded at Total Proposed Price
Debriefs to each Offeror included:
Offeror’s Technical Evaluation
Awardee & Value of Contract Awarded
UNCLASSIFIED (U)

36. Questions from Industry
4 total questions received from Industry on VATEP Pre Solicitation
3 out of 14 questions asked prior to solicitation release were related to VATEP Solicitation
1 out of 49 questions asked during the solicitation were related to VATEP
UNCLASSIFIED (U)

37. Presolicitation Questions
Q: After the VATEP evaluation has been conducted, what percentage of weight reduction will offerors be held to?
Per Section M, the awardee’s Government verified claimed weight will be incorporated into the Purchase Description and will become the threshold for contract performance.
Q: Is the evaluation of weight in Price or Technical Factor?
Per Section M, the Government will evaluate an Offeror’s weight as a Go/No Go Criteria. The Government will also evaluate the Offeror’s weight under Factor 4 – Price.
Q: What are the dollar values the Government associated with the TEP based on?
The dollar value represents the value to the Government for the associated weight reduction and is limited by the acceptable level of cost to the Government for the ECH.
UNCLASSIFIED (U)

38. Solicitation Questions
Q; If an offeror submits a bid with four sizes, the measured weight of two of those sizes is 4 percent lighter than the threshold, the measured weight of one size is 5 percent lighter, and the measured weight of one size is 8 percent lighter, and the claimed weights are the same as the measured weights, what will be the weight reduction granted by the Government?
Per Section L, the claimed weights should achieve the same percentage of reduction for each size. Per Section M, in the event the Government verified weights (referred to as “measured weight” in the question) do not achieve the same weight reduction across all sizes, the Government will adjust the Offeror’s Government verified claimed weight reduction to the helmet size with the lowest percentage reduction. In this scenario, the Government would evaluate the offeror’s weight reduction at 4%.
Size
Percentage Reduction S 4% M L 5% XL 8%
UNCLASSIFIED (U)

39. Lessons Learned
Engage with stakeholders (e.g. industry, legal, leadership, etc.) early when using a new evaluation process or tool
Research the tool thoroughly and be prepared to answer questions
Create a step-by-step sample of the process
Keep it simple
Run the hypotheticals
Document the basis
UNCLASSIFIED (U)

40. Email: kathryn.hurd@usmc.mil
RFP #: M R-1122