APG_S3CoE_VATEP_Symposium_6Feb19.pdf

Source Selection Support Center of Excellence ~ S3CoE

U.S. Army Contracting Command

ACC APG S3CoE SYMPOSIUM SERIES Value Adjusted Total Evaluated Price (VATEP) 6 February 2019

UNCLASSIFIED

Agenda

Welcome Share Ground Rules and Fundamental Principles Objectives o Define, discuss applicability and review Value Adjusted Total Evaluated

Price (VATEP) examples o Discuss Potential Benefits and Potential Challenges Panel Introductions Panel ~ Audience Discussion to Solicit Recommendations and Best

Practices Closing Remarks

Ground Rules:

Informal Discussion - Not Binding.

The contracting officer (KO) is ultimately responsible for communications relating to specific solicitations.

Always rely on the solicitation language, not what you hear today.

We are not discussing specific solicitations, awards or litigations.

The positions stated are the opinions of the participants and not that of the Army or AMC.

Fundamental Principles driving Government/Industry communication:

Improving requirements, solicitations, evaluations and the overall process.

Maintaining the integrity of the procurement process.

Ensuring Fairness in Acquisitions.

Promoting competition.

Mission Accomplishment while protecting the taxpayer.

Ground Rules and Principles

VATEP is a tradeoff source selection process where offerors’ total proposed prices may be adjusted (for evaluation purposes only) based on the “value” placed on better performance as identified in the solicitation.

The solicitation identifies the percentage price increase or dollar amount the Government is willing to pay for measureable levels of performance between threshold (minimum) and objective (maximum) and the affordability cap; to inform industry decisions on what to offer to gain a competitive advantage.

The use of VATEP may be most suitable for procuring developmental items where the Government can determine the value (worth) of better performance and quantify it in the solicitations.

The VATEP adjustments are made after all evaluations are completed IAW the solicitation.

If the solicitation has an affordability cap and the proposed price exceeds the affordability cap, the Government may consider the proposal ineligible for award and not evaluate the proposal if stated in solicitation.

VATEP and Applicability Defined

Applying VATEP – Dollar Amounts

Identify the criteria: System Weight, Battery Life, Size

Identify the defined increments: Threshold (minimum), Objective (Government target)

Criteria Threshold Increment 1 Increment 2 Increment 3 Objective System Weight (pounds) 3.2 > x ≥ 3.0 3.0 > x ≥ 2.8 2.8 > x ≥ 2.6 2.6 > x ≥ 2.4 x < 2.4 Monetized Value $0 $6,000,000 $12,000,000 $18,000,000 $24,000,000

Battery Life (hours) 6.0 < x ≤ 6.5 6.5 < x ≤ 7.0 7.0 < x ≤ 7.5 7.5 < x ≤ 8.0 x > 8.0 Monetized Value $0 $7,000,000 $14,000,000 $21,000,000 $28,000,000

Size (cubic inches)1 161.33 > x ≥ 147.00 147.00 > x ≥ 133.33 133.33 > x ≥ 120.33 120.33 > x ≥ 108.00 x < 108.00 Monetized Value $0 $4,250,000 $8,500,000 $12,750,000 $17,000,000

1. Max - three inch height

Applying VATEP – Dollar Amounts Offeror’s proposed price is $250 million- System Weight: 2.7 pounds ($12 million credit), Battery

Life: 7.7 hours ($21 million credit), Size: 125 cubic inches ($8.5 million credit).

VATEP = $250 million – $12 million – $21 million – $8.5 million = $208.5 million for evaluation purposes

Criteria Threshold Increment 1 Increment 2 Increment 3 Objective Monetized Adjustments System Weight (pounds) 3.2 > x ≥ 3.0 3.0 > x ≥ 2.8 2.8 > x ≥ 2.6 2.6 > x ≥ 2.4 x < 2.4 Monetized Value $0 $6,000,000 $12,000,000 $18,000,000 $24,000,000 $12,000,000

Battery Life (hours) 6.0 < x ≤ 6.5 6.5 < x ≤ 7.0 7.0 < x ≤ 7.5 7.5 < x ≤ 8.0 x > 8.0 Monetized Value $0 $7,000,000 $14,000,000 $21,000,000 $28,000,000 $21,000,000

Size (cubic inches)1 161.33 > x ≥ 147.00 147.00 > x ≥ 133.33 133.33 > x ≥ 120.33 120.33 > x ≥ 108.00 x < 108.00 Monetized Value $0 $4,250,000 $8,500,000 $12,750,000 $17,000,000 $8,500,000

1. Max - three inch height

Offeror propsed price: $250,000,000 Monetized Adjustments: $41,500,000

Value Adjusted Total Evaluated Price: $208,500,000

Applying VATEP – Percentages Identify the criteria and the weightings, Identify the defined increments, now percentages.

Assume the Government has an affordability cap of $275 million and the value it places on meeting the criteria is 25%.

Value the Government places on meeting criteria: 25% Weight: 35%

Battery Life: 40% Size: 25%

Criteria Threshold Increment 1 Increment 2 Increment 3 Objective System Weight (pounds) 3.2 > x ≥ 3.0 3.0 > x ≥ 2.8 2.8 > x ≥ 2.6 2.6 > x ≥ 2.4 x < 2.4 Adjustment Factor 0% 25% 50% 75% 100%

Battery Life (hours) 6.0 < x ≤ 6.5 6.5 < x ≤ 7.0 7.0 < x ≤ 7.5 7.5 < x ≤ 8.0 x > 8.0 Adjustment Factor 0% 25% 50% 75% 100%

Size (cubic inches)1 161.33 > x ≥ 147.00 147.00 > x ≥ 133.33 133.33 > x ≥ 120.33 120.33 > x ≥ 108.00 x < 108.00 Adjustment Factor 0% 25% 50% 75% 100%

1. Max - three inch height

Criterion Weightings

The most probable cost estimate (MPC) times: The product of:

The value the Government places on meeting criteria.

The weighting of a particular criterion.

The adjustment factor of that particular criterion.

Value the Government places on meeting criteria: 25% Weight: 35%

Battery Life: 40% Size: 25%

Criteria Threshold Increment 1 Increment 2 Increment 3 Objective Monetized Adjustments System Weight (pounds) 3.2 > x ≥ 3.0 3.0 > x ≥ 2.8 2.8 > x ≥ 2.6 2.6 > x ≥ 2.4 x < 2.4 Adjustment Factor 0% 25% 50% 75% 100% $10,937,500

Battery Life (hours) 6.0 < x ≤ 6.5 6.5 < x ≤ 7.0 7.0 < x ≤ 7.5 7.5 < x ≤ 8.0 x > 8.0 Adjustment Factor 0% 25% 50% 75% 100% $18,750,000

Size (cubic inches)1 161.33 > x ≥ 147.00 147.00 > x ≥ 133.33 133.33 > x ≥ 120.33 120.33 > x ≥ 108.00 x < 108.00 Adjustment Factor 0% 25% 50% 75% 100% $7,812,500

1. Max - three inch height

Offeror propsed price: $250,000,000 Monetized Adjustments: $37,500,000

Value Adjusted Total Evaluated Price: $212,500,000

Offeror’s proposed price is $250 million, monetized adjustments are listed below.

System Weight is 2.7 pounds: $250 million (proposed price) X 25% (Gov’t value) X 35% (Criterion weight)

X 50%(increment value) = $10,937,500.

Battery Life is 7.6 hours: $250 million X 25% X 40% X 75% = $18,750,000.

Size cubic inches is 131.33: $250 million X 25% X 25% X 50% = $ 7,812,500.

Value the Government places on meeting criteria: 25%

Weight: 35% Battery Life: 40%

Size: 25% Criteria Threshold Increment 1 Increment 2 Increment 3 Objective Monetized Adjustments

System Weight (pounds) 3.2 > x ≥ 3.0 3.0 > x ≥ 2.8 2.8 > x ≥ 2.6 2.6 > x ≥ 2.4 x < 2.4 Adjustment Factor 0% 25% 50% 75% 100% $10,937,500

Battery Life (hours) 6.0 < x ≤ 6.5 6.5 < x ≤ 7.0 7.0 < x ≤ 7.5 7.5 < x ≤ 8.0 x > 8.0 Adjustment Factor 0% 25% 50% 75% 100% $18,750,000

Size (cubic inches)1 161.33 > x ≥ 147.00 147.00 > x ≥ 133.33 133.33 > x ≥ 120.33 120.33 > x ≥ 108.00 x < 108.00 Adjustment Factor 0% 25% 50% 75% 100% $7,812,500

1. Max - three inch height

Offeror propsed price: $250,000,000 Monetized Adjustments: $37,500,000

Value Adjusted Total Evaluated Price: $212,500,000

VATEP (Dollar Amounts) – Putting it Together

Offeror Proposed Price VATEP Offeror One $230,000,000 2.7 pounds $12,000,000 6.4 hours $0 165 in3 $0 $218,000,000 Offeror Two $265,000,000 2.3 pounds $24,000,000 8.1 hours $28,000,000 110 in3 $12,750,000 $200,250,000

Offeror Three $250,000,000 2.6 pounds $12,000,000 7.2 hours $14,000,000 128 in3 $8,500,000 $215,500,000 Offeror Four $280,000,000 2.3 pounds $24,000,000 7.7 hours $21,000,000 125 in3 $8,500,000 $0

Weight Battery Life Size

Potential Benefits and Challenges

Potential Benefits The solicitation identifies which performance parameters the Government places value for Industry to make informed decisions.

Objective approach for Source Selection Authority to evaluate tradeoff analysis.

Potential Challenges Soliciting and receiving good market research to support affordable and achievable levels of performance and or capabilities.

Selecting the correct number of criteria and assigning meaningful adjustment values.

Q~3: Other Transaction Agreements (OTAs) 10 Apr 19, 9-11 A.M. | Mallette Auditorium APG-N

Q~4: Lowest Price Technically Acceptable (LPTA) vs. Trade-Off 10 July 19, 9-11 A.M. | Mallette Auditorium APG-N

All symposium questions, answers and pending responses will be updated on FedBizOpps by 22 Feb 19.

The remaining FY 19 Quarterly Symposium Dates are listed to the right and will be advertised on FedBizOpps

Please send post symposium questions or comments to the S3CoE Mailbox at usarmy.apg.acc.mbx.acc-apg-s3coe@mail.mil

Post Symposium Information mailto:usarmy.apg.acc.mbx.acc-apg-s3coe@mail.mil