Best_Value_Award_Explanation_To_Industry_07182016.pdf

Maritime Administration (MARAD) Ship Disposal Program Explanation of Ship Recycling Best-Value Contract Awards

For Awards through July 2016

MARAD acquires towing, hazmat remediation, vessel dismantlement and recycling services for its non-retention National Defense Reserve Fleet (NDRF) vessels primarily through full and open competition.1 The services are acquired either through sales contracts or commercial item, service contracts awarded under the simplified acquisition procedures in Federal Acquisition Regulation under the Commercial Item Test Program authorized by FAR Subpart 13.5. MARAD’s ship disposal authority under the National Maritime Heritage Act directs MARAD to make awards on the basis of best value, consistent with the FAR, to qualified facilities considering price/cost, timeliness to perform, worker safety and the environment.

When determining best-value, MARAD considers price and the non-price factors of performance schedule, facility capacity and past performance. As permitted under the simplified acquisition procedures, the relative order of importance of the evaluation factors is not stated in the solicitation. The importance of the evaluation factors for each of the vessel awards is not specified because the trade-offs necessary for selecting the multiple awards are often made on a case-by-case basis given the specific offers received. This approach also results in a reasonable and timelier selection process.

As an example, a recycling facility may offer the highest sales prices for three ships but, based on their existing/scheduled workload and available resources, the facility is only capable of accepting and actively working two of the vessels. A second facility offers a lower sales price for the third ship, but has the capacity to start immediately and can complete the work in a reasonable period of time. In this example, for the potential award of a third vessel to this facility, capacity/schedule outweighs the higher sale price.

This simplified example of the iterative process used to select the best value offer(s) illustrates how the relative importance of the factors may be adjusted during the selection process and, as such, cannot be stated with certainty before or at the time of the request for offers/prices. Different trade-offs between price and non-price factors may be warranted depending upon the number of awards being considered for an offeror.

MARAD publicly posts the awarded contracts, disclosing the price and the performance schedule of the successful offeror. MARAD also provides each offeror the opportunity for a debriefing after the contract awards are publically posted. Offerors usually do not request debriefings because the reason for the award selection is self-evident from the awarded and publicly posted contract price and/or performance schedule.

Since November 2008, MARAD’s recycling solicitations have awarded contracts on a best-value basis for both sales contracts and service contracts.2 MARAD awarded a total of 97 vessels for recycling from November 2008 through July of FY 2016 from NDRF and Navy fleet sites. Of the 97 awards, 62 were sales and 35 were service contracts and 80%, (78 of 97), were made to the highest sales offer or the lowest price quotation for a service contract. Therefore, while the relative importance of the evaluation factors is not stated in the solicitation, price is clearly a significant factor though not the sole factor. Achievement of 80% of the best value awards that result in the maximum return or least cost is assessed to be in the best interest to the U.S. Government and adheres closely to the statute.

1 Two contracts were awarded non-competitively. The justification and contracts were publicly posted.

2 MARAD only solicits prices for service contracts if no acceptable sales offers are received.