BEM_Overview_DLA_Energy_Conference_2019.pptx

Bulk Bid Evaluation Model (BEM)

Matthew Shuster May 2019

DEFENSE LOGISTICS AGENCY

AMERICA’S COMBAT LOGISTICS SUPPORT AGENCY

WARFIGHTER FIRST

Good morning

Introduction:

Price evaluation done using a Bid Evaluation Model and the reason for using this instead of taking lowest offered price is due to Bulk’s business model in which you are able to offer both on an FOB Origin and FOB Destination basis.

Bulk Fuels Business Model Manage petroleum products in very large volumes

Fewer contracts with large dollar values

Estimated quantity with high minimum lift guarantee (75%)

Awards on FOB Origin and FOB Destination Basis

Extensive use of commercial distribution systems Distribution may be direct to demand point or through intermediate Defense Fuel Supply Points (DFSPs) Socio-Economic considerations

Small Business Set-asides (Price Matching)

Hubzone Premium Program

8(a) reservations

WARFIGHTER FIRST

What is the BEM?

How does it calculate the laid down price for each offer…

Bid Evaluation Model (BEM)

Mixed-integer linear optimization program used to find the minimum laid down cost for the entire procurement.

Laid Down Price includes:

Offered product price

All transportation costs

All additive costs

All intermediate DFSP distribution costs (fixed and variable costs) Excess throughput charges

Offer specific evaluation factors Base Reference Price evaluation factors

Offer Conditions

What is the BEM?

How does it calculate the laid down price for each offer…

Offer Conditions Offer Conditions

Optional

BEM evaluates complex offers Tiered pricing Block pricing Volume restrictions (Minimums and Maximums) Multiple load capabilities (modes of transportation) Additive injection capabilities Offer conditions such as “Either/Or” and “One before Two”

Conflicting Conditions Conditional statements must not conflict with each other (i.e.: Minimum award by Tanker is 5 million and overall maximum award is 3 million)

The BEM also allows you to set conditions to your offer….

Sometimes it may not be the lowest laid down price that ends up wining a certain location but because of offer conditions set the BEM found it more cost effective to award the second lowest vendor for one line item because overall it was the most cost effective across all requirements. So the BEM will do trade offs.

Evaluation Example Offers A: 6,000,000 USG by TT @ $2.95/gallon B: 6,000,000 USG by PL @ $3.00/gallon C: 1,000,000 USG by PL @ $2.98gallon Requirements Base 1: 3,000,000 gallons received by TT Base 2: 3,000,000 gallons received by TT Base 3: 1,000,000 gallons received by TT Intermediate Depot Support Available Into X by PL, out by TT to all Requirements Into Y by PL, out by TT to all Requirements Transportation Rates A to 1 (TT): .28/gallon A to 2 (TT): .20/gallon A to 3 (TT): .23/gallon B to X (PL): .02/gallon B to Y (PL): .02/gallon C to X (PL): .01/gallon C to Y (PL): .04/gallon X to 1 (TT): .05/gallon X to 2 (TT): .02/gallon X to 3 (TT): .05/gallon Y to 1 (TT): .04/gallon Y to 2 (TT): .06/gallon Y to 3 (TT): .02/gallon PL = Pipeline; TT = Tank Truck Offer A

6,000,000 USG @$2.95

Offer C

1,000,000 USG @$2.98

Offer B

6,000,000 USG @$3.00

DFSP X

DFSP Y

Base 3

1,000,000 USG

Base 2

3,000,000 USG

Base 1

3,000,000 USG

.28 .02 .05 .01 .02 .05 .02 .04 .02 .04 .20 .23 .06 Req 1 – Offer A (total cost $3.23/gal) Req 2 – Offer A (total cost $3.15/gal) Req 3 – Offer C (total cost $3.04/gal) Total cost: $22,180,000 Req 1 – Offer B (total cost $3.06/gal) Req 2 – Offer C (total cost $3.01/gal) Req 2 – Offer B (total cost $3.04/gal) Req 3 – Offer B(total cost $3.04/gal) Total cost: $21,310,000 $870K Savings Distribution Plan Generated Evaluated on Offered Price Only:

Evaluated on Laid-Down Cost:

This is a simple solution … the BEM actually considers more cost factors than are present in this example but this example demonstrates why we factor in transportation and use the model.

BEM Rounds

There may be multiple OET rounds and within those rounds there will be instances where you will receive BEM reports: After submission of IPRs, FPRs and RAs.

INITIAL OFFERS /

OET ROUND 1

INTERIM OFFERS /

OET ROUND 2

IPR BEM RUN - MCBEW

FPR BEM RUN – MCBEW & LCR

FINAL OFFERS /

OET ROUND 3

PRICE REDUCTION ROUND

BEM MCBEW

This is an example of the Min Cost Solution Bid Evaluation Sheet – Product Line Item and destination location Quantities Percentage allowed by mode Offered Bid Price Transportation Rate if an FOB Origin offer Total Additives Total Evaluation (BRP adjustment factor) Laid Down Price for each bid from the same Vendor

Hoping to have an Excel version of this sheet soon.

Laid Down Cost Report (LCR)

Laid Down Cost Report will be given after the FPRs and RA rounds It shows the current winning laid down price – which may not be the lowest price but to other offer conditions but represent the current winning price.

SEQUENCE OF BEM RUNS

Final Forced Run Small Business Set-Aside Run HUBZone Run 8(A) Run Base Run

Once RA rounds are complete we run the solutions in the BEM for the final prices received:

Base run - Sets up the award pattern not taking into consideration the socio economic programs.

8(a) Set-Asides RUN:

Considers any 8(a) set-aside qtys included in the Solicitation DLA Energy and the SBA agree on 8(a) set-aside quantities prior to issuing the solicitation.

Award price is determined as the price DLA Energy would have paid to the otherwise successful offeror.

Successful 8(a) awards are ‘forced’ into the BEM prior to Hubzone evaluation HUBZone Run:

HZ premiums apply to all solicitation quantities Award price may include a premium of up to 10% over the price DLA Energy would have paid to the otherwise successful offeror.

Successful HUBZone offers are ‘forced’ into the BEM prior to executing the Small Business Set-Aside Run.

As long as the HUBZone company is within 10% of the otherwise winning price and they can be evaluated to a location then that HZ company will win that location.

Small Business Set-Asides:

Qualifying, manufacturing small businesses will have the opportunity to match the winning price per demand location.

Accepted Set-Aside quantities are ‘forced’ into the BEM prior to final evaluation Final Forced Run: Final “forced” run reflects application of Socio-Economic Programs and unencumbered evaluation of remaining solicitation requirements. This award pattern is what is posted on FBO

Post Award Once the solicitation is awarded, award data will be published on Federal Business Opportunities website at https://www.fbo.gov/

For questions specific to an offer, please contact the Contracting Officer listed on the solicitation.

Any Questions?

Contact Information

For questions concerning the functionality of BEM/OET, please contact:

Work: (571) 767-9250

Any Questions?

QUESTIONS?

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