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Best Value Product Support Arrangements (PSA)

DAU GLOSSARY DEFINITION

The expected outcome of an acquisition that, in the Government's estimation, provides the greatest overall benefit in response to the requirement.

Alternate Definition
  1. “Best value” means the expected outcome of an acquisition that, in the Government's estimation, provides the greatest overall benefit in response to the requirement." 
  2. "The term "product support arrangement" [PSA] means a contract, task order, or any type of other contractual arrangement, or any type of agreement or non-contractual arrangement within the Federal Government, for the performance of sustainment or logistics support required for covered systems, subsystems, or components. The term includes arrangements for any of the following: performance-based logistics [PBL], sustainment support, contractor logistics support [CLS], life-cycle product support, [or] weapon systems product support." 
Alternate Definition Source
  1. Federal Acquisition Regulation (FAR) 2.101, Definitions
  2. Title 10 US Code (USC) 4324, Life-cycle management and product support
General Information

Background

Best value is often discussed in the context of both defense acquisition and product support, but what is it and how are best value acquisition and product support outcomes achieved?  In addition to Section 2.101 quoted in the definition above, the FAR has much to say about best value, including:

  • FAR 1.102, Statement of Guiding Principles for the Federal Acquisition System: "The vision for the Federal Acquisition System is to deliver on a timely basis the best value product or service to the customer, while maintaining the public's trust and fulfilling public policy objectives." It goes on to articulate a vision whereby "all participants in the System are responsible for making acquisition decisions that deliver the best value product or service to the customer" and that "best value must be viewed from a broad perspective and is achieved by balancing the many competing interests in the System."
  • FAR 15.101, Best Value Continuum:  "An agency can obtain best value in negotiated acquisitions by using any one or a combination of source selection approaches. In different types of acquisitions, the relative importance of cost or price may vary. For example, in acquisitions where the requirement is clearly definable and the risk of unsuccessful contract performance is minimal, cost or price may play a dominant role in source selection. The less definitive the requirement, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection." Note: Additional information on the best value continuum is also contained in section 1.2 of the DoD Source Selection Procedures.
  • FAR 15.101-1, Tradeoff Process states:  "a tradeoff process is appropriate when it may be in the best interest of the Government to consider award to other than the lowest priced offeror or other than the highest technically rated offeror."
  • According to USD(AT&L) 4 Mar 15 memo entitled “Appropriate Use of Lowest Priced Technically Acceptable Source Selection Process and Associated Contract Type", “LPTA is the appropriate source selection process to apply only when there are well-defined requirements, the risk of unsuccessful contract performance is minimal, price is a significant factor in the source selection, and there is neither value, need, nor willingness to pay for higher performance….Lowest Priced Technically Acceptable (LPTA) has a clear, but limited place in the source selection 'best value continuum.'”
    • Federal Agencies have been heavily criticized for the overuse of the LPTA process. As a result, Section 880 of the FY19 National Defense Authorization Act (NDAA) amends FAR 15.101-2Lowest price technically acceptable source selection process, by adding new criteria that agencies must consider before using LPTA source selection procedures. It also includes strong preference against using LPTA procedures for the acquisition of certain categories of procurements. The effect of these changes will be to limit the use of LPTA procedures only to those situations where it is clearly in the government’s best interest.
    • Additional information including limitations and prohibitions on the LPTA source selection process can be found in DFARS 215.101-2.  

Applying Best Value

Best value is a qualitative measure that factors price and performance into the decision process, much like we all do in our personal lives. For example, when buying a car, we may initially get two very different quotes from two different dealers. Dealer 1 may quote a "bare bones" price with no extras. Dealer 2 may quote a somewhat higher price which includes floor mats, free car washes for six months, and scheduled service for the first 36,000 miles. Depending on our requirements and our operational patterns, either offer may provide best value. To determine best value for each situation, we gather information concerning requirements and total costs, analyze the data and determine which offer is better for us, strategize our response and negotiating position, then negotiate with the dealers.

DAU's Service Acquisition Mall (SAM), provides guidance and procedures for services acquisition based on the Seven Steps to the Service Acquisition Process included in DoD Instruction (DoDI) 5000.74, Defense Acquisition of Services. The steps are further broken down into three phases: Planning, Development, and Execution.    

For federal civilian agencies, a good services acquisition reference is the Steps to Performance-Based Services Acquisition (SPBA) which states:  "while there are many aspects to crafting an acquisition strategy, among the most important for performance-based acquisition are to "compete the solution, use down-selection and due diligence, evaluate heavily on past performance information, and make a best-value source selection decision." It goes on to assert, "best value is a process used to select the most advantageous offer by evaluating and comparing factors in addition to cost or price. It allows flexibility in selection through tradeoffs which the agency makes between the cost and non-cost evaluation factors with the intent of awarding to the contractor that will give the government the greatest or best value for its money." In addition, it states the integrated product team should consider including factors such as the following in the evaluation model:

  • Quality and benefits of the solution
  • Quality of the performance metrics and measurement approach
  • Risks associated with the solution
  • Management approach and controls
  • Management team (limited number of key personnel)
  • Past performance (how well the contractor has performed on contracts of similar size, scope, and complexity)
  • Past experience (what the contractor has done)

Finally, it also adds "quite simply, best-value source selection involves subjective analysis. It cannot, and should not, be reduced to a mechanical, mathematical exercise."

Best Value and Product Support

DoDI 5000.91, Product Support Management in the Adaptive Acquisition Framework, is very clear about the applicability of best value in the realm of product support. In section 4.2, Life Cycle Product Support, it states: "The PM [Program Manager], with the support of the PSM [Product Support Manager] will begin life cycle product support planning by conducting early risk identification, mitigation, and product support analyses that inform best value solutions."  Additionally, this instruction notes the following:

  • "The LCSP [Life Cycle Sustainment Plan] is the detailed product support plan, including sustainment metrics, risks, costs, and analyses used to deliver the performance-based best value strategy covering the IPS [Integrated Product Support] elements." (Section 4.3.a)
  • "The output of the PS BCA [Product Support Business Case Analysis] helps determine a best value solution for meeting the PSS [Product Support Strategy]. The PM uses recommendations from the PS BCA to support sustainment funding requirements in the programming, planning, budgeting, and execution process." (Section 4.5.b)
  • "An LCSP (or a tailored LCSP for non-covered systems) will be completed prior to transitioning a prototype program to rapid fielding and document the transition plan in the LCSP, including sustainment performed by interim contract support as well as the timeline for those activities to transition to an organic PSP [Product Support Provider] or PSI [Product Support Integrator] or a best value mix of organic and contract PSI(s) and/or PSP(s)." (Section 6.2.c(3))
  • "To ensure funds are planned for and allocated to implement the PSS, the PSM should work with the PM and business financial manager to provide product support input into the POM [Program Objective Memorandum] for forecasted PSI and/or PSP activities at least 2 years before sustainment activities start. The LCSP (or for a non-covered system the tailored LCSP) will document the program’s transition plan and include the PSS, including sustainment activities performed by a contractor and the timeline for those activities to transition to an organic PSP or PSI, or a best value mix of organic and contract PSI(s) and/or PSP(s)." (Section 6.3.d(2))
  • "Software quality, security, and the development environment directly affect affordability. Affordability goals are achieved over time as software quality increases and the best value product support package is implemented." (Section 8.2.a(2))

*Note: bold italics added for emphasis

Additionally, see paragraph 3.9 entitled "Best Value Decision" of the August 20, 2022 Defense Pricing & Contracting (DPC) memorandum "Department of Defense Source Selection Procedures" for additional information on this subject as it relates to source selection decisions.

Summary

For the life cycle logistician and PSM, best value can be summed up by the phrase "achieving optimized affordable readiness." In other words, when it comes to product support strategies and PSAs, best value can be defined as a support solution that provides the government with an optimal mix of supportability, affordability, reliability, availability, maintainability, and transportability measures and metrics while achieving desired readiness requirements at the lowest life cycle cost (LCC).