In April 2016, the Department of Defense (DoD) published a memorandum expanding DoD Source Selection Procedures beyond Tradeoff and Lowest Price Technically Acceptable (LPTA) to include Value Adjusted Total Evaluated Price (VATEP) Tradeoff. This newer procedure’s intent is to help define how the government evaluates contractor capabilities that go beyond minimum requirements and reach the government’s objective.
Although it’s been an option since April, we’re finding that many people still are unfamiliar with it. And we’ve certainly not seen it used in many solicitations yet either.
What does VATEP do?
VATEP Tradeoff monetizes a contractor’s performance and capabilities that exceed the minimum threshold and reach a maximum level. It provides a dollar amount or percentage that would then be “credited” to the contractor’s price proposal. This “credit” will not affect the amount awarded, only the government evaluated price. It is important to keep in mind that if the contractor’s price falls outside the affordability cap, this “credit” would still not bring a price below it.
For example, let’s say the government wants a chair made. The government states that the chair needs a minimum of three legs so it won’t fall over, but they would prefer a chair with four legs. Being the entrepreneur that you are, you have the capability to make chairs that have both three and four legs. Making a chair with three legs is considerably cheaper than four, but you are not sure how much the government values that extra leg if a traditional Best Value Tradeoff evaluation was used. VATEP puts a dollar figure on that leg, which would then be subtracted from your proposed price to reach the government evaluated price.
How does it help me?
By putting a specific value on a contractor’s performance and capabilities that reach the objective level, it provides the contractor clarity on whether to pursue additional performance beyond the government’s minimum requirements. If a company knows it will cost them $500 to put that extra leg on all the chairs and the government only values the leg at $250, then the company knows it should only offer the government the three-legged chair instead.
This new procedure certainly won’t make sense for every requirement, but it does offer the government a way to make the process less cryptic. Could we see more agencies start to use this?
Only time will tell.
About the Author
Colin Johnson is a Contracts Manager who focuses on business development and federal contracts management. His expertise is in preparing quotes and responses for both government and commercial entities for training and legal support services.