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-1600) RELEASE: 95-65
May 11, 1995
NASA'S SWEEPING PROCUREMENT REFORMS AFFECT EOS BIDS As part of its Agency reinvention initiative, NASA is unveiling several new procurement practices, including source selection reforms that will affect procurement of spacecraft for the Earth Observing System (EOS). New practices in source selection are part of a reform package that touches all segments of the procurement process, from definition of requirements to contractor selection, award and program results. "We want not the best written proposal, but the best business deal," said NASA Administrator Daniel S. Goldin. "NASA expects total performance excellence from contractors," said Deidre A. Lee, NASA's Associate Administrator for Procurement. "That means excellence in the cost and schedule areas, as well as on the technical side." The newest part of NASA's reform package will hold contractors to the costs they propose and will change the way NASA negotiates with offerors on contracts. To ensure total performance, NASA is focusing on selecting contractors whose proposals represent the best technical approach that is realistically, as well as efficiently, priced. The first example of these new practices is the ongoing procurement of spacecraft for EOS. Letters have been sent to all four bidders notifying them that their cost estimates were unrealistically low. Each company will be given a chance to resubmit its bid under these guidelines: - In its evaluations, the Source Evaluation Board will adjust the mission-suitability score for a proposal if the cost estimate is unrealistic. - Rather than selecting one bidder and negotiating a final cost, as has been common on large contracts, NASA will negotiate in parallel a final cost with each offeror remaining in the competitive range. Those offerors will be asked to submit signed contracts with their "best and final offers." If, following this process, NASA is convinced that none of the offerors have demonstrated a realistic
cost proposal, NASA is prepared to cancel the procurement and obtain support through alternate approaches. - The selected contract will be the baseline by which NASA will judge the winning bidder's performance. If at any time it appears to NASA that the final cost will exceed the bid by more than 15 percent, the NASA Program Management Council will review the contract for possible termination. "These source selection reforms epitomize NASA's firm commitment to improving business excellence," Lee said. "NASA's Office of Procurement has made significant changes in its procurement processes to emphasize the best business deal." The agency is better defining requirements, using performance-based contracting and addressing contract type and performance incentives, she added. NASA also has instituted a stronger award-fee policy and cost control changes. Some contractors in recent years have proposed unrealistically low costs relative to their technical approach, expecting NASA to absorb increased costs that arise during the life of the contract, Lee said. Beginning with the EOS common spacecraft procurement, NASA's source selection process is being significantly changed to emphasize "best value"�that is the best, most affordable technical approach documented via contract. Under this approach, if an offeror's proposed cost relative to its technical approach is unrealistically low, NASA will lower that company's technical score on its proposal. In effect this lowers the overall technical score, significantly lessening the offeror's competitiveness. NASA will manage and expect contractor performance in accordance with that agreement. Contractors who do not perform will be reviewed for cancellation, and may also receive a negative past-performance evaluation when competing for other NASA work. "We won't award a contract that is not realistic," said Lee. "We want everyone to understand NASA is serious about cost realism and cost control. It is vital that we have contracts that support and encourage performance excellence." - end NASA press releases and other information are available automatically by sending an Internet electronic mail message to email@example.com. In the body of the message (not the subject line) users should type the words "subscribe press-release" (no quotes). The system will reply with a confirmation via E-mail of each subscription. A second automatic message will include additional information on the service. Questions should be directed
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