New Guidance for Transparency in “Best Value” Procurements
“Best value” procurements are sometimes criticized as involving a “black box” decision-making process. A recent report issued by the National Cooperative Highway Research Program (“NCHRP”) discusses practices to increase transparency in such procurements. The report is NCHRP’s latest installment of its “Synthesis of Highway Practice,” issued on March 5, 2015. A resource for public agencies, this “synthesis” addresses best practices for developing transparent “best value” selection procedures in public procurements. These concepts are of particular interest to public and private entities seeking to engage fair, value-based public-private partnership (“P3”) solutions to highway, and more broadly transportation, challenges in an environment of restricted funding and aging national transportation infrastructure.
The synthesis examines practices relating to the procurement process, where cost of the transportation asset is one among several factors in evaluating the winning bidder. The paper surveys practices across jurisdictions in best value procurement processes and highlights case studies that support transparency in such procurements.
The report lists seven “best value case examples” from procuring agencies that the NCHRP authors “found to have the most effective best value experience.” Prominent to all were consistent algorithmic value judgments against “clear, easy to understand and project-specific” evaluation criteria. These judgments translate into “adjectival ratings,” that are in turn given quantitative values for direct scoring “best value” submissions. “States most frequently using only a few of the available award algorithms and rating methods promote transparency….”. Other features of successful “best value” practices were separating price proposals from technical scoring, and pre-publishing relative or actual weights of evaluation criteria. “Approaches that contain the minimal number of evaluation criteria to succinctly align the procurement with stated project goals” were found to promote transparency.
It should be noted that the desire for transparency needs to be balanced against the public agency’s need to be able to make decisions regarding what constitutes the “best value” for the public. As an example, FHWA’s design-build rule requires federal-aid grantees to identify the relative weightings of the factors and major subfactors used to make the selection, but does not require use of formulas. Under one view, use of formulas as the basis for selection can be seen as an abdication of the responsibility to engage in an intelligent decision-making process to determine which proposal truly offers the best value to the public. (For a discussion regarding this issue, see NCHRP Report 561, “Best-Value Procurement Methods for Highway Construction Projects” (2006), p. 54.) Furthermore, use of a formula does not avoid subjectivity in the evaluation process, since scoring is necessarily the product of subjective decisions by the individuals involved in evaluations. For projects where the public agency has determined that the advantages of providing greater transparency outweigh the disadvantages associated with loss of flexibility in decision-making, this synthesis offers information regarding different approaches that agencies may wish to consider so as to make the procurement process as transparent and objective as possible.