Best Value Contracting: Key Facts & Issues
What is Best Value Contracting (BVC)?
- A procurement method that presents an alternative to the traditional low-bid method of contracting.
- A competitive contracting process, increasingly used in the public sector, which requires projects to be awarded to the contractor offering the best combination of price AND qualifications, instead of just the lowest bid.
- An approach for awarding contracts that, when properly designed and administered, rewards high-performance contractors who have trained, skilled workers and other essential qualifications for performing high quality projects in a safe, timely and cost-efficient manner.
Where is BVC Being Used? Best Value Contracting is being used in various public sector markets throughout the U.S. as shown below.
- Federal Sector: In FY 2001 federal agencies used BVC for nearly 70% of federal construction, according to data from the Federal Procurement Data Center. This represents a 500% increase in the use of this method by the federal government since 1997.
- State Government: BVC laws have been adopted in at least 10 states for public works programs: AK, CO, DE, GA, KY, NJ, NM, PA, TX, & UT. The laws in DE, NJ & NM were promoted by building trades unions and/or signatory contractor groups. Some of these states are using the method widely, others more sporadically. Also, in some states, only certain public agencies, e.g., stadium authorities or universities, may have the authority to use BVC, while other agencies do not.
- Local Jurisdictions: Use of BVC by cities, counties, school districts and other municipal or local jurisdictions varies and local laws must be researched on a case-by-case basis. The procurement laws of some jurisdictions may also be regulated by state law. Therefore, it may be necessary to research state law to obtain information as to whether BVC may be authorized in a particular jurisdiction.
Notes: New legislation is sometimes needed to authorize Best Value for a state or local government -- but not always.
For some jurisdictions existing laws already permit BVC. In these circumstances the BVC process can be implemented through a policy initiative or some other types of executive action by a mayor, governor or other executive branch official.
Best Value Contracting is also referred to by other terms, such as “competitive sealed proposal contracting,” “negotiated contracting,” “request for proposals or RFP contracting.”
How Does the BVC Process Work? Under the BVC process, bidding is open to all qualified contractors who submit detailed information on their past performance and qualifications through a Request For Proposals (RFP) process. After reviewing this information and researching past projects and prior construction customers, project owners use various types of procurement evaluation and selection procedures to identify the contractor or contracting team that offers the best combination of price and qualifications.
- Contracting Team: The contracting team should include the general or prime contractor and pre-listed subcontractors. If designed properly, the BVC system should require mandatory pre-listing of subcontractors over a certain dollar threshold (e.g., $500,000).
- Qualifications: These can be anything that impact the success of a project and typically include the past performance, technical expertise and management team of the general or prime contractor and subcontractors. Key craft labor issues should also be included, namely: skill training/apprenticeship, project staffing/labor sources; safety initiatives; and law compliance. In some cases jurisdictions or agencies must be lobbied to include craft labor issues in Best Value RFPs.
- Scoring Process: The qualifications of contracting teams are usually rated or scored by a team of procurement personnel employed by the project owner who review submittals provided by contractor/subcontractor teams and evaluate performance data and other relevant information from prior projects.
Information by The Building & Construction Trades Department, AFL-CIO
815 16th Street, Suite 600
Washington, DC 20006
(202) 347-1461
E-mail BCTD: severn@bctd.org
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