Procurement Wizard

3.9 Develop Proposal Evaluation Strategy

Proposal evaluation, particularly in a RFP, usually consists of an evaluation of mandatory requirements, evaluation criteria and cost/price.  The evaluation criteria used to assess proposals consist of the factors and sub-factors that reflect the areas of importance to an agency in its selection decision. Through the evaluation factors, the agency is able to assess the similarities and differences and strengths and weaknesses of competing proposals and, ultimately, use that assessment in making a sound selection decision. In accordance with HRS §103D-303 for goods, services and construction and HAR §3-143-205(d), for health and human services, the evaluation criteria and their relative point value shall be expressed in the RFP and proposals shall be evaluated only on the basis of those criteria. In addition, the RFP must state the relative point value of price to all of the other evaluation criteria. In doing so, offerors are informed of the factors that the agency will consider in determining which proposal best meets its needs, and offerors may use this information to determine how to best prepare their proposals.

In general, evaluation criteria should be tailored to each procurement and include only those factors which will have an impact on contractor selection. The nature and types of evaluation criteria to be used for an acquisition are within the broad discretion of the agency. In order to determine the point allocation for the price /cost factor please refer to the formula discussed below.

Non-cost factors address the evaluation areas associated with technical and business management aspects of the proposal. Examples of non-cost factors include technical and business management concerns such as technical approach and understanding, capabilities and key personnel, transition plans, management plan, management risk, past performance, and corporate resources. The level of quality needed by the agency in performance of the contract is an important consideration in structuring non-cost factors.

Mandatory requirements are requirements an offeror must meet to demonstrate they are legally or otherwise authorized to perform the work described in the RFP. This may include such things as business and/or contractor licensing or board certifications, proof of insurance, bonding requirements, etc. Mandatory requirements are evaluated on a pass-fail basis.

3.9.1 Evaluation Process

The evaluation process is typically divided into four (4) main phases and one (1) optional one. The evaluation phases are:

1. Evaluation of Mandatory Requirements
2. Evaluation of Technical Proposals
3. Evaluation of Cost Proposals
4. Ranking and Selection
5. Optional Discussions and Best and Final Offers  (Final Revised Proposals HRS 103F)

The specific steps and processes the Procurement Team will utilize in each step in the evaluation process should be documented in an evaluation plan. This ensures that at the time of evaluation there is a clear and documented process for how the solicitation responses will be evaluated.

3.9.2 Evaluation Factors

It is important to identify all evaluation factors and their relative importance, including price, prior to RFP development. Factors not specified in the RFP shall not be used for evaluating the proposals.

Next, the Procurement Team should begin making a detailed list of the most important aspects of the goods, services or construction required, including cost. Each item on the list is a potential evaluation criterion. From this list, the Procurement Team should group the criteria into categories, referred to as evaluation factors, and arrange the list in sequence of most important. This process will help to determine the most appropriate weighting (see below) and aid in assigning a point value to each factor based on its relative importance. The most important items will naturally be evaluated heavier and have more points available.

Evaluation factors should be individually tailored to each RFP. For criteria to be effective, they should have the following characteristics:

• Clear: not subject to multiple interpretations, not ambiguous
• Relative: all key elements of the project requirements must relate to the requirement definition and be covered by evaluation criteria
• Discriminating: separate best, average and weaker proposals
• Non-discriminatory: fair and reasonable
• Realistic: given the nature or value of the contract
• Measurable:  must have distinguishing importance
• Economical: use of the criteria should not consume an unreasonable amount of time or resources
• Justifiable: make sense and can be justified on common sense, technical and legal basis; mandatory and heavily weighted criteria must be justified

3.9.3 Weighting Factors

Weights reflect the relative importance of each of the evaluation criteria to the agency.  A statement in the RFP of the specific weighting to be used for each factor and subfactor, while not required, is recommended so that all offerors’ will have sufficient guidance to prepare their proposals.

Typically, factors are divided in four (4) major categories for evaluation purposes:

1. Technical approach
2. Managerial approach
3. Qualifications, prior experience (past performance) and references
4. Cost

In accordance with HAR §3-122-52(b), points assigned to each factor must be presented in the RFP using a numerical rating system, that details the relative priority of each evaluation factor. The following is an example of evaluation factors used in an RFP with a weighted 60/40 split between cost and technical/managerial merit.

Sample Evaluation Factor	Points
Technical Approach	400
Managerial Approach	50
Qualifications, prior experience and references	150
Cost	400
Total Points	1000

In accordance with HAR §3-122-52(d), cost is identified as a percentage of the total available points and cost proposals from all offerors are “normalized” meaning that the lowest cost offeror receives 100% of the points available and the other higher cost proposals receive a percentage of the available points based on their submitted cost.

The following is an example of a cost evaluation using the formula mandated in HAR §3-122-52.⁽¹⁾This formula described in this section does not apply to procurements … Continue reading

Sample Cost Normalization	Points ((Low Bid / Offeror Bid) x Total Points)
Offeror 1 – Low Bidder at $26,000 gets maximum points	400 = (($26,000 / $26,000) x 400)
Offeror 2 – Next Low Bidder at $28,400 gets 91.5% of points	366 = (($26,000 / $28,400) x 400)
Offeror 3 – Highest Bidder at $40,000 gets 65% of points	260 = (($26,000 / $40,000) x 400)

3.9.4 Evaluation Committee

Prior to writing an RFP or Competitive Procurement of Services, the purchasing agency must determine whether the solicitation responses will be evaluated by the Procurement Officer exclusively, or by an evaluation committee of named participants.  The following details the requirements for evaluation committees for each of these methods of procurement.

3.9.4.1 RFP Evaluation Committee

Although responses to an RFP may be evaluated by the Procurement Officer, it is generally considered best practice to establish a committee to evaluate proposals for an RFP.

In accordance with HAR §3-122-45.01, if an evaluation committee is used it must be composed of a minimum of three (3) governmental employees with sufficient qualifications in the area of the goods, services, or construction to be procured, one of which must be the contract administrator. The contract administrator or a designee shall serve as chairperson, and the Procurement Officer or a designee shall serve as advisor.

Private consultants may also serve (without compensation) on the committee provided that they have the relevant knowledge, do not have a conflict of interest, agree to keep the evaluation and all information they view confidential, and agree to their name being made public upon the award of the contract.  See Section 4.4.4 for guidance on how to evaluate proposals.

For the Executive Branch:

Individuals serving on the Evaluation Committee should be documented on form SPO-044, and each member must complete form SPO-024, Attestation Serving on an Evaluation, Review or Selection Committee to ensure that there are no potential conflicts.

3.9.4.2 Competitive Purchase of Services Evaluation Committee

For HRS 103F, The Procurement Officer or an evaluation committee selected by the Head of the Purchasing Agency or the Procurement Officer shall review and evaluate the proposals.  The approved list of evaluators shall be placed in the procurement file.

Evaluators:

1. The Procurement Officer; or
2. A Committee of a minimum of two state employees with the education and training to evaluate the proposals

Non-state employees may serve as advisors only if there is no conflict of interest and shall not represent or act in the selection or award process.

A copy of the document identifying the evaluation committee members and any subsequent changes thereto shall be kept in the procurement file. See Section 4.6.7 for guidance on how to evaluate proposals.