Practices for Developing Transparent Best Value Selection Procedures (2015)

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5 • Reviewing and synthesizing the history of best value award protests and their outcomes. • Reviewing and synthesizing existing best value enabling legislation. The goal for a best value selection is to choose the most advantageous offer by evaluating and comparing factors as well as cost. Previous research has shown that when used correctly, best value procurement provides sizable benefits in terms of cost saving, improved quality, and schedule reduc- tion (Gransberg and Ellicott 1996; Abdelrahman et al. 2008; FHWA 2012; Yu and Wang 2012). This synthesis report pro- vides state-of-practice information to help transportation agen- cies develop effective approaches to manage the best value solicitation. It provides agencies with the information to implement their evaluation and award processes in a fair, equitable, and transparent manner. SYNTHESIS METHODOLOGY This report is derived from the following four independent sources of information: • Literature review; • Survey of state departments of transportation (DOTs) using a web-based questionnaire; • Content analysis of RFQs and RFPs for best value transportation projects; and • Case examples of best value projects. A comprehensive literature review of related best value documents was conducted. The goal of this effort was twofold. Current academic literature, industry publications, state DOT websites, and government reports were searched to find the most current trends and best practices in best value procure- ment. In addition, the team searched for archival information to describe the origins of best value procurement and how it has evolved into the current state of practice. From the literature review and topic panel input, a question- naire was developed and a survey of state DOTs conducted. The survey questionnaire was distributed in web-based and paper-based forms to the members of the AASHTO Subcom- mittee on Construction and the AASHTO Subcommittee on Design in all 50 states, the District of Columbia, and Puerto Rico. After two follow-up requests, responses were received from 46 U.S. state DOTs, an 88% response rate. BACKGROUND Best value procurement is a process used to select the most advantageous offer by evaluating and comparing factors in addition to cost. Transportation agencies are increasingly using best value selection procedures to deliver transportation proj- ects. Although low-bid procurement processes are simple and transparent, they do not allow agencies to evaluate additional factors that may add value to the agencies and stakeholders. Construction time and technical approaches are examples of factors that can add value. Time can be evaluated similarly to cost by quantitatively comparing construction durations. Eval- uation of technical approaches requires engineering judgment. The construction and consulting industries have expressed concerns regarding the transparency and fairness of a process that is based on non-price evaluation factors such as technical approach, innovative solutions, qualifications, and experience. Agencies would like to provide the best value to the traveling public. They also want to work with their industry partners to develop transparent procedures that treat all proposers fairly. This synthesis provides information on effective practices that support transparent best value selection procedures. SYNTHESIS GOALS AND OBJECTIVES The overarching goal of this synthesis was to summarize and document the state of practice in developing transparent best value selection procedures, which was achieved by accom- plishing the following objectives: • Identifying selection methodologies that support trans- parency and achieving the contracting agency’s goals of selecting the proposal that represents the best value. • Identifying proposal evaluation criteria and request for qualifications (RFQs)/request for proposals (RFPs) requirements that support transparency. • Identifying procedures that minimize the overall industry cost of developing proposals, yet still maintain transpar- ency and a fair best value approach. • Documenting procedures, make-up, and structure of the evaluation committee to ensure that it is knowledgeable, fair, and objective. • Documenting debriefing procedures, including what information is shared and when. • Identifying industry outreach efforts that were used suc- cessfully by transportation agencies in implementing best value procurement of highway projects. chapter one INTRODUCTION

6 To better understand how states are implementing best value procedures, a content analysis was conducted of the DOT best value guidelines, manuals, and RFQs and RFPs from 35 state DOTs. A content analysis is defined as a technique for making valid inferences by objectively and systematically identifying specified characteristics of a message, written or visual, using a set of procedures (Holsti 1969; Neuendorf 2002). Finally, the case example projects were selected based on the literature review and survey responses indicating an agency’s willingness to participate in case examples. As a result, seven case examples from different states were conducted to furnish specific information related to a transparent and fair best value approach. The case example method described by Yin (2009) was used to furnish a rigorous methodology for collecting the data from the case study projects. Yin’s three principals were followed in the process of data collection: 1. Use of multiple sources, 2. Creation of a database, and 3. Maintaining a chain of evidence. During the effort, the team was careful to remember that single sources provide limited data based on “one specific source” and can create difficulty when drawing results, in addi- tion to a lack of “trustworthiness and accuracy” (Yin 2009). Multiple sources help alleviate lack of trust, increase viability, and frequently provide supplementary realms of thought and research that strengthen results (Yin 2009). SYNTHESIS ORGANIZATION This report is composed of five chapters. The first chapter introduces the subject area and covers scope, objectives, and study methodology. Chapter two provides a brief overview of best value procurement methods for highway construction projects. This chapter provides a foundation to understanding chapters three and four. Chapter three presents current prac- tices of best value procurement procedure, summarizing the findings from the survey and a review of agency documents and guidelines with regard to best value selection processes. Chapter three focuses on documenting effective practices that support the transparent best value selection procedure. Chapter four covers issues regarding evaluation criteria and selection methodologies that support transparency and achieve a contracting agency’s goals of selecting best value proposals. This chapter presents seven best value project case examples. Finally, chapter five summarizes the information presented in the previous chapters and offers conclusions and future research with regard to implementation of best value approaches. The appendices provide important supplemental infor- mation. Appendix A contains the relevant components of the survey questionnaire; Appendix B includes a list of case example questions; Appendix C provides a summary of vari- ous state statutes that may allow DOTs to implement best value procurement for transportation projects; and Appendix D summarizes four best value award protests from the Oregon, Utah, California, and Minnesota DOTs and their outcomes.