Brian Dunbar 
Headquarters, Washington, DC           May 11, 1995
(Phone:  202/358-1547)

Beth Schmid
Headquarters, Washington, DC
(Phone:  202/358-1600)

RELEASE:  95-65


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"Ñthat 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 -

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