Archived Information

# Competitive Sourcing Methodology

This guide provides a process for the Department of Education
(Department) to follow in determining a best value solution to
performing the activities necessary for the Department to fulfill its
mission. We will make maximum use of competitive procedures to obtain
best value and promote fairness. This approach is consistent with the
government-wide principles for competition between employees and
industry.

In identifying competitive sourcing activities, we will use a Strategic
Investment Process that includes developing a business case, assessing
the commercial marketplace potential and deciding whether reengineering
and/or competition will improve performance. (See the Strategic
Investment Process Flow Chart on page 7.)

# Identify Function(s) for Strategic Investment Analysis and Potential Reengineering and/or Competition

As required by the FAIR Act, within a reasonable time after the
publication of an annual Commercial Activities Inventory, the
Department's Executive Management Team (EMT) will examine the listed
activities to identify business functions to compete. For each activity,
we will review the following attributes:

-   Core/Non-Core

-   Value Added/Non-Value Added

-   Funding Source/Type

-   Combination Activities

-   Underutilized Assets

-   Unstable Workload

-   Workforce Issues

-   Specialized Skills

# Establish Strategic Investment Team

The EMT and the Strategic Investment Office (SIO) will organize a
Strategic Investment Team (the team) for each business function
undergoing the Strategic Investment Process. Teams may include
individuals from the program area affected, as well as procurement,
human resources, legal, and finance personnel. Teams will document
mission requirements and seek new and innovative ways to provide the
required products or services.

Team members will receive training and guidance about appropriate
analysis performance and any subsequent competitive sourcing
requirement.

**Communication**

The team and the SIO will prepare a Communication Plan to educate the
workforce about the strategic investment process. It will inform all
affected employees and their union representatives, in writing, that the
Department will conduct a strategic investment review of their business
function, and that a business case will be completed to determine
whether the function will be reengineered and/or competitively sourced.
If workload currently contracted out is also included in the analysis,
we will notify the incumbent contractors. Review dates will be provided.
Labor Relations staff will ensure that all communications comply with
applicable collective bargaining agreements.

# Establish Baseline Through a Business Case (Costs and Performance)

The team will perform a strategic investment analysis of the business
activities to determine baseline costs and performance. Data reviewed
will include, but not be limited to: mission and function statements;
organization charts; current staffing; position descriptions; inherently
governmental positions; outputs; historical workload; special
activities/services; sample reports from management information systems;
existing contracts; operating procedures; performance standards; union
agreements; relevant statutes, regulations and directives; equipment and
facility inventories; customers; security requirements; and any
identified problem areas.

The team will develop the business case in accordance with the
prescribed Department business case template and must include all
requested data. The team will prepare the business case with assistance
from the Strategic Investment Office and the Principal Office that owns
the function.

The Department will use the business case to quantify any cost savings
and performance improvements between the \"As-Is\" organization and any
reengineered or restructured organization.

# Making the Decision to Maintain Status Quo, Reengineer, or Reengineer and Compete a Business Function

After the team completes the business case, the Principal Office and
Strategic Investment Office will submit it, along with a recommendation
on reengineering/competition to the EMT. The EMT will then decide
whether to maintain the existing organization, reengineer the function,
or reengineer *and* compete the function between employees and industry
to obtain the best value solution.

**Develop Performance Work Statement/Quality Assurance Survey
Plan/Independent Government Cost Estimate**

If the EMT decides to reengineer and compete the business function, the
team will develop a Performance Work Statement (PWS). The PWS will
define need, performance standards and measures, and timeframes
required. The PWS will be performance-oriented, specifying outputs or
measures without dictating **[how]{.underline}** the work must be
performed.

The team will develop a Quality Assurance Surveillance Plan (QASP) that
describes inspection methods, the required reports and necessary
resources with estimated work-hours.

Through market research, the team will prepare an Independent Government
Cost Estimate (IGCE) based on PWS requirements. Used during the
solicitation phase of the process, it will provide an estimate of
contractor costs to perform the activities being competed.

The PWS, QASP, IGCE, and solicitation package developers will not be
allowed to develop the Education employees\' proposal. All team members
must sign nondisclosure and conflict of interest statements.

# Develop Employee Proposal

A Most Efficient Organization Team \-- consisting of employees \-- will
be organized to prepare an Employee Proposal to perform the PWS
requirements. It will describe the Most Efficient Organization (MEO) of
federal employees and resources to do the work.

The employees\' proposal should identify the organizational structures,
staffing and operating procedures, equipment, and transition and
inspection plans necessary to ensure that the government can perform the
activity in an efficient and cost effective manner.

The proposal will include a Technical Performance Plan (TPP), a Cost
Proposal and a Transition Plan (TP). The TPP represents the
Government\'s technical proposal to accomplish the PWS requirements. The
cost proposal is the employees' estimated costs to perform the relevant
business functions. The in-house cost estimate should be based upon the
following:

-   Personnel Costs

-   Materials and Supply Costs

-   Other Specifically Attributable Costs

    -   Depreciation

    -   Cost of Capital

    -   Rent

    -   Maintenance and Repair

    -   Utilities

    -   Insurance

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    -   Travel

    -   MEO Subcontracts

    -   Other Costs (i.e., transportation)

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-   Overhead Costs

-   Additional Costs (i.e., employee recruitment, relocation)

The TP will outline how the Government will transition from the current
organization to the MEO or contractor/ISSA performance.

Employee proposal information is procurement sensitive -- all necessary
steps to protect it must be followed.

# Independent Review of MEO

The Department will assign an Independent Review Officer (IRO) to review
the PWS, and QASP and employees' proposal. The IRO will certify in
writing that Government\'s cost estimates are consistent and reasonable.
The IRO will also certify in writing that the employee proposal
reasonably establishes the government\'s ability to perform the PWS
within the resources provided by the MEO, and that all employee proposal
costs are fully justified. After certifying, the IRO returns the
approved employee proposal documentation to the Contracting Officer.

The IRO must be a qualified employee whose work and place in the
organization is independent of both the activity being studied and the
relevant competitive sourcing activity.

#  Solicitation

The Contracts and Purchasing Operations (CPO) will prepare and issue a
solicitation to request proposals or quotes from commercial vendors.
During this step, the Contracting Officer (CO), in conjunction with the
Strategic Improvement Office, determines which type of solicitation
contract to use. The CO reviews the PWS for sufficiency and incorporates
it, along with other required contract clauses, into the solicitation.
The FAR requires that the Right of First Refusal of Employment clause be
included in the solicitation. This clause ensures that federal employees
whose positions are eliminated if an activity is outsourced will be
given employment priority with the winning contractor. The Contracting
Officer will announce the solicitation in accordance with FAR
requirements. The Contracting Officer and the team should work together
in developing the proposal evaluation criteria.

Using negotiated procurement award procedures, all industry offerors, as
well as the employee proposal, will be evaluated in accordance with the
stated evaluation criteria.

The CO will receive and evaluate proposals from outside offerors, i.e.,
the private sector or other government agencies (Interservice Support
Agreement \-- ISSA). The CO will evaluate all proposals, determine which
ones are within the competitive range, and begin negotiations. The CO\'s
objective is to obtain the best value for the Government. The CO will
negotiate with each offeror until a final proposal revision is submitted
that provides the best value based on the offeror's proposal, the
solicitation evaluation criteria, and the conditions affecting the
offeror's operations. The best value is a contract with a responsible
source that will satisfy ED requirements in terms of product quality and
timely delivery, and includes a fair and reasonable price. After
negotiations and receipt of final proposal revisions, the CO will select
a best-value industry/ISSA proposal.

Once the best-value contractor/ISSA proposal is selected, the
Contracting Officer reviews the employee proposal, which must comply
with the technical proposal requirements of the solicitation. The CO
will assesses the level of performance and performance quality to be
achieved. If necessary, the CO will negotiate with the MEO Team. The MEO
Team will make all changes necessary to maximize performance standards.
If necessary, the MEO will recalculate the employee-based cost proposal.
The IRO must certify the revised employee proposal.

The CO forwards the best value industry proposal and the best value
employee proposal, along with a recommended award decision, to the EMT.

# Best Value Decision

During this step, the EMT compares the best value contract/ISSA offer
with the in-house offer prepared by the MEO Team and makes a tentative
award decision. The CO announces the tentative decision.

# Debriefing and Protest Process

Before a final-award decision is made and a transition to the
\"winning\" proposal, unsuccessful offerors are entitled to a full
debriefing. At a minimum, the debriefing information shall include:
ED\'s evaluation of the significant weaknesses or deficiencies in the
offeror\'s proposal, if applicable; the overall evaluated cost or price
and technical rating, if applicable, of the successful offeror and the
debriefed offeror; and past performance information on the debriefed
offeror; the overall ranking of all offerors when any ranking was
developed by the agency during the source selection; a summary of the
award rationale; and reasonable responses to relevant questions about
whether source selection procedures contained in the solicitation,
applicable regulations, and other applicable authorities were followed.

Unsuccessful offerors have the right to file a protest at the
contracting agency or GAO.

Eligible protestors include only those individuals or organizations that
could be affected by the tentative best value award decision to convert
to or from in-house, contract, or ISSA performance as a result of the
cost comparison. Such individuals include the following:

-   The affected in-house employees (i.e., appropriated or
    non-appropriated fund civilian employees being cost-compared whose
    work is being competed) or their representative(s);

-   Contractors who have submitted formal offers;

-   An agency that has submitted a formal offer via an Interservice
    Support Agreement (ISSA); and

-   A non-selected contractor. A non-selected contractor is permitted to
    appeal in case the contractor originally selected to compete against
    the in-house offer is reversed via GAO protest.

# Implement MEO or Contract

After the end of the debriefing and protest process the EMT makes a
final award decision. If the MEO is chosen, the solicitation is
cancelled and the Most Efficient Organization (MEO) is implemented in
accordance with the employee proposal. If the final best-value decision
favors contract/ISSA performance, the contractor is awarded the contract
and CPO will administer it. The Strategic Investment Office implements
human resources options and oversees the transition. The Department's
human resources staff will begin processing appropriate personnel
actions such as: voluntary early retirement authority, voluntary
separation incentive pay, priority placement programs, transition
assistance reduction in force, etc.

The Transition Plan from the winning proposal is implemented.

# 

#  Post MEO Performance Review

After the winner of the competitive sourcing activity completes the
transition period, the new organization begins full performance duties.
The Government then, regardless of the outcome of the strategic
improvement process, implements the Quality Assurance Surveillance Plan
(QASP). This plan should be reviewed periodically and updated because
over the life of the contract current performance measures may no longer
be accurate indicators of performance, and/or performance standards may
no longer be valid.\
\
If the employee proposal won the competition, the government will
conduct a Post-MEO Performance Review to ensure that the government MEO
has been implemented as proposed. The Post MEO Performance Review
ensures that the government MEO is meeting the same requirements
expected of a contractor or ISSA provider, and that any documentation to
support a change in scope of effort has been provided.

# 

# Re-compete

The end of the competitive sourcing process is to re-compete the
business function at the end of the \"contract\" performance period. All
award decisions can be re-competed at the end of the \"contract\"
regardless of MEO or contract performance; the same process is followed
in the re-competition as in the original strategic investment process.
The awardee of the first competition will be required to provide all
information necessary for future strategic investment analyses, and any
workload data necessary for future solicitation.