DLA has three defense supply centers located in Philadelphia, Pennsylvania; Richmond, Virginia; and Columbus, Ohio. DSCP is the only center responsible for clothing and textiles, medical, subsistence, and general/industrial items. According to the Federal Acquisition Regulation (FAR) Part 15, Contracting by Negotiation, an agency can obtain best value in negotiated procurements by using any one or a combination of source selection processes. In different types of procurements, the relative importance of cost or price may vary. For example, in procurements where the requirement is clearly defined and the risk of unsuccessful contract performance is minimal, cost or price may play a dominant role in source selection, such as in the lowest price/technically acceptable source selection process. In procurements where the requirement is not easily defined or the risk of unsuccessful contract performance is relatively high, technical capability and other factors such as past performance considerations may play a dominant role. In those procurements, it may be in the government’s best interest to consider award to other than the lowest priced or highest technically rated supplier and to evaluate the relative importance of other factors, including past performance, in a “tradeoff” process. The FAR requires that past performance be evaluated in all source selections for negotiated competitive acquisitions expected to exceed $100,000, unless the contracting officer documents the reason past performance is not an appropriate evaluation factor. While DOD obtained a FAR deviation in 1999 that raised the threshold for requiring evaluation of past performance in procurements to those expected to exceed $5 million, DSCP’s “Best Value Handbook” requires past performance to be included as an evaluation factor for all negotiated competitive acquisitions exceeding $100,000. Based on our random sample, we estimate that procurements conducted by DSCP in fiscal year 2001 generally complied with best value statutes and regulations with an emphasis on past performance, as implemented in major provisions of the FAR as well as DLA’s implementing acquisition directive. These criteria pertain to four functional areas of the contracting process: acquisition planning, solicitation content, proposal evaluation, and source selection decision documentation. DSCP has been proactive in taking steps to encourage contracting officers to comply with best value guidance. Of the 15 procurements in our sample, 12 were based on a tradeoff source selection process that considered factors other than price and technical acceptability, while 3 were based on the lowest price/technically acceptable source selection process. We found that the 15 procurements adequately addressed past performance based on FAR and DLA criteria. For each procurement based on a tradeoff process, past performance was the first or second evaluation factor in order of importance. For procurements based on the lowest price, the contracting officers considered past performance in general terms as part of the determination of the contractors’ eligibility for award. All 15 of the procurements in our sample were required to have written acquisition plans under DLA’s acquisition directive implementing the FAR. Thirteen procurements had written acquisition plans, while 2 procurements awarded using simplified acquisition procedures under a test program for acquisitions of certain commercial items did not. A DSCP policy memorandum, dated August 21, 2002, reminded buyers and contracting officers of the need to prepare written acquisition plans for contract actions expected to exceed the simplified acquisition threshold, as the procurements here did. However, this memorandum was issued after the procurements included in our review had been completed. The 12 procurements that were based on a tradeoff source selection process were subject to further requirements pertaining to solicitation content, proposal evaluations, and source selection decisions. Despite overall compliance with major regulatory provisions of the FAR, we found some cases where specific requirements were not met. However, mitigating circumstances lessened the effect of the lack of compliance. The results of our evaluation in each functional area are presented on the following pages. The 12 procurements in our sample that were based on a tradeoff source selection process generally complied with the solicitation content criteria. Five solicitations, however, did not authorize prospective suppliers to provide information on problems encountered on prior contracts and corrective actions taken. Nevertheless, in these five solicitations, some suppliers identified problems and corrective actions taken, while others did not report any problems on their prior contracts. DSCP officials noted that offerors generally submit this information with their proposals even when it is not specifically authorized in the solicitation. In addition, the solicitations for 7 of the 12 procurements that were based on a tradeoff process did not describe DLA’s approach for evaluating past performance of offerors with no relevant past performance history. The solicitations should have provided that a “neutral” rating be assigned to such offerors. The effect of not describing a neutral rating in the solicitation was mitigated in most of these cases, however. In two cases, DSCP officials did apply neutral ratings when evaluating the proposals. In four cases, neutral ratings generally were not an issue in the evaluation of past performance, because nearly all offerors provided relevant past performance information in their proposals. In one case, where simplified acquisition procedures were used based on a tradeoff analysis, the contracting officer assigned unacceptable ratings to the proposals with no past performance history because they did not provide other information required by the solicitation. On March 1, 2002, DSCP implemented a new proposal rating system to be used in evaluating clothing and textile best value acquisitions. It includes notice to offerors that a neutral rating will be assigned to an offeror with no relevant past performance. DSCP officials expect that all future solicitations will properly cite the neutral rating approach for offerors lacking relevant past performance history. The 12 procurements that were based on a tradeoff source selection process generally complied with FAR requirements on proposal evaluations. For one of the procurements, however, DSCP did not evaluate and assess past performance on all of the factors and subfactors found in the solicitation. For that procurement, while the solicitation listed customer satisfaction as a subfactor, this subfactor was not considered when the proposals were evaluated. In addition, a commercial item procurement, conducted under the FAR simplified acquisition test program, did not evaluate past performance as discussed in the solicitation. While the solicitation stated that performance on prior contracts in subcontracting and assisting small businesses would be evaluated as a part of past performance, the evaluation of proposals did not consider these factors. Because these instances involved lower evaluation subfactors in the overall evaluation scheme, it is unclear whether the evaluation of these factors would have ultimately affected the source selection decisions. The 12 procurements that were based on a tradeoff source selection process complied with the FAR in documenting the source selection decision. For example, a comparative analysis was made of the potential suppliers, as appropriate. DSCP has taken further steps to document the basis of source selection decisions by conducting training for its contracting personnel on the need to thoroughly document all factors considered in making final awards in the source selection decision document. A recent DLA review of DSCP procurements found that the center is doing a good job of documenting best value tradeoff decisions in the files. DSCP has employed several techniques to promote compliance with best value contracting procedures. It has provided specific guidance on best value contracting, and a contract support group provides advice and review as procurements are planned and executed. First, to provide its contracting personnel with detailed procedures for competitive negotiated procurements, DSCP developed and published in 1996 its own Guiding Principles for Best Value Source Selection, known as the “Best Value Handbook.” The handbook outlines the functions and responsibilities of key personnel in the best value source selection process as well as various approaches to source selection that are available for use. As stated in the handbook, best value is the preferred method of source selection and should be used to the maximum extent possible. While other supply centers have issued policy guidance to implement the FAR as well as DOD directives, a DLA official said that DSCP is the only DLA center that has developed a handbook on best value contracting. Second, like all the Directorates at DSCP, the Directorate of Clothing and Textiles has its own contract support team. Headed by a supervisory procurement analyst, the team consists of five procurement analysts, a contract price/cost analyst, an industrial specialist, and a procurement technician. The team supports the Directorate by providing contracting guidance and direction, developing procurement policies and procedures, and developing and administering procurement training. For example, a training program for contracting personnel emphasizes the need to thoroughly document all factors considered in making the final award. The team also encourages the Directorate to use past performance as an evaluation factor for all purchases over $100,000. Further, DLA’s procurement management review program is designed to provide local, periodic, and specific subject/area reviews of the agency’s contracting offices by an independent and objective team of contracting professionals from the headquarters and field contracting staff. In April 2002, a DLA team reviewed DSCP’s Directorate of Clothing and Textiles procurements. The DLA team found the Directorate had substantially improved its documentation of tradeoff decisions related to best value source selection in the contract files. The best value tradeoff decisions documented in the files were characterized by the DLA team as among the best that the team had seen in the entire agency. DLA officials view the future of the clothing and textile supplier base as uncertain. They noted that the Berry Amendment, which requires DOD to purchase certain items such as food, clothing, and textiles from domestic sources, helps maintain a domestic supplier base to meet some of DOD’s unique military requirements. They also stated that competition for DOD’s clothing and textile contracts has never been stronger, as clothing and textile companies that have traditionally not done business with DOD are now competing for DLA contracts. In fact, they informed us that some U.S. companies produce items only for DOD.