4

Using a Statement of
Objectives (SOO) and
Related Issues

This chapter addresses the statement of objectives (SOO) concept and other issues related to competing an acquisition using an SOO. Because this is an emerging concept, this chapter will go beyond “how to write” an SOO and discuss the process itself and some of the ramifications related to the SOO concept.

WHAT IS AN SOO?

Section 5 of the 1996 Department of Defense handbook for preparing SOWs defines the SOO as follows:

In 2001, a group of volunteers from across the federal government joined together to participate in a project known as the Seven Steps to Performance-Based Acquisition.² This project also addressed the SOO concept and defined it as follows:

The SOO does not replace the SOW. MIL-HDBK-245D also states:

Potential offerors use the SOO, along with other information and guidance provided in the RFP, to develop the contract work breakdown structure, SOW, and other documentation supporting their proposals. The SOO should be clear and concise in defining the objectives of the work effort, and it should provide potential offerors with sufficient information to structure a sound response and satisfy the government’s objectives. Once the contract is awarded, the SOO is replaced with the offeror’s proposed SOW.

SOO FORMAT

There is no set format for an SOO, but the SOO should, at a minimum address the following:

Purpose—The purpose should be a short statement that describes why you need to acquire the services, usually in terms of what you want accomplished. In the Seven Steps example from a VA SOO⁵, the purpose was succinctly stated:

Background—Provide the background to the requirement and the current environment and its relationship to the project it supports. In the VA SOO example, the background statement included sections on:⁶

• VA loan servicing history

• Current VA portfolio origination/acquisition process

• Overview of the current servicing process.

The background should specifically include reference to any problems the government or previous contractors have encountered in the past that might affect how the services are provided. Of particular interest would be problems with methodology that did not work or otherwise created performance difficulties. You want to put offerors on notice of past problems so the problems will not be repeated.

Scope or mission—A scope statement is necessary to help offerors to get an overview of the size and range of the services needed. The Seven Steps VA SOO example contained the following scope statement:

The scope statement may also include information on the amount of funding available (see Releasing Funding Information at the end of this chapter).

Performance Objectives—Describe project objectives and performance requirement plans, including how project quality, cost, and adherence to the schedule will be measured. Success criteria may also be defined to ensure that potential offerors clearly understand the objectives that must be met for the work to be considered successful. The Seven Steps VA SOO example set forth the following performance objectives:

Period and Place of Performance—Indicate the period of performance, including any options. As appropriate, indicate the place of performance if it could affect how an offeror might propose to do the work.

Constraints—Identify any constraints that could affect the offeror’s proposed performance work statement and how the performance might be measured. For example, acquisitions related to information technology will need to conform to the agency’s information technology architecture and accessibility standards. There may be other constraints, such as security, privacy, safety, and accessibility to government facilities. Identify any government policies, directives, standards, or regulations that an offeror must comply with. If appropriate, identify any government property to be provided. Potential constraints should be a matter of interest for the program and contracting personnel, and particularly the users of the services, when initially developing the SOO. Contractor input with respect to potential constraints should be obtained during market research.

Section L

The government-prepared SOO is published in Section L of the RFP. When using an SOO, Section L of the RFP must inform offerors that if they receive the award, their proposal will be incorporated into the contract by reference. Section L must also provide offerors with a common outline or format to follow—otherwise the structure of offerors’ proposed PWSs will vary considerably, making a comparative assessment difficult. Require offerors to provide a performance work statement complete with the performance metrics and measurement plan, and a quality assurance plan that addresses how performance assessment (surveillance) will be conducted.

Section L must also provide directions on how to write the PWS, including direction on the common dos and don’ts of SOW/PWS writing (see Chapter 6). It is in the government’s best interests to ensure that potential offerors are provided sufficient information to write their proposals in a manner that will be contractually acceptable.

Section M

Special care must also be taken when writing the evaluation criteria in Section M of the RFP. The technical evaluation criteria and their respective weights should center on those things that demonstrate how well the offeror understands the requirement, how well the contractor’s proposal will meet the requirement, the validity of the proposed performance metrics and measurement, the viability of its quality assurance and performance assessment plan, and whether the government has sufficient resources to monitor and assess the offeror’s performance in accordance with the offeror’s proposal.

The technical evaluation plan (and to the extent possible, the description and weighting of the evaluation criteria) must recognize that the content of offerors’ proposals may vary widely as they propose their own way of meeting the government’s requirements. The plan must establish the value of the services and provide a tradeoff method for determining the respective values of the differing performance levels. The technical evaluation plan itself is not provided in the RFP, but, if appropriate, Section M could provide offerors with a target performance level along with a minimum acceptable performance level. This would help avoid having to evaluate clearly unacceptable offers.

Past performance is an important evaluation factor when using an SOO. How well an offeror has performed similar government or commercial work provides a good indicator of how well it might perform to its current proposal.

Evaluation criteria should not be structured in a manner that inhibits offerors’ creativity. Take particular care with the wording of evaluation criteria related to staffing plans, labor mixes, the experience of key personnel, and other resource-related evaluation criteria to ensure that such criteria do not directly or indirectly restrict how an offeror might propose to do the work.

In standard services acquisitions, manpower requirements are commonly prescribed in terms of “required number of bodies” or by other qualifiers such as college degrees or specific years of experience. In an SOO, prescribing manpower requirements in this manner limits the ability of offerors to propose their best solutions and could preclude the use of qualified contractor personnel who may be well suited for performing the requirement but may be lacking, for example, a complete college degree or the exact years of specified experience. Offerors should be free to propose whatever resources they deem appropriate. However, if a resource must have a specific skill set or certification, then it should be duly identified.

INCORPORATION BY REFERENCE

A contract will be awarded to the offeror whose proposal is determined to offer the best value. Award is made in the usual fashion after including a clause in the contract identifying the contractor’s proposal and incorporating it into the contract by reference.

The concept of incorporating an offeror’s proposal into the contract by reference (in whole or in part) is not new. It has been used in the R&D community for years in situations where the government knew what it wanted as an end product but either didn’t know how to get there or knew that there were a number of solutions and didn’t want to fix on one solution without seeing what else industry could come up with. The RFP outlined what was wanted as a result of the contract and set forth any constraints that might apply (much like an SOO). The RFP invited offerors to provide complete proposals to accomplish the purpose of the contract and informed them that their proposals would be incorporated by reference into the resulting contract. Award would be made to the offeror proposing the best combination of technical value and price. It was not unusual during negotiations to direct an offeror to make specific wording changes to ensure that what was incorporated by reference was contractually viable.

Even though the contractor’s proposal is incorporated into the contract by reference, it should also be included as an attachment to the contract. This document will become the only contractual requirement (the government’s SOO is deleted along with the rest of Section L) and should be made available to those government and contractor personnel who will be involved in contract performance and administration.

Because the proposals will become the contractual requirement, they must be examined closely during the evaluation process to ensure that they do not contain loopholes, inconsistencies, vagueness, or other problems that will adversely affect contract compliance. Problems with the wording of an offeror’s proposal should be considered deficiencies, and offerors who are included in the competitive range must be informed of such deficiencies during negotiations and given an opportunity to correct them.

Correction of the wording of an offeror’s proposal may generate new protest grounds. Under the current rules, offerors must be informed of the deficiencies and significant weaknesses in their proposals, but agencies cannot tell offerors how to correct them. When using an SOO, however, the wording of an offeror’s proposal may have inadvertently created loopholes, inconsistencies, or vagueness that is contractually unacceptable but does not go to the essence of the proposal (i.e., would not affect the offeror’s competitive position if corrected). In such instances, agencies should not only identify the deficiencies but should also tell the offeror the corrections that must be made if the offeror is to remain in the competition. This is likely to draw protests, but it is the only way to ensure that the government does not incorporate a proposal by reference that contains contractually unacceptable wording.

USING AN SOO

Two questions must be addressed when deciding on the acquisition approach during acquisition planning: “What is the contract supposed to achieve?” and “Does market research indicate that innovative or different approaches might be available?” The first question is addressed during the budget process but should be reexamined at the initiation of acquisition planning. The second question should be critically examined during market research. The market research should focus on what is available in the commercial marketplace that might satisfy the government requirement.

The results of the market research will bring about a third question, “Do we want to consider innovative or different approaches?” The fact that there are “other” ways to get the job done does not necessarily mean that such approaches must be considered. There may be reasons to continue doing the work as it has been done before. Market research may reveal that the “other” approaches are too expensive; risk analysis may indicate that the “other” approaches are too risky—innovations are not risk-free. Then there is the old adage, “If it ain’t broke, don’t fix it.” In other words, do not change something unless there is a clear benefit to making the change.

The SOO approach is viable when there are clear benefits to be achieved. For example, market research reveals that “other” approaches may result in cost savings or will bring about greater efficiency, even if at acceptably greater cost or that it is not possible for the government to develop performance standards and assessment methods without inhibiting competition because of the variety of “other” approaches available in the marketplace. The SOO approach permits the offeror to develop the performance metrics and measurements in accordance with how the offeror proposes to accomplish the work.

COMPETING THE SOO

In a typical services acquisition, the government issues an RFP containing a statement of work or performance work statement that describes the work requirement, identifying the kinds of services required and what they are to accomplish. The RFP contains all the information an offeror needs to know to develop a competitive proposal.

The SOO, however, provides only the basic, high-level objectives of the acquisition. Will this be enough information to serve as the basis for a competitive proposal? In many cases it will be enough information. When dealing with commercial or commercial-like services, offerors already know how to perform the work and only need to know what it is that you want. This may not be the case, however, for complex or multi-task services or for service contracts where the performance requirements are continually evolving.

Five-Step Approach

In “An Innovative Approach to Performance-Based Acquisition Using a SOO,” Chip Mather and Ann Costello suggest a five-step approach to conducting a services acquisition using an SOO:⁹

1. Conduct market research

2. Develop a statement of objectives and identify constraints

3. Conduct initial “competition”

4. Support contractors during the “due diligence” phase

5. Conduct best value evaluation and make award.

Step 1: Conduct Market Research

While market research is part of the normal process for conducting acquisition planning, it is critical to the success of an acquisition using an SOO. The authors recommend a particular process:

As noted in Chapter 2, market research is conducted in a variety of ways. Generally, one-on-one market research should be the last step in the market research process, after the research has examined the marketplace, looked at the various commercial practices, and identified the industry leaders. The industry leaders should then be approached with a preliminary SOO to serve as the basis for the one-on-one meetings. (Do not equate “industry leaders” with “large businesses,” as there are many very capable small businesses in the service industry.)

Step 2: Develop a Statement of Objectives and Identify Constraints

Developing a statement of objectives and identifying constraints is also part of the normal process in that the results of market research are used to develop a description of the requirement suitable for a solicitation. In this case the authors stress: “Whenever possible, the objectives should be ‘grounded’ in the plans and objectives found in agency strategic performance plans, program authorization documents, and budget and investment documents.”

Steps 1 and 2 are not distinctly separate processes. As a result of the market research, a final SOO, including the necessary constraints, is developed. It should be noted here that steps 1 and 2 are the same as those used when developing an SOW or PWS for a standard services acquisition, except that instead of an initial SOO at the last stages of market research, a draft SOW/PWS or RFP could be used, and as a result of the market research a final SOW/PWS would be developed and the RFP issued.

Steps 3 and 4, even while based on FAR 15.201 and 15.202 as the authors suggest, would require an adjustment to the typical approach to the presolicitation phase of an acquisition.

Step 3: Conduct Initial “Competition”

The authors suggest an “initial competition” based on FAR 15.202, which permits an advisory multi-step process:

The authors maintain that this initial competition is needed to give potential offerors “the time to understand the agency’s objectives, constraints, and history of performance, so they can craft an approach and solution to the agency’s needs.” They also note that “the advisory multi-step process is not like a competitive range decision: the choice is the contractor’s whether to continue to compete.”

The use of the term “initial competition,” even when explained, is likely to generate protests as lawyers for those not considered “competitive” seek any means to interrupt the procurement process. A better term might be “advisory process” to coincide with the FAR language.

A somewhat similar process, using “sources sought” synopses, has been in use for some time in the R&D community. Sources sought synopses are used to seek out firms capable of performing particular R&D efforts. The synopsis describes the project purpose and invites interested firms to submit their qualifications to perform the work. They are informed that there is no guarantee that a solicitation will ever be issued and proposals will not be accepted. Firms that fail to submit adequate qualifications are informed that they lack the requisite qualifications and would probably not be selected for award should they respond to any resulting solicitation, but they may request a copy of any resulting solicitation. This process works well and is still in use in the R&D community.

The advisory multi-step process is not in widespread government use and would require training for procurement personnel to ensure that they do it right, as a preliminary step to the “due diligence” phase.

Step 4: Support Contractors during the “Due Diligence” Phase

This step, called “due diligence,” will require a major adjustment in the approach to service contracting. Due diligence is used in acquisition to describe the period and process during which competitors take the time and make the effort to become knowledgeable about an agency’s needs in order to propose a competitive solution. Lawyers understand this term, but it is not in general use in the procurement community.

Before the FAR 15 Rewrite, there was concern about revealing advance procurement information that might provide a contractor with an unfair competitive advantage. Contracting officers were advised to be careful about what specific information was released prior to issuing the RFP. Generally, the “if you tell one you must tell all” process was followed. This led to the use of sources sought synopses and draft SOWs where procurement information was revealed to all interested parties and they were encouraged to respond, but there would be no dialogue between the government and individual contractors about their responses.

The FAR 15 Rewrite changed all that. The term “advance procurement information” is no longer in the FAR. The FAR now states:

This FAR citation dramatically changes the presolicitation process and is tailor-made for the use of an SOO. The SOO provides only broad information about the government requirement. Potential offerors are going to need a significant amount of additional information if they are to present a competitive, performance-based proposal. Now everything is open for discussion. This is where the fourth step comes into play. The authors describe the due diligence process as follows:

The authors’ due diligence concept makes sense and should lead to better proposals. There are some potential problems, however.

The first problem is getting program personnel to devote the necessary time to deal with contractor visits and questions. The service industry is very competitive, and there will likely be a number of potential offerors wanting attention. For program personnel this could involve a significant amount of time away from their duties. The prospect of entertaining multiple contractor visits and questions may cause program managers to seek more conventional acquisition approaches.

Second, attempts to limit the number of potential offerors wanting their turn at due diligence could lead to protests; even if a contractor has been told that it is unlikely to be a viable competitor, the contractor can still choose to participate. Limiting this right to participate would be a mistake. While the government is permitted to limit the number of offerors in the competitive range, this right applies only after receipt of proposals.

Finally, whether the FAR intended to or not, the pre-solicitation process outlined in 15.201(c) is going to result in presolicitation negotiations. When government and contractor program personnel meet to talk about a pending or potential acquisition, the conversation will end up with a give-and-take discussion. Astute contractor program personnel will gain insight into the government’s preferences with respect to offerors’ proposals and possibly be able to influence how the government will evaluate their approach. Is this a bad thing? Not necessarily. It might be bad if the government were writing the PWS, but here the due diligence process is designed to help offerors develop their best proposal, including the PWS, performance metrics and measurement, and a quality assurance plan. Nevertheless, it is likely that there will be protests in this area, and in due course the Comptroller General will address what can or cannot be said during the SOO presolicitation process.

With respect to due diligence, the authors go on to say:

There is a problem here, but only with respect to the “written process.” In the event of a protest, the Comptroller General and the courts place a great deal of importance on contemporaneous writings. When it comes down to who said what, the party that has something in writing that dates back to the event in question has a definite advantage. Contracting officers should insist that program personnel keep a written record of what they said to whom. These would be internal memorandums and not generally available to other potential offerors. This information would also be valuable to program personnel to ensure that they are providing consistent information during due diligence.

FAR paragraphs 15.201(a) through (e) address presolicitation activities and generally permit open communication between the government and industry relating to a potential procurement. FAR 15.201(f) addresses the restrictions on communications after release of the solicitation:

Basically, this FAR citation moves what used to be advance procurement information restrictions from the presolicitation phase to the period between the release of the RFP and the receipt of proposals. Once proposals are received, however, the regular evaluation, negotiation, and best value award processes apply.

Step 5: Conduct Best Value Evaluation and Make Award

The final step is to receive proposals, conduct the evaluation, negotiate with those in the competitive range, and make a best value award. The due diligence phase ends upon receipt of proposals. Any further communications with offerors are governed by FAR 15.306(b), Communications with offerors before establishment of the competitive range, which permits communications regarding past performance information and other issues necessary to understand offerors’ proposals. Such communications cannot be used to cure proposal deficiencies or material omissions, materially alter the technical or cost elements of the proposal, or otherwise revise the proposal. In short, the government may ask an offeror to clarify something in its proposal, but the clarification is unacceptable if it amounts to a modification to the proposal.

The evaluation and negotiation of competing proposals based on an SOO are more complex than those for standard services solicitations. Acquisition planning must provide for sufficient time for this to be accomplished properly.

Evaluation—Evaluating proposals based on an SOO will be more complex than usual because the proposals may vary widely as the offerors propose their own way of meeting the government’s requirements. Generally, the evaluation consists of three steps:

1. Evaluators examine each offeror’s PWS, performance metrics and measurements, and quality assurance plan on their own merits to decide if the proposed methods will meet government requirements. Among other things, the evaluators must consider whether the proposed performance metrics and measurements will support performance assessment and provide accurate results. The evaluators must also consider whether the government has sufficient resources to monitor the contractor’s performance in accordance with its proposed quality assurance plan. Those proposals found to be unacceptable should be rejected.

2. The evaluators make a comparative assessment between those proposals found acceptable initially, using tradeoff methods that determine the respective values of the differing performance levels, and then score and rank the proposals.

3. The evaluators determine which proposals are the most highly rated and should be recommended for inclusion in the competitive range. The other proposals should be rejected once the contracting officer establishes the competitive range.

Each evaluation must be fully documented as to the rationale for the scoring, the risk analysis, and the tradeoffs made among the differing proposals to determine which proposals are the most highly rated. This contemporaneous documentation will prove invaluable in the event of a protest.

Negotiation—Contracting officers should plan on extensive negotiations after establishing the competitive range to ensure complete and mutual understanding of each offeror’s proposal. First, emphasis should be placed on the technical aspects of the proposals to ensure a mutual understanding of the proposal and that the proposed approach will satisfactorily meet the government’s requirements. Even the most highly rated proposals are likely to have deficiencies, significant weaknesses, or other problems that must be resolved. Multiple rounds of negotiations may be required. The emphasis should then be placed on the wording of the proposals to ensure that it is contractually acceptable and does not contain ambiguities, inconsistencies, or loopholes that will complicate contract administration. Keep in mind that the winning offeror’s proposal will be incorporated into the contract by reference and will be the only contractual requirement the contractor must follow.

Award—It should be noted that making an award based on an SOO must be done on a best value basis. This is the only approach that makes sense when dealing with multiple approaches to the same requirement. The lowest–priced, technically acceptable source selection is not viable because the government cannot reasonably establish acceptable standards based on an SOO that provides only minimal information. Making an award based on price alone is an obvious nonstarter.

As with the evaluation, the source selection decision must be fully documented. Source selection decisions must be made in accordance with FAR 15.308, which requires that the decision documentation include the rationale for any business judgments and tradeoffs made or relied on by the source selection authority, including the benefits associated with additional costs. While the FAR does not require that tradeoff decisions be quantified, Comptroller General protest decisions indicate that the tradeoff rationale regarding each offeror must be explained sufficiently to justify the decisions made. This applies particularly to competitions using an SOO where differing approaches are proposed, and the award decision must be based on both technical and cost tradeoffs.

Awarding on the basis of an SOO brings forth a potential problem. The contractor has proposed how it would do the work. The government has incorporated the proposal into the contract by reference, making it the contractual requirement. To what extent would the changes clauses apply? Does the government have the right to unilaterally change the description of the services that the contractor designed? Even though the contractor has a right to an equitable adjustment, would a unilateral change be a good idea? Probably not. Any needed changes to a contract based on an SOO should be bilateral because the contractor’s input will be critical to ensuring that the contractor can perform to the proposed change.

Releasing Funding Information

The presolicitation activities related to the use of an SOO require some new approaches with respect to providing information to potential offerors, primarily because the SOO provides only a limited overview of the government’s objectives. In a standard performance-based services acquisition, the PWS provides sufficient information to the offeror to judge the size of the requirement and to price its proposal accordingly. But this information is lacking in an SOO. Would the due diligence process provide sufficient information? Maybe, but maybe not—it depends on the questions posed by each offeror. However, one thing you want to avoid is having offerors guessing wrong about the size or scope of your requirement and delivering proposals that offer too much or too little and fail to meet your objectives.

It is important that potential offerors understand the scope of your requirement. It would not be appropriate to indicate in your SOO the number of bodies, hours, or other resource requirements because this might inhibit offerors’ responses. You may, however, indicate the amount of funding available.

There is no FAR prohibition with respect to the release of funding information (although this is not usually done in standard services acquisitions). However, given the paucity of information provided in the SOO, it would seem appropriate to include some kind of funding information in the SOO. This information could be provided in the scope section or as a constraint that an offeror must observe.

Funding information may be released in many different ways—a specific amount, a dollar range, a minimum or maximum amount, or in some other fashion specifically designed for your requirement. However, when using an SOO, providing an indication of the funding available is the best way to ensure that all proposals are written and priced within the same parameters. This will be critical when evaluating proposals that may have significantly different approaches.

SUMMARY

The SOO concept requires a new look at how to approach the acquisition of services, particularly during the presolicitation phase. This is not a simple process. Market research is a key factor in gathering the information needed to develop the SOO document and will probably require more time and effort than usual. Being open to potential offerors and providing access to all information during the presolicitation phase may prove to be a difficult adjustment for acquisition personnel. Evaluating differing approaches in proposals and making tradeoffs to determine which proposal offers the best value will also prove to be difficult. Training will be required to acquaint government program and contracting personnel with this process. Contractor personnel may also need training on how to word a contractually acceptable proposal that can be incorporated by reference.

Can this concept work? Absolutely. It is a common sense approach to the acquisition of services that, when understood by the parties involved, can produce better and less costly services contracts.

Chapter 5 provides a model SOW format and discusses what kind of information belongs in an SOW, where it goes, and why. This information is applicable to both the PWS and the functional SOW and, as appropriate, to the SOO.