FAR 15.101-1—Tradeoff process.
Plain-English Summary
FAR 15.101-1 explains when and how the Government may use a tradeoff source selection process in negotiated procurements. It covers the basic purpose of tradeoffs, the requirement to disclose all evaluation factors and significant subfactors in the solicitation, the need to explain the relative importance of those factors, and the required relationship between non-price factors and cost or price. It also states that the Government may award to other than the lowest-priced offeror or the highest technically rated offeror when the higher-priced proposal’s benefits justify the added cost. In practice, this section is the core rule for best-value decision-making under a tradeoff approach: it tells contracting officers how to structure the solicitation, how to compare proposals, and how to document the award rationale so the decision is defensible. For contractors, it signals that price alone will not control award, but it also gives them notice of exactly what will matter in evaluation and how the agency will weigh price against technical merit.
Key Rules
Tradeoff process is discretionary
The Government may use a tradeoff process when it is in the Government’s best interest to consider award to someone other than the lowest-priced offeror or the highest technically rated offeror. This means the source selection is based on best value, not simply on price or technical score alone.
Solicitation must state evaluation factors
All evaluation factors and significant subfactors that will affect award must be clearly identified in the solicitation. Offerors must know in advance what will be evaluated so they can tailor proposals accordingly.
Relative importance must be disclosed
The solicitation must explain the relative importance of the evaluation factors and significant subfactors. This includes telling offerors how the agency will compare the factors against each other and against price.
Price relationship must be stated
The solicitation must say whether all non-price factors combined are significantly more important than, approximately equal to, or significantly less important than cost or price. This is a required best-value statement and cannot be left ambiguous.
Tradeoffs must be justified
The Government may accept a higher-priced proposal if the perceived benefits justify the extra cost. The award decision must show why the added value is worth the price premium.
Award rationale must be documented
The rationale for the tradeoff decision must be documented in the contract file in accordance with FAR 15.406. This documentation is essential to support the source selection decision and withstand protest or audit review.
Responsibilities
Contracting Officer
Ensure the solicitation clearly identifies all evaluation factors, significant subfactors, and their relative importance; confirm the solicitation states the relationship between non-price factors and price; and document the tradeoff rationale in the contract file.
Source Selection Authority / Evaluators
Compare proposals under the stated evaluation scheme, assess whether the benefits of a higher-priced proposal justify the additional cost, and provide a reasoned basis for the best-value recommendation or decision.
Agency
Use the tradeoff process only when it is in the Government’s best interest, and ensure procurement planning, evaluation criteria, and source selection documentation support a defensible best-value award.
Offerors / Contractors
Prepare proposals with the understanding that award may go to a higher-priced offeror if the non-price advantages are worth the premium; focus proposal content on the stated evaluation factors and subfactors.
Practical Implications
This section is the foundation for best-value procurements: it lets agencies pay more for better technical merit, lower risk, or other advantages when those benefits matter enough.
A common pitfall is vague solicitation language. If evaluation factors, subfactors, or their relative importance are not clearly stated, the tradeoff decision becomes vulnerable to protest.
Another frequent mistake is treating technical superiority as automatically worth a higher price without explaining why the specific benefits justify the premium.
Contracting officers should make sure the file contains a clear, contemporaneous comparison of the competing proposals and the reasoning behind the award decision.
Contractors should not assume the lowest price wins; they should align their proposal to the stated factors and demonstrate value in the areas the solicitation says matter most.
Official Regulatory Text
(a) A tradeoff process is appropriate when it may be in the best interest of the Government to consider award to other than the lowest priced offeror or other than the highest technically rated offeror. (b) When using a tradeoff process, the following apply: (1) All evaluation factors and significant subfactors that will affect contract award and their relative importance shall be clearly stated in the solicitation; and (2) The solicitation shall state whether all evaluation factors other than cost or price, when combined, are significantly more important than, approximately equal to, or significantly less important than cost or price. (c) This process permits tradeoffs among cost or price and non-cost factors and allows the Government to accept other than the lowest priced proposal. The perceived benefits of the higher priced proposal shall merit the additional cost, and the rationale for tradeoffs must be documented in the file in accordance with 15.406 .