Trade-Off (Best Value)

Definition

Trade-Off (also called 'Best Value Trade-Off') is a source-selection approach under FAR 15.101-1 in which the source-selection authority can trade lower prices against higher technical, management, or past-performance ratings to select the best-value proposal. The contrasting approach is LPTA. Section M of the solicitation tells offerors whether trade-off applies and the relative importance of price versus non-price factors (e.g., 'technical is significantly more important than price' or 'approximately equal'). Trade-off is the dominant approach for complex negotiated acquisitions today.

Why It Matters

Under trade-off, price is not decisive, so a firm with superior past performance and technical approach can win at a higher price. This structure rewards investment in differentiating capabilities, strong capture, and disciplined proposal development. However, price must still be realistic and reasonable; trade-off is not a license to ignore price competitiveness. Many losses in close trade-offs stem from price-realism risks the contractor failed to address.

Example

On a close $28M trade-off, Firm A bids $28.2M with 'Exceptional' past performance and 'Outstanding' technical. Firm B bids $25.1M with 'Very Good' past performance and 'Good' technical. The SSA trades Firm A's $3.1M price premium for superior non-price ratings and selects Firm A.

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