"The objective of our new commercial-like procurement practices is to minimize cost, complexity, and cycle time," said Don Larrichio, manager of Sandia's Procurement Policies and Procedures Department. "We wanted to move away from rigid rules and obtain the best value for Sandia."

The decision to streamline Sandia's procurement practices was made possible by former Department of Energy Secretary Hazel O'Leary's Strategic Alignment effort carried out in June 1995, Congressional budget cuts, and other regulatory reform. Before that DOE spelled out how a contractor's purchasing system had to operate in order to be acceptable to the government. Over the years, the purchasing system for management and operating (M&O) contractors became increasingly like the federal system, prompting efficient and effective commercial business practices to be replaced with inefficient layers of noncommercial systems and practices.

Sandia procurement took the best practices for choosing suppliers from businesses that included Chrysler Corporation, Motorola, Intel, Hewlett-Packard, and incorporated them into a set of purchasing guidelines for Sandia. "We found that there's a lot of teaming and partnering in the companies we benchmarked," Larrichio said. "Shared responsibility and accountability will play a more significant role at Sandia."

Under the federal changes, Sandia and other DOE prime contractors were given the choice to either develop commercial-like practices or follow federal procurement methods based on Federal Acquisition Regulations (FARs) and DOE Acquisition Regulations (DEARs). Sandia chose to develop commercial practices and worked closely with DOE headquarters in Washington, D.C., and with DOE offices in Albuquerque to develop strategies for streamlining the process.

Larrichio said Sandia's new process for selecting contractors encourages open communications, involves commercial competition techniques, introduces a variety of evaluation factors, can include oral presentations, and provides methods to determine which proposal offers the best trade-off between price and performance capabilities. He said Sandia generally will rank the proposals from best to worst by making a series of paired comparisons and trading off the marginal differences in capability and price.

"Cheapest is not always the best bargain," he said. "However, the concept of price reasonableness has not gone away."

Sandia now looks closely at four suggested nonprice evaluation factors other than technical elements in procurement selection — past performance, experience, total life-cycle costs, and financial capability of the provider.

"In the past, we used mostly technical elements to select products or services," Larrichio said. "In addition, we are no longer locked into predetermined weighted evaluations factors. We have a lot of flexibility in how we define those factors."

Fairness in the selection process is preserved by the ethical conduct of Sandia's procurement team and by a selection closely following criteria that results in the most advantageous business relationships for Sandia.

"There are two very basic rules of conduct - act ethically, and no arbitrary or capricious decisions. The Sandia Code of Conduct will be changed to include this emphasis," Larrichio said.

Sandia National Laboratories is a multiprogram national laboratory operated by a subsidiary of Lockheed Martin Corporation for the U.S. Department of Energy. With main facilities in Albuquerque, N.M., and Livermore, Calif., Sandia has broad-based research and development programs contributing to national defense, energy and environmental technologies, and economic competitiveness.