As defined in FAR 2.101, "Best value" means the expected outcome of an acquisition that, in the Government’s estimation, provides the greatest overall benefit in response to the requirement.
Best value is a qualitative measure that factors price and performance into the decision process, much like we all do in our personal lives. For example, when buying a car, we may initially get two very different quotes from two different dealers. Dealer 1 may quote a bare bones price with no extras. Dealer 2 may quote a somewhat higher price which includes floor mats, free car washes for six months, and scheduled service for the first 36,000 miles. Depending on our requirements and our operational patterns, either offer may provide Best value. To determine Best value for each situation, we gather information concerning requirements and total costs, analyze the data and determine which offer is better for us, strategize our response and negotiating position, then negotiate with the dealers.
If we prefer to have the service and other extras done somewhere other than at the dealer, the value offered by Dealer 1 is more attractive. In this case, we may want to approach Dealer 1 with a counter-offer at the same price, but including some additional items/features desired, such as floor mats.
On the other hand, if we find the extras offered by Dealer 2 attractive, and the incremental pricing quoted by Dealer 2 yields Best value, we can try to negotiate a lower price or accept the deal as offered.
When evaluating the alternatives, we perform our own assessment of the Total Cost (Value) of each alternative, essentially performing a Total Cost of Ownership (TCO) assessment, choosing the alternative that offers us the best value/lowest TCO.
Acquiring enterprise software is much like buying a car, insomuch as the determination of best value is similar in both situations. Overall "Best value" should be measured by the combined values (including trade-offs) of price and performance.