Agency:    Department of Energy

Disposition:  Protest sustained.

General Counsel P.C. Highlight:

GAO sustained protests of a $22.8 billion solicitation issued by the Department of Energy, National Nuclear Security Administration, to perform services associated with maintaining the nation’s nuclear weapons. A contract award was made to Consolidated Nuclear Security LLC (CNS) of Reston, VA. The agency announced the award in a January 8, 2013, press release asserting that the award would save $3.27 billion in taxpayer dollars over the life of the contract.

Two firms—Nuclear Production Partners LLC and Integrated Nuclear Production Solutions LLC—protested the award to CNS. The protesters challenged several aspects of the agency’s proposal evaluation process and award decision, however the protest was sustained due to the agency’s unreasonable evaluation of the feasibility and size of the offerors’ proposed cost savings.

The solicitation stated that the offerors’ proposed cost savings would be evaluated under the management approach/cost savings evaluation factor, specifically stating:

The Government will evaluate and assess the feasibility and quality of the offeror’s proposed management approach, including cost savings approach…The Government will also evaluate and assess the feasibility and size of the proposed cumulative savings to the Government…

The agency was to evaluate each offeror’s proposed cost savings, and assign one of four possible ratings: reasonable, partially reasonable, not reasonable, or cannot determine. The agency’s cost savings advisory committee (CSAC) evaluated the proposed cost savings of CNS, and determined that the largest portion of CNS’s proposed cost savings were rated as “partially reasonable.” The agency did not seek any additional information from offerors regarding the proposed cost savings, nor did it conduct any additional analysis beyond that performed by the CSAC.

Despite the lack of new information or analysis, the Source Evaluation Board designated as feasible all offerors’ proposed costs savings, with the exception of those rated as “not reasonable.” The Source Selection Authority (SSA) took this one step further, considering all of the cost savings proposed by the offerors to be feasible, even cost savings rated as “not reasonable.” GAO found that in electing to consider all cost savings proposed by the offerors to be feasible, ignoring the assessments of the agency’s own financial specialists and without performing any independent cost savings analysis, the SSA failed to comply with the provisions of the solicitation.

GAO stated that the solicitation clearly required, at minimum, for the agency to assess and consider the feasibility and size of each offeror’s proposed cost savings. By simply accepting every offeror’s cost savings as proposed, the SSA did not conduct any meaningful assessment of the feasibility and size of the proposed cost savings. Thus, the agency did not comply with the stated evaluation criteria in the solicitation, and as a result GAO sustained the protest. GAO recommended that the agency reopen the procurement, request additional information from the offerors regarding proposed cost savings, and evaluate the size and feasibility of each offeror’s proposed cost savings consistent with the terms of the solicitation.

Agency:    National Aeuronautics and Space Administration

Disposition:  Protest denied.

General Counsel P.C. Highlight:

GAO denied the protest of Womack Machine Supply Co., regarding the terms of a request for quotations (RFQ) issued by the National Aeronautics and Space Administration (NASA) for hydraulic servo control manifolds.

NASA posted to its website its intent to procure 300 hydraulic servo control manifolds on a sole-source basis and invited firms to submit bids. After receiving a number of responses, the agency issued the solicitation. NASA received several bids, including Womack’s, but ultimately decided the revise the solicitation to provide new performance requirements, including design criteria. Offerors were notified that bids that did not demonstrate that testing had been performed would be technically unacceptable.

Womack argues that the revised testing requirement is unreasonable. GAO stated that the record showed that NASA properly concluded that failure to include the testing requirements would preclude the agency from determining whether the proposed manifolds would be compatible and interchangeable with NASA’s exiting manifolds. Womack did not show how the decision to include the requirement was unreasonable or unnecessary. GAO concluded that because the manifold is part of the overall hydraulic testing system and was required to be interchangeable, the testing requirement was reasonable.

Agency:    Department of Homeland Security

Disposition:  Protest denied.

General Counsel P.C. Highlight:

GAO denied the protest of e-Management, based on the exclusion of its proposal from the competitive range under a request for proposals (RFP) issued by the Department of Homeland Security, United States Citizenship and Immigration Services (USCIS), for enterprise architecture services and governance planning.

The RFP was issued to offerors holding 8(a) Streamlined Technology Application Resource for Services (STARS) II government-wide acquisition contracts. Offerors were required to have one or more industry credentials. Offerors were informed that they were required to have at least an International Organization for Standardization (ISO) 9001-2000 or higher certification. The agency also responded to a question concerning whether the agency would accept a different credential in the negative.

e-Management, after its proposal was excluded from competitive range, argues that the requirement for the ISO 9001-2000 certification could be satisfied by a subcontractor. However, GAO found that the record showed that the agency reasonably evaluated e-Management’s proposal in accordance with the solicitation where it was made clear that the prime contractor must have the requisite certification and e-Management failed to meet that requirement.

Agency:    Department of the Army

Disposition:  Protest denied.

General Counsel P.C. Highlight: 

GAO denied the protest of Latvian Connection, LLC, regarding the terms of a request for proposals (RFP) issued by the Department of the Army for a video wall at Camp Buehring, Kuwait.

The solicitation was for a video wall consisting of a set of monitors with processing hardware and software. A number of errors occurred during the solicitation process. The agency posted the listing on a website used for publicizing solicitations aimed at local sources in Kuwait, although several postings were incomplete.

Latvian’s initial protest asserted that the agency failed to post the solicitation on the FedBizOpps website. After the agency decided to cancel the solicitation and re-solicit, Latvian filed a supplemental protest asserting that the agency improperly cancelled the solicitation to avoid resolution of Latvian’s initial protest. However, GAO concluded that the agency’s decision to cancel the solicitation was reasonable where the agency demonstrated that the cancellation occurred after the agency found a number of errors in the solicitation that would limit competition. For example, the solicitation was unavailable on the website for a four-day period, which the contracting officer found may have prevented offerors from having sufficient time to respond.

Agency:    Small Business Administration          

Disposition:  Protests denied.

General Counsel P.C. Highlight: 

GAO denied the protests of Colonial Press International, Inc., a small business, based on the award of two contracts by the Government Printing Office (GPO). The first contract was awarded to Fry Communications, Inc. under an invitation for bids (IFB) for printing of a Medicare handbook for the Centers for Medicare and Medicaid Services. The second contract was awarded to Monarch Litho, Inc. under IFB for printing of a healthy eating booklet for the Food and Nutrition Service.

The agency issued the IFB to print 63 versions of books for the Centers for Medicare and Medicaid Services. The IFB was for the award of a single fixed-price, with economic price adjustment, indefinite-delivery/indefinite-quantity (ID/IQ) contract for a one-year base period and up to four one-year option periods. Colonial submitted the bid that offered the lowest price. The agency issued a second IFB seeking bids to print 560,000 copies of another booklet and Colonial again submitted the lowest-priced bid. In both cases, the agency found that Colonial had made late deliveries, and therefore, Colonial was found to be not responsible. Colonial protests that determination.

Colonial argues that, as a small business, its responsibility determination should have been forwarded to the Small Business Administration (SBA). GAO first determined that GPO is not subject to the requirements of the Small Business Act. GAO also determined that the contracting officer’s determination was reasonable where Colonial’s past late deliveries rendered it not responsible. GPO awards contracts under the authority of the GPO Printing Procurement Regulation, which stated that responsibility includes the ability to “comply with the proposed delivery schedules.”

Date: Wednesday, May 15, 2013, 1:05pm EST

Esegur-Empresa de Segurança, SA, B-407947; B-407947.2, April 6, 2013
Earlier this month, we discussed a decision in which GAO denied a protest where the protester argued that the agency failed to conduct a price realism analysis. There, GAO determined the solicitation—for the award of a fixed-price contract—did not explicitly state that a price realism analysis would be conducted, nor did it inform offerors that proposals may be eliminated due to an unrealistically low price. In a decision recently released by GAO, we have almost identical arguments, but with a much different outcome.

In Esegur-Empresa de Segurança, SA, the protester challenged the agency’s award decision, arguing that the agency failed to conduct a price realism analysis. Had a price realism analysis been performed, argued the protester, the awardee’s proposal would have been determined to be unacceptable due to an unrealistically low price. The agency countered by arguing that the solicitation—again for a fixed-price contract—did not call for a price realism analysis, and thus one was not required. In this case, GAO agreed with the protester and sustained the protest.

While the solicitation in question did not appear to use the term “price realism,” it did inform offerors that unrealistically low prices may serve as a basis for the rejection of a proposal. GAO found that the solicitation’s notification that a low offer could be rejected was sufficient to require the agency to perform a price realism analysis. GAO read from that notification an implication that the agency would actually consider whether an offeror’s price was in fact unrealistic, and thus unacceptable.

The agency attempted to convince GAO that because the solicitation simply stated that unrealistically low price proposals “may” be rejected, this meant that the agency had the option to perform a price realism analysis. GAO rejected this argument. While GAO acknowledged that the “may” in the solicitation did give the agency discretion to reject an unrealistically low priced proposal as unacceptable, GAO pointed out that the agency would first have to conduct a price realism analysis to determine if proposals were unrealistically low in order to exercise this discretion. Thus, GAO determined that a price realism analysis was required.

GAO sustained the protest, and recommended that the agency reopen the record and evaluate the awardee’s price for realism.

Date: Wednesday, May 8, 2013, 8:05am EST

Quest Diagnostics, Inc. v. United States, No. 12-907C, May 1, 2013
In this bid protest filed before the Court of Federal Claims, the protester, Quest Diagnostics, Inc., made several challenges to an award decision made by the Army Medical Command, Center for Health Care Contracting (MEDCOM), in which Laboratory Corporation of America (“LabCorp”) was selected for award. While each of these grounds was dismissed by the Court, the Court’s discussion of one ground in particular warrants further discussion: Quest’s argument that MEDCOM improperly allowed LabCorp to revise its technical proposal after corrective action.

In this procurement, MEDCOM originally selected Quest for award. That award decision was protested by LabCorp, and the agency chose to take corrective action. The offerors submitted revised proposals, and after a new evaluation, MEDCOM selected LabCorp as the awardee. Quest then filed a protest challenging this award decision, and the agency again chose to take a second corrective action. After another re-evaluation, MEDCOM again selected LabCorp as the awardee. Quest filed its second protest with GAO, which was denied.

Quest then filed a protest before the Court, challenging several aspects of MEDCOM’s evaluation and award decision. One of the challenges made by Quest was that MEDCOM improperly allowed LabCorp to amend its proposal after the first corrective action. Quest’s argument was that the agency’s first corrective action only addressed pricing questions, and thus limited the offerors’ proposal revisions to price proposals. Quest pointed out that LabCorp used the opportunity given by the first corrective action to update its technical proposal. Quest argued that the non-price related updates were outside the scope of the first corrective action, and therefore should not have been considered by the agency.

The Court agreed with Quest that while the solicitation amendment issued as the first corrective action dealt with questions of price, LabCorp made revisions to its technical proposal. The updated technical proposal ultimately resulted in an improvement to LabCorp’s technical rating, which as recognized by the Court, may have influenced the award decision. However, the Court noted that while the first corrective action did address only pricing, it did not explicitly state that offerors could not revise other parts of their proposals.

The Court explained that when an agency initiates corrective action that invites proposal revisions, it is essentially a re-opening of the solicitation. Under the FAR, offerors are allowed to submit modifications to their proposals at any time before the closing date for the solicitation. Thus, the Court concluded that when an agency issues an amendment to a solicitation as part of corrective action, offerors may revise any part of their proposal, including those not the subject of the amendment, unless the agency explicitly restricts the scope of revisions.

Agency:    Department of the Army

Disposition:  Protest denied.

General Counsel P.C. Highlight: 

GAO denied the protest of FPM Remediations, Inc., based on the exclusion of its proposal from the competitive range under a request for proposals (RFP), issued by the Department of the Army for environmental remediation services.

The RFP was issued as a small business set-aside, and provided for the award of multiple, indefinite-delivery/indefinite-quantity task order contracts for environmental remediation services for a three-year base period and a two-year option period. The RFP provided that awards would be made on a best-value basis, considering cost/price and the following evaluation factors: technical requirements; performance risk/past performance; corporate technical plans, practices, and procedures. For the corporate technical plans, practices and procedures factor, offerors were required to provide a list of environmentally reportable incident violations and any notice of violations (NOV) that were received by the offeror in the past three years.

FPM argues that its proposal should not be excluded from competitive range because it could not have been found “unacceptable.” The agency argues that FPM failed to address the RFP’s requirement that offerors identify NOVs, which resulted in a deficiency that could not be corrected through clarifications. GAO found that the record supported the agency’s findings, i.e. that the protester failed to satisfy the RFP’s requirements.

Agency:    National Aeronautics and Space Administration      

Disposition:  Protest denied.

General Counsel P.C. Highlight: 

GAO denied the protest of Unispec Enterprises, Inc., based on the award of a contract to Wichita Tribal Enterprises, LLC, under a request for proposals (RFP), issued by the National Aeronautics and Space Administration (NASA), for institutional support services for NASA’s John F. Kennedy Space Center. 

The RFP was issued as a competitive section 8(a) set-aside and provided for the award of a single indefinite-delivery/indefinite-quantity contract. The RFP advised that proposals would be evaluated using technical capability, past performance, and price. The technical capability factor included three subfactors: management proposal, technical approach, and sample scenario. The past performance factor required the offeror to identify three contracts completed or ongoing within the last five years to show the offeror’s ability to perform.

Unispec first challenges the agency’s evaluation under the technical capability factor, arguing that the agency should have assessed it a number of strengths instead of weaknesses. Unispec also challenges the agency’s evaluation of the awardee’s evaluation, arguing that NASA engaged in disparate treatment of the competing offerors. GAO concluded that the agency’s conclusions were not unreasonable and that Unispec’s arguments of disparate treatment reflect a mere disagreement with the agency. As an example, GAO explained that where Unispec argued that the agency failed to recognize that Unispec and the awardee’s proposals under the management proposal subfactor were the same, and both should have been awarded strengths, GAO disagreed. GAO explained that the agency reasonably assigned the awardee’s proposal a strength for its compensation plan, but gave Unispec’s compensation plan a lower rating where Unispec’s plan did not include similar wage and benefit guarantees.

Unispec next challenged NASA’s evaluation of past performance.  However, GAO ultimately found that Unispec did not show that it was unreasonable for the agency to assign a moderate confidence rating. For example, the evaluators found that the largest contract that Unispec submitted for review only included one of the four tasks to be performed and the two smaller contracts involved only half the tasks.

Lastly, Unispec argued that NASA conducted unequal discussions with the offerors. GAO concluded that Unispec did not show unequal discussions. NASA submitted the same discussion items to both offerors requesting clarity.

Date: Wednesday, May 1, 2013, 1:50pm EST

PAE Government Services, Inc., B-407818, March 5, 2013
In conducting an evaluation of offerors’ proposals, an agency is required to evaluate the offered prices for their reasonableness. This price reasonableness analysis looks to whether the offered price is too high for that procurement. The question of whether an offered price is too low is a different issue, and is not always required to be posed by the agency. Where the agency is seeking to make an award of a cost-reimbursable contract, whether the offered price is too low is extremely important, as the agency is on the hook for the actual costs incurred by the contractor, regardless of the proposed amount. Thus, the FAR requires procuring agencies to conduct a cost realism analysis on all procurements for cost-reimbursable contracts to determine if the proposed cost is realistic for the work performed.

When evaluating proposals for award of a fixed-price contract, however, procuring agencies are generally  not required to conduct a price realism analysis. In a fixed-price contract, the contractor bears all of the risk of offering a low price; therefore whether the price is unrealistically low is less important to the government. However, in certain instances an agency may still elect to perform a price realism analysis on fixed-price awards, such as where there is concern that a low price may indicate an offeror’s lack of understanding of the solicitation’s requirements. However, offerors must be given reasonable notice in the solicitation that a price realism analysis will be conducted. A recent protest decision addressed the issue of whether a solicitation provided such notice of a price realism analysis.

In PAE Government Services, Inc., the protester challenged an agency’s evaluation, arguing that the agency failed to conduct a price realism analysis. The protester acknowledged that the solicitation did not specifically state that a price realism analysis would be conducted, however the protester contended that the solicitation effectively provided for one with other language. The protester pointed out that the solicitation required offerors to relate its offered price to sections of the statement of work, and break out its offered price to the lowest practical detail. The protester also cited language in the solicitation advising offerors that they should attempt to lower their operating costs, but also assure the Government that the requirements of the contract would be met.

The protester argued that because the solicitation required detailed price information and an assurance that it could meet the requirements of the solicitation, it essentially informed offerors that a price realism analysis would be conducted. GAO disagreed and denied the protest. GAO reasoned that the solicitation did not explicitly state that it would analyze price to evaluate offerors’ understanding of the technical requirements, nor did it advise offerors that a proposal may be eliminated based upon low price. Thus, GAO concluded that the agency reasonably determined that a price realism analysis was not required.