Link: GAO Opinion
Agency: U.S. Army Corps of Engineers
Disposition: Protest denied.
Protest that agency conducted inadequate evaluation of awardee’s proposed price, which was significantly below government estimate, is denied where record shows agency conducted systematic and well-documented evaluation of awardee’s price, consistent with solicitation requirements.
General Counsel P.C. Highlight:
ATI asserts that, since Environet’s proposed price is approximately one-quarter of the government estimate and one-half of ATI’s price, it is “inconceivably low.” The protester asserts that the Army must have disregarded the evaluation process set forth in the RFP. In general, there is no requirement that a price realism analysis be performed when award of a fixed-price contract is contemplated. As was the case here, however, a solicitation for a fixed-price contract may provide for a price realism analysis for the purpose of assessing offerors’ understanding of the requirements or the risk inherent in offerors’ proposals. The nature and extent of a price realism analysis ultimately are matters within the exercise of the agency’s discretion, and GAO’s review of such an evaluation is limited to determining whether it was reasonable and consistent with the solicitation’s evaluation criteria.
The Army conducted two separate analyses of Environet’s price. First, concurrently with the technical evaluation, the Army reviewed both offerors’ proposed rates to determine if they were fair and reasonable. This review resulted in a finding that “there was a great difference” with regard to several proposed rates in comparison to the government estimate and that these rates “should be validated.” The agency thereafter conducted an “expanded price analysis,” which indicated that Environet’s price for the first task order was “significantly lower” than the government estimate. The agency went on to determine, however, that this difference resulted substantially from the conservative nature of the government estimate and Environet’s status as an incumbent contractor. The agency went on to address in detail each of seven cost elements where Environet’s price was substantially lower than the estimate. In each case, the agency determined that there was a reasonable explanation for the difference in cost. The agency noted that, unlike the government estimate, Environet’s proposal provided for use of “existing plans that were accepted by the Government” and proposed to only “update them for this new project site.” GAO finds that, on their face, Environet’s information and explanations provided a logical basis for its low price. This being the case, and absent any countervailing evidence, GAO thinks the agency reasonably could conclude that the information and explanations provided were sufficient to establish that Environet’s pricing was not based on a misunderstanding of the requirement, which was the limited purpose of the price analysis under the RFP. The protest is denied.