Link: GAO Opinion
Agency: Defense Logistics Agency
Disposition: Protest denied.
Keywords: Price Evaluation; Wage Determination; Below-cost offer
General Counsel P.C. Highlight: Where the RFP provides for the award of a fixed-price contract, the contracting agency many not adjust offerors’ prices for purposes of evaluation. Below-cost offers on a firm fixed priced contract are not prohibited, and even where an offeror bases its prices on labor rates lower than those specified in accordance with the SCA, the firm is eligible for award if it does not take exception to the SCA requirements.
Bering Straits Logistics Services, LLC (BSLS) protests the award of a contract under a request for proposals (RFP), by the Defense Logistics Agency (DLA), for fuels management services at Tyndall Air Force Base, Florida.
The RFP provided that proposals would be evaluated on the basis of technical capability, past performance, and price. The technical capability factor was further divided into five subfactors: fuels operation management and support; safety; operation of the Fuels Information Service Center; maintenance of equipment and facilities; and compliance and environmental. Additionally, the RFP included Defense Energy Support Center clause 52.222-9F05, “Wage Determination,” advising offerors that the procurement was subject to a wage determination under the Service Contract Act (SCA), as well as a collective bargaining agreement (CBA).
BSLS’s final revised proposal was rated marginal under the technical capability factor and very good under the past performance factor and it was not lowest in price. BSLS alleges that the eventual awardee’s proposal ignored job classification requirements mandated by the CBA applicable to the contract, and that the job classifications actually set forth in the awardee’s proposal demonstrate that it failed to comply with personnel qualifications and experience requirements set forth in the RFP. DLA argued that the awardee’s offer on a firm fixed priced contract cannot be revised for evaluation purposes.
GAO agrees with the agency with DLA’s argument that it could not adjust the awardee’s price, where, as here, the RFP provides for the award of a fixed-price contract. The contracting agency many not adjust offerors’ prices for purposes of evaluation on a fixed priced contract. Given that the RFP here does not specifically call for a price realism analysis, the agency was not required to perform a detailed price analysis. In any event, below-cost offers are not prohibited, and even where an offeror bases its prices on labor rates lower than those specified in accordance with the SCA, the firm is eligible for award if it does not take exception to the SCA requirements. The record shows that the awardee took no exception to the SCA and CBA requirements. Accordingly, the awardee will be required to perform the specified fuels services in compliance with the terms of the RFP, including compensation of its employees at the required rates, at the prices proposed.
Second, BSLS’s argument that the awardee’s proposal should have received a lower technical rating or been found technically unacceptable for its alleged failure to comply with the job classification terms of the CBA is without merit. The RFP did not call for the agency to review proposals for compliance with the job classification or wage rate terms of the SCA or CBA. In this regard, the determination of prevailing wages and fringe benefits, and the issuance of appropriate wage determinations under the SCA, are matters for the Department of Labor (DOL). GAO states that concerns with regard to establishing proper wage rate determinations or the application of the statutory requirements should be raised with the Wage and Hour Division in DOL, the agency that is statutorily charged with the implementation of the Act. Protest denied.