Link: GAO Opinion
Agency: Defense Threat Reduction Agency
Disposition: Protest denied.
- Protest that the agency improperly determined that the protester’s cost proposal lacked realism is denied where the record shows that the protester was not prejudiced by the agency’s determination, because the agency in fact considered the protester’s proposal for award and reasonably determined that another proposal represented the best value to the government.
- Challenge to an agency’s best value determination is denied where the agency reasonably determined that the awardee’s proposal contained advantages that were worth the cost premium.
General Counsel P.C. Highlight:
The protester asserts that the agency should have evaluated Camber’s most probable cost using the amounts that the protester proposed; that the agency improperly determined that its cost proposal lacked realism; that the agency unreasonably determined that NEK’s proposed cost was reasonable; and that in making the best value determination, the SSA did not follow the evaluation criteria and did not treat all offerors fairly. GAO states that when an agency evaluates proposals for the award of a cost-reimbursement contract, an offeror’s proposed estimated costs are not considered controlling because, regardless of the costs proposed, the government is bound to pay the contractor its actual and allowable costs. Consequently, a cost realism analysis must be performed by the agency to determine the extent to which an offeror’s proposed costs represent what the contract should cost, assuming reasonable economy and efficiency. A cost realism analysis is the process of independently reviewing and evaluating specific elements of an offeror’s cost proposal to determine whether the proposed cost elements are realistic for the work to be performed, reflect a clear understanding of the requirements, and are consistent with the unique methods of performance and materials described in the offeror’s proposal. GAO reviews an agency’s judgment in this area to see that the agency’s cost realism evaluation was reasonably based and not arbitrary. An agency’s cost realism analysis must be reasonably adequate and provide some measure of confidence that the agency’s conclusions about the most probable costs under an offeror’s proposal are reasonable and realistic in view of other cost information reasonably available to the agency as of the time of its evaluation.
The protester argues that the agency should have evaluated its MPC using the amounts that Camber proposed, including the labor rate for the subcontracted surveyor. Task Order 1 called for a fixed number of hours and gave estimated expenses for travel and other costs; one of the few factors for consideration under the cost realism analysis was whether the offerors could produce qualified employees at the hourly rates proposed. Because the protester failed to provide, as required by the RFP, the detailed qualifications for its proposed subcontracted surveyor, GAO does not consider unreasonable the agency’s refusal to accept on its face the proposed hourly rate for that surveyor.
GAO also does not find any prejudice to the protester resulting from the agency’s failure to conduct a cost evaluation using the prices proposed for the five key personnel. Prejudice is an essential element of any protest, and GAO will not sustain a protest unless the protester demonstrates a reasonable possibility that it was prejudiced by the agency’s actions, that is, unless the protester demonstrates that, but for the agency’s actions, it would have had a substantial chance of receiving the award. The contemporaneous evaluation record substantiates the agency’s claim that, notwithstanding its finding that it could not determine that the protester’s cost proposal was realistic; the agency did not find the protester’s proposal ineligible. Rather, as noted above, in making its source selection decision, the agency identified key strengths in NEK’s proposal, compared that proposal to the protester’s, and determined that the benefits offered by NEK’s proposal were worth the cost premium. There is simply nothing in the record to suggest that the agency failed to meaningfully consider the protester’s proposal, or that the outcome of the best value determination would have changed if the agency had determined an MPC for the protester’s proposal based on the five proposed personnel
The agency extrapolated from the nine-month, FFP contract being performed by Camber to calculate a reasonable estimate of what a one-year contract would cost and compared that annualized cost to NEK’s proposed cost. Camber argues that it built in considerable risk in the pricing of its nine-month contract–risk that is not present in the contract contemplated by this RFP–and that therefore the agency’s determination that NEK’s proposed cost is reasonable, through a comparison to this annualized figure, is not reasonable. As the SSD states, this figure was an additional check on NEK’s costs; the SSD’s summary of evaluations indicates that NEK’s cost was found to be reasonable, independent of any consideration of the cost of the protester’s current FFP contract. Thus, even if GAO agreed with Camber’s assertion that the pricing should not have been extrapolated and considered by the agency, GAO finds no prejudice to the protester from the agency’s use of this extrapolated figure in its evaluation.
Camber also protests that the agency’s best value determination was improper. As an initial matter, the protester argues that the statement in the RFP, all evaluation factors other than cost, when combined, are significantly more important than price, and should be interpreted to mean that cost is more important than any other single evaluation factor. Contrary to Camber’s assertion, the language of the RFP does not require that cost be given more weight than any other single evaluation factor. The RFP only provides that, when combined, all of the factors other than cost are significantly more important than price; in that circumstance, it is also possible that individual evaluation factors and subfactors are each more important than price. The protest is denied.