Link: GAO Opinion
Agency: Department of Agriculture
Disposition: Protest denied.
Keywords: Price Realism; limitation on subcontracting
General Counsel P.C. Highlight: GAO has repeatedly held that the depth of an agency’s price realism analysis is a matter within the sound exercise of the agency’s discretion. GAO’s focus is on whether the agency acted reasonably and in a manner consistent with the solicitation’s requirements.
Delta-21 Resources, Inc. (Delta) protests the award of a contract under a request for proposals (RFP), issued by the Department of Agriculture (USDA), for services to support the Supplemental Nutrition Assistance Program (SNAP).
The SNAP, which is the successor to the Food Stamp Program, “provides low-income households with SNAP benefits to purchase food in selected retail stores.” In order to participate in SNAP, a retail store submits an application to the agency, and the agency collects information through a store site visit to confirm certain of the information provided. The contractor awarded this contract, will supplement the agency’s “ability to visit food stores for the purpose of confirming that the stores are eligible” to participate in the SNAP, by conducting site visits and documenting observations.
The RFP, issued as a total small business set-aside, provided for the awardee of a fixed-price, indefinite-delivery/indefinite-quantity (ID/IQ) contract for a base period of one year with four one-year options. The RFP stated that the offerors’ price/cost proposals would be evaluated for “price realism and reasonableness,” and that as part of this evaluation, the agency would consider the prices per store site visit using the baseline of 25,000 visits per year and excess quantities of 5,000 visits per year as set forth in pricing worksheets.
Delta’s proposal was found to be “significantly higher” on a price-per-visit basis, than the other contract prices. Delta and the eventual awardee were asked to “justify their original proposed prices, and/or provide pricing adjustments.” Delta, in response, explained that its prices were higher than its own historical prices as an incumbent contractor because of the RFP’s requirements regarding DOL wage determinations and SCA requirements. The agency ultimately decided to go with the lower priced proposal.
Delta argues that the agency’s price realism evaluation is flawed in that the agency did not reasonably consider whether the greater number of store visits per trip proposed by the awardee was realistic.
GAO has repeatedly held that the depth of an agency’s price realism analysis is a matter within the sound exercise of the agency’s discretion. GAO‘s focus is on whether the agency acted reasonably and in a manner consistent with the solicitation’s requirements.
GAO finds no basis to conclude that the agency’s evaluation of the awardee’s proposal for price realism was unreasonable. The agency communicated with both offeror’s regarding proposed prices, and reasonably found, based upon its consideration of the awardee’s proposed technical approach, that the awardee’s prices were realistic. Delta’s disagreement with how the agency conducted its price realism analysis does not establish that the agency’s evaluation was unreasonable.
Delta also argues that the agency “failed to evaluate whether the awardee’s proposal complied with the limitations on subcontracting clause.”
GAO states that, as a general matter, an agency’s judgment as to whether a small business offeror will be able to comply with a subcontracting limitation present a question of responsibility. However, where a proposal, on its face, should lead an agency to the conclusion that an offeror has not agreed to comply with the subcontracting limitation, the matter is one of the proposal’s acceptability.
The awardee’s proposal expressly addressed that firm’s proposed compliance with the subcontracting limitation by listing the “team members” and their respective “estimated work share.” The awardee’s proposal also included a Quality Assurance Surveillance Plan, as suggested by the RFP, which provided that the awardee would “augment staff to reduce dependency on subcontractors” if needed to ensure continued compliance. GAO agrees with the agency that there was nothing on the face of the awardee’s proposal evidencing that the awardee had not agreed to comply with the subcontracting limitation. The protest is denied.