Link: GAO Decision
Protestor: EcoAnalysts, Inc.
Agency: Environmental Protection Agency
Disposition: Protest Denied.
Where protester’s proposal, on its face, indicated that it would not comply with subcontracting limitation included in the solicitation, which required that at least 50 percent of the cost of contract performance incurred for personnel be expended for employees of the offeror, the agency properly rejected the proposal as unacceptable.
General Counsel PC:
EcoAnalysts, Inc. protested the award to EnviroScience, Inc. and PG Environmental, LLC of contracts for technical support services. The solicitation, issued as a total small business set-aside, contemplated the award of multiple ID/IQ task order contracts. Award was to be made on a best-value basis, with non-price/cost factors being significantly more important than cost/price. Although EcoAnalysts submitted one of the two most highly rated offers, the cost auditor found that it lacked an accounting system that had been approved by a government agency, among other concerns. After finding them to be non-responsible, the contracting officer referred both EcoAnalysts and EnviroScience to the SBA to be considered for a Certificate of Competency (COC). The SBA declined to issue a COC to EcoAnalysts, finding that the firm did not demonstrate that it had the ability to implement the cost accounting system required of a cost-type contract. A second review of EcoAnalysts’ proposal by the cost auditor found it to be noncompliant with the subcontracting limitations on a cost, as opposed to hours, basis, and EcoAnalysts was eliminated from the competition.
The GAO found that the agency had reasonably determined that EcoAnalysts’ proposal included less that 50% of the firm’s personnel cost in its direct labor base. It disagreed with EcoAnalysts that it was unreasonable for the agency to conclude that EcoAnalysts could not comply with the subcontracting limitation. The GAO pointed out that to make EcoAnalysts’ proposal acceptable would have required the agency to conduct discussions and allow EcoAnalysts to revise its cost proposal, but noted that agencies are not obligated to conduct discussions.
Offerors must pay strict attention to the requirements of an RFP, and ensure that their proposal complies with its criteria. Where there is a limit on subcontracting, offerors must remember that the 50% limitation applies to the cost of contract performance, not the percentage of hours performed by the small business. If the offeror has teamed with larger businesses who charge higher rates for their services, performing less than 50% of the hours on the contract could still result in the large business performing more than 50% of the cost of the contract. Failure to comply with the subcontracting limitations will make an offer unacceptable, and the agency is not obligated to allow offerors a chance to cure their noncompliance.