Link: GAO Decision
Protestor: EMR, Inc.
Agency: Department of the Air Force
Disposition: Protest Denied.
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GAO Digest:
Protest that agency improperly coerced protester to raise its labor rates and overall price, by advising during discussions that specific labor rates appeared to be low in relation to other offerors, and represented a weakness, is denied where information provided by agency was accurate, protester was specifically advised to either verify the proposed rates or provide revised rates, and record indicates that protester’s decision to raise its labor rates was a business decision, not compelled by the agency.
General Counsel PC Highlight:
EMR, Inc. protested the failure to award it a contract for construction and engineering services at Air Force activities under the Command-wide O&M Program Execution Contract (COMPEC II) program. The RFP contemplated award of multiple ID/IQ contracts, with award to be based on the lowest evaluated price of proposals meeting or exceeding the acceptability standards of non-cost factors. Every offeror who proposed labor rates outside the 20% range of the average rate for that labor category among all offerors was sent an Evaluation Notice (EN) to address the high or low rate. In response to two ENs, EMR raised its field rates for the three labor categories identified in the first EN, and lowered the home rates for the 14 labor categories identified in the second EN; overall, however, EMR’s total price increased.
The GAO first rejected the argument that the agency was not allowed to consider proposed labor rates on the assertion that only total price was to be evaluated under the RFP, pointing out that the RFP indicated that the agency would conduct price realism and price reasonableness analyses. The GAO then found that the record did not support EMR’s assertion that it was improperly coerced into raising its labor rates. It noted that the agency properly advised EMR of areas of its proposal that needed to be explained or altered to enhance the proposal’s potential for award.
An agency is required to conduct a price realism analysis in fixed price contracts. If the RFP indicates that award will be based on total evaluated prices, offerors must remember that their individual proposed labor rates will be considered as part of the price realism analysis. Even if an offeror proposes the lowest overall price, it should anticipate that its individual rates will be considered in the analysis and may be further examined if they prove to deviate substantially from average proposed rates.