Link: GAO Decision
Agency: Department of Energy
Disposition: Protests Denied.
Protests challenging agency’s cost realism evaluation are denied where record shows that agency performed a reasonable and adequate evaluation of cost proposals
General Counsel P.C. Highlight:
Energy Enterprise Solutions, LLC (EES) and Digital Management, Inc. (DMI) protested the issuance of a task order to ActioNet, Inc. for information technology support services. Both protestors argued that the agency misevaluated proposals and made an unreasonable source selection decision. Prior to evaluating proposals, the agency prepared an independent government cost estimate (IGCE) based on above average wage data given the sophisticated nature of the agency’s IT requirements. Following receipt of proposals, the agency chose to revise the IGCE in light of the average wage rates of the proposals.
The GAO first disagreed with the argument that the IGCE was improper and arrived at arbitrarily, noting that neither protestor demonstrated that the agency’s fundamental approach was unreasonable or that it used unreliable data to arrive at its calculations. It pointed out that the agency realized its error in using higher percentile rates, recognizing that the RFP did not contemplate superior quality staffing. The downward adjustment made by the agency was not arbitrary, but rather was close to the difference between the original IGCE and the average hourly wage among all proposals. The GAO then rejected the argument that the agency’s cost realism analysis failed to take into consideration the protestors’ respective unique technical approaches. It noted that the upward adjustment made to both protestors’ rates was because the agency failed to find any explanation for why their respective rates were so low. The protestors also objected to the evaluation of technical proposals, but the GAO declined to consider these arguments in detail because the protestors could not show prejudice. Even had their assertions regarding the technical evaluations been true, ActioNet still would have had the lowest priced proposal.
When preparing an offer, a firm should make sure it provides detailed reasoning behind its proposals, adequately explaining how it selected particular rates and how it intends to maintain those rates. Failure to provide sufficient support, particularly where the firm’s rates deviate significantly from either the government estimates or the average of the other proposals, may lead to the assessment of weaknesses to that firm’s proposal. The agency may also make an upward adjustment to the firm’s proposal, negating any cost savings the firm otherwise would have offered.