Link: GAO Opinion
Agency: Department of Commerce, National Oceanic and Atmospheric Administration
Disposition: Protest denied.
Keywords: Material Misrepresentation; Price Realism Analysis
General Counsel P.C. Highlight: The protester alleges that the awardee made a material misrepresentation in its proposal by including the name of a key subcontractor without the subcontractor’s consent and with whom protester had an exclusive teaming agreement. Protester also contends that the Agency did not conduct a price realism analysis that if done properly would have resulted in rejection of the awardee’s bid for unrealistically low labor rates.
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ERIMAX, Inc. (“ERIMAX”) protests the establishment of a blanket purchase agreement with Veterans Management Services, Inc. (“VMSI”) under an RFQ issued by the Department of Commerce, National Oceanic and Atmospheric Administration (“NOAA”) for acquisition and grant management support services.
The Agency selected VMSI’s quotation as the best value for the Agency. At a debriefing held at ERIMAX’s request, ERIMAX learned that VMSI had listed ASI as a potential subcontractor. ERIMAX informed the Agency that it had an exclusive teaming agreement with ASI and that ASI was listed by VMSI without ASI’s knowledge or consent. After an investigation, the Agency determined that (1) the teaming agreement was binding only for pre-award activities; (2) ASI was listed in VMSI’s quotation only as a potential subcontractor; and (3) VMSI was not evaluated more favorably because of its subcontractors. The Agency then closed the debriefing.
ERIMAX contends that by including ASI as a potential subcontractor, VRMI made a material misrepresentation in its quotation. ERIMAX also challenges the Agency’s evaluation of the quotation and the award decision.
In its decision, GAO states that a vendor’s material misrepresentation in its quotation can provide the basis for a disqualification where (1) the information at issue is false; (2) the agency relied upon the misrepresentation in making its decision; and (3) the misrepresentation had a significant impact on the evaluation. In support of its position, ERIMAX presented a letter from ASI about the teaming agreement which stated that ASI did not give permission to any other company to use its name in connection with this RFQ, and affidavits from ERIMAX’s employees stating that an ASI employee said that ASI told VMSI that it could not use its name in the quotation. In response, VMSI presented declarations from its employees stating that ASI consented to be listed on VRMI’s quotation. GAO determines that ERIMAX’s evidence does not establish that VMSI’s representations were false, finding that ERIMAX did not adequately refute VMSI’s declarations because it did not present affidavits from ASI’s employees and that the letter it presented was not persuasive because it was written to ERIMAX and not to the GAO and was not made under penalty of perjury.
ERIMAX also asserts that the Agency conducted an unreasonable price realism evaluation, and VMSI’s quotation should have been rejected for unrealistically low labor rates. In support, ERIMAX asserts that there were several instances in the evaluation documents where the Agency referenced a price realism evaluation. The Agency argues that the use of those references was mistaken and that the records indicate that no price realism analysis was performed to determine if the labor rate was too low. GAO states that when an agency conducts a price realism analysis, it must state in its offering that it will be conducting this analysis. In the absence of such a statement, the GAO will conclude that a price realism evaluation is contemplated only where the RFQ expressly states that the agency will review prices to determine whether they reflect a lack of technical understanding and that the vendor’s submission will be rejected because of low prices. Therefore, in light of the Agency’s explanation regarding the mistaken references, GAO concludes that a price realism analysis was not conducted, and that there was nothing improper in the Agency’s evaluation.