Link: GAO Opinion
Agency: Department of Defense
Disposition: Protest denied.
Keywords: Price Evaluation
General Counsel P.C. Highlight: An agency may, in its discretion, provide for a price realism analysis for the purpose of assessing whether an offeror’s price is so low as to evince a lack of understanding of the contract requirements or for assessing risk inherent in an offeror’s approach.
Goel Services in association with Grunley Construction Co., Inc. (Goel/Grunley), protests the award of a contract under a request for proposals (RFP), issued by the Department of Defense (DOD), for the cleaning and repair of exterior limestone facades of the Pentagon.
The RFP contemplated the award of a fixed-price contract to clean and repair two exterior limestone facades at the Pentagon, and repair weathered and deteriorated masonry joints. BIG, the awardee, was the incumbent contractor for the second phase. The work was required to be completed in 100 calendar days. The RFP provided that award would be made to the offeror whose proposal represented the best value to the Government. The solicitation identified three evaluation factors: technical; past performance; and cost/price. With respect to the cost/price factor, the RFP provided that price proposals would be evaluated for reasonableness using one or more of the price analysis techniques in Federal Acquisition Regulation (FAR) § 15.404-1(b).
A technical evaluation team (TET) evaluated Goel/Grunley’s proposal and rated the proposal acceptable for the management approach subfactor and good for the technical approach subfactor. Concerning price, Goel/Grunley initially did not include the required cost breakdown or supporting documentation in its proposal, but instead included only a lump sum amount per facade. In response to requests from DOD, Goel/Grunley subsequently provided cost breakdown information. The agency evaluated this information and determined that labor and other costs were “very low” compared to the government estimate and Goel/Grunley’s proposal was found to pose a “potential risk of failure because of the low cost of labor.” BIG was offered the contract.
The protester challenges the agency’s evaluation of its proposal under each subfactor of the technical factor. GAO states that in reviewing a protest against an agency’s evaluation of proposals, it will examine the record to determine whether the agency’s judgment was reasonable and consistent with the stated evaluation criteria and applicable statutes and regulations. A protester’s mere disagreement with the agency’s evaluation does not render the evaluation unreasonable.
Under the first technical subfactor, management approach, the agency assigned a rating of acceptable to Goel/Grunley’s proposal, finding three weaknesses. Given that Goel/Grunley’s proposal contained only general statements that did not fully address the RFP requirements; GAO finds that it was reasonable for the agency to assess the proposal as merely acceptable.
The RFP also required offerors to “[d]iscuss your plan to recruit, hire and retain qualified personnel to meet the requirements of this acquisition.” Neither the general statement included in Goel/Grunley’s proposal nor any other statement or section of the proposal addressed a plan to recruit, hire, or retain qualified personnel, as required by the RFP. Thus, GAO finds that the agency reasonably considered this aspect of the proposal to be a weakness.
The RFP required offerors to submit resumes for the proposed project manager, safety officer, and other key personnel. These resumes were to address, among other things, the key personnel’s experience and qualifications, current job title, and proposed position, thereby putting offerors on notice that the agency would evaluate this information. Although Goel/Grunley contends that the agency should not have assessed its proposal a weakness for the key personnel’s lack of experience, based on GAO’s review of the record, the agency’s concerns appear to be reasonable and supported by the record. For example, a resume submitted by Goel/Grunley’s shows over five years of general construction experience, but as the agency correctly notes, none of these projects involved limestone repair work on a historic building like the work required here.
Goel/Grunley also argues that the agency acted improperly by evaluating its proposal for price realism, asserting that the agency evaluated its proposal on the basis of an unstated evaluation factor. GAO states that before awarding a fixed-price contract, an agency is required to determine whether the price offered is fair and reasonable. An agency’s concern in making this determination in a fixed-price environment is primarily whether the offered prices are too high, as opposed to too low, because it is the contractor and not the government that bears the risk that an offeror’s low price will not be adequate to meet the costs of performance. An agency may, in its discretion, provide for a price realism analysis for the purpose of assessing whether an offeror’s price is so low as to evince a lack of understanding of the contract requirements or for assessing risk inherent in an offeror’s approach. However, offerors competing for award of a fixed-price contract must be given reasonable notice that a business decision to submit a low-priced proposal will be considered as reflecting on their understanding or risk associated with their proposal. Where a solicitation for a fixed-price contract omits a provision for realism but requests detailed cost or pricing information, GAO has found that an agency may properly consider whether an unreasonably low price poses proposal risk if the solicitation, in either the technical or price factors, provides for the evaluation of an offeror’s understanding of the requirements.
The RFP here asked for direct and indirect cost information to be separately provided for each facade for the following categories: design, labor, materials, equipment, bonding, overhead, and profit. The RFP also required offerors to “provide all necessary supporting documentation for cost breakdown of design, labor, materials and equipment,” and it encouraged offerors to provide “any other price or financial information that may be helpful in the understanding and evaluation of the Price Proposal.” Furthermore, the RFP contained an evaluation factor, technical, that required the evaluation of the offeror’s “understanding of the work,” and offerors were informed that their proposals had to “[d]emonstrate the efficiency and cost effectiveness of [their proposed] approach.” Based on this record, GAO concludes that the RFP provided adequate notice to the offerors that their low prices could be considered as reflecting on their understanding or risk associated with their proposals. The protest is denied.