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Low Balling the Government: Not Always a Win

  • By GCPC GovCon Legal Team
  • May 22, 2014
  • Bid ProtestsGovernment Contracts

It’s no secret that budgets are tight in the recovering economy. With the prospect of reduced spending growth from sequestration, nearly every government agency has had to tighten its purse strings and prioritize expenditures. For contractors already operating on razor thin profit margins, this harsh environment has directly affected the quantity and type of contracts on which they are willing to expend their precious B&P funds. For many, this has reinforced an already faulty assumption that low balling the government in the form of bottom-dollar proposals is a guaranteed strategy for success.

A frequent cause for bid protests is that the aggrieved protestor was not selected despite having the lowest bid, sometimes significantly so.  While this is not an altogether terrible reason to file a protest, unless a contract is specifically bid as “lowest price, technically acceptable,” the government is usually looking for more than just a low number. Most solicitations are “best value” procurements. In a best value procurement, values are assigned to factors such as price, past performance, schedule, and vision. This system is beneficial because it allows the procuring agency to tabulate the various evaluation factors and choose a winning contractor while minimizing risk and easily justifying their decision in the event of a protest.  Although price is often the single most important factor, the combination of other factors used in the overall evaluation often equal the importance of price.

Recently, Emergint Technologies, Inc., of Atlanta, Georgia, protested the issuance of a task order to DB Consulting Group, Inc., of Silver Spring, Maryland, for an indefinite-delivery-indefinite-quantity task order from the Center for Disease Control and Prevention.  Emergint’s offer was roughly $12 million less than the awardee’s offer.  Emergint argued that because the agency did not select its low priced offer, the source selection tradeoff determination was inconsistent with the terms of the solicitation and insufficiently documented.  Denying the protest, the Source Selection Authority found that “the protestor’s lower price posed performance risk and reflected a lack of understanding.” After issuing an amended solicitation that considered “price realism” among its other evaluation factors, Emergint’s proposal still ranked lower than the awardee’s, leading to another protest, which was again denied.

Regardless of how you choose to focus your proposal team, writing a compliant, compelling, and persuasive proposal starts with understanding what the customer is actually looking for. Knowing how federal procurements are organized is a good first step to managing a successful proposal.  The evaluation criteria itself is customarily articulated in Section M of the solicitation. Section L is typically the instructions to offerors, which defines the formatting, organizational, and submission requirements for the proposal. Section C is the Statement of Work itself, and this is where most contractors spend the lion’s share of their time and focus. However, some industry leaders in capture and proposal management find that the order of precedence for writing and building a winning proposal is L-M-C.

While there may not be a magic formula for winning proposals, having a thorough understanding of the evaluation criteria and the agency’s overall approach to grading proposals is an excellent step in the right direction. Although lower-priced bidders can usually articulate a strong case for why they should be selected, bidders that are significantly lower priced than their competition run the risk of portraying a lack of understanding to the government. While it is ultimately the goal to convince the government that your firm provides the most “bang for the buck,” successful bidders are often the ones that can deliver equal value to their competitors for slightly less money, or significantly greater value for marginally more money. For these reasons, pricing a winning proposal remains as much an art as it is a science.

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