Link: GAO Opinion
Agency: Department of the Army, U.S. Army Corps of Engineers
Disposition: Protest denied.
Keywords: Discussions; price realism
General Counsel P.C. Highlight: In the context of a solicitation that provides for award of a fixed-price contract, an agency may, in its discretion, provide for the use of a price realism analysis for purposes of assessing whether a price is so low as to evince a lack of technical understanding on the part of the offeror and for assessing the risk inherent in an offeror’s proposal.
The Army Corps of Engineers issued a request for proposals (RFP) for design and construction services related to a strategic airlift ramp and hot cargo pad at the Manas Air Base in Kyrgyzstan. The RFP contemplated the award of a fixed-price contract to the proposal that was most advantageous to the government, based on price and three non-price factors: management and technical; experience; and past performance. Six offerors were ultimately included in the final evaluation, with the contract being awarded to Serka Insaat Ve Ticaret A.S. METAG Insaat Ticaret A.S. protested this decision.
METAG’s protest challenged several aspects of the agency’s evaluation of proposals and subsequent award decision. METAG alleged that Serka was ineligible for award because the evaluators had identified “significant informational deficiencies” in Serka’s proposal concerning a variety of issues. GAO reviewed the record and found that the RFP stated that offerors “should” provide information concerning qualifications and background experience for management personnel, meaning this information was not a mandatory requirement and the government’s evaluation was not unreasonable.
Next, METAG contended that the agency was required to conduct discussions because the cumulative total of identified weaknesses in METAG’s and Serka’s proposal could be considered a deficiency. However, here the RFP had provided for award on the basis of initial proposals without conducting further discussions. Thus, the agency was not required to hold discussions and GAO grants considerable deference to the contracting officer’s discretion for deciding whether discussions are necessary.
Finally, METAG asserts that the agency misevaluated its price proposal as unreasonably low, by arguing that price reasonableness concerns whether a price is higher, not lower, than warranted. When a fixed-price contract is being contemplated, an agency may conduct a price realism analysis for determining whether a price is so low as to evince a lack of technical understanding on the part of the offeror and for assessing the risk inherent in an offeror’s proposal. GAO’s review of the record determined that METAG’s pricing reasonably raised questions as to whether its prices were realistic for the work and whether METAG had a clear understanding of the solicitation. As such, GAO was unable to find a basis upon which to question the agency’s evaluation and denied METAG’s protest.