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Nippo Corporation, B-402363.2, May 5, 2010

  • By GCPC GovCon Legal Team
  • May 13, 2010
  • Cost-Technical Trade-OffTechnical Evaluation

Link: GAO Opinion

Agency: Department of the Navy

Disposition: Protest denied.

Keywords: Technical evaluation; cost-technical trade-off

General Counsel P.C. Highlight: In conducting a price-technical tradeoff, the source selection official has discretion to select a higher-priced, higher technically-rated proposal if doing so is in the government’s best interest, is consistent with the stated evaluation criteria, and is properly documented in writing in the procurement file.

—————————————————————————————————————————–

Nippon Corporation protested the award by the Navy of a contract to Toa Corporation for revitalization of several hundred townhouses in Sasebo, Japan. The construction work here would be awarded not based solely on low price, but offers would be evaluated on their technical proposal as well. The awardee would be selected on a best value basis, where technical factors when combined were considered to be equally important to the price factor. Nippon’s proposal was significantly lower in price, by 11%. Toa’s proposal was rated as overall Good and Nippon’s proposal was overall lower at the satisfactory level. Nippon argued that, because its price was more than 10% lower than Toa’s, Toa’s technical proposal would have to be rated as “Excellent,” or two adjectival ratings above Nippon’s to warrant an award to Toa. GAO rejected this mechanistic application of the rules for a cost-technical trade-off.

In conducting a price-technical tradeoff, the source selection official has discretion to select a higher-priced, higher technically-rated proposal if doing so is in the government’s best interest, is consistent with the stated evaluation criteria, and is properly documented in writing in the procurement file. An agency is not required to engage in a mechanical process of equating differences in adjectival ratings to some established dollar value or percentage difference in price. To the contrary, adjectival ratings are merely a guide to intelligent decision making, and it generally is improper for an agency to rely on a purely mathematical or mechanical price-technical tradeoff methodology. GAO noted that the source selection official extensively documents the strengths and weaknesses that supported her award decision. GAO found the assessment to be reasonable and denied Nippon’s protest.

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