Link: GAO Decision
Protestor:Paladin Data Systems Corporation
Agency: Department of the Navy, Naval Sea Systems Command
Disposition: Protest Denied.
- Protest of issuance of a task order to a lower-cost, lower-rated firm was reasonable and consistent with evaluation scheme in which cost/price was the least important evaluation factor, where the agency reasonably determined that payment of cost premium associated with a higher-rated firm was unwarranted.
- Protest challenging cost realism analysis is denied, where agency performed an analysis of major cost elements utilizing the Defense Contract Audit Agency, the Defense Contract Management Agency, and relevant cost information available to the agency as of the time of its evaluation.
General Counsel P.C. Highlight:
Paladin Data Systems Corporation protested the issuance of a task order to Phacil, Inc. for software development and support services. Paladin had submitted the highest rated proposal with a total cost of $24,890,911.26; Phacil’s proposal received marginal and acceptable ratings, but had a cost of $17,859,146.89. Paladin argued that the agency made an arbitrary and capricious award decision by improperly converting a best-value solicitation into one based on low cost and technical acceptability.
The GAO found that the agency had made a well-reasoned conclusion that the 40% premium for Paladin’s technically superior proposal was not the best value for the government. The GAO also disagreed that the agency had failed to conduct a cost-realism analysis, noting that the agency had evaluated the cost realism of the firms’ direct labor costs, indirect costs, other direct costs, cost escalation, and level of effort, comparing their rates to national industry averages.
In awards made on a best-value basis, offerors must remember that an agency may select a lower-rated, lower-priced proposal if it is in the best interests of the government. As long as the agency makes a rational decision consistent with the evaluation criteria, disappointed offerors will be unsuccessful should they elect to protest the selection.