Planned Systems International, Inc., B-405292.3, July 10, 2012

Link: GAO Decision

Protestor: Planned Systems International, Inc.

Agency: Department of the Air Force

Disposition: Protest Denied.

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GAO Digest:

1. Agency reasonably evaluated offerors’ fixed prices by performing comparisons of proposed individual labor rates and total evaluated prices, consistent with the Federal Acquisition Regulation and the provisions of the solicitation, and was not required to consider protester’s historic pricing in performing the evaluation.
2. Protester’s assertion that it should have received the highest possible past performance rating will not be considered where protester’s evaluated price was more than 19 percent higher than that of the highest-priced awardee, and the solicitation expressly provided that the agency would pay no greater than a 10 percent price premium for a proposal with the highest past performance rating.
3. Where, after initially announcing contract awards, the agency corrected the past performance rating of another offeror, leading to an additional award to that offeror on the basis if its second-lowest price, the agency was not required to further expand the pool of awardees to include the protester’s highest-priced proposal.

General Counsel PC Highlight:

Planned Systems International, Inc. (PSI) protested the agency’s decision not to award PSI a contract to provide medical advisory and assistance services. The solicitation provided for multiple awards of ID/IQ contracts for a five-year ordering period; subsequent task orders would be competed between the awardees. Award would be made based on price/past performance tradeoffs between technically acceptable proposals. The agency would rank technically acceptable proposals by price; tradeoff analyses would be performed where a higher priced offer with a “substantial confidence” past performance rating was within 10 percent of a lower priced offer with a “satisfactory confidence” rating. Contracts were awarded to nine offerors, including Luke & Associates (L&A), which successfully protested its “limited confidence” rating and was subsequently awarded a contract as the second lowest-price offeror.

The GAO first disagreed with PSI’s assertion that the agency failed to follow the evaluation criteria with respect to reasonableness of price proposals. It pointed out that, although an agency must determine whether proposed prices are fair and reasonable in fixed-price contracts, the agency is permitted to use a variety of price analysis techniques and procedures. The GAO found that the agency’s analysis, including preparing comprehensive spreadsheets comparing each offeror’s proposed fixed-price sample task order (STO) rate for each labor category, performance location, and option period, was reasonable and in conformance with the terms of the solicitation. The GAO then declined to consider the allegation that PSI should have received a “substantial confidence” past performance rating, rather than “satisfactory confidence,” on the grounds that PSI was ineligible for award regardless of its past performance rating. It pointed out that the solicitation expressly provided that the agency would pay not greater than a 10 percent price premium in connection with offeror’s past performance rating of “substantial confidence;” PSI’s proposed price was 19 percent higher than the next highest offeror. Finally, the GAO found without merit PSI’s argument regarding the propriety of the corrective action awarding a contract to L&A, noting that PSI’s assertions were factually inaccurate.

Price realism analysis is not required as part of the evaluation process for fixed-price contracts; agencies must only determine whether proposed prices are fair and reasonable. The RFP may provide for some price realism analysis in order to measure an offeror’s understanding of the solicitation requirements, or to evaluate the risk of default from a contractor. However, the agency may exercise discretion in determining the depth of analysis it will perform in these situations, and may use various price analysis techniques and procedures. So long as the agency acted reasonably and in a manner consistent with the terms of the solicitation, the GAO is likely to uphold their analysis.