Link: GAO Decision
Protestor: Resource Ltd.
Agency: Department of the Air Force
Disposition: Protest Denied.
- Where solicitation contemplated award of fixed-price contract, price realism analysis was reasonable where agency compared proposed prices to independent government estimate and other proposed prices, and ensured that prices reflected a complete understanding of the requirement.
- Protest that the independent government estimate (IGE), revised after receiving initial offers, was unreasonable and that awardee’s price realism determination was improperly based on comparison with the revised IGE is denied, where agency had a reasonable basis for revising the IGE and the revised IGE was consistent with prices received by the majority of the competitive range offerors.
General Counsel PC Highlight:
Resource Ltd. protested the award to Sodexo, Limited of a contract for custodial services at Air Force facilities in the United Kingdom. The RFP provided for award of a fixed-price, ID/IQ contract on a lowest-price, technically acceptable basis. Offerors were asked to provide fixed unit prices for a number of CLINs, each of which identified an estimated quantity of square feet of space for custodial services. Because all of the offerors’ proposed prices were substantially below the IGE, the agency reviewed and found a number of errors in the IGE, which it revised prior to conducting discussions. In response to three evaluation notices from the agency, Sodexo raised its pricing on several CLINs. Although Sodexo’s pricing still remained below the IGE, after conducting further price analysis, the agency concluded that Sodexo’s pricing was realistic.
The GAO found that the agency had performed a reasonable price realism analysis, noting that the agency had specifically asked Sodexo about its pricing where the agency had concerns about deviations from the IGE. It pointed out that the agency compared Sodexo’s pricing to the next two lowest priced offerors and had concluded that Sodexo had anticipated and accounted for associated costs in support of work requirements, demonstrating its understanding of the requirements. The GAO also found nothing improper in the agency’s decision to revise the IGE, noting that the revised IGE took into account the standardization of custodial services and the economies of scale by the inclusion of two additional facilities.
Price realism analysis is not required as part of the evaluation process for fixed-price contracts. The RFP may provide for some price realism analysis in order to measure an offeror’s understanding of the solicitation requirements, or to avoid the risk of poor performance from a contractor who is forced to provide goods or services at little or no profit. However, the agency may exercise discretion in determining the depth of analysis it will perform in these situations. 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.