Link: GAO Opinion
Agency: Department of Defense
Disposition: Protest sustained.
Keywords: Fixed Price Contract
General Counsel P.C. Highlight: Where a solicitation requests proposals on a fixed-price basis, a price offer that is conditional and not firm cannot be considered for award.
Solers, Inc. protests the issuance of a task order to Booz Allen Hamilton, Inc. (BAH), by the Department of Defense, Defense Information Systems Agency (DISA) under a request for quotations (RFQ) for support of the DISA Program Executive Office–Mission Assurance and Network Operations Cross Domain Solutions.
The RFQ was issued and was subsequently amended. The competition was limited to offerors who hold GSA Federal Supply Schedule (FSS) contracts. The RFQ anticipated issuance of a fixed-price task order for a one-year base period with four one?year options. Offerors were advised that they would be evaluated on the basis of price, and the following non-price factors: (1) technical approach, (2) management approach, (3) past performance confidence, and (4) past performance relevancy. The RFQ advised that the agency estimated that the task order would require the contractor to provide 21.55 full-time equivalent employees (FTEs). Offerors were required to submit technical and price proposals that demonstrated their ability to meet the requirements of the PWS. For the past performance evaluation, offerors were required to complete a form by listing three past performance references.
DISA selected Solers’ proposal for award. BAH filed a protest with GAO, arguing that the agency had not conducted meaningful discussions and failed to consider a potential organizational conflict of interest concerning Solers. DISA then advised GAO that it would take corrective action in response to BAH’s protest. DISA’s corrective action consisted of reopening discussions with the offerors, requesting and evaluating revised proposals, and making a new award decision.
The contracting officer (CO) served as the source selection authority for the procurement. The CO found that “[a]lthough the Solers proposal was rated technically superior to BAH’s proposal, the identified strengths do not warrant payment of an approximate 12% higher price.” The CO concluded that BAH should be selected for award based on the following rationale: “Based on the technical sufficiency of the [BAH] proposal, the superior past performance, and the lower cost, the Government recommends awarding the contract to [BAH].”
Solers argues that BAH’s price proposal improperly took exception to the RFQ requirement to propose a fixed price. GAO states that the requirement to propose fixed prices is a material term or condition of a solicitation requiring such pricing. Where a solicitation requests proposals on a fixed-price basis, a price offer that is conditional and not firm cannot be considered for award.
Here, the RFQ required offerors to submit proposals on a fixed-price basis. Offerors were also required to provide pricing information regarding the basis for their fixed price, including fully-loaded labor hourly rates for personnel, and information concerning the offeror’s GSA schedule labor rates. The contractor was to be paid fixed monthly payments based on a delivery schedule set forth in the solicitation. GAO states that a fair reading of BAH’s proposal shows that the awardee took exception to the requirement to propose a fixed price. In this regard, BAH stated that it had based its price on government-site and contractor-site rates, and that use of the government-site rates permitted the offeror to offer “a significant discount or savings” to the agency. On the record, GAO finds that DISA improperly issued the task order to BAH, based on a proposal that took exception to the solicitation requirement to propose a fixed price. Because DISA cannot accept BAH’s proposal that did not offer a fixed price for award, and because Solers, which did offer a fixed price, was the only other offeror who submitted a proposal, GAO concludes that Solers was prejudiced by DISA’s error, and sustain the protest on this basis.