Link: GAO Opinion
Agency: United States Agency for International Development
Disposition: Protest denied.
Keywords: Best Value; Cost/Technical Trade-Off
General Counsel P.C. Highlight: It is difficult to prove an awardees price is unrealistically low when it is 11% higher than the first Government estimate and 2% higher than the final government estimate.
GAO denies the protest of Symbion Power, LLC-Haytrac, JV where it was denied award of a contract, by the U.S. Agency for International Development (USAID), for the rehabilitation and upgrade of five electrical substations in Port-au-Prince, Haiti.
Symbion argues that USAID improperly awarded the contract on a lowest price, technically acceptable basis. Symbion contends that the solicitation required USAID to award the contract to the offeror offering the best value based on a cost-technical tradeoff analysis. GAO first stated that Symbion is correct that the solicitation contained language that could lead offerors to believe the basis for award was best value rather than lowest-price, technically acceptable. However, the RFP was amended to clarify that award would be made to the lowest-priced, technically acceptable offeror. That is, prior to the closing date for receipt of proposals, in response to a question concerning conflicting language in the RFP, USAID stated that award would be made on a lowest-price, technically acceptable basis.
Symbion also argues that USAID failed to conduct a cost realism analysis as required by the solicitation, which Symbion claims would have shown that the eventual awardees price was unrealistically low. GAO states that cost realism is ordinarily not considered in the evaluation of proposals for the award of fixed-price contracts because these contracts place the risk and responsibility of loss upon the contractor. However, an agency may, in its discretion, provide for the use of cost realism analysis in a solicitation for the award of a fixed-price contract for the limited purpose of measuring an offeror’s understanding of the solicitation’s technical requirements or to assess the risk inherent in an offeror’s approach.
While it is true that the RFP advised offerors to ensure that the cost information provided is sufficient to provide a basis for USAID to determine that the costs proposed are reasonable and realistic, the RFP was amended to eliminate the requirement for cost or pricing data. Instead, the RFP required offerors to propose fixed prices on price schedule line items for equipment and tasks to be performed by the contractor. This schedule did not provide for identification of labor mix or labor rates or any cost elements for each line item. Consistent with the RFP’s instructions, neither Symbion nor the awardee submitted detailed cost information that would permit the sort of cost realism analysis that Symbion now asserts was required.
Finally, Symbion generally challenges the adequacy of USAID’s price analysis, arguing, for example, that the agency was required to conduct line-by-line analyses and was inconsistent in its application of a government cost estimate. However, Symbion fails to demonstrate that USAID’s actions were improper, or that Symbion was prejudiced by the government’s actions. GAO states that the depth of an agency’s price analysis is a matter within the sound exercise of the agency’s discretion.
Here, the agency compared both Symbion’s and the awardees proposed prices with the initial March 2011 government cost estimate (GCE) of $11,327,318. As Symbion notes, the source selection decision refers to the April 2011 GCE of $12.5 million as the basis for determining that the awardees price was reasonable and realistic. Regardless of which GCE is relied upon by the agency in its price analysis, Symbion has not demonstrated that USAID unreasonably determined that the awardees price was reasonable and realistic. The awardees price is approximately 11% higher than the March 2011 estimate and almost 2% higher than the April 2011 estimate. Thus, under the circumstances of this case, the record supports the agency’s determination that the awardees price was not unrealistically low. The protest is denied.