Government Contracts Monitor

GAO Sustains Price Realism Protest

March 28, 2012

The GAO recently sustained a price realism protest where the agency failed to consider the proposed prices of all technically acceptable offerors.    Digital Technologies, B-406085 (Feb. 6, 2012), available here.  The RFP requested proposals for a fixed price contract with a 6-month base period and four 1-year options for computer maintenance and support.  According to the RFP, the award would be made on a best value basis, with technical capability and past performance considered significantly more important than price.  The RFP also stated that the agency would “evaluate price based on comparative, competitive pricing among the offerors,” and that the “overall price offered will be used for comparison for evaluation purposes.”  Id. at 2.

The agency received seven proposals that ranged in price from $4.3M to $12.6M.  The protestor’s proposal was for $9.0M, while the awardee’s proposal was for $12.6M, the highest offered.  Both of those proposals received an “outstanding” rating for their overall technical proposals.  One other proposal, for $8.5M, received an “acceptable” rating, while the remaining four received “marginal” ratings.

When conducting its price realism analysis, the agency compared the price proposals of the two offerors with the “outstanding” rating to each other and to the government’s price estimate.  In doing so, the agency ignored the price proposals of the remaining five offerors, which ranged from $4.3M to $10.4M.  The agency then determined that the protestor’s price proposal was unrealistic because the pricing in the option years was below the government’s estimate and because the overall price was below the awardee’s proposal.  The agency did not consider the price proposals of the other five offerors.

The GAO held that the agency’s price realism analysis was fundamentally flawed in that it failed to take into account the price proposals of all offerors, and inappropriately focused on the cost of the option years as opposed to the “overall price offered” as required by the RFP.  The GAO also noted that the agency’s price realism evaluation failed to account for the protestor’s overall “outstanding” technical rating and its teaming relationship with the manufacturer of the computers in question.

 

Jeffry Cook is the attorney responsible for the content of this post.