Government Contracts Monitor

Is The Higher Price Justified? GAO Again Weighs In On Price/Technical Tradeoffs

September 11, 2012

By: Lindsay Simmons

A recent GAO case confirms the Government’s obligation to perform proper price/technical tradeoffs in best value procurements. 

In J.R. Conkey & Associates, Inc. dba Solar Power Integrators, B-406024.4 (Comp. Gen. Aug. 22, 2012), the Government’s price/technical tradeoff analysis included only the three proposals with the highest technical scores.  The Government did not consider whether the alleged technical superiority of these three proposals was worth paying a higher price than that offered by the Protestor.  The Protestor, Solar Power, argued this was an inadequate price/technical tradeoff analysis, and GAO agreed.

GAO begins its decision by restating that (i) the evaluation of proposals is a matter within the agency’s discretion; (ii) GAO will examine the record to determine whether the agency’s judgment was reasonable; and, (iii) although GAO will not substitute its judgment for that of the agency, it will sustain a protest where the agency’s conclusions are not reasonably based.  Here GAO found that the evaluation was unreasonable on several grounds, including that the Contracting Officer, acting as the Source Selection Authority (SSA), failed to conduct an adequate price/technical tradeoff analysis, as alleged by the Protestor.

In a “best value” procurement, the SSA must perform an analysis of the tradeoff between price and non-price factors, that is, s/he must determine whether one proposal’s superiority under the non-price factors is worth a higher price. This is true even where the Government states that price is less important than the non-price factors – an agency is still required to consider the price to the Government in making its source selection decision.

Said another way, before the Government can choose a higher-priced, technically superior proposal over a lower-priced but acceptable proposal, its decision “must be supported by a rational explanation of why the higher-rated proposal is, in fact, superior, and explaining why its technical superiority warrants paying a price premium.”

In this case the SSA limited his price/technical tradeoff analysis to a comparison of the three proposals with the highest point-scores, without any consideration of their price, and without any assessment of the whether the technical superiority was worth the higher price.  He did not identify a single benefit in the awardee’s proposal that justified paying the price premium when compared to Protestor’s technically acceptable lower-priced proposal.  As a result, GAO sustained the protest.  In doing so, GAO made clear, however, that it was not in a position to determine whether the SSA would have determined that the awardee’s technical features justified the price premium.  A proper tradeoff analysis simply was not performed.

 

Lindsay Simmons is the attorney responsible for the content of this article.