#GovConThoughts: Successful GAO Protest Highlights Focal Point of Price Realism Analysis
A recent Government Accountability Office ("GAO") decision highlights a successful price realism argument and shows that, when a price realism evaluation is used, the agency must tie its analysis back to the offeror's technical approach.
The protest of Criterion Corporation, B-422309, April 16, 2024, 2024 CPD ¶ __, involved an ID/IQ procurement for base operations support. Relevant here, for price, the solicitation asked offerors to provide unit prices for each fixed-price CLIN and to fill out a workbook with a "firm-fixed-price worksheet.” The workbook included a total evaluted price and the solicitation also advised offerors that prices must "demonstrate a logical correlation to the staffing proposed in the technical approach."
During its evaluation, the agency found that the protester's price was significantly lower than the IGE and average proposed price and ultimately concluded that the protester's price was unrealistic. As a result, the agency excluded the protester from the competition. The protest followed.
In its protest, the protester argued that it proposed a unique technical solution with a "very competitive price," but that the agency ignored this unique technical approach during its price evaluation. In other words, the protester argued that the agency's price realism evaluation was unreasonable because the agency "simply conducted a mechanical comparison of the firm’s proposed price against the IGE and the average price of other offerors" without looking at its technical solution, which it argued had many beneficial aspects.
The agency argued that its evaluation was reasonable and that the protester's price was unrealistic after looking at the firm’s technical approach. The agency said that it examined the protester's technical proposal and concluded that it proposed more FTEs than the second-low offeror, despite being "significantly lower" in price. And, based on a comparison of average percentage difference between the protester's labor rate and that of the second-low offeror, the agency said that the protester's price was unrealistic and that it could not "possibly perform at the proposed price."
In sustaining the protest, GAO noted that when price realism analysis is used, the purpose is to ensure that prices are realistic for the work performed, reflect a clear understanding of requirements, and consistent with the offeror's proposed method of performance. To be reasonable, a price realism analysis must include consideration of the offeror's technical approach. A price realism analysis that only compares prices is inherently limited in light of the requriement to analyze an offeror's technical approach. With these conepts in mind, GAO found that the agency failed to meet its burden and its evaluation was thus flawed.
Specifically, while the agency stated that it looked at the number of FTEs, GAO found that the record did not reflect that the agency considered the protester's technical solution (proposed labor mix, experience levels, etc.) or labor utilization strategy when concluding that the protester's price was unrealistic. Instead, the record showed that the agency reached that conclusion because the protester proposed fewer FTEs and had lower rates. In GAO's view, the anayisis was flawed because the "agency did not consider whether [protester] used a different labor mix or technical solution from that of the second-low offeror."
Without considering the protester's unique technical solution, GAO said that there was simply no way for the agency to conduct an apples-to-apples comparison, meaning that the results of such an analysis would not yield any meaningful information. Because GAO found that the agency’s price realism analysis was unreasonable for failing to tie it back to the protester's proposed technical approach, it concluded that the protester was prejudiced.
Takeaway
As this GAO decision shows, when a price realism analysis is used, the agency may not solely rely on a comparison of proposed prices because the focal point of a price realism analysis is the offeror's proposed technical approach. Thus, where an agency conducts a price realism analysis but does not consider an offeror's specific technical solution, GAO will likely conclude that the evaluation was unreasonable. Notably, unlike a cost realism, a price realism evaluation is only permitted where the solicitation puts offerors on notice that prices will be evaluated to determine whether they are realistic.
. . .
Comentários