These snatches are not precise quotes from the decisions and should not be relied on for citation. Read each decision at the appropriate link.
Matter of Tetra Tech, Inc., File B-409095; B-409095.2, January 17, 2014
Award was to be made to the offeror whose proposal represented the best value to the government based on price and the following non-price evaluation factors listed in descending order of importance: (1) technical approach; (2) key project team members/management approach; (3) previous corporate experience; (4) past performance, including small business subcontracting compliance past performance; (5) small business participation plan; and (6) small business subcontracting plan.Matter of: Delaware Resource Group of Oklahoma, LLC, File B-408962.3; B-408962.4, March 24, 2014
The source selection evaluation board (SSEB) evaluated the technical proposals and the price team, comprised of a price analyst and a cost engineer, evaluated price proposals. The price team prepared a report, for the SSEB, which then provided its own report, along with the price/cost report, to the source selection authority (SSA). With regard to price, the price team prepared a 112-page report reviewing each offeror's price for each of 84 contract line item numbers (CLINs).
Tetra Tech contends that the agency failed to conduct and document a proper "price reasonableness analysis of the URS Group's very low price." As our decisions make clear, price reasonableness and price realism are distinct concepts. The purpose of a price reasonableness review is to determine whether the prices offered are too high, as opposed to too low. Arguments that an agency did not perform an appropriate analysis to determine whether prices are too low, such that there may be a risk of poor performance, concern price realism, not price reasonableness.
Here, we view Tetra Tech's argument as going to the realism of URS's pricing. In this regard, the price team evaluated the reasonableness and realism of each of the offerors' proposed prices under each of the 84 CLINs and noted instances in which an offeror's price was considered to be high or low, considering its proposed technical approach. For 8 CLINs, accounting for approximately 1.6% of URS's overall price, the price team found that URS's price appeared to be low, and for 1 CLIN, the price team found that the price appeared to be high.
The agency determined that URS's lower prices generally reflected its use of an innovative, advantageous, and less costly technology, and that the risk associated with using the technology was sufficiently mitigated by URS's approach in this regard. We find nothing in Tetra Tech's protest that calls into question the resulting agency determination that URS's overall pricing was realistic for its technical approach.
Protest alleging that the agency failed to conduct a reasonable price realism analysis is denied where the record shows the agency’s analysis was reasonable and adequately documented.Matter of: JCMCS File B-409407, April 8, 2014
With regard to price, the RFP established that the agency would rank all technically-acceptable proposals by their total evaluated price, and conduct a price evaluation to determine if the prices were fair, reasonable, and complete. The RFP advised that the agency “reserves the right to conduct a price realism review to determine whether the price proposed is feasible in relation to the technical proposal and the requirements of the [PWS].” Price proposals that were unreasonably high or unrealistically low when compared to the independent government estimate and the offeror’s proposed technical approach could be found to have an inherent lack of understanding of the solicitation requirements, and the proposal could be rejected.
Where, as here, an RFP contemplates the award of a fixed-price contract, or a fixed-price portion of a contract, an agency may provide in the solicitation for the use of a price realism analysis for the limited purpose of measuring an offeror’s understanding of the requirements or to assess the risk inherent in an offeror’s proposal. Our review of a price realism analysis is limited to determining whether it was reasonable and consistent with the terms of the solicitation. The nature and extent of an agency’s price realism analysis are matters within the agency’s discretion.
On this record, we conclude that the Air Force conducted a reasonable evaluation of Chenega’s price consistent with the RFP criteria. To the extent that DRG believes that Chenega cannot perform the contract at its proposed price, DRG’s disagreement with the agency’s judgment provides no basis to sustain the protest.
JCMCS, of Washington, DC, protests the Department of the Army’s award of a contract to M&F Concrete, of Manassas, Virginia, under invitation for bids (IFB) No. W91QV1-13-B-0010, for general concrete services at facilities in Virginia and the District of Columbia. The protester argues that M&F’s bid price is so low that the agency should have concluded that M&F is not a responsible bidder. Award was to be made to the low-priced, responsible bidder whose bid was responsive to the terms of the IFB.Matter of Kilda Group, LLC, File B-409144; B-409144.2, January 29, 2014
M&F had the lowest bid price of $20,514,321.50, significantly lower than JCMCS’s bid, which was the second lowest ($36,374,996).
Below-cost prices on fixed-price contracts are not prohibited, and whether a bidder can perform at its bid price is a matter of bidder responsibility, which is not reviewable by our Office absent circumstances not present here. See Bid Protest Regulations, 4 C.F.R. § 21.5(c) (2013).
First, the protester argues that the agency failed to use any of the price analysis techniques set out in Federal Acquisition Regulations. There is no requirement, however, for the use of price analysis techniques in assessing bid prices.
JCMCS also asserts that, given M&F’s unrealistically low prices, the awardee cannot meet the solicitation requirement to pay labor rates compliant with the applicable Davis Bacon Act wage rates. A bidder may remain eligible for award even if lower wage rates than those required by a prevailing wage rate determination are offered by the firm, where the firm accepts (and is therefore obliged to meet) a requirement to compensate employees at prevailing rates, and the firm is otherwise determined to be responsible.
JCMCS next argues that M&F’s bid is so low that the bid must be unbalanced. This argument, by itself, fails to state a basis for protest. Unbalanced pricing exists where the prices of one or more items are significantly overstated, despite an acceptable total evaluated price (typically achieved through underpricing one or more of the other line items). Low prices, by themselves, are not improper and do not themselves establish (or create the risk inherent in) unbalanced pricing. Where an unbalanced offer is received, agencies are not required to reject it, but should consider the risk to the government of unreasonably high prices for contract performance.
The RFP was issued as a total small business set-aside, seeking proposals to design a strategy for delivering a core curriculum of training programs for agency leaders at the supervisory, management, and executive levels. As amended, the RFP described a broad range of requirements, identifying a number of mandatory tasks such as, project management, on-demand training, executive development, and blended learning.
The RFP provided for the award of a fixed-price contract with definitive and indefinite-delivery/indefinite-quantity contract line items (CLINs) for a four-month base period and three 1-year options. Award was to be made on a best-value basis considering the following factors listed in descending order of importance: (1) technical approach; (2) past performance; (3) socioeconomic considerations; and (4) price. The non-price factors, when combined, were significantly more important than price. Kilda contends that the agency failed to adequately evaluate the awardee’s prices for realism.
The Federal Acquisition Regulation (FAR) recognizes a number of price analysis techniques that may be used to determine whether prices are reasonable and realistic, including a comparison of proposed prices with each other and comparison of proposed prices with an independent government estimate (IGE).
Here, the VA compared ALIS’ total price to the median total price of $28,340,513, calculated based on the total prices of eight offerors. Kilda insists that the VA should have considered whether ALIS’ proposed labor rates and proposed unit prices were realistic, rather than simply comparing ALIS’ total proposed price to the median of the offered prices. Although Kilda ultimately believes that a more detailed realism assessment was necessary, as noted above, the extent of a price realism analysis is within the sound exercise of the agency’s discretion and agencies are free to use a number of techniques in assessing price realism. Indeed, we have found that a comparison of prices received is among the proposal analysis techniques that may be used under FAR § 15.404-1, and also “can be appropriate in a price realism analysis.”
Kilda also argues that the realism assessment was unreasonable since it was based on an unreasonably calculated median price. In this regard, the protester highlights the fact that the agency calculated the median using the prices of two proposals that had been rated as unsatisfactory under the technical approach factor, in part, because they did not have an acceptable understanding of the agency’s needs. We agree with the protester that the agency should not have included the prices for these two firms in calculating the median. Nevertheless, when these firms’ prices are excluded, the median does not change significantly--it goes up from $28,340,513.00 to $29,802,909.98 (a change of approximately 5%).
Our Office will not sustain a protest absent a showing of prejudice to the protester; that is, unless the protester demonstrates that, but for the agency’s actions, it would have had a substantial chance of receiving the award. In our view, given the minimal impact on the calculated median, we have no basis to conclude that the protester was prejudiced by the alleged error.