Change in evaluation method or quantity requirements from specifications

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GAO Decision Matter of: CGI Federal Inc.. File: B-410330.2, Date: December 10, 2014

CGI Federal Inc., of Fairfax, Virginia, protests the award of contracts to five other offerors under request for proposals (RFP). The RFP here, which is a follow-on to previously awarded contracts for system design and development and the production of limited deployment units, contemplates the award of contracts pursuant to which production units for unit, force, and submarine platforms will be ordered on a build-to-print basis. The RFP provided for the award of up to three indefinite-delivery/indefinite-quantity (ID/IQ) contracts with firm-fixed-price (FFP) and cost-plus-fixed-fee (CPFF) contract line items (CLINs).

The SSAC recommended that despite the solicitation language indicating that the agency intended to award up to three contracts, award be made to the five top-ranked offerors. In conjunction with its decision to increase the number of awards, the agency decided to change its strategy for placing delivery orders with the selected contractors. Specifically, the agency decided that it would not place 3-4 orders of larger quantities of CANES units annually as originally planned, but rather it would issue more orders for smaller quantities of CANES units in order to achieve more competition on a per order basis.

CGI raises a number of challenges to the agency evaluation of proposals. As a threshold matter, the protester argues the agency used a flawed price evaluation methodology, which produced a misleading result. In this regard, CGI contends that the agency knew prior to award that the solicitation’s stated approach to evaluating offerors’ prices, based solely on the highest order level of 15 units, departed from how the agency actually intended to order the units, which was to place orders for much lower levels. Accordingly, CGI maintains that the agency should have amended the solicitation’s price evaluation scheme to comport with the agency’s actual ordering needs.

CGI contends that the agency’s price evaluation methodology, which provided for comparing offerors’ prices at the maximum order level of 15 units, did not match the agency’s planned ordering needs as determined by the agency prior to award. Given this disconnect, the protester argues that the agency was required to amend the solicitation’s evaluation scheme to provide a reasonable basis for comparing offerors’ prices, one which matched the agency’s ordering needs. CGI further maintains that if the price analysis had been based on offerors’ NTE unit prices for quantities of 5 per delivery order, which is far more in line with the agency’s revised acquisition strategy, decision. its evaluated price would have been [deleted], rather than highest, which would clearly have had an impact on the best value tradeoff.

This case turns on two fundamental principles. One is that, while it is up to the agency to decide on some appropriate and reasonable method for evaluating offerors’ prices, an agency may not use an evaluation method that produces a misleading result. Raymond Express Int’l, B-409872.2, Nov. 6, 2014, 2014 CPD ¶ 317 at 6; Air Trak Travel et al., B-292101 et al., June 30, 2003, 2003 CPD ¶ 117 at 22. That is, the method chosen must include some reasonable basis for evaluating or comparing the relative costs of proposals, so as to establish whether one offeror’s proposal would be more or less costly than another’s. Id.

The other is that where an agency’s requirements materially change after a solicitation has been issued, it must issue an amendment to notify offerors of the changed requirements and afford them an opportunity to respond. Federal Acquisition Regulation (FAR) § 15.206(a); Murray-Benjamin Elec. Co., L.P., B-400255, Aug. 7, 2008, 2008 CPD ¶ 155 at 3-4.

For example, where an agency’s estimate for the amount of work to be ordered under an ID/IQ contract changes significantly, prior to award, the agency must amend the solicitation and provide offerors an opportunity to submit revised proposals. See Symetrics Indus., Inc., B-274246.3 et al., Aug. 20, 1997, 97-2 CPD ¶ 59 at 6. In Symetrics, our Office concluded that the agency should have amended a solicitation for an ID/IQ contract because although the solicitation initially estimated the agency would require 3,755 sequencers, the agency subsequently learned--prior to award--that the agency no longer had a requirement for 3,219 of the sequencers. Id. Similarly, in Northrop Grumman Info. Tech., Inc., et al., B-295526 et al., Mar. 16, 2005, 2005 CPD ¶ 45 at 13, our Office sustained a protest where the Department of the Treasury, prior to award, negotiated a memorandum of understanding with OMB and the General Services Administration that significantly changed the approach set forth in the solicitation and the FAR for determining whether to exercise contract options, making it significantly less likely that the options, which were part of the evaluation, would be exercised.

The circumstances here are unusual in that the meaningfulness of the price evaluation scheme set forth in the RFP changed between the closing date for receipt of FPRs and the date of award. That is, the record reflects that it made perfect sense to evaluate on the basis of 15/each unit pricing when the agency intended to award three contracts and issue 3-4 delivery orders per year. Evaluating on the basis of 15/each unit pricing no longer provided a rational basis for comparison, however, when, during the source selection process, the agency decided to increase the number of awardees to five, and to alter its ordering strategy to significantly increase the number of delivery orders annually, thereby decreasing the number of units to be acquired per delivery order.

Given this fundamental shift in the agency’s anticipated ordering plans, it was unreasonable for the agency to proceed with a price evaluation methodology that was divorced from these plans. Rather, the appropriate course of action was for the agency to amend the solicitation in a manner that would enable it to evaluate, and make a tradeoff decision based on, the offerors’ relative relevant prices.

The agency defends its actions on the basis that it followed the terms of the solicitation and that all offerors competed on an equal basis because the solicitation did not establish that the agency would, in fact, place orders at the 15/unit level. Regarding the latter point, the agency notes that offerors were to submit prices at each level and should have understood that orders could be placed at any of the 15 price levels. The agency’s arguments, however, miss the point.

We agree that the agency followed the terms of the solicitation, and that the offerors submitted prices on an equal basis. The problem is that the price evaluation, and resulting selection decision under which CGI did not receive an award due to its high price, were based on comparing prices for quantities of units that the agency now knows it does not intend to order.

We recognize that price evaluation in the context of an ID/IQ contract may be representative, and therefore something of a fiction; nevertheless, the fiction employed must bear some rational relationship to the agency’s needs. See CW Govt Travel, Inc.--Recon.; CW Gov’t Travel, Inc., et al., B-295330.2 et al., July 25, 2005, 2005 CPD ¶ 139 at 4-5.

Where the agency’s intended ordering strategy does not anticipate placing orders at the 15 unit per order level, we fail to see how comparing prices at this level, and using such prices as the basis for a tradeoff decision, can be understood to be reasonable. As explained above, where the disconnect between the terms of the solicitation and the agency’s order needs became apparent prior to award, it was incumbent on the agency to instead amend the solicitation to correct the flaw in the solicitation.

CGI further contends that the agency failed to conduct a price realism analysis, as required by the terms of the solicitation, and that it failed to recognize that the prices of one of the awardees were unbalanced. CGI also argues that the agency engaged in unequal discussions, assigned its proposal too low a rating for past performance, and unreasonably assigned NG’s proposal a performance confidence rating of satisfactory. We deny the protester’s remaining arguments.