GAO: Awardee’s Low Price Isn’t Too Low, Absent a Price Realism Evaluation

In a fixed-price procurement, an agency cannot reject an offeror for proposing a “too low” price unless the solicitation specifically contemplates a price realism evaluation.

This point is one of several interesting issues recently addressed by GAO in URS Federal Services, Inc., B-412580 et al. (Mar. 31, 2016). Another interesting issue—pertaining to an offeror’s protest of the awardee’s subcontractors’ size—will be addressed in a forthcoming post. But this post serves as a reminder of an important limitation to a protester’s ability to challenge an awardee’s price.

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GAO: Protester Must Show Awardee’s “Specific Exception” to Subcontracting Limitation

A protester challenging an awardee’s compliance with the FAR’s limitation on subcontracting faces an uphill battle.

As explained in a recent GAO bid protest decision, an offeror’s compliance with the limitation on subcontracting is presumed; a protester, therefore, must present specific evidence demonstrating that the awardee will not comply with the limitation. In many cases–especially when the solicitation does not require offerors to provide a breakdown of costs of the work performed by the prime and its subcontractors–such evidence may be next to impossible to obtain.

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Small Business Set-Asides: Two Small Manufacturers Required

When an agency acquires manufactured products or supplies, the agency need not set aside the solicitation for small businesses under the FAR’s “rule of two” unless the agency has a reasonable expectation of receiving offers from small businesses offering the products of two or more small manufacturers.

A recent GAO bid protest decision highlights a little-known provision of the FAR, which provides that the “rule of two” does not apply to acquisitions for manufactured products over $150,000 where two or more small business nonmanufacturers are likely to submit offers, but the small business nonmanufacturers will not offer the products of two or more small business manufacturers.

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Exercised Options May Be Protested At GAO–But Agency Discretion Is Broad

Contrary to a common misconception, GAO has jurisdiction to consider a protester’s challenge to the exercise of an option in a competitor’s contract. But GAO’s review is largely deferential to the agency: it will uphold the exercise of an option unless a protester is able to show the agency failed to follow applicable regulations or otherwise should have conducted a new procurement.

A recent bid protest illustrates this deferential review, as GAO denied a protest challenging the exercise of an option where the agency considered pricing and other factors before exercising its option.

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GAO: Offeror’s High Labor Hours Need Not Be Raised In Discussions

An agency was not required to inform an offeror that its proposed base year labor hours were too high, even though the offeror proposed more than twice as many labor hours as the awardee.

In a recent bid protest decision, the GAO held that a procuring agency did not act improperly by failing to raise the protester’s high labor hours in discussions, because the protester’s labor hours, while much higher than the awardee’s, were not deemed unacceptably high under the RFQ’s lowest-price, technically acceptable evaluation scheme.

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GAO Considers “Intertwined” Protest of Task Order Valued Below Jurisdictional Threshold

GAO’s bid protest jurisdiction is defined—and limited—by both statute and its regulations. As part of these jurisdictional limits, GAO ordinarily may only consider protests relating to task order procurements if those orders are valued in excess of $10 million.

But despite this rule, GAO recently considered a protester’s challenge to a task order valued at only $8.7 million. It did so after deciding that the challenge was “intertwined” with the protester’s challenge to its own termination for convenience–another matter the GAO only considers in unusual circumstances.

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GAO: Agency Could Disclose Incumbent’s Staffing Numbers

In a solicitation seeking the award of a follow-on services contract, a procuring agency could validly disclose the number of incumbent personnel performing a particular function.

In a recent bid protest decision, the GAO held that this information was not proprietary or confidential to the incumbent, and that the incumbent was not competitively harmed by the release of the information.

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