GAO: Agencies Cannot Ignore Price In Evaluating BPAs

In the current economic climate, procuring agencies seem to be focused more than ever on the bottom line, with “lowest-price, technically-acceptable” solicitations appearing to be on the rise.  Even today, however, price is not the government’s paramount consideration in every solicitation–nor is it required to be.  But that does not mean that a procuring agency is free to ignore price completely.

In a recent GAO bid protest decision, the procuring agency failed to consider the protester’s price before eliminating the protester from a competition for award of a Blanket Purchase Agreement.  The GAO’s response?  “Not so fast.”

The GAO’s decision in GAO Protest of Cyberdata Technologies, Inc., B-406692 (Aug. 8, 2012) involved a GSA request for quotations for the establishment of a BPA to support the Chief Information Officer for GSA’s Public Building Service.  The RFQ stated that the BPA would be awarded on a best value basis, including price and four technical evaluation factors.  The RFQ stated that the technical factors were more significant than price.

The solicitation provided for a “downsizing” process, whereby the GSA would narrow the competitive field.  After reviewing initial proposals, the GSA would pick no more than twelve contractors (six large businesses and six small businesses) to present oral proposals.  The remaining contractors would be eliminated.  According to the RFQ, the downsizing would be “based on the technical quotation only,” not price.

The GSA received 35 total proposals.  Twenty-three of the proposals were from small businesses, including the proposal of Cyberdata Technologies, Inc.

The GSA reviewed the technical proposals and assigned Cyberdata an overall adjectival rating of “good.”  Cyberdata was ranked 14th among offerors based on its technical proposal alone, and was informed that it had been eliminated from the competition.

Cyberdata filed a bid protest with the GAO, alleging that it had been unfairly excluded from the competition without consideration of its price.

The GAO agreed that the GSA had acted improperly.  Pointing to FAR 8.404 and FAR 8.405-3, the GAO wrote that “under the FAR, price is the one factor that, at a minimum, must always be considered when determining best value for purposes of establishing a BPA under the FSS.” The GAO continued, “[m]oreover, we have previously held that a best value analysis necessarily encompasses consideration of an offeror’s price or cost since, to be meaningful, a best value determination requires a weighing of the value and benefits associated with a firm’s approach against their associated cost to the government.”  The GAO sustained the protest, writing, “[h]ere, the agency’s elimination of technically acceptable quotations, such as Cyberdata’s, without consideration of their price, was inconsistent with the requirement that price be considered in a best value analysis.”

The Cyberdata Technologies GAO bid protest decision holds that price must always be considered when the government awards a BPA–even during a downsizing process, as opposed to the final award decision.  For small companies used to keeping prices low in the current economic climate, the Cyberdata Technologies case helps ensure that those low prices will receive due consideration, even in best value BPA awards.

If you are a GAO bid protest junkie (yes, I confess that I am), you may be asking one other question: wasn’t Cyberdata’s protest untimely?  After all, the RFQ expressly stated that the downsizing would be based on the technical factors alone.  Wasn’t Cyberdata required to protest this matter prior to the due date for submission of proposals?

The answer is yes–but Cyberdata caught a break.  The GAO invoked a rarely-used exception to its timeliness requirements, which allows the GAO to consider an otherwise-untimely bid protest if the protest raises an issue significant to the procurement system.

In this case, the GAO applied the exception because it had never before considered the issue of whether price must be considered before an otherwise technically acceptable proposal can be eliminated from a BPA competition.  The GAO deemed this issue of significant interest to the procurement community and decided to proceed on the merits.

Of course, now that the GAO has issued its decision in Cyberdata Technologies, the next case with similar facts will not present a significant new issue.  In other words, if a contractor sees a BPA solicitation indicating that price will not be considered as part of a downsizing, the contractor should protest before proposals are due, or run the risk of a dismissal on timeliness grounds.

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