GAO: No Set Aside Required Where Offerors’ Prices Too High

An agency was justified in canceling a small business set-aside solicitation–and reissuing the solicitation on an unrestricted basis–where the agency determined that the prices offered by small businesses were too high.

In a recent bid protest decision, the GAO confirmed that while the FAR’s “rule of two” set-aside requirement provides a powerful and important preference for small businesses, it doesn’t require an agency to pay more than fair market value for products or services.

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GAO: “Mechanical” Cost Realism Evaluation Was Improper

An agency’s cost realism evaluation was improper because the agency “mechanically” compared an offeror’s proposed staffing to an undisclosed government estimate.

In a recent bid protest decision, the GAO held that it was improper for the agency to apply its own estimates for labor hours and costs without considering the protester’s unique technical approach.

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Agencies Need Not Mention High Price In Discussions, Says Federal Court

A procuring agency need not inform an offeror, as part of discussions, that the offeror’s price is higher than those of its competitors.  According to a recent ruling of the Court of Federal Claims, the only exception is if the offeror’s price is so high as to preclude award to the offeror–an “unreasonable” price, in FAR parlance.

The Court’s decision in Lyon Shipyard, Inc. v. The United States (Nov. 27, 2013) comes on the heels of a recent GAO decision reaching a similar result.

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