In a recent protest, GAO examined the rules for price evaluation and source selection methodology required under the Federal Supply Schedule (FSS) Program. At a minimum, an agency must perform price comparisons to evaluate what vendor will be lowest cost along with any additional features and benefits to the government. Because the FSS solicitation at issue failed to include proper price evaluation terms, GAO sustained a challenge to those terms.Continue reading
Pop quiz: Your company is the only technically acceptable offeror in an lowest-priced, technically acceptable procurement. You win, right? Not when the agency cancels the solicitation, hoping that a cheaper offeror who was not technically acceptable will submit a bid if given another chance. GAO recently considered this very scenario.Continue reading
Unless a solicitation for a fixed-price contract provides that the agency can conduct a price realism analysis, it can’t. Even so, agencies sometimes perform this analysis without alerting prospective offerors of the possibility.
If they do, however, the ground is fertile for a protest.Continue reading
When the federal government awards a contract, the government must ensure that the price it pays is “fair and reasonable.” In other words, the government cannot pay a price that is too high.
If a contract is awarded on the basis of competitive proposals, an agency may be able to establish price reasonableness by comparing the prices proposed by competing offerors. But as demonstrated in a recent GAO bid protest decision, competition alone doesn’t mean that the prices received are reasonable–the government still must compare offerors’ prices to determine reasonableness.
When I went out for pizza with my family the other night, the only number that mattered to me when I got the check was the bottom-line price. It didn’t matter to me what the price for each pizza or each lemonade was, as long as the total price was within my budget.
For an agency evaluating a proposal for reasonableness in a fixed-price setting, the same holds true: it is the bottom-line price that matters, not the individual items that add up to the bottom-line price. The GAO recently had the opportunity to review this concept in a bid protest decision.
When an agency decides to hold discussions with offerors, must it discuss with an offeror the price proposed for the contract? Not unless that offeror’s proposed price is so high as to be unreasonable.
As the GAO held in a recent bid protest decision, unless an offeror’s price is so high as to make its proposal unacceptable, the offeror is not entitled to be informed during discussions that its price is too high–even if the price is significantly higher than competitors.