Agency Must Consider Price Before Eliminating a Contractor from Competitive Range, GAO Confirms

In theory, best value procurements provide the government with an opportunity to select a higher priced proposal where the higher price is justified by the technical superiority of the proposal. In practice, though, the technical factors of a best value procurement can seemingly relegate price to a secondary consideration. In a recent decision, however, GAO confirmed that price is an essential evaluation consideration in any best-value decision.

Addx Corp., B-417804 et al. (Comp. Gen. Nov. 5, 2019) involved an Army task order procurement for mission planning and execution analytics to support the United States Special Operations Command. The Solicitation was competed among holders of the GSA’s One Acquisition Solution of Integrated Services (OASIS) Small Business government-wide acquisition contract.

As relevant here, the Solicitation anticipated making an award to the offer that represented the best value to the government. To accomplish this, offers would be evaluated first under five discrete management and technical evaluation factors. The management and technical evaluation would then be traded off against the cost of each proposal. When combined, the management and technical factors were significantly more important than proposed price.

In response to the Solicitation, the Army received two offers: one from Addx and another from Sawdey Solutions Services. During its evaluation, the Army identified six strengths and six weaknesses in Addx’s proposal. As such, Addx’s proposal received an overall adjectival rating of Marginal under the combined management and technical factors.

The Army’s evaluation of Sawdey, on the other hand, identified 12 strengths in its technical and management approach with no corresponding weaknesses. On this showing, Sawdey received an overall adjectival rating of Acceptable under the combined management and technical factors.

Despite its ratings, Addx proposed a lower price of $59,872,454. Sawdey’s proposal was significantly more expensive at $68,910,721.

Based on its evaluation the technical evaluation team recommended that the Army open discussions with Sawdey. It was not recommended that Addx be afforded the same opportunity. Accordingly, the contracting officer eliminated Addx from the competition.

Following its debriefing, Addx protested its elimination from competition. According to GAO, “[t]he protester challenges virtually every aspect of the agency’s conduct of this procurement.” Among other things, Addx alleged that the Army failed to weigh Addx’s lower price before eliminating it from the competition.

In response, the Army argued that it had established a competitive range, and Addx was not among the most highly rated proposals. Consequently, Addx was properly eliminated from competition. According to the Army, “there was no need for a trade-off because the Army reasonably eliminated Addx from the competitive range prior to award.”

The Army’s argument, however, did not find firm footing in the record of its evaluation. In one instance, the technical evaluation team explained that it “recommends initiating discussions, if required, with [Sawdey].” Based on this recommendation, the contracting officer explained as follows: “I have reviewed the various elements of the proposals, evaluation results, and discussion and have determined that an award to [Sawdey] is in the best interest of the Government considering the criteria set forth in the solicitation.”

In a declaration prepared during the protest, the technical evaluation team and contracting officer further explained that the technical advantages of Sawdey’s proposal meant that “[Sawdey] had significantly higher probability of successfully transitioning the incumbent work force without a disruption in service[.]” Importantly, none of these statements incorporated a significant discussion of Addx’s lower price.

On the record before it, GAO was not convinced that a proper best value trade off had occurred. At the outset of its analysis, GAO explained that, as a legal matter, “it is the function of the SSA to perform a price/technical tradeoff, that is, to determine whether one proposal’s technical superiority is worth its higher price.” According to GAO, however, “[o]ur review of the record shows that cost was not considered in any meaningful way prior to the agency’s decision to eliminate Addx’s proposal from the competition.”

Even with the supplemental explanations provided by the Army, GAO nevertheless concluded that “the agency still does not explain why a higher-rated proposal that includes a transition with no disruption is worth the over $9 million price premium associated with the Sawdey proposal.” As price was not meaningfully considered prior to eliminating Addx from competition, GAO sustained the protest.

GAO’s decision in Addx confirms that price remains an important proposal evaluation consideration. This is true even in solicitations that emphasize technical factors over pricing.