GAO Sustains Protest, Reminds Government It Must Show Its Work

If a teacher has told you once, they’ve told you a thousand times, show your work.  That was GAO’s reminder to GSA in its decision in Hoover Properties, B-418844 (Sept. 28, 2020).  In the case, GAO sustained a protest from property management company Hoover Properties, the non-awardee of a GSA request for lease proposal (RLP), in which Hoover argued that GSA failed to provide adequate documentation for its evaluation.

GSA was deciding between Hoover and another property management company, MSDG Frankfort, LLC on an RLP for office space it issued using the Automated Advanced Acquisition Program (AAAP).  Per the solicitation, lowest price was to be determined by conducting a net present value (NPV) price evaluation, and GSA would add certain costs to the offerors’ tenant improvement allowance (TIA), and gross present value cost, including “[t]he cost of relocation of furniture, telecommunications, replications costs, and other move-related costs, if applicable.” 

MSDG was given the award as the lowest-priced proposal of $19.39 per square foot.  Hoover was notified of the award, and informed its evaluated NPV price was $21.12 per square foot.

Hoover was not satisfied that its NPV price was found to be higher than MSDG’s, so it alleged in an agency-level protest that GSA had used an incorrect NPV calculation resulting in a higher than intended present value calculation of its offer.  In response, GSA sent Hoover a collection of emails between the two parties and stated, “we have provided the sufficient amount of information and detail in regards to your questions below.”  Shortly after, GSA put this same response into a legal brief to the decision-maker for the agency-level protest, explaining that, the agency’s award decision had been made to the lowest-priced technically acceptable offeror as determined by the AAAP, since it was an automated procurement.

GSA denied Hoover’s agency-level protest, advising that the costs used to calculate Hoover’s NPV “f[e]ll well within” the terms of the RLP.  Unconvinced, Hoover filed a protest with GAO.

Hoover asserted in its protest that GSA’s NPV evaluation of its offered price was unreasonable for a few reasons.  Two of Hoover’s arguments failed, but it only takes one, and GAO agreed with Hoover’s third argument,  that GSA had failed to adequately document or explain how the TIA costs and relocation and move-related costs worked together to approximate the actual cost of moving from the incumbent building to Hoover’s offered building. 

At issue with regard to whether GSA reasonably performed its evaluation was its net present value (NPV) price evaluation, which Hoover argued was unreasonable and inadequately documented. GAO agreed, a boost of reassurance not only to Hoover, but to contractors every where, that an often-raised, but not always validated argument–the reasonableness of an agency’s evaluation–is not raised in vain.

The solicitation for the RLP advised offerors that GSA would determine the lowest price by conducting the NPV evaluation.  GAO recognized that its role is not to reevaluate submissions of the offerors, but to examine the supporting record and ensure an agency’s determination has the following three attributes: it is reasonable, consistent with the stated evaluation criteria, and adequately documented.  Here, the emphasis was on the third factor, adequate documentation.

Citing a previous decision, GAO explained that where an agency fails to document or retain evaluation materials, it bears the risk that there may not be adequate supporting rationale in the record for GAO to conclude the agency had a reasonable basis for its evaluation conclusions.  GAO takes a broad look at information provided in its review of an agency’s evaluation, including a party’s arguments and explanations.  But an agency’s post-protest defense of its evaluation that is not supported by the contemporaneous record, or inconsistent with it, will be afforded little weight.  Here, GSA’s defense fell victim to that flaw.

The gist of Hoover’s argument was that GAO could not discern whether GSA added reasonable costs to its proposal during the price evaluation. Hoover pointed out three main factors in support.  First, GSA’s evaluation used relocation and move-related costs that were unreasonably high based upon bids from local movers presented by Hoover.  Second, GSA did not adequately document or explain the actual cost of moving derived from what were unclear TIA costs and relocation and move-related costs. And relatedly, additional build-out costs could not be added as relocation and move-related costs, when they were already included as TIA costs.  GAO agreed, finding the agency had failed to provide adequate documentation to support the reasonableness of the relocation and move-related costs that it added to Hoover’s NPV price.  As a result of the lack of documentation and analysis in the record, GAO found they were unable to determine that the agency reasonably evaluated Hoover’s NPV price.

In its argument, GSA had invited GAO to simply accept the figures they had put into the AAAP system regarding relocation and move-related costs which were used by the system to calculate Hoover’s evaluated NPV price.  Even though GSA described in detail how they formulate estimates of relocation and move-related costs, documentary support showing how estimates in this particular procurement were derived was lacking.  GAO denied GSA’s answer, employing (like a 7th grade math teacher) the age-old adage “no work, no credit “–as without the underlying basis for the estimates GSA used, GAO could not conclude that the relocation and move-related costs added to Hoover’s NPV price were not unreasonably high. 

Since GAO found that the record was inadequate to support a finding that the agency’s NPV price evaluation was reasonable, it sustained the protest.  This finding was a win for the protester Hoover and a word of encouragement for contractors not to lose faith in the protest process–the government has to be reasonable in both its evaluations and its decisions regarding potential awards, and GAO reminds us here it will hold them to that standard.

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