Maybe it’s happened to you: your company receives a notice of unsuccessful offeror, and your eyes pop. You can’t believe that the winner’s price is so low. “There’s no way they can successfully perform for that,” you say.
But before you file a GAO bid protest, you should carefully check the solicitation’s evaluation criteria. As one unsuccessful offeror recently learned the hard way, GAO often won’t listen to an argument that “the other guy’s price is too low.”
Price realism—the evaluation of whether a proposed price is too low—is a method the government may use to evaluate fixed price offers to ensure that offerors are proposing pricing that reflects an understanding of the work required by the solicitation.
Prices that are unrealistically low can result in proposal elimination. This means price realism is an important consideration when preparing a bid. But what if an agency decides after proposal submission that a price realism evaluation will not be performed? In a recent decision, GAO confirmed that offerors must be given the opportunity to revise their proposals.
Contractors in the COVID-19 era may be tempted to think that the Government will compensate them for increased costs caused by virus-induced shutdowns, quarantines, and the like. And this line of thought has some inherent appeal.
After all, the virus was entirely unforeseen by both parties when the contract was inked. So shouldn’t the customer–the party wanting the good or service–bear the risk of these extraordinary events?
There are not many people or organizations that can say they anticipated the spread of this pandemic disease that is confining million to their homes as part of stay in place orders and self quarantines.
Though the FAR Council did not foresee that the coronavirus and COVID-19 would trap contractors in their homes, it did anticipate that from time to time events completely out of the control of contractors may conspire to affect the performance of contracts—though perhaps not to this magnitude.
Sometimes you may find yourself running late. It happens to the best of us for a multitude of reasons. But what happens to federal contractors when they are running late in performing under a contract and there is “no reasonable likelihood” of timely performance?
Unfortunately for contractors in this position, as illustrated by a recent Civilian Board of Contract Appeals (CBCA) decision, the result may be a default termination.
We previously have written about the trending preference toward fixed-price contracts, and away from cost reimbursement contracts, in defense procurements. The Defense Department’s supplement to the FAR (known as DFARS), in fact, already includes restrictions on using cost-reimbursement or time and materials contracts.
Now the President has come out in favor of fixed-price defense contracting. In a Time Magazine article published today, President Trump signaled strong support for the fixed-price contracting preference, going so far as to “talk of his plans to renegotiate any future military contracts to make sure they have fixed prices.”
Earlier this month, the GAO released a comprehensive report detailing the trends in government contracting over a five-year period (from fiscal year 2011 through 2015). The entire report is available here. If you have a few hours to spare, it’s worth a read; if not, this post will summarize a few of its most eye-catching nuggets.