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.
Tag Archives: fixed-price
GAO Reaffirms Agencies’ Broad Discretion to (Not) Consider Price Realism for Fixed-Price Contracts
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As a general rule, an agency is only required to evaluate a fixed-price offer for reasonableness (that is, whether the price is too high). Agencies are not required to evaluate fixed-price offers for realism (that is, whether the price is too low) and, in fact, cannot do so unless the solicitation advises offerors that a realism evaluation will be conducted.
GAO recently reaffirmed this principle when it denied a protest challenging an agency’s refusal to consider the realism of offerors’ fixed prices as part of a corrective action, even though the agency suspected that at least one offeror’s price was unrealistically low.
2017 NDAA Establishes Preference For DoD Fixed-Price Contracts
The 2017 National Defense Authorization Act establishes a preference for the DoD to use fixed-price contracts, and will require executive approval of cost reimbursement procedures for certain high-dollar procurements.
Government “Poaches” Contractor’s Employee, Then Rejects Fixed-Price Invoices
Picture this scenario: the government hires your company to do a job; you assign one of your best employees to lead the effort. He or she does such a good job that the government hires your employee away. The government then drags its feet on approving your proposed replacement and refuses to pay you for the time when the position was not staffed–even though the contract was fixed-price.
The scenario is exactly what happened to a company called Financial & Realty Services (FRS), and according to the Civilian Board of Contract Appeals, FRS wasn’t entitled to its entire fixed-price contract amount.
GAO: No Protest Under Omitted FAR Clause
A would-be protester had no valid basis to allege agency wrongdoing when the protester’s allegation was that the awardee would violate a FAR performance of work clause–but the clause was not included in the solicitation.
In a recent decision, the GAO held (unsurprisingly), that a protester could not challenge the awardee’s supposed failure to comply with FAR 52.236-1 because the clause was omitted from the solicitation.
GAO: If Price Realism Will Be Evaluated, Offerors Must Be Notified
Agencies must notify offerors when price realism will be evaluated under a fixed price solicitation.
Recently, the GAO sustained a protest where a procuring agency rejected an offeror’s proposal because the offeror’s quoted prices were significantly lower than the government’s estimate–even though the solicitation did not notify offerors that price realism would be evaluated.
Price Realism Evaluation: Only If Solicitation Says So
An agency awarding a fixed-price contract can only evaluate offerors’ proposals for price realism–that is, determine whether offerors’ proposed pricing is so low as to be unrealistic–if the solicitation calls for a price realism evaluation.
In a recent bid protest decision, the GAO confirmed that when a fixed-price solicitation does not advise offerors that a price realism evaluation will be conducted, the agency is not permitted to reject an offeror’s proposal because of unrealistically low pricing.