When is a competitor’s low price simply too low to be realistic? Maybe never, at least when it comes to challenging the low price in a GAO bid protest.
As seen in a recent GAO bid protest decision, when a fixed-price solicitation does not call for a price realism analysis, the procuring agency is not required to conduct one–and a competitor will not succeed in challenging the award on the basis of a supposedly unrealistically low price.
When an incumbent contractor loses a follow-on contract to a lower-priced competitor, the incumbent sometimes complains that after successfully performing the contract, it “knows what it takes” to get the job done, and that based on its experience, the competitor’s price is unrealistically low.
It is a perfectly logical argument, with one big problem: it can be very difficult to convince the GAO that an incumbent knows better than the procuring agency what constitutes a realistic fixed price for a contract. The difficulty in succeeding with such an “incumbent knows best” price realism protest is demonstrated in a recently released GAO bid protest decision, Resource Ltd., B-406492, B-406492.2 (June 6, 2012).