GAO: AGENCY’S “BEST VALUE TRADEOFF” INADEQUATE, PROTEST SUSTAINED!

In KPMG, LLP, B-420949, 2022 WL 16921986 (11/7/22), the GAO sustained a post award protest, ruling that the Agency’s best value tradeoff did not qualitatively compare the proposals before it selected higher-priced, higher-rated proposals for award.

Nature of the Procurement

In 2020, the Air Force (AF or Agency) issued a solicitation seeking IT type support services for various AF activities. The solicitation contemplated an award of multiple IDIQ contracts under which the Agency would issue fixed-price task orders. Award was to be made to the highest tech-rated offerors with acceptable small business commitments, fair and reasonable prices and realistic professional employee compensation plans.  However, the solicitation also stated that the source selection decision would use a best value tradeoff (BVTO), per FAR 15.101, with technical factors more important than cost/price.

The AF received 27 proposals, including that of KPMG. The technical evaluators rated 10 proposals as outstanding; 8 as good; 2 as acceptable; 1 as marginal; and 6 as unacceptable. KPMG’s technical proposal was rated as good; it also proposed the lowest price of those proposals eligible for award.  The “Source Selection Evaluation Board” recommended an award to the top 7 outstanding technical proposals. The “Source Selection Authority” (SSA) followed this recommendation and issued awards to these offerors. Insofar as pertinent, the SSA decision stated that these 7 higher priced proposals represented “best value” to the government and were worth the payment of higher costs due to the reduced risk associated with contract performance, as compared to the other good/acceptable technical offerors with lower prices. However, the SSA did not qualitatively compare these latter proposals with those chosen for award. After receiving a debriefing from the Agency, KPMG filed this protest.

The Protester’s Contentions

KPMG claimed, among other things, that the AF failed to properly evaluate its proposal; failed to perform a proper price analysis; and failed to conduct a proper BVTO. The GAO found merit in this latter contention and sustained the protest.

The GAO Rules

Preliminarily, the GAO noted that the solicitation indicated that awards would be made using two different evaluation schemes: (1) Highest tech-rated offeror with fair and reasonable price, etc. (see above) and (2) use of a BVTO. This was a patent ambiguity in the solicitation, and this issue should have been raised prior to the date of receipt of proposals. Given KPMG’s failure to raise the issue at that time, it could not object to the ambiguity nor to the evaluation method used by the AF, i.e., a BVTO.

However, the GAO found that the Agency committed error in assessing the BVTO. In a BVTO evaluation, the SSA must perform a tradeoff between price and nonprice factors in a meaningful way, that is, it must determine whether a proposal’s superiority under the nonprice factor is worth the payment of a higher price.  The award decision must be supported by a rational explanation of why a more costly, higher rated technical offeror is superior to those acceptable offerors with lower price, like the offer of KPMG here. The SSA failed to make such an analysis. Once the AF identified the top 7 outstanding proposals, it failed to analyze the comparative merits of the acceptable/lower priced offerors with those in line for award. The GAO concluded that the AF’s failure to meaningfully consider KPMG’s technically acceptable and lower priced proposal rendered the BVTO decision unreasonable. It sustained the protest on this basis and recommended, among other things, that the Agency issue a new source selection decision.

Lessons Learned

This decision is another painful reminder to the government that superficial and conclusory BVTO evaluations are unacceptable. The GAO made it clear that it expects these evaluations to be rational, meaningful and adequately documented to allow for legal review. Such evaluations will also result in more responsive and transparent source selection decisions that ultimately will benefit all participants in the federal procurement process.