Billion Dollar Task Order Protest Sustained Due to Price Determination

by Rachel Thomas

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One of the most common frustrations in preparing bid protests for government contractors is the feeling that protests centered on stark price differences are dead on arrival due to the vague nature of “price reasonableness evaluations” and the seemingly infinite deference a federal agency has on that determination. However, as shown in a recent Government Accountability Office (“GAO”) decision, there is hope as the GAO increasingly pushes back on agencies’ unspecified or conclusory price determinations.

The challenged task award was offered to the 28 holders of the indefinite-delivery, indefinite-quantity (IDIQ) Transformation Twenty-One Total Technology Next Generation (T4NG) VA contract. The protesting firm, Cognosante, LLC, submitted a bid with an almost 800 million price tag, landing in the middle of other offerors. The awardee, Booz Allen Hamilton, was the highest bidder at just under an even billion. While a twenty-five percent increase in price is common among bids, we can all agree it’s a good idea for agencies to take a hard look at an extra 200 million dollars. The protestor raised this ground of protest by challenging the reasonableness of the high price, which the GAO sustained.

While there was a significant gap in the proposed prices, this had very little to do with the GAO’s determination. Instead, the GAO ruled the VA had merely failed to determine whether any offerors’ prices were fair and reasonable. The VA only offered evidence that the bids were “received under adequate price competition in accordance with FAR Part 15.403-1(c)(1)(i)” and therefore price reasonableness was assumed. The GAO explained how flawed this reasoning was given, “the plain language of FAR § 15.404-1(b)(2)(i) indicates, a price reasonableness determination relying upon this technique requires a ‘[c]omparison of proposed prices received in response to the solicitation.’” In short, if an agency is going to assume prices are reasonable because of competition, it needs a method to compare the prices actually received. Failing to do so resulted in the GAO recommending the bids be re-evaluated and for the protester to receive any attorney and filing fees associated with bringing the protest.

The GAO’s Cognosante decision is far from groundbreaking, but it does provide a much-needed example for future protests challenging a required determination so often brushed over.