Getting “Real” – Agency’s Inadequate Price Realism Evaluation Supports Protest

by Rachel Thomas

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In Apogee Engineering, LLC, 2019 CPD 85, 2019 WL 927366 (February 21, 2019), the GAO recently sustained a protest, due to, among other things, the agency’s failure to show that it performed an adequate price realism evaluation as required by the RFP.

The Department of Transportation, Office of the Secretary of Transportation (agency), issued the RFP as a competitive set aside under the SBA’s 8(a) program. The RFP contemplated the award of a labor hour contract with fixed-price labor rates to provide staffing for the agency’s crisis management center. Per the RFP, price proposals were to be evaluated to determine price reasonableness, “realism” and “probable cost.” According to the RFP, the purpose of the realism evaluation was to determine if the offerors’ proposed prices reflected an understanding of the RFP’s requirements.

Apogee, the incumbent contractor, and CASE the eventual awardee were both rated exceptional in all technical factors, but CASE’s price was significantly lower. The SSA concluded that CASE’s proposal represented the best value to the agency and awarded the contract to CASE. This protest followed.

In the protest, Apogee raised numerous issues, but we focus on the price realism issue here. Apogee contended that the agency failed to show that it performed a reasonable price realism evaluation as required by the RFP. Specifically, Apogee argued that the agency failed to consider whether CASE’s price was “too low” given its proposed technical approach.

The GAO agreed. First, the GAO noted that where a solicitation anticipates the award of a labor hour contract with fixed-price labor rates, there is no general legal requirement that the agency perform a price realism evaluation. However, the RFP here included such a requirement, and therefore the evaluation was required. GAO found that the record failed to show that the agency meaningfully performed such an evaluation.

Citing authority, the GAO stated that it was insufficient for the agency to show price realism based upon a comparison of CASE’s price to the prices of other offerors. Rather, the agency was required to assess CASE’s price against its own proposed technical approach. The record did not support the agency’s assertion that it performed this evaluation. The protest was sustained for this reason, and on other grounds not pertinent here.

Lessons Learned

From the agency’s perspective — it is essential to document the record to demonstrate that all required proposal evaluations were performed and how they were performed. Purely conclusory statements, i.e., that a particular evaluation “was performed” will not pass muster; the GAO has shown that it is prepared to look behind such general statements to determine that the evaluation was performed in a reasonable and meaningful way. From the offeror’s perspective — Apogee teaches us, once again, that an inadequately documented record remains fertile ground for protest.