GAO decisions/Denied/Decided 27 Sep 2024
CW Government Travel, Inc.
Price realism not provided for in a fixed-price solicitation
The procurement
GSA competed a fixed-price contract under FAR parts 12 and 15 to manage the government-wide FedRooms program and the DOD Preferred program for temporary duty lodging (1-year base, three 1-year options). The contractor recoups its operating costs through a service fee built into the negotiated room rate and collected from each property. Technical, past performance and price funding model were weighed in descending order of importance. CW and AdTrav Corporation both received High Confidence on technical and past performance; AdTrav's evaluated price was $22,380,504 against CW's $36,995,687.
The protest
The RFP required each offeror to propose a price funding model for recovering its operating and marketing costs, and said GSA would evaluate whether the model accomplished the program objectives listed in section D.5.2. CW argued that AdTrav's funding model was unrealistically low and could not support the operating and marketing costs needed to perform, which showed a lack of understanding that GSA should have caught.
The agency’s answer
GSA said the RFP contained no price realism provision and did not say a proposal could be rejected for a low price. Asking offerors to explain how they would recover costs did not create a realism review. The contracting officer had checked each of AdTrav's proposed approaches against the D.5.2 objectives, and the RFP put the cost of any fee change on the contractor, at no cost to the government.
What decided it
The RFP never warned that a low price could count against an offer, so realism was not part of this fixed-price evaluation.
GAO denied the protest. Without an express price realism provision, GAO finds a solicitation contemplates a realism evaluation only where it says the agency will review prices to determine whether they are so low that they reflect a lack of technical understanding, and that a proposal can be rejected for offering low prices. The funding model requirement and the D.5.2 objectives evaluation did neither. GAO also found the contracting officer's review of AdTrav's model against each objective reasonable and documented.
“an offeror competing for award of a fixed-price contract must be given reasonable notice that its business decision to submit a low-priced proposal will be viewed negatively by the government in assessing the risk associated with its proposal”
GAO, B-422714
For the file: If a buy-in on a fixed-price award worries you, write it into the RFP: say prices will be reviewed for realism and that an unrealistically low price can be rejected. Without that language, a low price is the offeror's business risk, not a basis to downgrade or reject.
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