Construction Law

The Government Cannot Simply Disregard a Lower-Priced Proposal When Making a "Best Value" Source Selection

By Michael Payne

By: Lane F. Kelman

In making an award on initial proposals, is a tradeoff only between the two (2) highest-rated, highest-priced proposals appropriate?  The GAO, in a recent decision,Coastal Environments, Inc., B-401889, dated December 18, 2009, provides important clarification.  The decision beckons closer scrutiny of awards by unsuccessful offerors.

In Coastal Environments, Inc., the RFP identified six (6) evaluation factors in descending order of importance: (1) personnel and company qualifications, (2) management capability, (3) technical excellence, (4) past performance, (5) small business participation, and (6) price; the RFP also identified several subfactors under the non-price evaluation factors. Award was to be made to the responsible offeror whose proposal was determined to represent the 'best value' to the government, all factors considered.

Eight proposals were received and evaluated using the adjectival rating system.  The contracting officer, as the Source Selection Authority (‘SSA'), reviewed the evaluation findings and performed a price/technical tradeoff between the two most highly rated proposals; those of Ecological Communications Corporation ('ECC') and another Offeror.  Those two proposals were also the highest priced proposals. The Source Selection Authority ('SSA') ultimately selected ECC for award after concluding that 'due to the highly specialized nature of the work…ECC's technical superiority' justified paying an additional $2,984 to ECC.

Coastal, who was not part of the tradeoff process, filed a protest and alleged, among other issues, that the tradeoff process should not have been restricted to ECC and the other most highly rated offeror. Coastal's proposal, while not as highly rated, was $17,434.44 lower in price than GCC's proposal.  The GAO held that the SSA impermissibly limited the price/technical tradeoff analysis to a comparison of the two highest-rated, highest-priced proposals.  The SSA failed to conduct any qualitative assessment of the technical differences between the two (2) highest-rated, highest-priced proposals and any of the other technically acceptable proposals to determine whether either of these proposals contained features that would justify the payment of a price premium.

The GAO found that the two higher-rated, higher-priced proposals considered in the tradeoff both received overall adjectival ratings of 'Good' and 'Low Risk,' while Coastal's proposal received the next lowest rating of 'Acceptable' and 'Low Risk,' but was priced approximately 20 percent lower. The GAO concluded that a proper tradeoff decision must, per Federal Acquisition Regulation § 15.308, provide a rational explanation of why a proposal's evaluated technical superiority warrants paying a premium.  Here, the SSA did not identify what benefits in ECC's proposal warranted paying a premium to ECC when compared to Coastal's lower-priced proposal, which was found to be acceptable and low risk.

Lane F. Kelman is a Partner in the firm and a member of the Federal Contracting Practice Group

Full post as published by Federal Construction Contracting Blog on February 06, 2010 (boomark / email).