Higher Price Not Unreasonable

Many times, the lowest bidder doesn't win. You have to check the evaluation factors to understand why.

The GAO just released a bid protest decision that illustrates this reality. The Army Corps of Engineers issued a solicitation to award five IDIQ (Indefinite delivery/indefinite-quantity) contracts for construction services. It was to be a two-phased procurement where the initial complement of round 1 bidders would be pared down to not more than ten best qualified to participate in round 2.

Round 2 bids were evaluated under the following factors; technical, schedule, design drawings, design narratives, and price. According to the solicitation, the overall design technical factors were equal in importance to price.

Under the solicitation, no less than three and no more than five contracts were to be awarded. Nine bidders made the cut for round 2. At the conclusion of the evaluation, six offerors were included in the best value trade-off. Four of the six were clearly among the five best. The trade-off decision came down to numbers 5 and 6. The Corps decided to go with one over the other and the losing bidder, TMG Services, filed an appeal to the GAO on the basis that its price was significantly lower than that of the other company who's price was "unreasonably high".

The GAO disagreed stating that the selection was made according to the evaluation factors delineated in the solicitation. While TMG's price might have been lower, the other bidder won out in technical, schedule and design narratives. In fact, for "design narratives", the winner was rated outstanding while TMG's was rated only "acceptable". The GAO also looked at basis for the Corps rating system and found no inconsistencies or discriminators. The GAO concluded that  "...TMG has not shown that the agency's determination that (the winning bidder's) overall price was reasonable given its technical approach was inconsistent with the solicitation or otherwise unreasonable."

Selections always come down to the evaluation factors. If price was the only factor, contract awards would be easy. However, there are usually other factors that come into play. Prospective contractors need to know and understand those factors and prepare their proposals accordingly.