The Department of Veterans Affairs issued a solicitation for a contractor to handle EEO claims investigations at its Office of Resolution Management. One of the bidders, David Jones CPA (DJCPA) was eliminated from consideration because the VA found that one of his line item prices was not fair and reasonable.
DJCPA challenged the VA's adverse price reasonableness determination, arguing that the VA unreasonably eliminated its quotation from consideration for award without any discussion of or an acknowledgement of the relationship among the CLINs (Contract Line Item Numbers) and without considering the fact that its prices for all but one CLIN were lower than the VA's benchmarks. The Comptroller General agreed with the protester that the VA's price analysis was unreasonable.
The VA maintained that because the solicitation instructed vendors to insert a not-to-exceed quantity for each line item, meaning that vendors were quoting on varied quantities, price reasonableness was conducted based upon an examination of the unit price for each contract line item number. Thus, according to the VA, it was reasonable for it to exclude DJCPA's quotation from consideration for award on the basis that DJCPA's price for a single line item was high.
The Comptroller General did not agree. The solicitation did not provide estimated quantities for the various line items, and thus, the VA had no basis upon which to assess the reasonableness of DJCPA's overall price for the CLINs, and instead evaluated price reasonableness at the line item level. Before rejecting DJCPA's quotation on the basis that a single line item price was high, however, the VA was required to also consider the risk that this single line item price would result in an unreasonably high price overall, or consider whether the single line item price presents some other risk to the Government, as in the context of unbalanced pricing.
Here, the VA engaged in no analysis whatsoever to assess whether there was a risk that DJCPA's high price on the single line item in question would result in the Government paying an unreasonably high price for performance of a typical order. In the Comptroller General's (CG) view, it was not reasonable to exclude DJCPA's quotation from consideration without performing such an analysis. On that basis, the CG sustained the protest.
You can read the full text of the bid protest decision here.