Protest challenging agency’s cost realism analysis is denied. The agency rejected the protester’s proposal because it omitted information on indirect costs required by the solicitation. The protester argued that the agency could have calculated the missing information based on other cost data in the proposal. But GAO found that this would have merely filled the hole in a mathematical equation without allowing the agency to validate the accuracy of the missing information. The protester also argued the agency did not really need the data on indirect costs because DCAA had already approved its indirect costs. GAO, however, found this was really an untimely challenge to the solicitation’s requirements.
The Army published a solicitation seeking technical, engineering, and logistical support for the Aviation and Missile Command. AECOM Management Services submitted a proposal. The Army determined that AECOM was ineligible for award because its technical proposal did not propose the appropriate labor categories and its cost proposal did not provide required information. AECOM protested, challenging the technical and cost evaluation.
At the outset, GAO found that it did not need to consider AECOM’s challenge to the technical evaluation because the cost issue was dispositive. What’s more, although AECOM challenged three deficiencies assigned to its cost proposal, GAO only addressed one of them. GAO found the deficiency warranted, which was enough to render AECOM’s proposal ineligible.
The Army assigned AECOM’s cost proposal a deficiency because one of the company’s proposed subcontractors failed to provide cost information required by the proposal. The solicitation stated that if an offeror capped proposed indirect rates, they had to include documentation from DCMA/DCAA that allowed for the rate cap. AECOM’s subcontract proposed caps for its indirect rates, but did not provide information from DCMA or DCAA verifying that its accounting system allowed the caps. In the absence of support for the caps, the Army attempted to evaluate the realism of the subcontractor’s indirect costs through a regression analysis. But the agency determined that the proposal lacked detailed cost pool information needed for the analysis.
AECOM claimed that the Army could have calculated the missing cost pool information from the data that was included in the proposal. But GAO found that this argument missed the mark. The Army could have used information in the proposal to calculate cost pool data, but that would have simply filled in the missing piece of an equation. It would not have permitted the agency to assess the data to validate its accuracy.
AECOM argued that it did not need to submit cost pool data because it had submitted a letter from DCAA that approved the subcontractor’s indirect costs. GAO, however, found this was really a challenge to the terms of the solicitation. Essentially, AECOM was arguing that the Army should not have required information specified in the solicitation. But the agency required that information to validate indirect costs. If AECOM thought this was unnecessary it should have challenged the requirement before the proposal deadline.
AECOM also argued that the Army failed to use the government estimate to evaluate the realism of its proposed indirect costs. But GAO noted that the FAR did not require an agency to use an estimate to evaluate cost realism, and AECOM had not explained why the estimate would have been dispositive in evaluating indirect costs.
Finally, AECOM contended that even if the Army did not have enough cost information to evaluate the realism of the subcontractor’s proposed costs, the subcontractor’s costs represented a small percentage of AECOM’s overall costs and was essentially a flaw that the agency could have overlooked. GAO rejected this argument noting that solicitation expressly required the information to support the offeror’s costs and advised that if an offeror omitted the information, its proposal could be rejected.
AECOM is represented by Kevin P. Connelly, Kelly E. Buroker, Jeffrey M. Lowry, Kristen W Konar, and Tamara Droubi of the Vedder Price, P.C. The intervenor, Sigmatech is represented by Aron C. Beezley, Lisa A. Markman, Sarah S. Osborne, Patrick Quigley, and Nathaniel L. Greeson of Bradley Arant Boult Cummings LLP. The agency is represented by Alexa B. Bryan and Jennifer Janulewicz of the Army. GAO attorneys Jonathan L. Kang and Laura Eyester participated in the preparation of the decision.
