Agency’s Price Reasonableness Evaluation Disregarded Solicitation and the FAR; Dyncorp International LLC v. United States, COFC No. 19-1133


Protester’s motion for judgment on the administrative record on protest ground challenging agency’s price reasonableness analysis is granted. The solicitation required the agency to evaluate the reasonableness of each offeror’s proposed costs and proposed fixed prices. In this case, however, the agency only evaluated the reasonableness of the lowest-priced offerors, not the awardees. Not only did the agency’s violation deviate from the solicitation, but the court found that evaluation—which omitted a value analysis and a price competition determination—defied the FAR. The protester also alleged the agency misevaluated past performance, held misleading discussions, and botched the cost realism analysis, but the court found these other protest grounds meritless.

The Army issued a solicitation seeking logistics support services for the various Geographic Combatant Commands­—e.g., NORTHCOM, CENTCOM, PACOM etc.—and Afghanistan. The solicitation contemplated the award of four to six IDIQ contracts to cover the each of the Combatant Commands. Simultaneous with each IDIQ contract, the Army planned to issue immediate task orders to each IDIQ awardee.

The Army awarded IDIQ contracts to Fluor International, PAE Parsons, Vectrus Systems Corporation, and Kellogg Brown and Root (KBR). Another offeror, Dyncorp International LLC, which did not receive any of the IDIQ contracts, filed a protest with the Court of Federal Claims challenging the Army’s past performance evaluation, conduct of discussions, and price analysis. The four awardees intervened, and everyone moved for judgment on the administrative record.

Dyncorp first alleged that the Army had “whitewashed” KBR’s past performance record and failed to adequately document the company’s “substantial confidence” past performance rating. The court rejected this argument, noting that KBR’s performance issues were only a small portion of what the Army reviewed. What’s more, KBR had responded to it previous performance issues with corrective action plans to ensure the issues did not reoccur. The Army had considered those corrective action plans as part of its analysis. The record supported the company’s substantial confidence rating.

Next, Dyncorp contended that the Army did not conduct meaningful discussions by not informing Dyncorp of issues with the company’s cost/price volume and labor staffing matrix. Indeed, Dyncorp complained that the Army had conducted discussions with other offeror and allowed them to correct problems with their proposals while not affording Dyncorp the same opportunity.

The court noted that an agency does not need to conduct discussions for every area where an offeror’s proposal could be improved. Here, the Army did not reopen discussions with Dyncorp because it had no open concerns with Dyncorp’s prices or labor matrix. The Army found that Dyncorp’s price was high and its labor matrix was simplistic, but these were not the kind of deficiencies or weaknesses that necessitated discussions. Moreover, the Army’s decision to hold discussions with others did not constitute unequal treatment.

Dyncorp also alleged that the Army conducted misleading discussions by convincing the company to unnecessarily increase its prices. The Army had asked Dyncorp to provide further documentation to support its labor rates. Dyncorp interpreted this request as a requirement to change its reliance of market surveys and instead provide the Army with historical wages, which ended up raising Dyncorp’s price. The court, however, found that the Army did not require Dyncorp to raise its prices but only to provide support for its labor rates. The solicitation allowed offerors to support their rates with historical data or market surveys. The court reasoned that Dyncorp had not been misled by the Army but instead misunderstood the solicitation.

Dyncorp further objected to the Army’s evaluation of price reasonableness. The solicitation provided that the Army would evaluate each offerors’ proposed costs and proposed fixed priced for reasonableness. Dyncorp alleged that instead of evaluating each offeror’s cost and fixed prices, the Army simply listed each offeror’s costs and prices in descending order and then only evaluated the reasonableness of the lowest-priced offeror, not the awardee. Indeed, Dyncorp argued, the record lacked any evidence that the Army had evaluated the reasonableness of any of the awardee’s prices.

The court agreed with Dyncorp, finding that the cost/price chair failed to evaluate the reasonableness of each offeror’s costs and firm fixed prices as required by the solicitation. This evaluation error was particularly egregious because some offerors’ prices were 1,000-2000% higher that the lowest-priced offerors. To make matters worse, the contracting officer, acting as the SSA, simply relied on the flawed analysis, failing to make any meaningful analysis other than reciting the percentage difference between each offeror. Such a bare comparison without further analysis was inadequate.

In fact, the court noted that a deeper review of the record revealed even more flaws with the Army’s price reasonableness analysis. Specifically, the contract officer failed to perform a concurrent value analysis and price competition determination as required by the FAR.

Aside from price reasonableness, Dyncorp complained about the Army’s analysis of cost realism, noting that stark differentials between offerors’ proposed costs indicated that some offerors had significantly understated the hours necessary to perform the solicitation’s requirements.

But the court found the solicitation granted offerors a great deal of discretion in creating their labor staffing matrices. Accordingly, it was plausible that each offeror’s proposal included a unique approach with different levels of staffing. Additionally, the court continued, the administrative record reflected that the Army conducted a lengthy cost realism analysis that included an evaluation of whether proposed labor hours were too low.

Finally, the court found that Dyncorp had been prejudiced by the flaws in the price reasonableness evaluation. A protester is prejudiced by a procurement error when (1) the procurement official’s decision lacked a rational basis, or (2) the procurement violated a statute or regulation. The court reasoned that when an agency decision lacks a rational basis, prejudice is presumed. Here, the court had determined that the price reasonableness evaluation was arbitrary, so the court could presume that Dyncorp had been prejudiced. The court also noted, independent of the arbitrary evaluation, that the agency’s price reasonableness analysis had violated the FAR, and that this error likely affected Dyncorp’s chances of being awarded a contract.

Dyncorp is represented by Lawrence Philip Block of Reed Smith LLP. Intervenor Fluor Intercontinental, Inc. is represented by Andrew Emil Shipley of Wilmer Cutler et al. LLP. Intervenor PAE-Parsons is represented by Anuj Vohra of Crowell & Moring LLP. Intervenor Vectrus is represented by Kevin Patrick Mullen of Morrison Foerster, LLP. Intervenor Kellogg, Brown and Root is represented by Lee Paul Curtis of Perkins Coie. The government is represented by William Porter Rayel of the Department of Justice.

COFC - Dyncorp