Protest challenging adequacy of discussions and agency’s price evaluation is sustained. The discussions were inadequate because the agency failed to inform the protester that its prices were unreasonably high. While the agency had advised that some of the protester's prices were “high,” that is not the same as advising that prices are “unreasonably high.” GAO also found that the price evaluation was flawed because the awardee had failed to substantiate its prices, the agency had failed to explain why the protester’s prices were unreasonable, and the evaluation was largely driven by an out-of-date government estimate.
Background
The Defense Logistics Agency (DLA) issued an RFP for hardware and abrasives. Science Applications International Corporation (SAIC) and Noble Supply and Logistics submitted proposals. Following discussions and proposals revisions, DLA awarded the contract to Nobl, finding that its lower-priced proposal represented the best value. SAIC protested.
Legal Analysis
- DLA Conducted Inadequate Discussions – SAIC alleged DLA failed to conduct meaningful discussions because the agency never advised that the company’s price was unreasonably high. GAO agreed. When an agency determines a proposed price is unreasonably high, it is required to advise an offeror of this finding during discussions. Here, DLA informed SAIC that certain of its prices were "high," but it never told the company its prices were considered "unreasonably high."
- DLA Muffed Evaluation of Noble’s Price – SAIC contended DLA failed to properly consider the risks posed by Noble’s low price. GAO found the price evaluation profoundly flawed:
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- Noble Failed to Substantiate Its Price – DLA received divergent prices from offerros, so it asked them to provide data substantiating their prices. SAIC provided data, Noble didn’t. DLA ignored SAIC’s data and simply found Noble’s prices reasonable because they were closer to the government estimate.
- DLA Failed to Sufficiently Document Price Evaluation – The record was devoid of any explanation as to why DLA ignored SAIC’s data and just accepted Noble’s prices at face value. SAIC provided robust empirical support for its prices. Noble provided nothing. Without an explanation as to why Noble’s price was acceptable while SAIC’s was not, GAO could not find DLA acted reasonably.
- Government Estimate Was Inaccurate – DLA’s price evaluation was heavily influenced by a government estimate. That estimate, however, failed to account for large shifts in market conditions caused by the COVID-19 pandemic.
SAIC is represented by James J. McCullough, Michael J. Anstett, Anayansi Rodriguez, and Christopher H. Bell of Freid, Frank, Harris, Shriver & Jacobson LLP. The intervenor, Noble, is represented by Gregory R. Hallmark, Eric S. Crusius, HIllary J. Freund, and Amy Fuentes of Holland & Knight LLP. The agency is represented by Elan D. Taylor and Linwood I. Rogers of the Defense Logistics Agency. GAO attorneys Scott H. Riback and Tania Calhoun participated in the preparation of the decision.