Protest challenging the price evaluation and the conduct of discussion is denied. The protester argued that the agency’s price reasonableness evaluation was flawed. But GAO found that the agency assessed reasonableness in accordance with the solicitation and the FAR. Pointing to a discrepancy between the RFP and the awarded contract, the protester asserted that the agency had relaxed price terms for the awardee. GAO, however, found that the discrepancy was due to an inadvertent “scrivener’s error,” not a relaxation of terms. The protester contended the agency did not conduct meaningful discussion because it failed to sufficiently inform the protester about its unreasonable price. GAO opined that the agency provided adequate notice of the protester’s price issues, and was not required to disclose the magnitude of the price difference between offerors.
The Federal Emergency Management Administration (FEMA) issued an RFP seeking flood insurance policy administration. The RFP contemplated award of a single IDIQ contract. FEMA received proposals from Torrent Technologies, Inc. and National Flood Services, LLC (NFS). FEMA found Torrent’s price, which was 234.68 percent higher than NFS’s, unreasonably high. NFS received the contract. Torrent protested.
Torrent alleged that FEMA’s price reasonableness evaluation was flawed because it was only based on the receipt of two disparate offers. But GAO noted that the FAR includes a non-exhaustive list of permitted techniques for evaluating price reasonableness. Here, the RFP did not specify a method for a price reasonableness evaluation, thereby allowing FEMA to use its discretion.
FEMA evaluated reasonableness by conducting a line-item by line-item comparison of the offerors completed price schedules and by considering offerors’ price worksheets. FEMA identified differences between the offerors prices. FEMA found that Torrent’s fully burdened labor rates were generally higher that NFS’s. GAO found that this evaluation was consistent with the terms of the solicitation and the FAR.
Torrent contended that FEMA should have evaluated reasonableness using a government estimate. GAO, however, found that the government estimate was unreliable because it was 44 percent higher than the average total evaluated prices proposed, did not include historical prices, and did match the pricing structure contemplated by the RFP. FEMA reasonably declined to rely on the estimate.
Torrent also argued that the price evaluation was flawed because FEMA failed to identify NFS’s extremely low price as on outlier. GAO found that this argument was essentially a claim that FEMA should have performed a price realism analysis. But the RFP contemplated the issuance of fixed-price or time-and-materials task orders. Absent a solicitation provision explicitly mandating a realism evaluation, agencies are neither required nor permitted to conduct a price realism analysis in awarding a fixed-price or time-and-materials task order.
Torrent further asserted that FEMA relaxed the solicitation terms with regard to price for NFS. Torrent noted that the terms of the RFP differed from the terms of the contract awarded to NFS. The RFP stated that the government would reimburse the contractor for the “travel costs, mailing, and postage.” That same provision in the contract, however, stated that the government would reimburse the contractor for “travel costs and ODCs [other direct costs].” This change allowed NFS to seek reimbursement for things like rent, which in turn allowed NFS to propose a lower price.
FEMA, however, explained that the discrepancy between the RFP and the contract was an unintentional “scrivener’s error.” The contract specialist inadvertently typed different text into the final contract. The contract officer stated he intended to modify the contract to correct the language. FEMA avowed that it had not discussed the change with NFS, and the company had not been permitted to revise its proposal to respond to the change.
GAO accepted FEMA’s explanation. Torrent argued that FEMA’s explanation was implausible and that GAO should assess the credibility of FEMA officials. GAO, however, saw no basis to question the agency.
Torrent argued that FEMA failed to conduct meaningful discussions because the agency failed to convey the magnitude of the disparity between prices. GAO disagreed, noting that the discussions letter to Torrent stated “your pricing is unreasonably high and not considered to be fair and reasonable.” GAO believed this more than met the agency’s obligation to conduct meaningful discussions. GAO opined that FEMA was not obligated to give Torrent the magnitude of the price difference.
Lastly, Torrent posited that FEMA failed to consider that NFS had proposed an untested and risk solution. But GAO found that this argument amounted to disagreement with FEMA’s evaluation conclusions.
Torrent is represented by Michael J. Schaengold, Melissa Paige Prusock, Danielle K. Muenzfeld, and Brett A. Castellat of Greenberg Traurig LLP. The intervenor, NFS, is represented by Daniel R. Forman, Abigail T. Stokes, and Craig Barrett of Crowell & Moring LLP. The agency is represented by Rina Martinez of the Department of Homeland Security. GAO attorneys April Y. Shields and Christina Sklarew participated in the preparation of the decision.
