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Filing Pre-Award Protests Challenging Flawed Evaluation Methodologies

This article is part of our government contract law firm’s Bid Protests series. Learn more, and if you’re in need of a federal contract attorney, contact us today.

Prospective contractors may raise pre-award protests challenging solicitations that contain unreasonable evaluation criteria or methodologies. While the Government has discretion in selecting the appropriate evaluation methodologies for fulfilling their procurement needs, the stated evaluation scheme must provide a meaningful basis for differentiating between offerors and support a reasonable award decision. Pre-award protests that challenge the agency's evaluation methodologies are distinct from post-award protests filed due to flawed agency evaluations or disparate treatment of offerors. Such pre-award challenges are raised in response to the agency's planned approach to evaluate one or more solicitation factors, rather than a failure to adequately evaluate the proposals. For instance, the Government’s methods for evaluating offeror pricing are often challenged on the basis of a flawed evaluation methodology. Contractors bidding on large multi-phase acquisitions involving a testing phase may also face situations where the agency’s evaluation methodology unreasonably favors an incumbent or a competitor. In such cases the evaluation methodology may be flawed as it fails to properly assess the capabilities of all offerors in response to the government’s stated mission needs. Generally, such issues must also be raised during the pre-award phase.

While it is within the agency’s discretion to select an appropriate method to assess offeror pricing, the agency may not use an evaluation method that produces a flawed or misleading result. That is, the Government must select a pricing evaluation method that clearly identifies the option that is most advantageous to the government. In B-409872.2, the GAO sustained a pre-award bid protest because it found that the solicitation’s price evaluation methodology could produce misleading evaluation results when analyzing the competitiveness of price proposals. The contract at issue involved an indefinite-delivery requirements contract for fresh fruit and vegetables for military commissary stores in South Korea, Japan, and Guam. The commissary stores provided groceries and household items to members of the military and other authorized patrons. The incumbent contractor responsible for fulfilling the fresh fruit and vegetables requirement for the commissary store protested the solicitation terms for allegedly containing a flawed pricing evaluation methodology.

The evaluation methodology at issue required offerors to propose a patron savings discount percentage for certain high-volume core items. The patron savings discount percentage was calculated by comparing the prices of these core items to like items from comparable private retail stores in the local area and was fixed for the duration of the contract. Instead of evaluating the offerors’ pricing based on this fixed patron savings discount percentage, the solicitation required offerors to apply the fixed patron savings discount to variable core items pricing proposed for a particular week. This application of the fixed patron savings discount percentage to variable proposed pricing for a particular week opened the door for potential price gaming where an offeror with a lower patron discount could potentially be evaluated more favorably than an offeror with a higher patron discount. In other words, an offeror could artificially lower variable proposed pricing for the particular week in question and apply a lower patron discount percentage, but still propose a lower price evaluation price point than an offeror that proposed a higher overall patron savings discount percentage. Since in the performance of the contract, the unit pricing would be updated on a weekly basis, but the patron savings discount would remain constant, such an evaluation could produce misleading results and thus lead to unfavorable procurement outcomes contrary to the Government’s interests.

During the protest, the Government stated that by using the price evaluation methodology provided in the solicitation, it intended to award the contract to the offeror proposing the higher patron discount percentage. However, despite the Government’s correct intentions, the GAO found that the price evaluation methodology stated in the solicitation could be reasonably interpreted as establishing the “snapshot-in-time” pricing methodology described above as the basis of the agency’s award decision. Therefore, the GAO sustained the protest, finding that the solicitation’s price evaluation scheme was flawed, as stated, directing the agency to revise the price evaluation scheme to allow an accurate comparison of proposals to determine which prospective contractor offered the most advantageous pricing to the government.

Unreasonable agency evaluation criteria and methodologies prejudice offerors and lead to unfair procurement outcomes. While the wide discretion that agencies are afforded in selecting their preferred evaluation criteria and methodologies may seem difficult to overcome, affected contractors should nevertheless challenge solicitations containing such provisions as impacting their interests in the solicitation. Timely challenging such solicitations for large multiple award indefinite delivery indefinite quantity (IDIQ) contracts may prove vital for prospective contractors wishing to increase their probability of success when competing for task orders. At a minimum, such issues must be raised with the contracting office during the solicitation phase, giving the Government an opportunity to clarify the evaluation methodology.

This Bid Protests Insight provides a general summary of the applicable government contract law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or contact our government contract attorneyto determine how the law would apply in a specific situation.