When evaluating the pricing of prospective contractors, the government must determine whether the proposed pricing is realistic for the work to be performed. The government performs price realism analysis to ensure that the offerors’ pricing reflects a clear understanding of the technical performance requirements. While the Federal Acquisition Regulation (FAR) does not provide agencies with a specific roadmap to conduct price realism analysis, the government must still conduct realism analysis on proposed pricing where the solicitation so requires. Furthermore, the government must also conduct such an analysis if the solicitation advises offerors that the government will review proposed pricing to ensure that the prices are not so low that they demonstrate a lack of understanding of the technical requirements. In the latter scenario, the solicitation must also warn offerors their proposed solution may be rejected if the government determines their proposed pricing as unrealistic. By conducting price realism analysis in such situations, the government ensures that offeror pricing is consistent with the proposed technical solution.

In B-422309, the Government Accountability Office (GAO) sustained a protest alleging that the price realism analysis conducted by the Air Force was unreasonable. The April 2024 bid protest decision concerned a Request for Proposal (RFP) that contemplated the award of an indefinite-delivery, indefinite quantity (IDIQ) contract for base operations support services at the Homestead Air Reserve Base in Florida. Under the IDIQ contract, the Air Force planned to issue fixed-price, time and material (T&M) and cost-reimbursable task orders for the management of materiel, fuel, and services such as ground transportation, traffic operations and real property maintenance. The evaluation under the RFP was to be conducted in two phases, first of which involved an evaluation of proposed pricing. Notably, the RFP advised prospective offerors that their proposed pricing would be evaluated for price realism, if necessary. The RFP also warned prospective offerors that their proposed prices must be based on their corresponding technical approach and demonstrate a logical correlation to the staffing proposed in the technical approach. All offerors with unfavorable proposed pricing were to be excluded from the competition after the first phase. Under the second phase of the evaluation, the Air Force would evaluate the offerors’ proposals for technical acceptability, starting with the lowest priced proposal. To conclude the second phase, the technically acceptable proposals would be evaluated for past performance, with the Air Force finally awarding the contract to the proposal offering the most favorable combination of price and past performance.

Government agencies must document their evaluations decisions in sufficient detail to provide a reasonable basis to support an award. When a protestor challenges the reasonableness of the government’s evaluation in the form of a bid protest, adjudicative forums such as the Government Accountability Office (GAO) first question whether the government’s evaluation is adequately documented before determining whether the evaluation is consistent with the solicitation’s stated evaluation criteria. Therefore, when an agency fails to document its evaluation or retain evaluation materials, it bears the risk that there may not be sufficiently detailed supporting rationale in the record for the adjudicative forum to conclude that the government had a reasonable basis for the award decision. In such cases, the GAO will typically sustain the protest challenging the government’s evaluation decision and recommend that the agency reevaluate the proposals and sufficiently document its rationale. The adjudicative forum will also generally recommend that the procuring agency terminate the awarded contract for the government's convenience if as a result of the reevaluation, an offeror other than the awardee is in line for the award.

Under best-value evaluation schemes, government evaluators are typically required to qualitatively assess the offerors’ proposals based on the stated evaluation criteria in the solicitation to determine which proposal represents the best value to the government. If the evaluation scheme provides that the procuring agency would evaluate the “extent” to which a proposal meets a particular requirement, offerors may reasonably expect that their proposal exceeding the government’s stated requirements would be evaluated more favorably than a competing proposal that meets the minimum requirements. In such best-value procurements, the agency must usually identify and assess potential discriminators between the offerors’ proposals in addition to evaluating whether the proposals are acceptable under the stated criteria in the RFP. Disappointed offerors may challenge a procuring agency’s best-value determination as flawed when one or more underlying evaluations upon which that tradeoff analysis is based are unreasonable.

In B-421871.3; B-421871.4, the Government Accountability Office (GAO) sustained a bid protest implicating these best-value evaluation principles in a Department of Homeland Security (DHS) procurement for financial and program management support services. The underlying task order (TO) was issued in support of the Countering Weapons of Mass Destruction (CWMD) Office under DHS’ Program Management Administrative, Operation and Technical Services II (PACTS II) indefinite-delivery, indefinite quantity (IDIQ) contract. The request for proposal (RFP) contemplated a time-and-materials (T&M) award to be issued on a best-value basis upon the consideration of four factors. The “technical capability and approach” was the most important non-price factor followed by “management approach” and “past performance” factors in decreasing order of importance. The non-price factors, when combined, were considered more important than the “price” factor. Furthermore, the RFP’s evaluation criteria outlined an adjectival confidence ratings framework for the evaluation of non-price factors, with “High Confidence” being the highest possible adjectival rating. The RFP also provided “positive” and “negative” evaluation elements that were assigned when an offeror’s proposal demonstrated an understanding (or lack thereof) of RFP requirements. Evaluators were also required to consider the soundness of the offerors’ proposed approaches to accomplish the relevant objectives.

When evaluating proposals received in response to competitive procurements, the government may utilize a variety of techniques to ensure it obtains best value depending on the specific circumstances of the acquisition. In such procurements involving any one or a combination of source selection approaches, government evaluators often assign strengths and weaknesses to various aspects of the proposals to justify the government’s tradeoff decisions. A strength is an aspect of an offeror’s proposal that improves the probability of successful performance. Meanwhile, a weakness could be a defect in the proposal that increases the risk of unsuccessful performance. Notably, Federal Acquisition Regulation (FAR) § 15.306(d)(3) requires agencies to discuss significant weaknesses with offerors in the competitive ranges. However, not all strengths and weaknesses are created equal, and evaluators may not derive adjectival ratings from a mechanical count of the strengths and weaknesses alone. In other words, the government must qualitatively assess proposals based on the stated criteria in the solicitation when assigning adjectival ratings in competitive procurements. Additionally, agencies must adequately document their rationale so that a bid protest adjudicative forum such as the Government Accountability Office (GAO) has sufficient basis to review the underlying evaluation decision. Should the government assign adjectival ratings on a mechanical counting of strengths and weaknesses alone or fail to adequately document its evaluation rationale, the resulting award may be protested.