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Countering Post-hoc Rationalizations in Government Contracts Disputes

When reviewing an agency’s procurement actions, adjudicative forums such as the Government Accountability Office (GAO) typically consider various materials and information in the record. Such materials may include arguments the agency and contractor raised during litigation, explanations of decisions and events advanced during the procurement cycle, and any hearing testimony. When reviewing evidence to determine the reasonableness of the government’s procurement actions, the adjudicative forum will generally assign greater weight to contemporaneous materials than post hoc arguments or analyses. This is because the judgments made in the heat of an adversarial process do not always represent the fair and considered judgment of the agency. Therefore, while adjudicative forums will consider explanations provided by agency counsel that merely fill in previously unrecorded details, post hoc rationalizations are typically deemed less persuasive. For instance, in resolving bid protests, the GAO has explained that it accords greater weight to contemporaneous materials, which are far more indicative of whether the agency conducted a rational evaluation and source selection process.

In B-422162; B-422162.2; B-422162.3, a bid protest decision issued on February 1, 2024, the GAO applied this principle in sustaining the protestor’s challenge to the government’s cost realism evaluation. The United States Army Corps of Engineers (USACE) awarded the contract at issue for environmental remediation services at the Durham Manufacturing Company superfund site in Connecticut. The cost-plus-fixed-fee contract was awarded on a best-value tradeoff basis where the non-price factors, when combined, were approximately equal to cost. Notably, the solicitation provided that the government would evaluate proposed costs for realism and, if needed, adjust an offeror’s unrealistically low proposed costs to a most probable cost (MPC) calculated solely for evaluation purposes. Among other contentions, the protestor alleged that USACE made unreasonable upward adjustments to the proposed rates for two labor positions. Specifically, USACE evaluators found the protestors’ rates for the quality control (QC) manager and site safety and health officer (SSHO) position to be unrealistically low when compared to the independent government estimate (IGE). However, instead of upwardly adjusting the protestor’s QC manager and SSHO rates to the IGE rates for these positions, the evaluators adjusted these rates to the protestor’s proposed rate for the superintendent position. The evaluators also failed to contemporaneously record their rationale for this adjustment.

The protestor challenged this upward adjustment as unreasonable and prejudicial, noting that its rate for the superintendent position was higher than the IGE rates for the QC manager and SSHO positions. The protestor pointed out that the superintendent position required higher qualifications and more duties than either position subject to upward adjustment. In demonstrating prejudice, the protestor took the position that it had received the highest possible ratings in the non-price factors. Since the protestor’s proposed price after the upward adjustment was only approximately $ 6,500 lower than the awardee’s evaluated price of $ 11,540,018, if the QC manager and SSHO rates were lowered to the IGE rates, it would give the protestor a substantial chance of receiving the award. The protestor also pointed to the administrative record, which contained no explanation as to why the USACE evaluators chose to use the protestor’s proposed superintendent rate instead of the lower IGE rates for the upward adjustment benchmark for the two positions. In responding to the bid protest, agency counsel proffered an explanation, asserting that USACE used the protestor’s proposed rate for the superintendent position as an estimate for the realistic cost of the two positions because those salaries had been similar on prior USACE contracts. USACE also presented an alternative MPC calculation based on the median salary for the QC and SSHO positions from the salary.com website. However, the alternative MPC calculation provided by agency counsel upwardly adjusted the protestor’s costs for the two positions by a lesser amount than the evaluator’s contemporaneous assessment. Therefore, the updated MPC proposed by USACE counsel reduced the protestor’s overall evaluated cost, making it lower than the awardee’s.

In sustaining the protest, the GAO pointed out that agency counsel’s post-protest explanation for using the higher superintendent position rate was not found in the contemporaneous evaluation record. Additionally, the agency counsel’s post hoc justification proposing a new MPC calculation did not simply fill in previously unrecorded details in this case. Instead, it derived a new total evaluated cost, which did not reflect the evaluation record or the source selection decision. The GAO found that the agency crafted its arguments in the heat of litigation, with no support in the contemporaneous record. Therefore, the GAO deemed the agency’s argument a post hoc rationalization deserving little weight. In the decision, the GAO also pointed out that the government’s attempt to calculate an alternative MPC using the salary.com median rates was equivalent to the government conceding that its contemporaneous evaluation over-adjusted the protestor’s MPC. Consequently, the GAO found the USACE’s use of the superintendent rate as the basis for its upward adjustments arbitrary and the cost evaluation for the QC manager and SSHO positions unreasonable.

Contractors involved in government contract disputes and litigation should carefully assess the administrative record to ensure that the arguments advanced by the government are supported with contemporaneous evidence. Depending on the specific facts, when faced with scenarios where the record does not support the government’s position, contractors should flag such arguments as post hoc rationalizations deserving little, if any, weight in justifying the agency’s procurement actions. In reviewing the government’s evaluation decisions, contractors should be aware that adjudicative forums seek to determine whether the agency conducted a rational evaluation and whether the source selection process was adequately documented and supported in the record. Therefore, while post hoc rationalizations and analyses may be considered when advanced to fill in previously unrecorded details, entirely new arguments and analyses proffered by agency counsel for the first time in the heat of litigation should be assigned little probative value.

This Federal Procurement Insight is provided as a general summary of the applicable 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 Us to determine how the law would apply in a specific situation.

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Countering Post-hoc Rationalizations in Government Contracts Disputes

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