TITLE: B-298889, U.S. Dynamics Corporation, December 19, 2006
BNUMBER: B-298889
DATE: December 19, 2006
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B-298889, U.S. Dynamics Corporation, December 19, 2006
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Decision
Matter of: U.S. Dynamics Corporation
File: B-298889
Date: December 19, 2006
Henry L. Goldberg, Esq., Norman Steiger, Esq., and Brian P. Craig, Esq.,
Goldberg & Connolly, for the protester.
Robert G. Fryling, Esq., and Brian S. Gocial, Esq., Blank Rome LLP, for
U.S. Technologies, Inc., an intervenor.
Gary R. Allen, Esq., Department of the Air Force, for the agency.
Paula A. Williams, Esq., and Glenn G. Wolcott, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest challenging agency's evaluation of awardee's price proposal is
denied where the record supports the agency's determination that awardee's
prices were fair and reasonable.
DECISION
U.S. Dynamics Corporation (USDC) protests the Department of the Air
Force's award of a contract to U.S. Technologies, Inc. (USTI) under
request for proposals (RFP) No. FA8217-06-R-76466 for a quantity of
exciter radios, a part used in radar transmitters. USDC contends that the
agency improperly evaluated the awardee's price proposal and, thus, made a
flawed award decision.
We deny the protest.
The RFP, as amended, provided for the award of a fixed-price contract for
the exciter radios, and the competition was limited to qualified sources
known to have the required experience and capability. RFP amend. 3, at 3.
Offerors were advised that the agency would "utilize the Lowest Price
Technically Acceptable source selection procedure" to arrive at a "best
value" award decision by "obtaining the lowest evaluated price." RFP
amend. 2, add., sect. M-900(a). The application of this technique involved
determining the acceptability of each offeror's proposal by ascertaining
whether the offeror "has been notified by the government that they are
considered a qualified source." Id., sect. M-900(b)(1). There is no issue
in this protest regarding the evaluation of USTI's proposal as technically
acceptable.
Rather, this protest challenges the evaluation of USTI's proposal under
the price factor. Schedule B of the RFP called for fixed prices to produce
a first article unit, test report and test plan data, a minimum production
quantity of three and a maximum production quantity of six units after
approval of the first article. RFP amend. 3, at 3-7. The RFP also stated
that:
The price will be evaluated using the lowest price. [T]his solicitation
is for a minimum quantity of 4 each, including first article, and a
maximum quantity of 7 each. The evaluation for award will be made on a
total price based on a quantity of 4, 5, 6, or 7--example: If a total
quantity of 4 is selected for award the evaluation would be a First
Article price, Data Price, and Production unit price multiplied by the
quantity of 3. These three prices . . . would be summed to provide the
lowest evaluated price for the quantity of 4 each. The [contracting
officer] will make a unilateral decision on which quantity will be
awarded.
RFP amend. 2, add., attach. 1, Price Evaluation. In addition, the
solicitation also stated as follows:
In accordance with FAR [Federal Acquisition Regulation] 15.403-1(b) and
15.403-3(a), information other than costs and pricing data may be
required to support price reasonableness. Information shall be provided
in accordance with FAR 15.403-5. If, after receipt of proposals, the CO
[Contracting Officer] determines that there is insufficient information
available to determine price reasonableness and none of the exceptions
in FAR 15.403-1 apply, the offer shall be required to submit costs or
pricing data.
RFP amend. 2, add., sect. L-900(c)(1).
Four firms, including USDC and USTI, submitted proposals. Of these, only
USDC and USTI were deemed qualified sources. RFP amend. 3, at 3; Agency
Report (AR), exh. 13, Final Price Competition Memorandum, at 7. The agency
thus evaluated both USDC's and USTI's proposals as technically acceptable
and included those proposals in the competitive range. The agency
conducted discussions with each competitive range offeror by issuing
evalution notices to address the delivery schedule for the production
units. Offerors were required to respond to the written discussion and
clarification questions and were then given an opportunity to submit final
revised proposals. Contracting Officer Statement (COS), at 1
Final revised proposals were received and evaluated. For seven units, USTI
offered a total price of $2,600,472, comprised of (1) a first article unit
price of $371,496; (2) a test report and test plan data unit price of
$0.00; and (3) a production unit price of $371,496. [DELETED] AR exh. 12,
Final Price Abstract, at 1-2.
In performing a price reasonableness analysis, the contracting officer
compared and contrasted the offerors' final proposed prices for the
various quantities of the exciter radios. More specifically, the
contracting officer did a comparison of the proposed prices with each
other, a comparison of the proposed prices to the independent government
estimate ($2,629,791.78), the technical support office's screening
analysis estimate ($3,251,178.28), the final market research estimate, and
the historical pricing information for similar items. AR exh. 13, Final
Price Competition Memorandum, at 1-7; COS, at 4-7. The final price
evaluation report narrative summarized the contracting officer's
conclusion thus:
[t]he offeror selected for award was based on adequate price
competition. The prices are extremely competitive. . . . The government
made the determination to award 7 each (1 First Article, 1 Data Line
item and 6 Production Units). [USTI] was the lowest price for this
quantity. The offeror selected for award has provided the best value to
the Government based on the evaluation addressed in the RFP. The offered
price selected is fair and reasonable based on adequate price
competition.
AR exh. 13, Final Price Competition Memorandum, at 7. Thereafter, award
was made to USTI. This protest followed.
USDC asserts that the Air Force did not properly evaluate the
reasonableness of USTI's proposed price. More specifically, USDC maintains
that by proposing the same unit price for both the first article and the
production quantities, USTI failed to include necessary non-recurring
costs (such as, environmental testing, test fixtures, and reverse
engineering due to parts obsolescence) required for the successful
production of the first article unit. In addition, USDC points to the fact
that USTI entered "zero" dollars for the first article test plan and data
report as further evidence that USTI's pricing should have raised
questions as to whether USTI's costs were realistic for the work to be
performed and whether USTI had a clear understanding of all the
solicitation requirements. Protest at 3-6; Protester's Comments at 3-4.
The FAR provides a number of price analysis techniques that may be used to
determine whether prices are fair and reasonable, including comparison of
the prices received with each other; comparison of previously proposed
prices for the same or similar items; and comparison with the independent
government estimate. FAR sect. 15.404-1(b)(2). A price reasonableness
determination is a matter of administrative discretion involving the
exercise of business judgment by the contracting officer that we will
question only where it is unreasonable. The Right One Co., B-290751.8,
Dec. 9, 2002, 2002 CPD para. 214 at 5. Our review of the record here
provides no basis to question the reasonableness of the contracting
officer's determination.
Section M of the RFP, quoted above, clearly stated that an offeror's
evaluated price would be calculated by multiplying each of the priced line
items by the estimated quantities and by adding all of the extended prices
to arrive at the lowest total evaluated price for the varied quantities.
RFP amend. 2, adden., attach. 1, Price Evaluation. Further, section M did
not require the use of price realism analysis to measure the offerors'
understanding of the government's requirements or to assess the risk
inherent in an offeror's proposal. PHP Healthcare Corp., B-251933, May 13,
1993, 93-1 CPD para. 381 at 5. Rather, as described above, the record
shows that the contracting officer agency conducted a price reasonableness
evaluation based upon adequate price competition, which reflected
approximately a 4 percent differential between the proposals of USDC and
USTI, along with comparison of the proposed prices to the government
estimate. Although USDC's essential complaint is that the contracting
officer's analysis should have been more exhaustive, our review confirms
that the price evaluation conducted by the agency was reasonable and fully
consistent with the provisions of the RFP.
USDC asserts that the contracting officer should have obtained and
analyzed additional information in evaluating offerors' proposed prices.
In support of its position, USDC points to language in section L of the
RFP which states that information other than costs and pricing data may be
required to support price reasonableness. As discussed above, in this
case, section M of the RFP did not require that additional information
would be evaluated as part of the agency's price evaluation. Absent an RFP
provision in a solicitation for a fixed-price contract requiring a price
realism analysis, no such analysis is required. Dismas Charities, Inc.,
B-289575.2; B-289575.3, Feb. 20, 2004, 2004 CPD para. 66 at 4.[1]
In sum, we conclude, based on this record, that the agency reasonably
satisfied its obligation under the FAR and the RFP to perform a price
reasonableness evaluation. USDC's mere disagreement with how the agency
conducted its price reasonableness analysis for these requirements, and
with the agency's ultimate conclusion that USTI's prices were fair and
reasonable, does not establish that the agency's evaluation was improper.
The protest is denied.
Gary L. Kepplinger
General Counsel
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[1] Additionally, USDC asserts that the Air Force should have considered
whether USTI's pricing methodology created doubt that the firm would
satisfy the requirements of the solicitation. However, USDC has not
pointed to any areas in USTI's proposal where USTI took exception to the
solicitation requirements.