Government Contracts Government Didn't Analyze Performance Risk of Unbalanced Pricing
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Monday, March 23, 2020

Government Didn't Analyze Performance Risk of Unbalanced Pricing

By Government Contracts Editorial Staff

The Court of Federal Claims enjoined a task order award for information technology services because the government’s price evaluation was flawed, which led to an improper best value tradeoff decision that prejudiced the protester. The government issued the request for quotation for a fixed-price contract to Schedule 70 Federal Supply Schedule contract holders. The RFQ required a price evaluation that “documented the fairness and reasonableness of the total evaluated price,” which included the total quoted price for the base year and the sum of all option years. Agency regulations required a FAR Part 15 price evaluation instead of the simplified FAR Part 8 analysis required for FSS contracts. For proposals with unbalanced pricing,FAR 15.404-1(g)(2) requires the government to carry out a two-part price- and performance-risk analysis.

Price Risk. After calculating each offeror’s TEP and comparing it to other offerors’ prices and the independent government cost estimate, the government implicitly determined the awardee’s pricing was materially unbalanced—the government found the awardee’s quote understated 5 of 15 contract line items and overstated 6 CLINs, including 3 substantially overstated CLINs. The RFQ contemplated a fixed-price contract, so the government’s price-risk analysis and conclusion the awardee’s unbalanced pricing did not create a risk of an unreasonably high price was reasonable.

Performance Risk. As for performance risk, the government simply noted that all offerors had proposed “total labor hours” the government had estimated would be required and “just all divided up or distributed these work hours differently amongst the various CLINs and tasks.” This determination compared CLIN prices to total labor hours but failed to analyze whether the awardee could perform the contract with the level of effort or labor mix it proposed for each CLIN. FAR 15.404-1(g)(2)(i) required the government to review the level of effort and labor mix in the materially unbalanced CLINs in the awardee’s quote to determine whether there was performance risk. Without such an analysis, or documentation of such an analysis, the government’s conclusory judgment there was no risk in the awardee’s materially unbalanced pricing was arbitrary and contrary to law. (Green Technology Group, LLC v. U.S., et al., FedCl, 64 CCF ¶81,860)

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