Government Contracts Selection Methodology Was Inconsistent with FSS Requirements
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Friday, February 21, 2020

Selection Methodology Was Inconsistent with FSS Requirements

By Government Contracts Editorial Staff

A protest of the terms of a request for quotations for hardware store supplies and ancillary services was sustained because the source selection methodology was inconsistent with applicable law and regulations. The RFQ, issued to holders of Federal Supply Schedule No. 51V, Hardware Superstore, sought to establish single-award blanket purchase agreements for the Navy, Army, Air Force, and Marine Corps, with a potential combined value exceeding $3 billion. The RFQ stated the government would evaluate price quotations “to ensure that offered pricing … is fair and reasonable,” and that award would be made on a best-value basis but would not involve either a lowest-priced technically acceptable or a best-value tradeoff source selection methodology. The protester argued the RFQ’s evaluation and source selection methodology failed to meaningfully consider price. The government responded that the evaluation of pricing solely for reasonableness is appropriate and consistent with prior decisions regarding the use of a highest-technically rated reasonably-priced selection methodology.

Reasonableness Review Insufficient. The Comptroller General explained use of the FSS in lieu of full and open competition is premised on following Federal Acquisition Regulation Subpart 8.4 to determine which FSS vendor meets the government’s needs at the lowest overall cost (18 CGEN ¶111,502). Further, “price is the one factor that, at a minimum, must always be considered when determining best value for purposes of establishing a BPA under the FSS” (27 CGEN ¶113,821). When the government seeks to establish a BPA under the FSS, the use of an HTRRP source selection methodology fails to fulfill the government’s obligation to consider the “lowest overall cost alternative” to the government, as required by 41 USC 152(3)(B), FAR 8.404(d), and FAR 8.405-3(a)(1) and (2). The purpose of a price reasonableness review is to determine whether prices are too high, but here, the RFQ’s price evaluation methodology consisted solely of considering the reasonableness of each product’s unit price in each vendor’s product catalog. The methodology did not provide a basis to assess whether one vendor’s pricing would result in the “lowest overall cost alternative,” as required under an FSS procurement. According to the Comptroller General, “[w]ithout any comparative assessment of prices, any best-value determination [would] be made without a weighing of the value and benefits associated with a vendor’s approach against its associated cost to the government. Such an approach is not permitted in the context of an acquisition under the FSS program.”

Pricing Instructions Flawed. Moreover, the RFQ’s required pricing structure was inconsistent with the terms of the underlying FSS contract. The anticipated BPAs were to include three special item numbers from the FSS—two were for products, and the third was for ancillary services. The RFQ did not include instructions for pricing the ancillary services under the third SIN, but in the Q&A, the government instructed vendors to include the pricing for any ancillary services within the prices for the two SINs for products. However, the only reasonable interpretation of the underlying FSS contract was that the ancillary services provided under the third SIN were distinct from, and should be priced separately from, the products provided under the other SINs. The Comptroller General recommended the government amend the RFQ to provide for an evaluation and source selection approach consistent with its obligations under statute and the FAR, and a pricing structure consistent with the terms of FSS No. 51V. (Noble Supply & Logistics, Inc., 35 CGEN ¶116,670)

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