Proposals way below Independent Government Estimate

[lost but found]

Long time reader, first time poster. Thanks for everyones contributions.

We have a KO that has major issue when the proposals come in below the IGE. I have searched the FAR, WIFCON, and the GAO website without any luck.

I tend to be pretty good at finding my answers, but I cannot find this mentioned anywhere except for allowable comparisons for price fair and reasonable.

Scenario:

Deployed in Support of Contingency

$1M SAT

FFP

Commercial item

pricing below SAT.

IGE: $690,000

Low bid: $575,000

All the quotes were below the IGE.

Proposals between $575k-$650k

Maybe I just do not understand what the concern is. We have several contracts with this same basic scenario. Basically the IGE is being written with US specs and we are getting 3rd world proposals.

Does this even matter? .

Dave

[ji20874]

If the low bid is $575,000 and all the other bids are $911,000, $973,000, and $999,000, there might be a problem. See FAR 14.407-3( g )( 1 )( i ) for mistake in bid when the lowest bid "is so much lower than the other bids . . . as to indicate the possibility of error."

If you are using FAR Part 13 procedures, maybe one of your evaluation criteria is understanding of the requirement -- if so, and if the low price makes you think the vendor doesn't understand the requirement, then select a higher-priced vendor and make the award. Even if you don't use that criteron, you can still reject the quotation if the price is so far out of line with the amounts of other quotations, or the Government estimate, as to reasonably justify the conclusion that acceptance of the quotation would be unfair to the quoter (adapted from FAR 14.407-3( g )( 5 )).

Service versus supply could make a difference in the degree of risk. Already-manufactured-supply versus to-ba-made-in-the-future supply could make a difference.

If you're really buying a real comercial item, look at the proposed price in comparison to market prices.

Your contracting officer may have learned through experience in the marketplacers he or she deals in that there is too much risk associated with low-ball quotations -- that's reasonable. I have heard the advice in some marketplaces to throw out the low price and the high price and negotiate with those in the middle.

In short, yes, it is very possible that your contracting officer is right. Maybe not, but definitely maybe based on what little is provided here.

Sometimes the question has to be, is our goal to get the money obligated or to actually get the product? These questions will result in different vendor selection approaches.

[lost but found]

All the quotes were below the IGE. Left that out.

Proposals between $575k-$650k

I have heard the same thing about throw out the low and high. This company has done work for us before. We (the organization) have been fighting this battle for a while. Utimatly this person sits in a reviewer postion and does not sign anything, just comments. This is the new "hurdle" we keep hitting.

I am just trying to find something to reference for the requirement. His argument is that we could be protested for the prices being awarded below the IGE. I have no idea how that ties together. To be protested, we would have to violate something.

[Navy_Contracting_4]

All the quotes were below the IGE. Left that out.

Proposals between $575k-$650k

I have heard the same thing about throw out the low and high. This company has done work for us before. We (the organization) have been fighting this battle for a while. Utimatly this person sits in a reviewer postion and does not sign anything, just comments. This is the new "hurdle" we keep hitting.

I am just trying to find something to reference for the requirement. His argument is that we could be protested for the prices being awarded below the IGE. I have no idea how that ties together. To be protested, we would have to violate something.

If all the quotes were below the IGE, and the KO has issues with awarding to bidders below the IGE, what is he suggesting in this case? You can be protested for anything, whether youve violated anything or not, but for the protester to be successful, they have to show they've been prejudiced/harmed unfairly. How will anyone show unfair harm if you award to the low bidder (assuming that's what you said you planned to do in your solicitation)?

By the way, in Government procurement, throwing out the high and low and negotiating with the others is a sure-fire way to be protested, unless you have documented (i.e. not arbitrary) reasons for throwing each one of them out. The low bidder, in particular, will be in a good position to win a protest if he's thrown out for being low in a low-price, technically-acceptable deal.

[ji20874]

"Utimatly [sic] this person sits in a reviewer postion and does not sign anything, just comments."

So you're not talking about the contracting officer? You're talking about someone on the sidelines giving advice?

There may be nothing to reference. There is no regulatory citation prohibiting stupidity. To me, it sounds like adequate price competition establishes price reasonableness in your case. Maybe you should make him provide the the reference or citation that award below the IGE invites a higher protest risk.

Is there really a concern? IGE = $690,000. All quotations are $575k-$650k? That all sounds pretty tight to me. But you have to play according to your organization's rules, and if this bystander is a hurdle you have to get over, you need to figure out a way to persuade him or avoid him. Just tell your colonel or general that you cannot make award because no one is asking for enough money. Ha-ha! Anyway, do you have a decision-maker or just a committee where you have to get consensus? I really, really, really hope for the former.

Navy_Contracting_4, no one is suggesting throw out the low and high for a Government acquisition -- just sharing that the advice and practice does exist in some marketplaces.

[lost but found]

"Utimatly [sic] this person sits in a reviewer postion and does not sign anything, just comments."

So you're not talking about the contracting officer? You're talking about someone on the sidelines giving advice?

There may be nothing to reference. There is no regulatory citation prohibiting stupidity. To me, it sounds like adequate price competition establishes price reasonableness in your case. Maybe you should make him provide the the reference or citation that award below the IGE invites a higher protest risk.

Is there really a concern? IGE = $690,000. All quotations are $575k-$650k? That all sounds pretty tight to me. But you have to play according to your organization's rules, and if this bystander is a hurdle you have to get over, you need to figure out a way to persuade him or avoid him. Just tell your colonel or general that you cannot make award because no one is asking for enough money. Ha-ha! Anyway, do you have a decision-maker or just a committee where you have to get consensus? I really, really, really hope for the former.

.

He is a once upon a time contracting officer that now sits in a reviewer position. I agree, all sounds tight. Wrap it up and make the award. As I said, we are estimating US prices and getting 3rd world returns. They are the decision maker and yes we have to get consensus. Stupid process for below SAT purchases that eats up to much time. Especially at end of year.

Another example, we had to make small changes to a SOW and then review the award; back to back and on the same day. The award was approved and released. While making changes to the SOW on the day of award, he made us change the date on the SOW. Now when we send over the award, the vendor has actually never seen the SOW, based on the date change. That sounds arguable in court to me.

This is some of the stupidity we are dealing with. Very frustrating. We have real world stuff going on with guys on the ground that need things. Two locations just moved from urinating in a bucket to having a hole. I say that just to show the neccesity of getting these things done quickly.

[Guest Vern Edwards]

If you are using FAR Part 13 procedures, maybe one of your evaluation criteria is understanding of the requirement -- if so, and if the low price makes you think the vendor doesn't understand the requirement, then select a higher-priced vendor and make the award. Even if you don't use that criteron, you can still reject the quotation if the price is so far out of line with the amounts of other quotations, or the Government estimate, as to reasonably justify the conclusion that acceptance of the quotation would be unfair to the quoter (adapted from FAR 14.407-3( g )( 5 )).

Without further qualification, that is a singularly bad piece of advice. The fact that a proposed fixed-price is less than the government cost estimate or the cost of contract performance is not, in and of itself, grounds for rejecting a competitive quote or proposal. The rules for simplified acquisition are no different in that regard than the rules for acquisitions valued in excess of the simplified acquisition threshold.

[Guest Vern Edwards]

We have a KO that has major issue when the proposals come in below the IGE.All the quotes were below the IGE...

Proposals between $575k-$650k...

Basically the IGE is being written with US specs and we are getting 3rd world proposals.

If the "issue" is that the quotes raise a red flag about the clarity or definiteness of the specification or the quoters' understanding of it, that strikes me as a reasonable concern, especially if you are getting "3d world" quotes. However, if the only issue is that you could get a protest, then the objection is silly. Protest on what grounds?

Another example [of the reviewer's "stupidity"], we had to make small changes to a SOW and then review the award; back to back and on the same day. The award was approved and released. While making changes to the SOW on the day of award, he made us change the date on the SOW. Now when we send over the award, the vendor has actually never seen the SOW, based on the date change.

If the text of the SOW in the award will be different from the text in the solicitation on which the winning proposal was based, then changing the date on the SOW to reflect the version on which the award is to be based and asking the prospective awardee to review the new version and confirm in writing that its offer or quote stands is sound procedure, not "stupidity." It must be frustrating for the reviewer to have to work with contracting people who don't understand such fundamentals and who are in such a darned hurry that they won't take pains in order to avoid pains later.

[lost but found]

If the text of the SOW in the award will be different from the text in the solicitation on which the winning proposal was based, then changing the date on the SOW to reflect the version on which the award is to be based and asking the prospective awardee to review the new version and confirm in writing that its offer or quote stands is sound procedure, not "stupidity." It must be frustrating for the reviewer to have to work with contracting people who don't understand such fundamentals and who are in such a darned hurry that they won't take pains in order to avoid pains later.

The problem is now the dates do not match; nor did the awardee have the new one to review before award.

I fully agree if the possible awardee was able to review the document and the award document was changed to reflect the new SOW.

The problem I see is none of the contractors were able to re-submit proposals accordingly. While there were no major changes that should change the price, I still see this as a problem.

Thanks to everyone for contributing.