LPTA and Adequate Price Competition

[Weno2]

Government is using LPTA Source Selection Process for procuring services. Solicitation Section M provision Evaluation states

The evaluation process will begin with a ranking based on the Total Evaluated Price (TEP) from the lowest to highest price of all proposals according to the evaluation criteria set forth in paragraph (a) of this section. The offers will subsequently be evaluated utilizing price analysis techniques to determine if the price is complete, reasonable, realistic and balanced. Following the price ranking, the lowest price proposal will then be evaluated for technical acceptability under the non-price factor, according to evaluation criteria set forth in paragraph b of this section. Award will be made upon identification of a successful offer with the lowest price and acceptable non-price factors. The government will not evaluate Technical Proposals from offerors who proposed higher pricing than the successful offeror.

The government reserves the right to evaluate the lowest-priced proposal first to determine technical acceptability. If the government determines the lowest price meets the acceptability standards for non-cost factors, the government will award to the offeror.

The government received five proposals (for example). Offeror #1 I(lowest evaluated price) was technically unacceptable. Offeror #2 (second lowest evaluated price) is technically acceptable. The government did not evaluate Offeror's 3-5 per the evaluation provision:

Offer

Total Evaluated Price

Technical Evaluation

#1

$300K

Unacceptable

#2

$320K

Acceptable

#3

$340K

Did not evaluate

#4

$400K

Did not evaluate

#5

$425

Did not evaluate

FAR 15.401-1, Proposal Techniques states the contracting officer (KO) is responsible for determining the reasonableness of the offered prices. The KO wants to use FAR 15.401-1( (2)(I) Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1©(1)(i)) to determine fair and reasonableness.

Although the KO did not conduct a technical evaluation on offerors' #3-5, could the KO determine Offeror's #2's price to be fair and reasonable based on adequate price competition? Or would the KO have to conduct other price analysis techniques to determine Offeror #2 price as fair and reasonable?

Legal's opinion is the KO must conduct other price analysis techniques to determine the fair and reasonableness of Offeror #2's price. Their position is for LPTA procurements, an offeror must have a technically acceptable proposal in order to consider the offeror's price for adequate competition.

[ji20874]

I say YES, you have adequate price competition; provided, the offerors were pricing more or less the same product or effort.

For example, if the lowest-price offeror was unacceptable because it failed to cover a third of the work, then the offerors were not pricing the same product or effort. However, if the lowest-price offeror was unacceptable because it proposed blue instead of yellow, and that makes no real difference in price, then they are pricing the same product or effort.

Your legal office's opinion, I think, is driven by a recent protest case where competing offerors were allowed to propose very different approaches or solutions. Ask for a copy of that case, and discern whether your facts fit the facts in that case.

[Guest Vern Edwards]

You don't need a case. Just read the FAR.

You have adequate price competition in an LPTA procurement when the criteria in FAR 15.403-1( c)(1) have been met. Period.

In an LPTA procurement, offers that are not technically acceptable do not "satisfy the Government's expressed requirement", which is one of the criteria.

Thus, in an LPTA procurement you cannot count consider the prices of technically unacceptable offers when determining if there is adequate price competition.

In your case, since you evaluated only two offers and one of them was technically unacceptable you do not have adequate price competition and cannot rely on FAR 15.404-1( b )(2)(i) to determine price reasonableness.

[ji20874]

Vern's point is well taken -- the FAR says what it says.

Let's look a little deeper...

FAR 15.403-1( c )( 1 )( i ) allows for adequate price competition when two or more "submit priced offers that satisfy the Government's expressed requirement." You're not in this situation.

However, you might be able to reach adequate price competition under FAR 15.403-1( c )( 1 )( ii ) or ( iii ). Look at those.

[Guest Vern Edwards]

Yes, look deeper.

What Weno2's CO wants to do is rely on FAR 15.404-1( b )(2)(i) to determine price reasonableness. [Weno wrote 15.401-1( B )(2)(I), but there's no such thing in FAR.]

Well, if adequate price competition is based on FAR 15.403-1( c)(1)(ii) or (iii), then the CO cannot rely on FAR 15.404-1( b )(2)(i) to determine price reasonableness based on adequate price competition, because that subparagraph refers specifically to 15.403-1( c)(1)(i). The CO must have at least two technically acceptable priced offers in order to rely on 15.404-1( b )(2)(i).

The agency can have adequate price competition based on 15.403-1( c)(1)(ii) or (iii), but in that case it cannot rely on FAR 15.404-1( b )(2)(i) to determine price reasonableness.

The legal office stands on solid ground. His CO must determine price reasonableness some other way.

If Weno2 works for DOD, he should also check DFARS 215.371.

[Weno2]

Thank you.

[Navy_Contracting_4]

Vern,

Why do you suggest that Weno2 check DFARS 215.371, "Only one offer." S/he received 5 offers.

[Guest Vern Edwards]

Because DOD limits the application of the adequate price competition exception when only one offer is received. I just wanted to make sure he/she knew about that.

At least, I think that's why I made the suggestion. That was more than two weeks ago, so I'm not sure. You know, Navy, I post these things and then promptly put them out of my mind. Goodness knows why I said what I said in most of these threads. I have reasons, but I don't store them in my head. I've got too much else to do. To be honest, I don't remember what this thread was about and I'm not going to read it to refresh my memory.

[InNeedofWisdom]

Vern is right about adequate price competition under FAR 15.403-1( c )(1)(i). If the agency only evaluated one offer, they should not conclude that the unevaluated offers meet the Government's expressed requirement for purposes adequate price competition. If the agency is part of DoD and decides to go down the path of FAR 15.403-1( c )(1)(ii) for adequate price competition with only one offer, it makes sense that they should follow DFARS 215.371 Only One Offer.

However, I am not convinced that FAR 15.404-1( b )(2)(i) requires adequate price competition. The requirement in the first sentence appears to only be that there are two or more proposed prices received in response to that particular solicitation. Furthermore, the second sentence qualifies itself with the word "Normally" in regards to establishing price reasonableness by adequate price competition. Thus, I do not think the requirements for FAR 15.403-1( c )(1)(i) are incorporated into the requirements for FAR 15.404-1( b )(2)(i). Here is the actual text of FAR 15.404-1( b )(2)(i):

Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1( c )(1)(i).

When the requirements for adequate price competition under FAR 15.403-1( c )(1)(i) are not met and there are no other qualifying exceptions, FAR 15.404-1( b )(2)(i) provides for price analysis to supplement the cost analysis that must be performed with certified cost or pricing data. Taking it a step further, some defense contractors may subcontract requirements for commercial items (e.g. 25 units) with two or more "sole/single source" subcontractors (e.g. Sub A gets 10 and Sub B gets 15), but then use FAR 15.404-1( b )(2)(i) for price analysis of the commercial items.