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FAR 8.405-2:  Ordering procedures for services requiring a statement of work

Comptroller General - Key Excerpts

With respect to USIT's challenge to the agency's evaluation of 5D's price, USIT complains that DLA relied upon a flawed independent government estimate in evaluating prices, because the government estimate ($7,359,688) was overstated by approximately $900,000 due to the inclusion of costs and labor hours associated with the technical support tasks that had been removed from the procurement by amendment 3. Protester's Comments at 9. USIT argues that 5D's quoted price should have been found to be approximately 22.5 percent higher than the government estimate (and not 8 percent higher) once the estimate was corrected to remove the hours and costs associated with the deleted technical support tasks. See Protester's Comments at 11; see also AR, Tab 20, Selection Decision, at 12. USIT also argues that the price evaluation was unreasonable because DLA did not evaluate 5D's reallocation of labor hours from the deleted technical support tasks to the customer support tasks in its revised quotation. Protester's Comments at 11; Protester's Supp. Comments at 5.

When an agency issues an RFQ to vendors holding FSS contracts for the delivery of services at hourly rates, and, as here, a statement of work is included, the ordering agency must evaluate the quotations received consistent with the stated evaluation criteria. FAR sect. 8.405‑2(d). The FAR also requires the agency to consider the level of effort and the mix of labor proposed to perform the task being ordered, determine that the total price is reasonable, and document the agency's price reasonableness determination. FAR sect. 8.405‑2(d), (e) ; see also Advanced Tech. Sys., Inc., B‑296493.6, Oct. 6, 2006, 2006 CPD para. 151 at 9-10.

In our view, the record here does not show that DLA's price evaluation was reasonable. As noted above, vendors were required to provide detailed pricing information, labor hours, and labor mix for each PWS task and to demonstrate the relationship between their pricing structure and their technical approach. See RFQ sect. 4.2.4.1. USIT and 5D both provided labor categories, corresponding labor rates, and hours by labor category for each task, as required by the RFQ. USIT and 5D apparently have very different approaches to performing the PWS tasks, given the dramatic differences in the vendors' quoted labor hours and labor mix for the PWS tasks. For example, with respect to the customer support task (to which 5D reallocated its labor hours from the deleted technical support task), USIT quoted a total of [DELETED] hours at a price of $2.4 million, and 5D quoted a total of [DELETED] hours at a price of $4.5 million. 

At best, the record here indicates that the vendors' quoted labor hours were reviewed by the [technical evaluation panel] TEP, and found "sufficient to complete the tasks." See, e.g., AR, Tab 17, Final Consensus Evaluation Summary for 5D, at 1. As noted above, the CO also compared 5D's quoted price to the government estimate (noting that 5D's total price was within 8 percent of the government estimate) and concluded that 5D's quoted price was fair and reasonable "based on the existence of full and open competition, the fact that the [TEP] accepted the total labor hours, and the use of [FSS] pricing." AR, Tab 20, Selection Decision, at 12-13.

There is no documentation in the record demonstrating that the TEP or the CO evaluated 5D's, or USIT's, labor mix to perform the PWS tasks, or performed the analysis required by FAR sect. 8.405-2(d) to determine whether the labor mix proposed--albeit at fixed hourly rates--would result in a reasonable price for performance. Rather, the TEP's evaluation report and CO's selection decision merely state that the TEP found that the vendors' total labor hours were considered sufficient to perform the PWS tasks. The record also lacks any analysis of 5D's reallocation of over 6,000 labor hours (at a price over $878,000) from a task that had been deleted from the PWS to another task. There is also no explanation for why reallocating these hours to another PWS task was reasonable. Moreover, no such analysis or explanation has been provided in response to this protest. On this record, we cannot find a basis to uphold DLA's determination that the vendors' overall price (which is based upon the application of the vendors' FSS rates to their quoted labor hours for each labor category) was reasonable.  (U S Information Technologies Corporation, B-404357; B-404357.2, February 2, 2011)  (pdf)

The protester asserts that it was improper for GSA to rescore the quotations after receiving the evaluation materials prepared by IHS’s technical evaluators. According to the protester, this rescoring resulted in the technical superiority of CSN’s quotation being exaggerated, and also ultimately led to the SSA’s not considering OPTIMUS’s quotation in the price/technical tradeoff decision, notwithstanding OPTIMUS’s substantial price advantage over CNI.

We will not reevaluate quotations in reviewing a protest challenging an agency’s technical evaluation; rather, we will examine the record to determine whether the agency’s evaluation conclusions were reasonable and consistent with the terms of the solicitation and applicable procurement laws and regulations. Engineered Elec. Co. d/b/a/ DRS Fermont, B-295126.5, B-295126.6, Dec. 7, 2008, 2007 CPD para. 4 at 3-4.

GSA’s scoring changes here are unobjectionable. The record shows that both the GSA program manager and SSA did not change the scores in a vacuum; rather, the changes were made with reference to the contents of the quotations and the evaluation materials prepared by the IHS evaluators (and, in the case of the SSA, the evaluation materials prepared by the program manager). In this regard, the program manager states as follows:

I can testify that I created a consensus evaluation document utilizing the comments from the first set of IHS’ evaluations. As is common practice of the Project Manager, I reviewed all [quotations] to verify the comments from the first set of evaluations. I evaluated each [quotation’s] Past Experience/Past Performance, Technical/Management Approach and Staffing Plan. Each of these factors included multiple criteria that received scores in the evaluation. The IHS evaluators, however, did not correlate their scores to the Evaluation Plan Criteria accurately thus resulting in inaccurate scores. In the consensus document, I applied the comments from the first set of evaluations, correlated such comments to the Evaluation Plan Criteria, and applied the correct score. (All [of the IHS evaluators’] evaluation comments were preserved on the consensus evaluation document.) I added comments on the consensus document when the score I applied differed from the technical panel average score for that factor.

Agency Submission, Dec. 8, 2008, Program Manager Affidavit, at 2. Similarly, the SSA states his rationale for changing the scores a second time:

I can testify that the resulting scores from the initial evaluations and consensus document resulted in fractional scores. . . . The scoring criteria in the solicitation was based on . . . whole number scores. . . . To determine whether a score of 2.5 equaled a ‘2’ or a ‘3’, I re-read all 7 [quotations]. As the Source Selection Authority, based on my reading of (1) the [quotations], (2) the solicitation criteria, and (3) the comments of the evaluation panel and the GSA [program manager], I determined the most appropriate whole number score.

Agency Submission, Dec. 8, 2008, SSA Affidavit, at 2.

In the final analysis, ratings, be they numerical, color, or adjectival, are merely guides for intelligent decision making in the procurement process. Citywide Managing Servs. of Port Washington, Inc., B-281287.12, B-281287.13, Nov. 15, 2000, 2001 CPD para. 6 at 11. The germane consideration is whether the record shows that the agency fully considered the actual qualitative differences in the technical quotations or quotations. See, e.g., Bernard Cap Co., Inc., B-297168, Nov. 8, 2005, 2005 CPD para. 204 at 6.

Both GSA officials, after a detailed review of the evaluation materials and the quotations themselves, assigned point scores that they determined more accurately portrayed the relative merits of the quotations, and were consistent with the terms of the solicitation’s evaluation scheme. These actions were in no way inconsistent with the RFQ, and the protester has not shown that the revised scores inaccurately reflected the relative merits of the quotations. We thus have no basis to object to the rescoring.  (OPTIMUS Corporation, B-400777, January 26, 2009)  (pdf)


The protester maintains that the agency failed to provide it with meaningful discussions. According to the protester, the agency’s request for price reductions after the submission of initial quotations constituted the opening of discussions, which obligated the agency to bring to OPTIMUS’s attention the weaknesses the agency identified in the technical portion of its quotation.

This assertion is without merit. As noted, this requirement is being met through the FSS, and was conducted pursuant to FAR part 8.4. There is no requirement in FAR part 8.4 that an agency soliciting vendor responses prior to issuing a task order under an FSS contract conduct discussions with vendors regarding the contents of those responses, even where the solicitation does not specifically advise firms of the agency’s intent to issue a task order without discussions. Avalon Integrated Servs., Corp., B-290185, July 1, 2002, 2002 CPD para. 118 at 4. [5] Under FAR sect. 8.405-2(c)(3)(ii), where, as here, an agency is placing an order under the FSS that exceeds the maximum order threshold, it is required to seek price reductions below the prices included in the vendors’ FSS price lists. The agency’s request for price reductions was pursuant to this requirement, and therefore did not constitute the opening of discussions, such that the agency was obligated to engage in meaningful discussions.  (OPTIMUS Corporation, B-400777, January 26, 2009)  (pdf)


Because GSA administers the FSS program, we solicited GSA’s views on the responsibility determination issue. In its filing, GSA notes that the purpose of the FSS program, as set forth in FAR Part 38, is to provide federal agencies with a simplified process of acquiring commercial supplies and services. In furtherance of this goal, GSA states, it is responsible for awarding indefinite-delivery contracts in accordance with all applicable statutory and regulatory requirements, including compliance with the requirements relating to contractor responsibility (see FAR sect. 38.101(d), (e)). GSA concludes that, because it is tasked with making determinations of responsibility pertaining to the award of FSS contracts, ordering agencies, while not precluded from doing so, are not required to make a responsibility determination prior to placing an FSS order. Letter from GSA to GAO, July 26, 2006, at 1-3. We agree.  Responsibility is a contract formation term that refers to the ability of a prospective contractor to perform the contract for which it has submitted an offer; by law, a contracting officer must determine that an offeror is responsible before awarding it a contract. See 41 U.S.C. sect. 253b(c), (d); FAR sect. 9.103(a), (b). The concept of responsibility expressly applies to “prospective contractors”--not “current” or “existing” contractors--a limitation that is repeated throughout the applicable statutes and regulations, and that indicates that the requirement for a responsibility determination applies before award of a contract. See, e.g., 41 U.S.C. sect. 403 (“As used in this Act . . . the term ‘responsible source’ means a prospective contractor . . . .”); FAR sect. 9.100 (“This subpart prescribes polices, standards, and procedures for determining whether prospective contractors . . . are responsible”); FAR sect. 9.102(a) (“This subpart applies to all proposed contracts with any prospective contractor . . . .”); and FAR sect. 9.103(c) (“A prospective contractor must affirmatively demonstrate its responsibility . . . .”). Consistent with this statutory and regulatory framework, once an offeror is determined to be responsible and is awarded a contract, there is no requirement that an agency make additional responsibility determinations during contract performance. E. Huttenbauer & Son, Inc., B-258018.3, Mar. 20, 1995, 95-1 CPD para. 148 at 2 (holding that a contracting officer was not required to make a new responsibility determination before deciding whether to exercise an option because the concept of responsibility has no applicability with respect to a contract once that contract has been awarded). Contrary to the protester’s position, the extent of the requirement for a determination of responsibility is not tied to the type of contracting vehicle that the government elects to use for an acquisition; thus, there is no basis to conclude that the requirement for a responsibility determination is broader for orders placed under FSS contracts. In this regard, we note that FAR sect. 8.405 and sect. 8.406 set forth the ordering procedures and ordering activity’s responsibilities, respectively, with regard to FSS contracts; there is no requirement in these provisions to make a responsibility determination. In sum, we conclude that the initial responsibility determination made by GSA in connection with the award of the underlying FSS contract satisfies the requirement for a responsibility determination regarding that vendor and that there is no requirement that an ordering agency perform separate responsibility determinations when placing orders under that contract. In view of our conclusion, ATS’s challenge to HUD’s consideration of PSI’s responsibility here does not give rise to a valid basis of protest since HUD was not required to perform a responsibility determination. (Advanced Technology Systems, Inc., B-296493.6, October 6, 2006) (pdf)


Given the clear language of FAR sect. 8.405-2(d)--“the [o]rdering activity is responsible for considering the level of effort and the mix of labor proposed to perform a specific task being ordered”--we conclude that HUD was required to consider each vendor’s proposed level of effort and labor mix as part of its evaluation of quotations here. As explained below, however, while the record indicates that the agency did consider PSI’s proposed level of effort and labor mix as part of its best value determination, the record also indicates a complete lack of support for the agency’s conclusion that PSI’s proposed level of effort and labor mix were sufficient to perform the specific tasks being ordered under this bridge contract. In order for us to review an agency’s evaluation of vendors’ quotations, an agency must have adequate documentation to support its judgment. See Northeast MEP Servs., Inc., B-285963.5 et al., Jan. 5, 2001, 2001 CPD para. 28 at 7. Where an agency fails to sufficiently document its evaluation findings, it bears the risk that there may not be adequate supporting rationale in the record for us to conclude that the agency had a reasonable basis for the source selection decision. Southwest Marine, Inc.; American Sys. Eng’g Corp., B-265865.3, B-265865.4, Jan. 23, 1996, 96-1 CPD para. 56 at 10. The record here does not provide any basis to support the agency’s determination that PSI’s proposed level of effort and labor mix were sufficient to perform the PWS requirements. The agency’s source selection decision provides no support for the contracting officer’s determination--it is simply a conclusion without explanation. Similarly, in the statement submitted after the filing of ATS’s protest here, the contracting officer merely reiterates his conclusion that PSI’s proposed level of effort and mix of labor were determined acceptable, again without providing an explanation of how this determination was made. The only additional information provided in the contracting officer’s statement is that he spoke with other HUD personnel who also concluded, again without explanation, that PSI had proposed an acceptable level of effort and labor mix. FAR sect. 8.405-2(d) does not elaborate on the method or extent of consideration an agency is responsible for giving to a vendor’s proposed level of effort and labor mix in the circumstances here. In our view, agencies are not required to conduct a formal evaluation of the kind typically performed in a negotiated procurement under FAR Part 15. However, here, in light of the significant differences both between PSI’s and ATS’s proposed levels of effort, and between PSI’s own prior and current proposed levels of effort and labor mixes for the identical TRACS requirements, the conclusory statements in the record simply are not adequate to demonstrate that HUD reasonably considered whether PSI’s level of effort and labor mix were sufficient to perform the specific tasks, as required by FAR sect. 8.405-2(d). We, therefore, sustain the protest on this basis.  (Advanced Technology Systems, Inc., B-296493.6, October 6, 2006) (pdf)

Comptroller General - Listing of Decisions

For the Government For the Protester
OPTIMUS Corporation, B-400777, January 26, 2009  (pdf) U S Information Technologies Corporation, B-404357; B-404357.2, February 2, 2011  (pdf)
Advanced Technology Systems, Inc., B-296493.6, October 6, 2006 (pdf) (responsibility determination) Advanced Technology Systems, Inc., B-296493.6, October 6, 2006 (pdf) (level of effort, labor mix)

U. S. Court of Federal Claims- Key Excerpts

D. FAR Part 15 and FAR 8.405-2(e)

Matt Martin contends that the AR does not establish that the SSO conducted an independent best-value analysis “or that she made any tradeoffs or business judgments that would justify accepting a technically inferior proposal.” Pl.’s Mem. 18 (citing FAR 15.308) see also Pl.’s Mem. 11-12. This procurement was conducted pursuant to FAR Subpart 8.4. See AR Tab 13, at 360. FAR Subpart 8.4 and FAR Part 15 are different provisions with different purposes. The amount of documentation necessary in FAR Subpart 8.4 procurements does not rise to the level required by FAR Part 15.11 “The very purpose of FAR Part 8 is to provide a more simplified and flexible approach away from the more formal and rigorous procedures for negotiated procurements.” Allied Tech. Grp. Inc. v. United States, 94 Fed Cl. 16, 50 (2010) (internal quotation omitted). “Orders placed against [Federal Supply Schedule] contracts are viewed as involving ‘full and open competition’ without requiring the use of procedures contained in FAR Part 15.” HomeSource, 94 Fed. Cl. at 486 (citing FAR 8.404(a)). The Evaluation Plan uses some language that also appears in FAR Part 15. See AR Tab 10, at 319. However, the use of some of the same words in two procurements does not transform a FAR Subpart 8.4 procurement into a FAR Part 15 procurement. See Ellsworth Assocs., Inc. v. United States, 45 Fed. Cl. 388, 394 (1999) (“The decisional law does not support plaintiff's contention that an FSS selection process that is handled more like a negotiated procurement must comply with the requirements of Part 15.”).

Matt Martin’s argument in criticism of the documentation of the agency’s decision in this case relies substantially on CRAssociates, Inc. v. United States, No. 10-339 C, 2010 WL 4162118 (Fed. Cl. Oct. 4, 2010, reissued Oct. 20, 2010), and Femme Comp, Inc. v. United States, 83 Fed. Cl. 704 (2008), Pl.’s Reply 11-15, 24-27, two cases interpreting FAR Part 15, not FAR Subpart 8.4. In Femme Comp, the court found that the SSA had failed to document adequately her comparative analysis of each proposal. Femme Comp, 83 Fed. Cl. at 767-68. The court determined that the SSA’s conclusions in her Source Selection Document appeared to have relied on assigned factor ratings instead of underlying evaluations, in violation of FAR 15.308. Id. Matt Martin’s reliance on Femme Comp, as with its reliance on CRAssociates, see supra note 10, is similarly unpersuasive because those cases involve alleged defects in a procurement based on the failure of the evaluations in those cases to comply with the requirement of FAR Part 15.  (Matt Martin Real Estate Management LLC v. U. S. and HomeTelos, LP, BLB Resources, Inc., Ofori & Associates, P.C., and PEMCO Ltd, No. 10-675C, December 2, 2010)  (pdf)


1. Analysis of cost.

The Technical Evaluation Panel used cost-realism analysis in assessing the offerors' proposals while the contracting officer opted instead to perform a reasonableness assessment under FAR Subpart 8.4 to determine which offerors' proposal represented the "best value" to the government.

(sentences deleted)

Holloway seeks to apply procedures from FAR Part 15 — procedures similar to the cost realism analysis mentioned by the Technical Evaluation Panel — to this procurement.

(sections deleted)

However, the government is not always obligated to perform a cost-realism analysis when analyzing competing proposals. Competitive procedures have been classified into specific subtypes, of which competitive proposals are one and FSS contracts are another. See Systems Plus, Inc. v. United States, 68 Fed. Cl. 206, 209 (2005). Applying that distinction, the court in Systems Plus

f[ou]nd it persuasive that [FAR] subpart 8.404(a) explicitly exempts supply schedule procurements from [FAR] Parts 13 (with minor exceptions), 14, and 15. . . . Thus, while the agency can elect to use procedures from these other parts, they are not presumptively applicable.

Id. at 210. The distinction between when “the more formal and rigorous procedures for negotiated procurements set forth in FAR Part 15” are required, and when they are not, has to do with the nature of the procurement. See Labat-Anderson, Inc. v. United States, 50 Fed. Cl. 99, 103 (2001). A procurement taking place under the FSS program involves the selection of “products and services from a list of eligible contractors whose pricing schemes have been preapproved by GSA.” Id. In this circumstance, because the GSA has already determined that the prices of supplies and services under FSS contracts are “fair and reasonable,” the ordering agency is “not required to make a separate determination of fair and reasonable pricing, except for a price evaluation as required by [FAR §] 8.405-2(d).” FAR § 8.404(d). In this context, FAR § 8.405-2(d) instructs that the contracting agency “is responsible for considering the level of effort and the mix of labor proposed to perform a specific task being ordered, and for determining that the total price is reasonable.” FAR § 8.405-2(d) (emphasis added).

In short, “a procurement under subpart 8.4 is different in kind from one conducted under Part 15, even if some procedures also present in Part 15 are u[s]ed.” Systems Plus, 68 Fed. Cl. at 211; see also Ellsworth Assocs., Inc. v. United States, 45 Fed. Cl. 388, 395-96 (1999) (holding that “consistent with the simplified and flexible approach Part 8 takes toward [FSS] procurements, . . . the protester will not be able to prevail on the theory that the procurement procedure involved a clear and prejudicial violation of applicable statutes and regulations, because no applicable procedural regulations are contained in [FAR] Part 8. A protester instead must rely on establishing that the government officials involved in the procurement process were without a rational and reasonable basis for their decision.”). Accordingly, a cost-realism analysis that accords with FAR § 15.404-1(d)(1), quoted supra, is not necessarily required when reviewing offers made pursuant to a negotiated procurement under the GSA’s FSS program. This contrasts with the source selection decisions reviewed by this court in Lumetra and> Alabama Aircraft, neither of which involved an FSS procurement but both of which explicitly mandated that the agency “perform a cost-realism analysis.” Lumetra, 84 Fed. Cl. at 560 (citing Sections L and M of the Request for Proposals); see also Alabama Aircraft, 83 Fed. Cl. at 671 (“Although the . . . contract was to be a fixed-price contract, the RFP explicitly required the Air Force to evaluate the ‘reasonableness and realism of the prices and labor rates proposed’ by the offerors.” (quoting the Solicitation-Request for Proposal)). Here, no such mandate was included in the RFQ.

Holloway argues that “[FAR] 8.4 does not prohibit cost realism assessment, which we believe was required under this RFQ, and which was in fact conducted by the [P]anel [and] which the Source Selection Authority confirmed in the source selection document.” See Hr’g Tr. 34:10-14 (Apr. 14, 2009). Holloway additionally points to CMS’s second amendment to the RFQ, in which CMS asked offerors to submit “a cost or price proposal supported by cost and pricing data adequate to establish the reasonableness and realism of the proposed cost or price,” AR 4-155 (Amendment #2 to RFQ) (emphasis added), as calling for a cost-realism analysis by the contracting officer. See Hr’g Tr. 36:2-7.

The second amendment to the RFQ introduced an ambiguity which was not fully resolved by CMS during this procurement. However, because the RFQ expressly provided that the resulting award was to be a “[t]ask [o]rder” under a “current GSA Schedule contract,” AR 1-1 (RFQ), all offerors were on notice that the framework provided by FAR Subpart 8.4 applied. In the circumstances at hand, a cost-realism analysis would be required only if CMS had specifically set out such a requirement. Moreover, the conduct of CMS does not lend support to the existence of a price-realism mandate. Although the Technical Evaluation Panel at times used cost-realism language, it frequently also referred to the “reasonableness” of the price proposed by various offerors. See, e.g., AR 14-1141 to 14-1144 (Business Proposal Evaluation). In this respect, the contracting officer opined that “[t]he main concern of the TEP was whether or not Grant Thornton’s proposed price was reasonable based on the [Independent Government Cost Estimate].” AR 26-1237 (Addendum to Source Selection Document) (emphasis added). The contracting officer restricted himself to a cost-reasonableness analysis, omitting any mention of cost-realism.

Overall, CMS’s contracting officer was not obligated by the RFQ to employ the detailed cost-realism procedures set out in FAR Part 15. It was sufficient, under FAR Subpart 8.4, for the contracting officer to have conducted, in conjunction with a performance risk assessment, a “best value” inquiry into the reasonableness of the competing proposals.  (Holloway & Company, PLLC, v U. S. and Grant Thornton, LLP, No. 09-53C, May 14, 2009) (pdf)

U. S. Court of Federal Claims - Listing of Decisions
For the Government For the Protester
Matt Martin Real Estate Management LLC v. U. S. and HomeTelos, LP, BLB Resources, Inc., Ofori & Associates, P.C., and PEMCO Ltd, No. 10-675C, December 2, 2010.  (pdf)  
Holloway & Company, PLLC, v U. S. and Grant Thornton, LLP, No. 09-53C, May 14, 2009 (pdf)
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