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DigiFlight and Cost Realism Analysis


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From today's main page, a protest decision at the Court of Federal Claims, decided for the protestor.

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While the agency appears to have conducted a rational price reasonableness analysis, as is explained below, its price realism analysis was not conducted in a rational manner.

The agency’s price realism analysis, at least as documented in the administrative record, essentially consisted of a set of conclusory and repetitive statements with very little explanation or documentation of what, if anything, was actually done to complete this requirement. For instance, the price evaluation section of the source selection decision, which intermixes both the reasonableness and realism components, states that “[i]n conducting the price evaluation, the government assessed the price quotation to ensure the proposed pricing is realistic for the work to be performed, reflects a clear understanding of the requirements, and is consistent with the various elements of the other parts of the quotation.” AR 489. Fair enough, but this statement simply restates the requirements of the price realism analysis the agency committed itself to conduct and then, in conclusory fashion, states the agency did in fact conduct such an analysis. The analysis then reiterates this same conclusion, that “[t]he Government took no exceptions or issues to the Offerors’ proposed pricing and found all three to be realistic for the work to be performed. Additionally, all three Offerors reflect a clear understanding of the requirements.” Id. The Court is left to wonder where the actual analysis is.

Although the government was not required to perform a cost realism analysis for this fixed-price award, it committed to do so. 

Request for injunction granted.

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Seems to me the agency did an acceptable job; not the best but certainly not poor enough to sustain.  It appears the protesters attorneys got the complete file, found some faults, and convinced the judge that the price realism analysis was flawed.  

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18 hours ago, Vern Edwards said:

😆 Seems to me you should read the decision again.

Those people did not know what they were doing. And I include the government's lawyers among "those people."

 

No doubt.  My comment was more about GAO decisions which let agency documentation slip by to support award decisions.  The thing I’m wondering is what was the basis of the original protest?  I don’t see how the issue of the adequacy of price realism was apparent at time of award or debriefing

Edit:  I did reread the decision.  What I missed the first time was the likely basis of the protest - the selected awardee must have proposed a very low price.  The court decision doesn’t show prices except the total estimated amount of the awardee.  So there’s nothing for us to see.   It obviously the proposed rates were very low.  In that context I see how the court came to its conclusion that the government file lacked supporting documentation. 

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@formerfed Why did they conduct a price realism evaluation? The service appears to be for support service staffing. As such, I'm thinking it was for an unspecified, steady-state type of arrangement𑁋the contractor was to provide an office staff to perform various administrative tasks specified on an ad hoc basis.

If that's correct, then I wonder about the decision to evaluate price realism. There was no "understanding" of the requirements  to be considered. As specified in the "PWS," the requirements were probably vague, at best, and would be fully defined on an as-you-go basis after contract award.

I think of price realism as appropriate for project-type service contracts, which require the contractor to complete a single project within a specified period of time.

In any case, the agency did not know what it was doing and the SSA failed to ensure that the evaluation was conducted properly. Did you note that they appear to have failed to evaluate professional employee compensation.

Poor work badly done.

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1 hour ago, Vern Edwards said:

@formerfed Why did they conduct a price realism evaluation? The service appears to be for support service staffing. As such, I'm thinking it was for an unspecified, steady-state type of arrangement𑁋the contractor was to provide an office staff to perform various administrative tasks specified on an ad hoc basis.

If that's correct, then I wonder about the decision to evaluate price realism. There was no "understanding" of the requirements  to be considered. As specified in the "PWS," the requirements were probably vague, at best, and would be fully defined on an as-you-go basis after contract award.

Just guessing, but someone probably just copied portions about evaluation from other documents.  They didn’t think things through.

FAR 8.4 ordering is simple.  From 8.405-2, it says consider level of effort and mix of personnel as total price reasonableness.  That’s it.

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d)  Evaluation. The ordering activity shall evaluate all responses received using the evaluation criteria provided to the schedule contractors. The ordering activity 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. 

 

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  • 2 weeks later...

This is from a GAO decision Bob recently posted on the home page.  It’s Excelsior Ambulatory Service

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To the extent Excelsior argues that the evaluation of Pro Care EMS’s proposal was unreasonable for not assessing that firm’s ability to perform at the price offered, it is dismissed for failing to state a valid basis of protest under the terms of this solicitation. 4 C.F.R. §§ 21.1(c)(4), (f); § 21.5(f). The RFP contemplated the award of a fixed‑price contract and stated that “The government will evaluate information based on the following evaluation criteria: Factor A- Past Performance and Factor B- Price.” RFP at 92, 94. There is no evaluation factor requiring the agency to consider whether an offeror could comply with the requirements of the PWS at the price offered. See Protest at 3‑4; Comments & Supp. Protest at 1‑2.

Excelsior argued, in part, that the agency failed to consider whether the awardee could perform at the award price.  The awardee’s price was much lower than Excelsior.  The interesting aspect to me is GAO dismissed the protest saying there wasn’t an obligation to do so.

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1 hour ago, formerfed said:

Excelsior argued, in part, that the agency failed to consider whether the awardee could perform at the award price…The interesting aspect to me is GAO dismissed the protest saying there wasn’t an obligation to do so.

Why is this interesting? GAO restated that there was no evaluation factor requiring the agency to consider whether an offeror could comply with the requirements of the PWS at the price offered. 

I think you may be looking for ‘price realism’ rather than ‘price reasonableness.’ These are distinct concepts. Mountaineers Fire Crew, Inc.; ASP Fire, LLC; Diamond Rd. Maint. Inc. (d/b/a Diamond Fire), B-413520.5 et al., Feb. 27, 2017.

The purpose of a price reasonableness review, under fixed-price arrangements, is to determine whether the prices offered are too high, as opposed to too low.

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2 hours ago, Jamaal Valentine said:

Why is this interesting? GAO restated that there was no evaluation factor requiring the agency to consider whether an offeror could comply with the requirements of the PWS at the price offered. 

I agree with what GAO literally said about no evaluation factor.  I’m surprised though by GAO not bringing up the fact that the awardees price was half of the protestors who had “substantial confidence” past performance and the agency admitted they did not do an assessment to determine if the awardee could perform the PWS at that price.  As a minimum I think some analysis along those lines is necessary along with documentation supporting how performance can occur at a price half of the protestor.  After all this is a $17-34 million contract action.

And I’m likely being critical outside of the narrow view of the protest by GAO.

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@formerfed


Ability to perform as used here is about responsibility. The protestor didn’t address the VA’s comments about the responsibility determination. Consequently, I presume the government’s determination was reasonable or otherwise satisfactory to them. Maybe that’s the analysis you want. Either way, GAO dismissed it as abandoned.

Remember, FAR does not preclude at- or below-cost pricing. LCPtracker, Inc.; eMars, Inc., B-410752.3 et al. (Sep. 3, 2015).  Thus, it seems the and concern would have to be processed under FAR 9.104-1(a). Again, we see above that responsibility was not an issue.

 Finally, “the agency admittedly did not evaluate Pro Care EMS’s proposal for that firm’s ability to comply with the PWS at the offered price” because it was not an evaluation factor. The VA did not include a special standard of responsibility to evaluate; nor did it include price realism factor. What would you have them do?

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@formerfed

 To be clear, I don’t think you disagree. I haven’t said anything controversial or novel. I really just want to understand (1) what is interesting, or (2) what you don’t like, if any, and why. I’m hoping to learn something.

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@Jamaal Valentine My comments were the decision was “interesting” and “surprised” that GAO didn’t elaborate more.  That’s all.  I also said GAO seemed to take a narrow view of the issues when they arrived at their decision.  Without seeing more details, maybe that’s all there is.  

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