Protest of Exclusion From Competitive Range

B-200756: Sep 14, 1981

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A firm protested its exclusion from the competitive range for negotiations under a request for proposals (RFP) issued by ACTION to obtain training for Peace Corps volunteers. The protester contended that its exclusion and the resultant restriction of the competitive range to only one offeror was improper. Further, the protester requested compensation for its costs in responding to the RFP and asked that the present contract award be terminated. Although the determination of whether a proposal falls within the competitive range is a matter of agency discretion, it must have a reasonable basis. GAO could not conclude that the ACTION determination was reasonable because it was based on the final results of a combined technical and cost evaluation formula. GAO believed that the results were tainted because ACTION failed to conduct an adequate or accurate analysis of the proposed costs. Regulations provide that a cost analysis should assure the reasonableness of the pricing result and that proposed costs should not be considered controlling in selecting a contractor for a cost reimbursement type contract since they are merely estimates. The record indicated that the extent of the ACTION cost analysis was based on: (1) a comparison of the awardee's estimated cost with the cost of a previous Peace Corps training contract; (2) reliance on the awardee's history of tight costs on similar contracts; and (3) the awardee's cost with those proposed by other offerors under the solicitation. GAO held that it was inaccurate to compare as equals the awardee's proposed cost under this solicitation with the costs of a previously completed contract since this RFP added significant new requirements not included in prior contracts. GAO has held that taking cognizance of a history of tight costs is insufficient to satisfy the requirement for a cost analysis. Proposal preparation costs can be paid only upon a showing that the contracting agency's actions were arbitrary or capricious and that there was a substantial chance that the claimant would have received the award but for those actions. The protester did not show that it had a substantial chance of receiving the award if it had been in the competitive range. Because the contract was already being performed in a foreign country, GAO believed that it would not be appropriate or in the Government's best interest to recommend termination. Accordingly, the protest was sustained, but the request for relief was denied.