A. Prentice Ray & Associates, LLC

DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.

Decision

Matter of: A. Prentice Ray & Associates, LLC

File: B-421248.4

Date: September 7, 2023

DIGEST

Protest challenging the agency’s price realism analysis is denied where the agency evaluated the realism of proposed prices in accordance with the terms of the solicitation; the agency was not required to conduct an in-depth analysis of the awardees’ prices in the manner argued by the protester.

A. Prentice Ray & Associates, LLC (APRA), an 8(a)[1] certified, woman-owned small business located in Washington, District of Columbia, protests the corrective action undertaken by the Department of State (DOS) in response to APRA’s earlier protest
(B-421248.3) challenging the award of indefinite-delivery, indefinite-quantity (IDIQ) contracts[2] under request for proposals (RFP) No. 19AQMM22R0221, for staffing support services. APRA challenges the agency’s price realism evaluation of DGI’s and Maven’s proposals.

We deny the protest.

BACKGROUND

On July 25, 2022, DOS issued the RFP as a competitive 8(a) small business set-aside for technical, administrative, and professional service employees to assist the agency’s Bureau of Administration, Office of Operations (A/OPR). RFP at 7, 58.[3] The contractor will provide staffing in the areas of real property management, facilities management, industrial design, construction, commissioning, space management, administration, logistics, budget and finance, information technology, and project management.[4] Id.
at 55.

The solicitation anticipated award of two but no more than three IDIQ contracts under which time-and-materials or labor-hour task orders would be issued in accordance with FAR subpart 16.5. Id. at 7. Each IDIQ contract will have a 5-year term comprised of a 1-year base and four 1-year options. Id. at 13. The solicitation provided for awards on a best-value tradeoff basis, considering the following evaluation factors: (1) technical capabilities; (2) quality control program; (3) past performance and experience; (4) facility clearance; and (5) cost/price. Id. at 65. The facility clearance factor was to be evaluated on a pass/fail basis. Id. For purposes of the best value tradeoff, the technical capabilities factor was more important than the quality control program and past performance and experience factors; and the quality control program factor and past performance and experience factors were of equal importance. The non-cost/price factors, when combined, were significantly more important than cost/price. Id.

For the evaluation of cost/price, the RFP contemplated that the agency would evaluate the realism and reasonableness of each offeror’s proposed cost/price for the base and option years. Id. at 65. To this end, the RFP stated:

The Government will review and evaluate the Price proposals (Attachment C – Ceiling Rates and Sample Pricing) for both Price Realism and Reasonableness. The Government will review and evaluate separate cost elements and profit in the offeror’s proposal (including cost or pricing data or information other than cost or pricing data), and apply judgment to determine Price Realism. Upon completion of the Price Realism Analysis, the Government will also perform a price analysis based on the proposed Sample Pricing (Attachment [D]). The Government will evaluate the deviations/ exceptions and/or conditional assumptions for acceptability. The Government will also evaluate all Representations, Certifications, and Other Statements of Offerors.

Id.

In their cost/price proposals, offerors were instructed to submit certain required documentation to include, a completed table with proposed hourly ceiling rates for 37 specified labor categories and associated security clearance levels, for each period of performance.[5] Id. at 61; AR Exh. 14, RFP amend. No. 0002, attach. C, Revised Hourly Ceiling Rates. Offerors were to apply their indirect costs, general and administrative (G&A) costs, and profit to the direct labor rate and then enter the fixed, fully burdened labor rates on the ceiling rates table for each labor category and performance years. RFP at 61. Additionally, each offeror was instructed to provide a complete cost breakdown showing all cost elements or loads applied to that rate such as the unburdened labor rate, fringe benefits, overhead, G&A, and profit, to support the agency’s price realism analysis. Id. Offerors were also required to provide a supporting pricing narrative. Id.

The solicitation also required each offeror to submit completed sample IDIQ pricing (hereinafter referred to as “sample pricing”). AR Exh. 14, RFP amend. No. 0002, attach. D, Revised Sample Pricing.[6] The sample pricing was comprised of spreadsheets that were prepopulated with various labor categories, associated security clearance levels, number of staff per labor category, and annual labor hours per labor category, for each performance year. The sample pricing was programmed to automatically fill-in the offeror’s proposed fully burdened labor rates from the hourly ceiling rates table. The agency would then multiply the offeror’s proposed labor rates by the annual hours for each labor category and use those resulting values to find the offeror’s estimated total price for each performance period. Finally, each offeror’s total prices for each performance period would be added together to arrive at the total price for the base and option years, which would be the value used in evaluating price realism and reasonableness. RFP at 62 (incorporated by reference FAR provision 52.217-5, Evaluation of Options).

DOS received timely proposals from 12 offerors, including proposals from APRA, HTGS, DGI, and Maven. Memorandum of Law (MOL) at 1. The agency evaluated proposals and awards were made to Maven and HTGS in September 2022. Contracting Officer Statement (COS) at 2.

On October 27, 2022, APRA filed a post-award protest, which our Office docketed as
B-421248. The protester challenged the agency’s price and technical evaluation of proposals and subsequent best-value decisions. On November 15, we dismissed the protest as academic based on corrective action proposed by the agency. A. Prentice Ray & Assocs., LLC, B-421248, Nov. 15, 2022 (unpublished decision).

During the corrective action, the agency issued amendment No. 0002, which, among other things, included a revised ceiling rates table and revised sample pricing spreadsheets. AR Exh. 12, RFP amend. No. 0002 at 1. Following a pre-award protest to our Office filed by APRA challenging the terms of the amendment, the agency announced it would take corrective action to include, requesting and evaluating final proposal revisions. As a result of the agency’s proposed corrective action, we dismissed APRA’s pre-award protest as academic. A. Prentice Ray & Assocs., LLC,
B-421248.2, Dec. 9, 2022 (unpublished decision).

DOS then issued amendment No. 0004 and requested and received final proposal revisions. Two offerors, HTGS and DGI, made no changes to their technical proposals and all four submitted revised cost/price proposals. COS at 2.

After this reevaluation, the agency evaluated the proposals as follows:

COS at 4, 6.

The independent government cost estimate (IGCE) was $35,713,620.20 and was based on the historical pricing of the non-competitively awarded incumbent contracts. AR
Exh. 47, Corrective Action Price Evaluation Report at 8-9 (Adobe PDF page numbers);
Exh. 45, IGCE tab; Exh. 46, IGCE Sample Pricing Calculation tab.

The contracting officer, who was also the source selection authority, reviewed the evaluation results and determined that the proposals submitted by HTGS, DGI, and Maven represented the best-value to the government. On January 13, 2023, the agency announced that IDIQ contracts were awarded to these firms. COS at 3. After requesting and receiving a debriefing, APRA filed another protest with our Office
(B-421248.3) challenging virtually every aspect of the agency’s evaluation and award decisions.

On April 17, the GAO attorney assigned to the protest conducted an outcome prediction alternative dispute resolution (ADR) conference.[7] The GAO attorney advised that she would likely draft a decision sustaining APRA’s challenges to the agency’s price realism evaluation and denying the remaining protest allegations. The GAO attorney explained that the agency’s price realism evaluation, which consisted merely of a comparison of the offerors’ proposed prices, was insufficient where the record was devoid of any documented considerations of each offeror’s respective technical approaches.

On April 18, DOS advised that it would take corrective action in response to the protest, stating:

The scope of the corrective action will include reconsidering the price realism evaluation in accordance with the Solicitation and making a new Best Value Award Determination taking into consideration the updated price realism evaluation and prior technical and price reasonableness evaluation findings.

Agency Notice of Corrective Action (B-421248.3).

We dismissed the protest as academic based on the agency’s proposed corrective action. A. Prentice Ray & Assocs., LLC, B-421248.3, Apr. 18, 2023 (unpublished decision).

In response to the ADR conference, DOS conducted and documented a supplemental price realism evaluation of final revised pricing proposals. AR Exh. 47, Corrective Action Price Evaluation Report. In its realism analysis, the agency first reviewed aspects of the offerors’ technical evaluations to assess the realism of their technical approach in light of their proposed sample pricing. See generally, id. at 3-8.

The agency then evaluated offerors’ proposed sample pricing and the separate cost elements of their proposed labor rates and compared offerors’ total evaluated sample pricing to both the IGCE and the prices proposed by competing offerors. Id. at 8; see also, Table 1, Sample Pricing. The agency also evaluated the proposed unburdened labor rates of each offeror to determine if the salaries proposed would support the RFP’s staffing requirements and were not too low. The agency’s analysis found that APRA and HTGS, the two highest-priced offerors, each proposed salaries in excess of $[DELETED] for [DELETED] of 37 labor categories, and [DELETED] of 37 labor categories, respectively. In addition, APRA’s and HTGS’s unburdened labor rates each included security clearance level premiums of [DELETED] percent and [DELETED] percent, respectively. AR Exh. 47, Corrective Action Price Evaluation Report at 9. On the other hand, the two lower-priced offerors, DGI and Maven, did not propose salaries in excess of $[DELETED] for any labor category and neither proposed to pay security clearance premiums. Id., see also, Table 2, Unburdened Labor. Based on market research, Maven’s initial success in recruiting incumbent personnel on previously awarded task orders under these contested contracts, and historical pricing, the agency determined that salaries in excess of $[DELETED] or clearance premiums were not required to successfully support this effort. Id.

After completing the supplemental realism evaluation, the agency concluded that all four offerors’ proposals demonstrated an understanding of the solicitation requirements, low risk of unsuccessful performance, and that each proposed realistic labor rates. The contracting officer again determined that HTGS’s, DGI’s, and Maven’s proposals represented the best value to the government. AR Exh. 48, Corrective Action Award Decision Document at 1-4. On May 26, the agency notified APRA that the awards had been reaffirmed. AR Exh. 49, Notice to Unsuccessful Offeror. APRA requested and received a debriefing. AR Exh. 50, APRA Debrief. Letter.

This protest followed.

DISCUSSION

APRA challenges the agency’s price realism evaluation of both DGI’s and Maven’s proposals. Protest at 6-8; Comments at 2-5. In this regard, the protester asserts that the realism analysis undertaken by the agency was fundamentally flawed, with the two principal techniques used by the agency--relying on the evaluation results under the other evaluation factors, and on comparisons to the IGCE--were “not up to the task.” Comments at 5. APRA also asserts that the agency did not meaningfully consider that DGI’s and Maven’s total pricing each reflected a lack of understanding of the RFP requirements. In this regard, APRA asserts DGI’s and Maven’s total prices were significantly lower than the prices proposed by APRA (which APRA states were based on its incumbent contract), much lower than the prices proposed by HTGS, and much lower than the IGCE. For the reasons discussed below, we find none of the protester’s arguments provide a basis to sustain the protest.

Where a solicitation provides for the evaluation of prices for realism purposes, an agency may conduct a price realism analysis for the limited purposes of assessing whether an offeror’s low price reflects a lack of technical understanding or performance risk. FAR 15.404‑1(d)(3); NextGen Fed. Sys., LLC, B-420456 et al., Apr. 14, 2022, 2022 CPD ¶ 99 at 8. The nature and extent of an agency’s price realism analysis are matters within the agency’s discretion and an agency is not obligated to verify each and every cost/price element of an offeror’s proposal. See Arrington Dixon & Assocs., Inc., B‑409981, B-409981.2, Oct. 3, 2014, 2014 CPD ¶ 284 at 6; Citywide Managing Servs. of Port Washington, Inc., B-281287.12, B-281287.13, Nov. 15, 2000, 2001 CPD ¶ 6
at 5. Our review of an agency’s price realism analysis is limited to determining whether it was reasonable and consistent with the terms of the solicitation. See Smiths Detection, Inc.; Am. Sci. & Eng’g, Inc., B-402168.4 et al., Feb. 9, 2011, 2011 CPD ¶ 39 at 17.

Here, APRA has not demonstrated that the price realism evaluation was unreasonable. As discussed above, the agency utilized two evaluation techniques in its realism analysis of DGI’s and Maven’s proposed pricing: analyzing the findings of their technical evaluations in light of their proposed pricing; and comparing the cost elements of DGI’s and Maven’s sample pricing to the IGCE and to competing offerors.

Regarding DGI’s proposal, the record indicates that the agency reviewed the consensus evaluation assessments and ratings assigned and found DGI’s low proposed pricing posed no performance risks associated with its technical approach. In this regard, the agency found that although DGI’s “quoted sample task price is 15.5 [percent] lower than the competitive range [offerors’] group average [$37,379,744.55] and 12.5 [percent] lower than the IGCE [$35,713,620.20], the DGI JV solution is a competitively priced, low risk solution with no concerns regarding the rates being too low to support functional areas identified in the SOW.” AR Exh. 47, Corrective Action Price Evaluation Report at 8 (emphasis omitted).

In support of finding DGI’s proposal presented low risk and a clear understanding of the requirements, the agency noted, among other considerations, that DGI’s proposal was evaluated as “the best among all proposals” under the most important qualitatively assessed technical capabilities factor. Id. at 7. The price evaluators specifically considered strengths associated with DGI’s approach to transitioning incumbent resources, detailed staffing plan, and approach to salary increases. The agency also considered that DGI’s proposed subcontractor was a previous prime contract holder for several senior positions. Id. Additionally, the evaluators considered DGI’s positive past performance performing similar operations and maintenance and construction services, including previous work performed for DOS. Id. at 8.

As to Maven’s proposal, the record reflects that the agency reviewed the consensus evaluation assessments and ratings assigned and concluded that although Maven’s “quoted sample task price is 20 [percent] lower than the competitive range [offerors’] group’s average and 16 [percent] lower than the IGCE” there was no basis to conclude that Maven’s proposed rates were too low to support the functional areas specified in the SOW. Id. at 5. In reaching this conclusion, the agency noted that Maven priced “this effort in a way that reflects their understanding of the [RFP] requirements, including the expertise and types of personnel” needed to provide the solicited support services. Id.

In support of finding Maven’s proposal presented low risk and a clear understanding of the requirements, the agency noted, among other considerations, the similar and relevant experience performed by Maven and its proposed subcontractor, including for DOS involving cleared personnel up to the secret compartmentalized information level. Id. at 4. The agency also considered Maven’s staffing capabilities, including its approach to incumbent capture. In this regard, Maven explained that its proposed ceiling rates used “a formula that pulled the rates directly from our IDIQ ceiling rates.” Id. at 5. Maven explained that when it was previously awarded the first two task orders under this IDIQ--which were subsequently protested by APRA--Maven’s initial proposed rates were sufficient to capture more than [DELETED] percent of the incumbent staff; Maven explained that based on its updated proposal and direct compensation discussions with its incumbents, it reasonably believed it would be able to capture up to [DELETED] percent of the incumbent staff. Id.

APRA disagrees with the agency’s conclusions. The protester claims that the agency’s use of this evaluation technique--considering the specific technical approaches and prior experience of the awardees--could not reasonably determine whether DGI and Maven understood the scope of the required services or whether their proposed pricing created a risk of poor performance. We find this assertion to be without merit.

Our decisions explain that agencies have discretion as to the type of analysis they conduct to determine the realism of proposed prices. Arrington Dixon & Assocs., Inc., supra. Absent a specific provision in a solicitation, agencies are not required to conduct price realism analyses using a particular methodology. NTT DATA Servs. Fed. Gov’t., Inc., B‑417235.2, B‑417235.3, Jan. 2, 2020, 2020 CPD ¶ 19 at 4. Here, a review of the solicitation shows no requirement for the agency to use a particular evaluation method or technique; therefore, it was up to the agency to decide upon the appropriate method for the evaluation of price realism. Despite its claims to the contrary, APRA has not shown that the agency’s review of DGI’s and Maven’s technical evaluations to assess the realism of their technical approach was an unreasonable evaluation technique.

Indeed, our Office has explained that an agency’s assessment of price realism requires a consideration of the offeror’s technical approach. Apogee Eng’g, LLC, B-414829.2, B‑414829.3, Feb. 21, 2019, 2019 CPD ¶ 85 at 9 (“In this respect, we have stated that the comparison of offerors’ price proposals in the context of a price realism analysis is an inherently limited methodology given the requirement to consider each offeror’s unique technical approach.”). The agency’s previous price realism evaluation, which consisted merely of a comparison of the offerors’ proposed prices without any documented consideration of their respective technical approaches, was the principal basis for the GAO attorney’s outcome prediction ADR in APRA’s prior protest. On the record before us, we find nothing objectionable about the evaluation of DGI’s and Maven’s proposed pricing using this evaluation technique.

Similarly, we find no basis to object to the agency’s comparison of various cost elements of DGI’s and Maven’s sample pricing with its IGCE or to prices proposed by competing offerors. In this regard, the agency recognized that its IGCE was developed utilizing rates from its incumbent, non-competitively awarded contracts, and, therefore, understood that the IGCE would likely “be on the higher side of competitive pricing,” and “when evaluating the sample pricing of offerors in the competitive range, proposed sample pricing under the IGCE did not raise red flags.” AR Exh. 47, Corrective Action Price Evaluation Report at 9.

APRA contends, however, that the agency’s use of the IGCE was not an appropriate evaluation technique because the agency failed to establish the accuracy of the underlying information used to develop the IGCE. Comments at 3-4. In particular, APRA alleges the agency: did not identify the incumbent contracts relied on in developing the IGCE; did not explain how the incumbent labor categories were correlated with the labor categories in the IGCE; did not indicate the point in time these incumbent rates were charged to the government and further alleges that the incumbent rates used in the IGCE were the escalated incumbent rates. Id.

As an initial matter, we note that procuring agencies generally have discretion in how they utilize a government estimate in a realism evaluation; they are not required to find that proposed costs below the estimate are unreasonable. Booz Allen Hamilton, Inc., B‑414283, B-414283.2, Apr. 27, 2017, 2017 CPD ¶ 159 at 12-13; Optex Sys., Inc., B‑408591, Oct. 30, 2013, 2013 CPD ¶ 244 at 5-6. While APRA seeks a more exacting accounting of how the agency calculated its IGCE, it fails to meaningfully rebut the agency’s reasonable concerns that the IGCE skewed higher due to the non-competitive nature of the incumbent contracts or other indicia that the IGCE was overstated. For example, the agency considered that the lowest-priced offeror, Maven, was able to successfully capture more than [DELETED] percent of incumbent staff when it was initially awarded the first two task orders for the subject IDIQ contracts, and had then increased its proposed rates in its revised proposal. AR Exh. 47, Corrective Action Price Evaluation Report at 9.

However, as noted above, the agency also compared each offeror’s proposed pricing to the prices proposed by other competing offerors, which the protester does not challenge. See generally, AR Exh. 47, Corrective Action Price Evaluation Report. In this context, while the protester disagrees with the agency’s limited use of the IGCE, we find nothing unreasonable in the agency’s comparison of DGI’s and Maven’s proposed pricing to those proposed by competing offerors. APRA’s disagreement with the agency’s price realism methodology/technique, does not provide a basis on which to sustain a protest. See BillSmart Sols., LLC, B‑413272.4, B‑413272.5, Oct. 23, 2017, 2017 CPD ¶ 325 at 10.

Finally, the protester argues that the agency’s realism analysis provided no justification for its conclusions that DGI’s and Maven’s proposed technical approach could be performed at the low pricing each proposed and that there was no increased risk of poor performance. In this regard, APRA complains that the agency overlooked the fact that both DGI and Maven proposed significantly lower salaries than what APRA, an incumbent contractor, and HTGS, each proposed to pay to recruit and retain incumbent personnel.[8] As support, the protester identifies and compares several labor categories where the disparity in proposed salaries between itself, DGI, and Maven, were neither identified nor considered by the agency in its realism analysis. See Comments at 5-9. Simply put, APRA believes that the agency was required to perform a far more in-depth level of review than the terms of the RFP--or the pertinent regulations--impose.[9]

As addressed above, the depth of an agency’s evaluation in this regard is a matter within the sound exercise of the agency’s discretion. Citywide Managing Servs. of Port Washington, Inc., supra. While the record does not include a detailed analysis comparing and contrasting each proposed direct labor rate across each labor category for every offeror, the record reflects that the agency specifically evaluated the reasonableness and realism of the offerors’ respective technical approaches and considered the specific differences between proposals across proposed price elements. In this regard, the agency specifically contemplated unique elements supporting the lowest-priced offerors’ low risk and understanding of the requirements including, for example, that Maven was able to successfully recruit incumbent staff at its proposed rates, as well as factors that could explain the other offerors’ higher-proposed prices, including for example the fact that APRA’s higher rates were based on the rates used on its non-competitively awarded incumbent contract. For these reasons, based on our review of the entire record, we find no basis to question the reasonableness of the agency’s price realism analysis.

The protest is denied.

Edda Emmanuelli Perez
General Counsel