Even in Best Value Procurements, Price Matters
By: Lori Lange
Published Date: November 30, 2020
The Federal Government awards many of its contracts on the basis of best value (i.e., the contracting agency awards the contract to the offeror whose proposal has the best combination of technical evaluation factor scores and price). A solicitation is supposed to indicate whether the technical evaluation factors, when combined, are more important, less important, or approximately equal to price. Regardless of the relative importance of price, FAR 15.101-1 requires that price actually be considered in any best value tradeoff decision. If the agency fails to properly consider price, its best value tradeoff decision may be challenged.
GAO Sustains Protest
In Qbase, LLC., Perspecta Enterprise Solutions, LLC, and Northrop Grumman Systems Corporation, B-416377.9, et al., (November 13, 2020), the Government Accountability Office (GAO) sustained a protest challenging the award of seven IDIQ contracts for information technology support services. Although the solicitation stated that the technical evaluation factors were significantly more important than price, the protesters alleged that the agency failed to meaningfully consider price in its best value tradeoff decision. GAO agreed and sustained the protest.
GAO has long held that source selection officials have considerable discretion in determining the manner and extent to which they will make use of technical and price evaluation results as long as their judgments are rational and consistent with the solicitation’s stated evaluation criteria. Where the solicitation states that the technical factors are more important than price, the agency may select a technically superior, higher-priced proposal if the agency reasonably concludes that the price premium is justified in light of the proposal’s technical superiority. GAO requires, however, that the agency adequately document its decision and that the decision be supported by a rational explanation as to why the higher-rated proposal is, in fact, superior and why its technical superiority warrants paying a price premium.
In the Qbase case, GAO found that the agency failed to document a reasonable basis for the tradeoffs it made. According to GAO, the record indicated that the agency mechanically awarded contracts to the seven offerors whose proposals, in descending order, had the best combination of evaluation scores for the technical evaluation factors. In other words, the agency failed to make a qualitative assessment of the technical differences among the proposals in order to determine whether the evaluated technical superiority of the most highly rated proposals justified paying the price premium associated with those proposals. GAO recommended that the agency conduct and document a new best value tradeoff decision.
Importance of Solicitation’s Evaluation Factors
When preparing their proposals, contractors need to understand the relative importance of the solicitation’s evaluation factors, especially price. While an agency is not required to award to the lowest-priced offeror in a best value procurement, agencies still must consider the offeror’s proposed price and whether the strengths and benefits of the offeror’s proposal merit paying a higher price.