This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its December 2014 decision in the matter of CGI Federal Inc., the U.S. Government Accountability Office found that the Department of Navy, Space and Naval Warfare Research Center failed to properly evaluate pricing based on its actual product needs. The protest dealt with a Request for Proposals (RFP) for the production of build-to-print network systems for Navy ships as part of a project to modernize information technology at sea. As the GAO noted, for the purposes of the price evaluation, bidders were to provide a price for a single unit to be ordered at the time of contract award, but that unit price ceilings proposed would be “for evaluation purposes only and did not apply to the resulting awarded contract.” The GAO found that the Department actually planned to order unit shipments at far lower levels than what was contemplated in the RFP. The complainant challenged the unfairness in the evaluation process caused by the misalignment between stated unit shipping requirements and actual requirements:
CGI contends that the agency’s price evaluation methodology, which provided for comparing offerors’ prices at the maximum order level of 15 units, did not match the agency’s planned ordering needs as determined by the agency prior to award. Given this disconnect, the protester argues that the agency was required to amend the solicitation’s evaluation scheme to provide a reasonable basis for comparing offerors’ prices, one which matched the agency’s ordering needs.
The complainant also maintained that it would have ranked better in the evaluations had its pricing for the actual required number of units been used as the basis for assessing proposed pricing. The GAO agreed, finding that the price evaluation discrepancy was caused by a change in required product volumes between the bid submission date and the contract award date:
The circumstances here are unusual in that the meaningfulness of the price evaluation scheme set forth in the RFP changed between the closing date for receipt of FPRs [Final Proposal Revision (FPR)] and the date of award. That is, the record reflects that it made perfect sense to evaluate on the basis of 15/each unit pricing when the agency intended to award three contracts and issue 3-4 delivery orders per year. Given the agency’s projection that it would acquire approximately 45-60 units annually in FYs 2014-2017, each order would necessarily need to be placed at the 15/each unit level based on the intended number of orders issued. Evaluating on the basis of 15/each unit pricing no longer provided a rational basis for comparison, however, when, during the source selection process, the agency decided to increase the number of awardees to five, and to alter its ordering strategy to significantly increase the number of delivery orders annually, thereby decreasing the number of units to be acquired per delivery order. Given this fundamental shift in the agency’s anticipated ordering plans, it was unreasonable for the agency to proceed with a price evaluation methodology that was divorced from these plans. Rather, the appropriate course of action was for the agency to amend the solicitation in a manner that would enable it to evaluate, and make a tradeoff decision based on, the offerors’ relative relevant prices.
After finding that the divergence between the stated requirements in the solicitation and the actual requirements in the awarded contracts undermined the accuracy of the price evaluations, the GAO directed the Department to amend its solicitation and provide the bidders with a new opportunity to submit bids so that its pricing could be evaluated based on actual needs.
As this case illustrates, discrepancies between the stated contract volumes used for bid evaluations and actual contract volumes can lead to fundamental defects in the defensibility of bid evaluation processes. Purchasing institutions should therefore be careful to ensure that they accurately disclose their anticipated contract volume requirements when drafting their solicitation documents and then apply those volumes consistently in subsequent evaluation processes.
