Fixed Price Contracts - Contingencies And Assumptions Not Welcome

In an April 6, 2011 decision, the GAO overturned the award of a $24.6 million task order to Booz Allen Hamilton, Inc. (“BAH”), sustaining the protest of the incumbent Solers, Inc. (“Solers”). This procurement has a long and storied protest history. The Defense Information Systems Agency (“DISA”) originally awarded the contract to Solers in September 2010. BAH filed a protest, in response to which DISA took corrective action. After the reopening of discussions and evaluation of offerors revised proposals, the Agency awarded the contract to BAH, despite Solers’ technical superiority, based on BAH’s lower price and superior past performance. This time Solers protested. 

Solers argued that BAH took exception to the fixed-price requirement and that DISA failed to evaluate the offerors’ past performance and BAH’s proposed personnel reasonably. GAO sustained the protest on all three of these grounds.

With regard to BAH’s proposed price, Solers contended that BAH really did not propose a firm-fixed price because it conditioned its offer on the Agency’s provision of on-site facilities far in excess of what the solicitation indicated would be made available. The solicitation provided that “[t]he contractor shall perform the majority of work for this contract at its own facilities,” and that “[t]he government may provide space for up to seven (7) personnel to perform work” on-site with the government. In its offer, BAH explained that it offered lower prices for its engineers who worked on-site with the government, because it understood a significant portion of its personnel (presumably many more than 7) would be working on-site. Moreover, BAH’s proposal stated that “[i]n the event that these conditions are not met, contractor site rates may need to be applied.” GAO found that this amounted to “taking exception” to the fixed price requirement. The GAO also specifically rejected DISA’s and BAH’s assertion that the conditional language was merely a “suggestion” that BAH may in the future request a higher price adjustment. Because the price was premised on the availability of more government workspace than that for which the RFP provided, it was not fixed.

In overturning DISA’s past performance evaluation, GAO found that the record was simply inadequate to determine whether the evaluation was reasonable. Specifically, DISA asserted that it relied on past performance references and interviews of those references, but it did not have copies of the interview questions or notes. Instead, it simply had conclusory findings.  The GAO found “the contemporaneous record does not document the information upon which the evaluators appeared to have relied in making the judgments, an the agency’s response to the protest relies on numerous assertions, which are either unsupported or contradicted by the contemporaneous record.”  

Finally, in overturning DISA’s technical evaluation, GAO found that the contemporaneous evaluation record did not support DISA’s ultimate finding that BAH had proposed a sufficient number of hours for the required engineering support because there were unexplained inconsistencies in the proposal and no documented analysis of those inconsistencies. 

Throughout the decision, the GAO particularly took issue with the lack of support and documentation in the record, noting that where an agency fails to document or retain evaluation materials, it bears the risk that there may not be adequate support for the conclusion that the agency had a reasonable basis for its decision.  There was simply nothing in the record to support its findings and the GAO expressed frustration that DISA could only rely on post hoc arguments that were either unsupported or flatly contradicted by the record.

GAO’s recommended that DISA either terminate BAH’s contract and award a contract to Solers or reopen discussions with offerors to see if BAH will eliminate the contingency. If DISA opts for a reopening, GAO further recommended that it reevaluate offerors’ past performance and BAH’s proposed personnel, and this time around, document its evaluation.  If DISA opts to reopen, stay tuned for round 3!