Marines Amphibious Combat Vehicle Procurement Shows That Low Price Does Not Always Win
From the early days of our country’s space program, government contractors had a critical role to fill, and quite often the subject of government contracts was a topic in media reports. When asked how he felt sitting on top of a rocket waiting for lift off, one astronaut famously quipped about how the parts below him all were “supplied by the lowest bidder on a government contract.”
The perception that low price wins has carried forward to the present day, even as government procurement practices have evolved. A recent decision by the U.S. Government Accountability Office (GAO), however, shows that in the real world the low bidder does not always win.
In General Dynamics Land Systems, B-412525; B-412525.2, March 15, 2016, the GAO upheld the decision by the U.S. Marine Corps to select the higher-priced proposal for award of phase one of a contract for Amphibious Combat Vehicles.
The Marines rejected GDLS’s proposal even though it was almost $325 million less expensive than the $1.2 billion proposal of the awardee, Science Applications International Corporation. Here, GDLS lost even though it was lower-priced by a significant margin. What happened?
This was a best value procurement under which the Solicitation specifically stated that the Marines would be willing to pay a premium for a superior technical solution. The Marines source selection authority (SSA) found that GDLS and SAIC were “essentially equivalent” in designated “emphasis areas” and focused on “discriminators” between the two proposals. The SSA stated:
In highlighting these differences, I am mindful of the proliferation of improvised explosive devices on the battlefield and I believe a price premium for SAIC’s proposed protection . . . is merited in order to provide Marines greater protection against loss of life or limb.
The SSA concluded that the “significantly increased protection provided by SAIC compared to GDLS, warrants SAIC’s higher price.”
GAO explained the law for best-value procurements and noted that an agency’s tradeoff analysis is “governed only by the test of rationality and consistency with the stated evaluation criteria” and that an agency “may ultimately focus on a particular discriminator between proposals, even if it is not related to one of the most-heavily weighted evaluation factors,” where the agency has a “reasonable basis to do so.” And, GAO found the Marines tradeoff was reasonable and consistent with the evaluation criteria in the Solicitation here. GAO noted that it is “not inconsistent with an evaluation scheme in which technical factors are of equal weight for an agency to distinguish between proposals on the basis of one of those factors.”
This was probably a pretty easy decision for GAO to write. When an agency tradeoff decision is based on providing “greater protection against loss of life or limb,” it will be hard for GAO to second guess that tradeoff. At the end of the day, low price does not always win in government contracts. And for the women and men who will be riding in the Marines’ new Amphibious Combat Vehicles, that sure is a good thing.