AST Environmental, Inc., B-291567, December 31, 2002

B-291567 Dec 31, 2002 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Protest that agency failed to perform an adequate price realism analysis is denied where agency's price analysis was reasonable and legally sufficient. Contending that Air Force's price realism analysis was inadequate. AST asserts that Water Quality's proposal should have been rejected because its proposed price was unrealistically low. Proposals were to be evaluated for technical acceptability. Award was to be made on a "best value" basis. That the agency might reject proposals where the prices were unreasonably high or so low as to indicate a lack of understanding of the work to be performed. AST appears to believe that those proposals should have been rejected due to their allegedly unrealistic prices. View Decision AST Environmental, Inc., B-291567, December 31, 2002 DIGEST Attorneys DECISION AST Environmental, Inc. protests the award of a contract to Water Quality Systems, Inc., under request for proposals (RFP) F33601-02-R-9035, issued by the Department of the Air Force for all labor, material, and equipment necessary to clean and monitor oil separators and settling basins at Wright Patterson Air Force Base. Contending that Air Force's price realism analysis was inadequate, AST asserts that Water Quality's proposal should have been rejected because its proposed price was unrealistically low. We deny the protest. The RFP contemplated the award of a requirements contract for a base period and 4 option years. Proposals were to be evaluated for technical acceptability, and then, among technically acceptable proposals, award was to be made on a "best value" basis, with a tradeoff permitted between past performance and evaluated price. The RFP stated that the agency would evaluate the proposed prices for realism and reasonableness, and that the agency might reject proposals where the prices were unreasonably high or so low as to indicate a lack of understanding of the work to be performed. The agency received offers from five firms, including AST (the incumbent contractor) and Water Quality (an incumbent contractor to AST). The agency awarded the contract to Water Quality, and AST protested. Specifically, AST protests that the Air Force did not follow the evaluation criteria laid out in the solicitation because the agency failed to consider the lack of realism in the prices proposed by the firms who submitted the three lower priced proposals. AST appears to believe that those proposals should have been rejected due to their allegedly unrealistic prices. Price realism is not ordinarily a consideration in fixed-price contracts, since the risk of performing the contract at the proposed price is borne by the contractor. However, an agency may decide to use price realism in the competition for a fixed-price contract to assess the risk of poor performance in an offeror's approach or to measure an offeror's understanding of the solicitation's technical requirements. PHP Healthcare Corp., B-251933, May 13, 1993, 93-1 CPD 381 at 5. The nature and extent of an agency's price realism analysis are matters within the agency's discretion, and our review of an agency's price realism evaluation is limited to determining whether it was reasonable and consistent with the solicitation's evaluation criteria. Uniband, Inc., B-289305, Feb. 8, 2002, 2002 CPD Para. 51 at 4. Here, offerors proposed fixed unit prices for eight tasks, and, as noted above, the solicitation stated that the agency would evaluate proposed prices for realism, in particular, to ensure that prices are not so low as to indicate a lack of understanding of the work to be performed. Having reviewed the record, we see no basis to find the Air Force's price analysis legally objectionable. Each offeror submitted detailed information about its pricing, and the contracting officer compared the total prices to each other, as well as the estimated total labor hours and the technical approach for performing the work. Agency Report, Tab 2(g), Price Competition Memorandum, at 3-4. The contracting officer noted that AST and Water Quality both have first-hand knowledge of the work, and yet proposed significantly different prices, with AST's prices substantially higher. Id. The contracting officer noted in particular that the offerors assumed a similar number of labor hours to perform the work. Id. at 4. On this record, we see nothing objectionable in the agency's ultimate conclusion that Water Quality's prices were not so low as to indicate a lack of understanding of the work, and that they were realistic. AST nonetheless contends that the three lower-priced proposals (including that of Water Quality) were unrealistically low because they failed to account for the proper amount of water-disposal required under the solicitation.