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4 min read

Price Premium must be Adequately Justified in Best-Value Decision

Price Premium must be Adequately Justified in Best-Value Decision

When issuing a solicitation, the solicitor can assess the bids or quotations using a best-value tradeoff evaluation. The tradeoff evaluation process is used when it is in the best interest of the solicitor, in this case the government, to award a contract to the contractor who is not the lowest price or the highest technically rated. In order to use this process per the Federal Acquisition Regulation (FAR) 15.101-1, the solicitation must contain the following: 

  1. 1.  The evaluation factors and significant subfactors affecting the award must be clearly stated in the solicitation
  2. 2.  Other than cost or price, all other evaluation factors combined are more important than, approximately equal to, or significantly less important than cost or price

If using the best-value tradeoff evaluation, the solicitor must provide adequate information on how it reached its decision. If a contractor who was not awarded the contract is not satisfied with the best-value decision and/or the decision lacks sufficient evidence to justify the award to another contractor, they can appeal the decision to the Government Accountability Office (GAO). 

Alpha Omega Integration, LLC GAO Protest No. B-419812; B-419812.2
Decision issued August 10, 2021

The solicitation

On February 3, 2021, the United States Department of Agriculture (USDA) issued an 8(a) set-aside solicitation for “…contract personnel to support the [Enterprise Application Systems (EAS)] staff in providing professional services for developing, maintaining, and supporting enterprise-class business applications, cloud services, geospatial management, and distance learning services.” The solicitation was for a fixed-price, labor-hour task order for one base year and four 1-year option periods. The quotations were evaluated on best-value tradeoff based on past performance, technical approach, and oral presentation (listed in descending level of importance), and price. The solicitation also stated the agency reserved the right to award the contract to the vendor that was not the lowest price, and the Contracting Officer (CO) “shall make an assessment of the proposed price and the Performance Confidence rating and the Confidence ratings and trade one-off for the other to determine the best value for the government.” 

The USDA received eight quotations including bids from Alpha Omega Integration, LLC (Alpha Omega) and Synergy Business Innovation & Solutions, Inc. (Synergy). Alpha Omega and Synergy received identical ratings on past performance (Substantial Confidence), technical approach (High Confidence), and oral presentation (Some Confidence). Alpha Omega’s price was $586,211.58 lower than Synergy.

Although the two contractors received identical rates by the technical evaluation team, the CO disagreed with several aspects of the evaluation. The CO concluded Synergy’s quotation was stronger under the past performance and technical approach factors, while Alpha Omega’s quotation was stronger under the oral presentation factor. Due to the past performance and technical approach factors being weighted more heavily than the oral presentation factor, the CO determined Synergy’s stronger responses in the two most important factors warranted a trade-off to Synergy to achieve the best value. After being notified of the bid award to Synergy, Alpha Omega filed a protest with the GAO.

The protest

Alpha Omega argued the USDA’s best-value tradeoff decision was inadequately documented, stating a lack of sufficient evidence that the USDA performed a qualitative and comparative assessment of the bids. Specifically, the USDA did not explain what capabilities or features provided in Synergy’s quote warranted the award.

The USDA contended the CO exercised independent judgment throughout the evaluation process, and Alpha Omega’s protest was nothing more than a disagreement with the “[a]gency’s textbook example of a reasonable tradeoff analysis.” In the decision memorandum, the CO justified the decision with various statements praising Synergy’s proposal, including the following:

The additional cost provides incredible value to the Government based on Synergy’s demonstration of technical expertise and comprehensive approach to addressing both current and future challenges for EAS. Synergy has demonstrated unique innovative processes as well as their ability to take ownership of these processes though their past performance package as well as through their technical approach.

However the USDA failed to provide any information on the specific qualities of the two quotes in relation to each other, why Synergy’s proposal was superior to Alpha Omega’s proposal, how the Synergy’s proposal demonstrated this “technical expertise and comprehensive approach,” or what made the Synergy’s solution “demonstrate[] unique innovative processes.”

the outcome

The GAO found the USDA’s determination lacked sufficient evidence to prove the CO adequately assessed the differences between the two quotes. The decision memorandum provided to the GAO failed to identify any superior capabilities or features of Synergy’s quote that would justify the CO’s decision to pay the price premium. Therefore, the GAO could not conclude the decision to award Synergy the contract was reasonable and sustained Alpha Omega’s protest. 

The GAO recommended the USDA conduct and document a new analysis between the two companies, and Alpha Omega be reimbursed for the cost of the protest.

The takeaway

In a best-value decision, the CO or solicitor must explain why it is willing to pay a price premium in a best-value award. It is not enough to praise the awardee’s proposal without providing specific reasoning behind the decision. The CO or solicitor must explain why the awardee’s proposal provided greater value to the government as compared to the other proposals, thereby justifying a higher price. In this case, the CO’s general statements of praise, without any side-by-side comparison of each proposal’s strengths or even a mere identification of which features in the competitor’s proposal offered additional value to the government, was not sufficient. 

The government has wide discretion in determining which features, services, and other aspects of a proposal provides additional value and why that extra value is worth paying a higher price. This GAO decision does not change the basic framework for assessing the government’s best-value awards. The government still has the power to make nearly any reasonable tradeoff it wishes when assessing what proposal is truly the “best value.”

However, this GAO decision is a reminder that the government cannot base its decision on objectively unreasonable criteria or fail to explain its reasoning altogether. If the government fails to document its reasoning or does not actually compare the proposals, the decision is unreasonable.  


If you lost a contract award to a more expensive competitor and the government did not adequately explain why it should be paying more for your competitor’s products or services, contact us. Whitcomb, Selinsky, PC has a team of experienced attorneys ready to help.

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