GAO ruling lets GSA buy the USDA steak, not the mystery meat

The General Services Administration may have just put the first nail in the coffin that eventually will bury the widespread use of lowest-price, technically acceptable (LPTA) contracts for services.

The Government Accountability Office’s decision to deny four protests of GSA’s Alliant 2 contracts for IT services could end up being a landmark ruling that is that first nail.

“Lowest-price technically acceptable has been disfavored among contractors for putting price over innovation. Now we have protesters who in essence claim that cost was only nominally and improperly considered in the Alliant 2 evaluation,” said Barbara Kinosky, managing partner of Centre Law & Consulting LLC. “We have seen DoD move away from LPTA. This is the first major requirement coming out of a civilian agency that is clearly saying, ‘Contractors, we are looking for smart over cheap. Give us the USDA steak, not the convenience store mystery meat.’ I am confident this is a trend we will now see more of since GSA has taken the lead in the technology area where we definitely need to excel.”

The weight of this GAO’s ruling isn’t lost on GSA either.

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“This decision changes the paradigm of how the government has traditionally conducted price/cost analysis. It provides the precedent for innovation across the government during the source selection process,” said John Cavadias, the senior contracting officer for GSA’s Alliant 2 GWAC Procurement Contracting Office. “This could also result in a significant time savings (shorter procurement lead times), as it already has with programs in GSA.”

Eric Crusius, an attorney with Miles & Stockbridge, said GAO’s decision also now gives agencies the latitude to design a source selection process that they believe is most advantageous.

“Even though it is not provided for explicitly in the Federal Acquisition Regulations, GAO has given agencies permission to downplay price as an evaluation factor only ensuring the proposed pricing is fair and reasonable,” Crusius said. “Because GSA went with a ‘highest technically rated with fair and reasonable price’ evaluation scheme, the prices the government pays could be higher and awards could favor incumbents with experience. This is a pendulum swing in the other direction from the much-maligned LPTA source selection scheme.”

These also were the last four protests stopping Alliant 2 from heading into the home stretch. The 10-year, $50 billion unrestricted and $15 billion small business versions of the multiple-award governmentwide acquisition vehicle can now move closer to award of up to 60 vendors.

Mary Davie, GSA’s assistant commissioner of the Office of the Information Technology Category, wrote in a post on Twitter on Jan. 13 now that the protests have been resolved, GSA is “proceeding with evaluations and award.”

Read all of our coverage on the potential government shutdown.

GSA released the RFP for Alliant 2 on June 26 and has since issued nine amendments.

Alliant 2 will be the follow-on governmentwide IT services contract to $50 billion Alliant, which GSA awarded in March 2009 to 59 companies. GSA also is pursuing an Alliant 2 small business as a follow-on to the $15 billion Alliant small business contract, which it awarded to 72 firms in December 2008.

Both Alliant contracts expire in 2019, but GSA wants to award Alliant 2 to have some overlap.

GAO denied the complaints from four bidders — Sevatec, Inc.; InfoReliance Corp.; Enterprise Information Services, Inc.; Buchanan & Edwards, Inc. — about GSA’s approach to proposal evaluations and the number of awards under the GWAC.

“The protesters argue that our Office has found, citing this statute, that agencies are required to include cost or price as a ‘significant evaluation factor that must be considered in the evaluation of proposals,’ and that a ‘nominal consideration of price’ is not sufficient to have complied with the statute,” GAO stated. “[W]e find nothing improper about the agency’s price evaluation. As explained by the agency, this procurement does not involve a tradeoff and the agency’s price evaluation will consist of determining the fairness and reasonableness of multiple aspects of the highest rated offerors’ proposed rates. Those decisions cited by the protesters where our office has found that considering only the reasonableness of an offeror’s price proposal is an insufficient consideration of price, involved post-award protests under solicitations that used tradeoff source selection processes, not present here.”

Additionally, GAO disagreed with the protestors’ claims that use of “point scores” as an evaluation system was improper.

“Here, the agency has structured its solicitation such that there are no underlying ‘strengths’ or ‘weaknesses’ to be evaluated. Indeed, the RFP has provided for an ‘objective’ point scoring system, where there will be no tradeoff of proposal benefits relative to the proposed price,” GAO stated. “In those scenarios where our office has found the mechanical application of point scores to be unreasonable, this is because the agency was required to conduct a qualitative assessment (i.e., consideration of strengths and weaknesses) of the proposals. As the solicitation here expressly does not envision a qualitative assessment beyond the review and verification of the point scores, we find no basis to sustain the protesters’ challenge to the agency’s source selection process.”

The reason Kinosky and other procurement experts are pointing to this decision as a landmark case is because it’s the first of its kind in many respects. Even GAO recognized the importance of its decision, saying it had “not previously considered the question of whether an agency may properly structure a solicitation using a ‘highest technically rated with a fair and reasonable price’ evaluation scheme.”

Crusius said previously agencies may not have believed they could minimize price as a factor because there was no legal precedence. But now, GAO has given them that top cover needed to seek value over lowest price.

This wasn’t the first set of protests GSA faced over Alliant 2. GAO heard a total of eight protests in all and came out on top in all of them.

That was not the case with the original Alliant contract where GSA faced post-award protests and ended up awarding spots on the GWAC to all bidders.

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