By: Michael H. Payne

It is not uncommon, in best value negotiated procurements, for a solicitation to announce that the technical evaluation factors, collectively, are more important than price.  Construction contractors, of course, still remember the days of sealed bidding where the lowest bidder received the award and they are not very receptive to hearing about a subjective technical evaluation that results in an award to a higher priced proposal.  Nevertheless, the Federal Acquisition Regulation allows an award to a higher priced proposal, provided that an appropriate price/technical tradeoff has been made by the agency.

According to FAR 15.101-1(a), “A tradeoff process is appropriate when it may be in the best interest of the Government to consider award to other than the lowest priced offeror or other than the highest technically rated offeror.”  The regulations go on to provide, in FAR 15.101-1(b), that when using a tradeoff process, the following apply:
(1) All evaluation factors and significant subfactors that will affect contract award and their relative importance shall be clearly stated in the solicitation; and
(2) The solicitation shall state whether all evaluation factors other than cost or price, when combined, are significantly more important than, approximately equal to, or significantly less important than cost or price.

The key provision, found in FAR 15.101-1(c), however, provides that “The perceived benefits of the higher priced proposal shall merit the additional cost, and the rationale for tradeoffs must be documented in the file in accordance with 15.406.  This is where, in my opinion, the government frequently falls short.  It should not be enough for federal agencies to simply state that they have greater “confidence” or that they feel “more comfortable” with the higher priced proposal, they should be required to explain why the higher priced proposal is worth the price premium.  Unfortunately, many of the so-called pricetechnical tradeoff analyses that I have seen fall short of amounting to a rational explanation.

The U.S. Court of Federal Claims has held that price cannot be ignored simply because it is to be given less weight than the technical factors, and the Court has also stated an evaluation that fails to give price its due consideration is inconsistent with the Competition in Contracting Act and cannot serve as a reasonable basis for an award.   In this regard, it is important to note that FAR 15.308 provides that “the source selection decision shall be documented, and the documentation shall include the rationale for any business judgments and tradeoffs made or relied on by the SSA, including benefits associated with additional costs.”  Indeed, the Court has stated that “Conclusory statements, devoid of any substantive content, have been held to fall short of this requirement, threatening to turn the tradeoff process into an empty exercise.  Indeed, apart from the regulations, generalized statements that fail to reveal the agency’s tradeoff calculus deprive this court of any basis upon which to review the award decisions.”  Serco Inc. v. United States, 81 Fed.Cl. 463 (2008).

Unfortunately, a contractor who believes that he may have been victimized by an arbitrary pricetechnical tradeoff does not have direct access to the government’s documentation needed to determine whether his suspicions are correct.  It is necessary to first file a protest in order to gain access to the government’s internal documentation and, even then, only the protester’s attorney is permitted to review the documents.  Source selection documents, including a pricetechnical tradeoff analysis, are only made available after the entry of a Protective Order that swears the attorney to secrecy.  Nevertheless, once an experienced federal government contracts attorney reviews the agency’s documents, it will be possible for that attorney to advise the contractor as to whether a valid basis for protest exists.  If the agency’s documentation seems to be in order and makes rational sense, the protest can always be withdrawn.  It is a sad commentary, however, that contractors often need to file a protest in order to determine whether there is a valid basis to protest.

Michael H. Payne is the Chairman of the firm’s Federal Practice Group and frequently advises contractors about whether the government has conducted a proper source selection, and whether a pricetechnical tradeoff was conducted in accordance with the law.