In February, the Court of Federal Claims released its most recent statistics for bid protests filed and sustained. Spoiler alert: the sustain rate is not high. At just under 10%, the Court’s sustain rate is a tad lower than GAO’s 13%, which means, no matter where a contractor files its protest, victory is a longshot. Some contractors will file a protest, even if it is perceived as weak, to extend their incumbencies by another 100 days. For them, the costs of losing are simply the price of a three-month extension. For the rest of the contracting world, the low success rate suggests they be judicious in their filings.
This requires intimate familiarity with the most common bases for a successful protest. A prior article looked at how to identify and attack a flawed technical evaluation; the below recommendations tackle unreasonable cost evaluations, how to identify them and ways to challenge them successfully.
The role of cost or price in award evaluations is spelled out in FAR 15.305 (a) (1): “When contracting on a cost-reimbursement basis, evaluations shall include a cost realism analysis.” While cost realism can be used in fixed price incentive fee contracts and on some competitive fixed price contracts, it ordinarily is not. Read the solicitation.
A cost realism analysis is the process of independently evaluating the proposed cost elements of a proposal against the requirements and methods of performance. Simply put, this analysis looks at whether or not the proposal’s costs are realistic. If they are not, the cost after award may skyrocket well past the estimated costs, which is a target, not a ceiling, in cost-reimbursement contracting.
To get ahead of the process and ensure solid footing to prosecute or defend against a protest, it is a best practice to utilize a red team to perform a cost realism analysis and document the results every step of the way. This will help identify the key cost drivers, advantages over competitors and possible disadvantages. Anomalous cost results that emerge in the award announcement or during a debriefing will be more vulnerable to attack if advance homework can show why the results are in fact anomalous. Remember, the agency has quite a bit of leash when it comes to its evaluation. The bar for a successful protest is proving the analysis was unreasonable. In deciding whether a protest is viable, a contractor must consider whether the agency’s analysis relied on any factually inaccurate or plainly irrational assumptions.
Another potential basis for a successful protest is an agency’s deviation from the terms of the solicitation. For example, solicitations that require the recruitment and retainment of skilled labor often elicit bids that come in under cost because they have failed to account for adequate wages. When an agency awards a contract based on a low-price option that has failed to consider the specific needs of the solicitation, a protest may be in order. On a more fundamental level, the agency might have overlooked the fact that the offeror had failed to include the cost of one or more mandatory requirements of the RFP. Of course, it is crucial to submit relevant documentation in accordance with the protest timeline, otherwise even a winnable argument will fail.
Another common error in the evaluation is the agency’s failure adequately to consider and assess the realism of the cost of each offeror’s individual technical solution. This is another area in which a red team can be incredibly useful through a pre-submission analysis that enables the offeror to support the value proposition inherent in its proposal and attack the analysis of the cost impact of the awardee’s different approaches and solutions, including the state of maturity of its offering, the remaining steps needed to bring it on line and the cost impact not only of the extra work, but also, the cost of any likely schedule slippage to accomplish that extra work.
A thorough pre-proposal analysis may help avoid a future protest by highlighting your own weaknesses and allowing you to correct them prior to proposal submission. Of course, there is no guarantee the awarding agency will conduct a perfect analysis, so having an independent one before proposal submission can mean the difference between a successful or losing protest. Remember, the standard for proposal evaluations inherently favors the government, and the won/loss record for protesters is not impressive. It is incumbent upon the contractor to do its homework before proposal submission. It will enhance the defense of a protest in case of a win and, in case of a loss, it will help a contractor focus its resources on protests that have a reasonable chance of success.
This is the second part of a three-part series on bid protests. Part one focused on identifying a basis for a protest.
John Chierichella is the founder of Chierichella Procurement Strategies, a consultancy helping contractors pursue and perform Federal contracts and subcontracts. An alum of Sheppard, Mullin, Richter & Hampton LLP, Chierichella has 50 years of bid protest experience and is nationally recognized by Chambers & Partners, Legal 500, and by Who’s Who Legal as one of the most instantly recognizable names in government contracts law.