United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

Decision

Matter of: Resource Ltd.

File: B-406492; B-406492.2

Date: June 6, 2012

Gerald H. Werfel, Esq., Pompan, Murray & Werfel, .P.L.C., for the protester.

Thomas J. Madden, Esq., and James Y. Boland, Esq., Venable LLP, for Sodexo 

Limited., the intervenor.

Amanda M. Willis, Esq., Department of the Air Force, for the agency.

Linda C. Glass, Esq., and Guy R. Pietrovito, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision.

DIGEST

1. Where solicitation contemplated award of fixed-price contract, price realism 

analysis was reasonable where agency compared proposed prices to independent 

government estimate and other proposed prices, and ensured that prices reflected a 

complete understanding of the requirement.

2. Protest that the independent government estimate (IGE), revised after receiving 

initial offers, was unreasonable and that awardee’s price realism determination was 

improperly based on comparison with the revised IGE is denied, where agency had 

a reasonable basis for revising the IGE and the revised IGE was consistent with 

prices received by the majority of the competitive range offerors.

DECISION

Resource Ltd., of the United Kingdom, protests the award of a contract to Sodexo, 

Limited. of the United Kingdom, under request for proposals (RFP) No. FA5587-11-

R-0008, issued by the Department of the Air Force, for custodial services at Air 

Force facilities in the United Kingdom. Resource challenges the agency’s price 

realism analysis.

We deny the protest.

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to 

a GAO Protective Order. This redacted version has 

been approved for public release.
Page 2 B-406492; B-406492.2 

BACKGROUND

The RFP provided for the award of a fixed-price, indefinite-delivery/indefinitequantity (ID/IQ) contract on a lowest-price technically acceptable basis. The 

following evaluation factors and subfactors were identified:

(1) Technical Capability Proposal

(a) Transition Plan

(b) Quality Control Plan

(2) Past Performance

(3) Price

RFP at 33-34. Offerors were informed that proposals would be evaluated as 

acceptable or unacceptable under the technical capability factor and as satisfactory 

or unsatisfactory under the past performance factor. Id. at 34.

With respect to the technical capability subfactors, the RFP provided that proposals 

must receive an acceptable rating under each subfactor to be rated acceptable 

under the technical capability factor. Offerors were informed that to receive an 

acceptable rating under these subfactors their proposals must comprehensively 

address all prescribed elements in the transition and quality control plans, and meet 

the minimum requirements of the solicitation. RFP at 35.

With respect to price, the RFP required offerors to provide fixed unit-prices for a 

number of contract line item numbers (CLIN), each of which identified an estimated 

quantity of square feet of space for custodial services.1 Offerors were informed that 

a total evaluated price would be calculated by multiplying the proposed unit prices by 

the CLIN’s estimated quantities. The RFP also provided that the agency would 

assess the reasonableness, realism, and affordability of offerors’ prices in 

accordance with Federal Acquisition Regulations (FAR) § 15.305. RFP at 36.

The Air Force received five proposals, including Resource’s and Sodexo’s, which 

were evaluated by the agency’s source selection evaluation board (SSEB). 

All of the proposals were found to be technically acceptable with satisfactory past 

performance. Agency Report (AR), Tab 8, Competitive Range Determination. 

 1 Two CLINs requested that offerors provide fixed-unit-prices for a 1 month transition 

period (CLIN 0001) and for 620 hours of emergency/contingency services (CLIN 

0007). RFP at 3 and 6.
Page 3 B-406492; B-406492.2 

Sodexo’s initial proposed price was [Deleted]; and Resource’s initial proposed price 

was [Deleted]. The initial independent government estimate (IGE) was 

£11,090,983.2 Id. at 16. 

With respect to the evaluation of Sodexo’s proposal, the SSEB found that Sodexo’s 

technical capability proposal comprehensively addressed all prescribed elements in 

its transition and quality control plans, and clearly met the RFP’s minimum 

requirements. AR, Tab 20, Proposal Evaluation Report, at 9-10. The SSEB also 

found that Sodexo’s proposed prices demonstrated a clear understanding of the 

requirements and was consistent with the methods of performance described in 

Sodexo’s technical proposal regarding transition and quality control. Id. at 12.

Because all of the offerors’ proposed prices were much less than the IGE, the Air 

Force reviewed the IGE and found a number of errors. For example, the Air Force 

concluded that it had misused historical pricing information and had failed to account 

for newly standardized levels of service for this requirement. See Contracting 

Officer’s Statement at 26-28. Following its review, the Air Force concluded that the 

IGE for this procurement should be £6,806,378. The revised IGE was relied upon by 

the agency in conducting discussions. Id. at 28.

The agency conducted price discussions with Resource, Sodexo, and two other 

offerors.3 The Air Force issued three evaluation notices (ENs) to Sodexo where the 

agency found Sodexo’s prices for certain identified CLINs to be low when compared 

to IGE. See AR, Tab 16, ENs, at 7. Sodexo responded that, although the firm 

believed that it had offered adequate staffing, there would be a benefit by increasing 

staffing; Sodexo therefore raised its prices for those CLINs. Id. at 8. Because 

Sodexo’s revised pricing was still considerably lower than the IGE, the SSEB 

performed further price analysis, which included evaluating Sodexo’s cost data and 

comparing its revised unit pricing with the average unit pricing of the next two 

lowest-priced offerors. Id. The SSEB concluded that Sodexo’s pricing was realistic 

and was based upon a complete understanding of the requirements. Id. at 9. In this 

regard, the SSEB found that Sodexo had accounted for associated costs in support 

of the work requirements. Id.

The Air Force also conducted price discussions with Resource. The protester was 

advised that its unit pricing for certain CLINs was high compared to the IGE. AR, 

Tab 15, ENs, at 8. Resource responded by revising its CLIN pricing but not its 

overall price. Id. at 9.

 2 The RFP provided that all proposed pricing must be in British Sterling Pounds (£). 

RFP at 33.

3 One offeror later withdrew during negotiations.
Page 4 B-406492; B-406492.2 

Final proposal revisions were requested, and Sodexo reduced its overall price by 

[Deleted]. AR, Tab 17, Sodexo Final Proposal Revision, at 3. Sodexo stated that 

this “will have absolutely no impact on our service standards or management and 

staffing levels” and that the contract was “strategically important and vital to Sodexo 

as we seek to grow our USAFE business.” Id. Resource lowered its overall price by 

6.9 percent in its revised proposal. Id., Resource Final Proposal Revision, at 7-13. 

The competitive range offerors’ initial and final proposed prices, in British Sterling 

Pounds, were as follows:

OFFEROR Initial Price Final Price

Sodexo [Deleted] 4,997,331

Offeror A [Deleted] [Deleted]

Offeror B [Deleted] [Deleted]

Resource [Deleted] 8,509,040

IGE 11,090,983 6,806,378

AR, Tab 20, Proposal Evaluation Report , at 33.

Award was made to Sodexo as the lowest-priced, technically acceptable offeror. 

Following a debriefing, Resource protested to our Office.

DISCUSSION

The protester argues that the agency failed to perform a proper realism evaluation of 

Sodexo’s price proposal and contends that the awardee’s price is insufficient to 

perform the required services. Protest at 5. The protester also argues that 

Sodexo’s low prices demonstrate the firm’s lack of understanding and appreciation 

for the work required by the RFP and represents an unacceptable performance risk 

to the government.4

 Id. at 8. In this regard, Resource contends that only its 

proposed price is realistic.

Where, as here, the award of a fixed-price contract is contemplated, a proposal’s 

price realism is not ordinarily considered, since a fixed-price contract places the risk 

and responsibility for contract costs and resulting profit or loss on the contractor. 

However, an agency may provide in the solicitation for a price realism analysis for 

such purposes as measuring an offeror’s understanding of the solicitation 

requirements, or to avoid the risk of poor performance from a contractor who is 

forced to provide goods or services at little or no profit. The depth of an agency’s 

 4 Resource also protested that the agency failed to conduct meaningful discussions 

with Resource. Protest at 8. The agency specifically responded to this issue in its 

report. Resource abandoned this ground or protest, when it did not address in its 

comments the agency’s response to the protester’s arguments. See Cedar Elec., 

Inc., B-402284.2, Mar. 19, 2010, 2010 CPD ¶ 79 at 3 n.4.
Page 5 B-406492; B-406492.2 

price realism is a matter within the sound exercise of the agency’s discretion. Grove 

Resource Solutions, Inc., B-296228, B-296228.2, July 1, 2005, 2005 CPD

¶ 133 at 4-5. In reviewing protests challenging price realism evaluations, our focus 

is whether the agency acted reasonably and in a manner consistent with the terms 

of the solicitation.

Here, the record shows that the agency conducted a reasonable price realism 

analysis. The Air Force compared Sodexo’s pricing to the IGE and conducted price 

discussions with Sodexo with respect to instances where Sodexo’s pricing appeared 

to be low in comparison to the IGE. See AR, Tab 20, Proposal Evaluation Report, 

at 23. In response, Sodexo revised some of its pricing and verified that its CLIN 

level pricing was current, accurate and complete. In assessing Sodexo’s discussion 

responses and proposal revision, the SSEB further analyzed the awardee’s prices 

by evaluating cost or pricing data that Sodexo provided in its EN responses and 

comparing it to the proposed pricing of the next two lowest priced offerors. The 

agency found that Sodexo had anticipated and accounted for associated costs in 

support of work requirements and had demonstrated its understanding of the 

requirements. Id. at 24-25. 

Resource nevertheless claims that, as the incumbent for approximately 60 percent 

of this requirement, it can better judge the realism of offerors’ pricing. Resource’s 

arguments, however, ignore that the Air Force considered the basis for Sodexo’s 

pricing and found that it not only demonstrated Sodexo’s understanding of the 

requirements, but did not present a performance risk. Although Resource 

essentially disagrees with the level of scrutiny applied by the agency to Sodexo’s low 

proposed prices, an agency has considerable discretion in determining the nature 

and extent of required price realism and proposal risk assessments in the context of 

fixed-price contracts. Team BOS/Naples-Gemmo S.p.A./DelJen,, B-298865.3, Dec. 

28, 2007, 2008 CPD ¶ 11 at 13. Based on our review of the record, we conclude 

that Resource’s various arguments challenging the agency’s analysis and judgments 

reflect Resource’s mere disagreement or dissatisfaction with the agency’s 

determinations, and provide no basis to object to the agency’ analysis here.

Resource also complains that the Air Force revised the IGE after evaluating initial 

proposals and that this revised IGE was used as the basis for finding realistic the 

pricing by all the other offerors, including Sodexo. Supp. Protest at 3.

IGEs are, by their nature, inexact and agencies may change them after receipt of 

bids or proposals where a review of the bids or proposals shows that the initial IGE 

was incorrect in its assessment of the level-of-effort necessary to perform the 

requirement or in its prediction of fair and reasonable prices as compared to the 

actual pricing disclosed by competition. TAMS/Fluor Daniel, B-251068, 

B-251068.2, Mar. 2, 1993, 93-1 CPD ¶ 199 at 4.
Page 6 B-406492; B-406492.2 

We find nothing improper in the agency’s revision of the IGE. The agency states 

that based on the disparity in the pricing of the initial proposals, it reviewed the IGE 

and concluded that the disparity was primarily attributed to erroneous use of 

historical pricing paid under the existing contract. Contracting Officer’s Statement 

at 26. The agency stated that the original IGE did not take into account the 

standardization of custodial services and the economies of scale by the inclusion of 

two additional facilities. Id. at 27. The revised IGE took into consideration the 

pricing of offers received in response to the solicitation, pricing obtained through 

additional market research incorporating historical prices paid by the government for 

similar items and a comparison of a similar acquisition for custodial services 

awarded for facilities in Germany with similar levels of service and scope of square 

footage. Id.

Although Resource argues that none of the agency’s reasons support the revised 

IGE’s large price reduction, it has not shown that the agency’s revision of the IGE 

was unreasonable. In this regard, the record shows that the agency’s revised IGE 

was more consistent with the prices proposed by the other competitive range 

offerors, including an offeror that was the incumbent contractor for approximately 30 

percent of this requirement.

The protest is denied.5

Lynn H. Gibson

General Counsel

 5 Resource also argued that Sodexo’s and the other two competitive range offerors’ 

proposals should have been found technically unacceptable based upon their low 

proposed labor hours. Protester’s Comments at 17. Resource provides little 

support or explanation for this argument, other than its statement that these offerors 

proposed labor hours are too low. We find that this unsupported argument provides 

no basis to question the technical acceptability of Sodexo’s proposal, particularly 

given our determination finding reasonable the agency’s price realism evaluation.