United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

Decision

Matter of: Science Applications International Corporation

File: B-407013

Date: October 19, 2012

James J. McCullough, Esq., Brian M. Stanford, Esq., and Karen M. Soares, Esq., 

Fried, Frank, Harris, Shriver & Jacobson LLP, for the protester.

Keith R. Szeliga, Esq., Jonathan S. Aronie, Esq., Anne B. Perry, Esq., and 

Franklin C. Turner, Esq., Sheppard, Mullin, Richter, & Hampton LLP, for Harding 

Security Associates, Inc., an intervenor.

Wade L. Brown, Esq., and Leslie A. Neppert, Esq., Department of the Army, for 

the agency.

Pedro E. Briones, Esq., Christina Sklarew, Esq., and Guy R. Pietrovito, Esq., Office 

of the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

In a fixed-price procurement which reserved an agency’s right to conduct a price 

realism analysis if necessary, the agency reasonably found the awardee’s price 

realistic and reasonable.

DECISION

Science Applications International Corporation (SAIC), of McLean, Virginia, protests 

the award of a contract to Harding Security Associates, Inc., of McLean, Virginia, 

under request for proposals (RFP) No. W52P1J-11-R-0050, issued by the 

Department of the Army for services supporting efforts to counter insurgency and 

improvised explosive devices (IEDs) in Afghanistan and elsewhere. In essence, 

SAIC argues that Harding’s price is unrealistically low.

We deny the protest.

BACKGROUND

The RFP provided for the award of a fixed-price, indefinite-delivery/indefinitequantity contract for a 3-month transition and 9-month base period, and six 6-month 

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-407013

option periods, for a potential 4-year performance.1 RFP amend. 6 at 3. Offerors 

were informed that award would be made on a best-value basis considering 

the following factors, listed in descending order of importance: technical, past 

performance, and price. RFP §§ M.1, M.7. The non-price factors, when combined, 

were significantly more important than price. RFP § M.7. The technical factor 

included the following subfactors, which were of equal importance: mission 

capability plan; management plan; quality control plan; small business participation 

plan; and transition plan. Id. 

With regard to price, offerors were instructed to clearly identify all cost components 

included within their labor rates, such as bonuses, indirect costs, and profit. See

RFP § L.4.d(6). An offeror’s total evaluated price for each base and option period 

would be determined by adding the total price for all labor categories to the costs for 

travel, ODCs, and Defense Base Act insurance for that performance period. See id.

As relevant here, the RFP expressly advised potential offerors that the agency did 

not intend to conduct a price realism analysis. RFP § M.2.a. Specifically, the RFP 

stated that

[a]ny proposal which is unrealistic will be judged either as exhibiting 

a lack of competence or a failure to comprehend the Government's 

requirements and may be so evaluated and rated, or rejected for 

such reasons. Furthermore, any significant inconsistency between 

the Technical Proposal and Price Proposal, if unexplained, may be 

grounds for rejection of the proposal. The Government will evaluate 

each proposal strictly in accordance with its content and will not 

assume that performance will include areas not specified in the 

Offeror's proposal. Nothing in this paragraph is intended as a 

waiver of the Government’s right not to conduct a price realism 

analysis where none is otherwise required. The decision to conduct 

such an analysis or not remains within the sound discretion of the 

Contracting Officer.

Id. (emphasis added). In addition, the RFP stated that the agency intended to rely 

upon a comparison of competing prices to determine price reasonableness under 

Federal Acquisition Regulation (FAR) § 15.404-1(b)(2)(i), and would only use other 

methods if it did not receive adequate competition. See

 1 The RFP also included cost reimbursement line items for other direct costs (ODC), 

travel, and Defense Base Act insurance. Plug numbers were provided for ODCs 

and travel, and offerors were informed that these costs would not be evaluated. 

RFP § A.2.5. The RFP also provided rates that offerors were required to use to 

calculate insurance costs. RFP § L.7.

RFP § M.4.d(5). In this 
Page 3 B-407013

regard, the RFP also advised that the agency may use the price analysis techniques 

and procedures of FAR § 15.404-1(b)(2) to determine price reasonableness and 

whether the proposals reflected an understanding of the effort required. 

The agency received proposals from four offerors, including Harding and SAIC (the 

incumbent). AR at 2; Tab 21, Source Selection Evaluation Board (SSEB) Report, 

at 1. The Army included all four proposals in the competitive range and conducted 

discussions. See AR, Tab 21, SSEB Report, at 4-6. Among other things, Harding 

and SAIC were both asked to provide further cost information supporting their 

burdened labor rates. See, e.g., AR, Tab 8-1, SAIC Discussions, at 1; Tab 10-1, 

Harding Discussions, at 2. In particular, the agency noted to Harding that its 

overseas labor rates appeared to have [DELETED] and that its proposed base 

salary for domestic and overseas personnel was [DELETED], even though overseas 

personnel [DELETED]. See AR, Tab 10-9, Harding Discussions, at 1. The agency 

expressed concern that this approach might present a performance risk to 

successfully hiring and retaining personnel. See id. In its response, Harding 

provided additional details about its compensation model, stating that it has been 

using the same model successfully in its performance of two similar support 

contracts with the Army. AR, Tab 10-10, Harding Response to Request for Pricing 

Information, at 1-2. 

Offerors’ revised proposals were rated as follows:

Harding Offeror B SAIC Offeror D

Overall Technical Good Acceptable Outstanding Good

Past Performance

Substantial 

Confidence

Substantial 

Confidence

Substantial 

Confidence

Substantial 

Confidence

Total Price $176.5 million $207 million $270.1 million $277.7 million

AR, Tab 21, SSEB Report, at 63; Tab 22, Source Selection Advisory Council 

(SSAC) Award Recommendation, at 4.

The final cost/price proposals were evaluated by the agency’s price evaluation 

team. See AR, Tab 20, Source Selection Plan, at 20; Tab 16, Cost/Price Analysis 

Memorandum, at 5; Tab 17, Cost/Price Analysis Memorandum Addendum, at 4. 

The team compared offerors’ proposed total prices, including their fully-burdened 

labor rates and ODCs, to the independent government cost estimate (IGCE), and 

found they were all lower than the IGCE and within the range of acceptability.2 See

 2 The agency concluded that, although offerors’ prices were lower than the IGCE, 

the adequate price competition here addressed any concerns about these prices 

being too low. See AR, Tab 22, SSAC Report, at 5.
Page 4 B-407013

AR, Tab 21, SSEB Report, at 67. Proposed prices were also compared to historical 

monthly prices for the current contract; two offers were found to be below, and two 

above, the historic monthly price. Again, all were considered to be within the range 

of acceptability. See id. Noting that each offeror used a somewhat different 

methodology for paying personnel located overseas, the evaluators analyzed pricing 

for comparison purposes under one representative labor category, “Journeyman IED 

& Insurgency Analyst” (selected because this category requires the highest number 

of personnel and represents 40 percent of all overseas staffing). See AR, Tab 17, 

Cost/Price Analysis Memorandum Addendum, at 1. Based on this analysis, the 

evaluators compared offers by indirect rates, including fringe benefits, overhead 

costs, general and administrative expenses, profit, and what the Army termed 

“facility capital cost of money.” See id. at 1-3; Tab 22, SSAC Report, at 68.

The agency found all offerors’ prices to be reasonable and realistic, based on their 

respective technical approaches to executing the requirements. See AR, Tab 22, 

SSAC Report, at 6. With respect to the adequacy of prices to support an offeror’s 

approach, the SSAC states that the discussions confirmed that the offerors 

understood the requirement when developing their price proposals. See id. at 5. 

The SSAC also stated that any concerns about adequate pricing were alleviated by 

the offerors’ acceptable and outstanding technical proposal ratings. See id.

Harding’s total evaluated price ($176,507,092) was determined to be the lowest; 

SAIC’s total evaluated price ($270,070,520) was found to be the second highest. 

AR, Tab 21, SSEB Report, at 67-68. The SSEB and SSAC reviewed offerors’ 

technical and price proposals, as well as the agency’s technical and price 

evaluations. See id. at 1-69; AR, Tab 20, Source Selection Plan, at 7-16, 20; 

Tab 22, SSAC Report, at 1-7. The SSAC specifically considered the price difference 

between Harding’s and SAIC’s offers, and concluded that the difference was 

because SAIC’s rate for fees (such as fringe, overhead, and profit) was [DELETED] 

percent higher than Harding’s and because SAIC added a [DELETED] percent profit 

to its subcontract costs.3 See AR, Tab 22, SSAC Report, at 5-6; see also Tab 21, 

SSEB Report, at 67-68. Further, it found that, while SAIC’s proposed labor rates 

were higher in comparison to Harding’s, SAIC’s rates included [DELETED], which 

Harding had priced separately. Id.

The SSAC acknowledged SAIC’s higher technical rating, but concluded that it 

did not warrant paying a premium of 53 percent (an amount approaching an extra 

$100 million) for SAIC’s higher-rated approach. See

 3 The agency noted that although all offerors proposed to use subcontractors, only 

SAIC added a profit rate to the associated cost. See AR, Tab 22, SSAC Report, 

at 5.

AR, Tab 22, SSAC Report, 

at 6. The SSAC concluded that Harding’s lower-rated, but lower-priced proposal 
Page 5 B-407013

offered the best value to the government and recommended award to Harding. Id. 

Award was made to Harding, and this protest followed a debriefing.

DISCUSSION

SAIC argues that despite the agency’s statement in the RFP that it did not intend to 

conduct a price realism analysis, it was, nonetheless, an abuse of discretion not to 

do so. In this regard, SAIC insists that the RFP required the agency to conduct a 

price realism analysis to assess whether Harding’s prices were based on a clear 

understanding of the Army’s requirements. Protest at 16; Protester’s Comments 

at 2-4, 7-8. The protester also argues that, to the extent that the agency undertook 

any realism analysis, the agency could not reasonably have concluded that Harding 

could perform the requirement at its low price. See Protest at 13-17; Protester’s 

Comments at 4, 7. Specifically, SAIC maintains that the agency failed to consider 

whether Harding’s proposed compensation plan would allow it to realistically recruit 

and retain qualified personnel, or assess the risk that Harding would not be able to 

staff, mobilize, retain, and surge personnel at Harding’s proposed compensation 

rates. See Protest at 15-21.

The Army maintains that it reasonably evaluated Harding’s price proposal and 

that nothing in the agency’s technical, past performance, and price evaluations, or its 

responsibility determination, indicated financial or performance risk associated 

with Harding’s proposal or inconsistencies between its technical and price proposals. 

See AR at 3-4. The Army disagrees that the RFP required a price realism analysis, 

but asserts that, in any event, Harding proposed a reasonable estimate of labor 

hours per FTE, and the fact that its proposed price was lower than other offerors did 

not render its technical proposal inconsistent with its price proposal. See id. 3-5. 

Rather, the Army found that the difference in price primarily reflected SAIC’s higher 

fees. See id.

We do not agree with SAIC’s contentions. Where, as here, a RFP contemplates the 

award of a fixed-price contract, the agency is not required to conduct a realism 

analysis; this is because a fixed-price (as opposed to a cost-type) contract places 

the risk and responsibility for loss on the contractor. See R3 Government Solutions 

LLC, B-404863.2, Sept. 28, 2012, 2012 CPD ¶ __ at 4-5; PHP Healthcare Corp., 

B-251933, May 13, 1993, 93-1 CPD ¶ 381 at 5. In this regard, the RFP expressly 

advised offerors that the agency did not intend to conduct a price realism analysis, 

but would instead rely upon a comparison of the offerors’ proposed prices. See RFP 

§ M.2.a.

Although the RFP did not require the Army to perform a price realism analysis, the 

solicitation reserved the agency’s right to perform such an analysis, if the agency 

believed that this was necessary to measure the offerors’ understanding of the 

requirements or to assess the risk in the offerors’ proposals. See PHP Healthcare 

Corp., supra. Here, the record shows that the agency did assess the realism of the 
Page 6 B-407013

firms’ proposed prices.4 The nature and extent of such an analysis is within the 

sound exercise of the agency’s discretion, which we review for reasonableness 

and consistency with the solicitation’s evaluation criteria. See Rodgers Travel, Inc., 

B-291785, Mar. 12, 2003, 2003 CPD ¶ 60 at 4.

First, as the RFP indicated, the Army compared the prices received from all four 

offerors. These fixed prices were received after robust competition.5 Under these 

circumstances, there was no requirement to conduct further analysis.

Second, the Army compared offerors’ proposed total prices to the IGCE and to 

historical monthly prices for the current contract. The agency noted that all offerors 

(including SAIC) proposed prices that were lower than the IGCE, but concluded that 

because it had received adequate price competition, it did not need to rely only upon 

the IGCE in its pricing analysis.

Third, the Army compared the offerors’ prices and indirect rates for the largest 

required labor category, including fringe benefits, overhead costs, general and 

administrative expenses, profit, and “facilities capital cost of money.” In addition, 

both Harding and SAIC were asked in discussions to provide further cost information 

supporting their burdened labor rates; Harding, in particular, was asked to provide 

additional information regarding its overseas labor rates, overtime, and base 

salaries. See, e.g., AR, Tab 8-1, SAIC Discussions, at 1; Tab 10-1, Harding 

Discussions, at 2.

As a result of its review, the Army concluded that Harding’s revised price proposal 

reflected a realistic approach to performing the work. Although SAIC disagrees with 

the agency’s judgment in this regard, it fails to show that the agency unreasonably 

found the awardee’s price realistic.6

 See, e.g., Environmental Restoration, LLC

 4 The Army argues that it did not perform a price realism analysis. This is belied by 

the contemporaneous record, which documents the agency’s determination that all 

of the offerors’ proposed prices were realistic. See AR, Tab 22, SSAC Report, at 5.

, 

5

 SAIC does not contend that there was inadequate price competition here. 

Adequate price competition exists where two or more responsible offerors submit 

proposals that satisfy the government’s requirements, award is based on a best 

value determination where price is a substantial factor, and the price of the 

successful offeror is not unreasonable. See FAR §§ 15.403-1(c)(1); 

15.404-1(b)(2)(i).

6 To the extent that SAIC asserts that the agency could not have undertaken 

such an assessment because the agency’s price evaluation team may not have had 

access to offerors’ technical proposals during its price evaluation, see Protester’s 

Comments at 7-8, the record reflects that the contracting officer, the SSEB, and the 

SSAC reviewed offerors’ technical and price proposals.
Page 7 B-407013

B-406917, Sept. 28, 2012, 2012 CPD ¶ 266 at 6-7 (record does not support 

protester’s price evaluation challenges, but shows that agency made detailed 

comparison of offerors’ labor rates to each other’s rates, and to rates contained 

in the current contract and the IGCE, among other things); CC Distributors, Inc., 

B-406450, B-406450.2, May 25, 2012, 2012 CPD ¶ 177 at 7 (protest of agency’s 

price realism analysis denied where record shows that agency appropriately 

determined that proposed prices of all offerors were reasonable and realistic based 

on a comparison of prices with the IGE and prices received).

In its comments on the agency report, SAIC also challenges the Army’s identification 

of certain strengths in Harding’s proposal under the management plan and transition 

plan subfactors.7 See Protester’s Comments at 8-11. In essence, the protester 

asks this Office to conclude that modest adjustments to the agency’s assessment of 

strengths in Harding’s proposal under two evaluations subfactors could have 

resulted in the selection of SAIC’s much higher-priced (almost $100 million higher) 

proposal. While we are doubtful that SAIC could have been prejudiced by these two 

minor concerns, we have reviewed all of the protester’s assertions and conclude that 

the agency has adequately and reasonably justified its selection of Harding’s lowerpriced, but technically acceptable proposal. Although SAIC disagrees, this does not 

demonstrate that the agency’s judgment was unreasonable. Citywide Managing

Servs. of Port Washington, Inc., B-281287.12, B-281287.13, Nov. 15, 2000, 2001 

CPD ¶ 6 at 10-11.

The protest is denied.

Lynn H. Gibson

General Counsel

 7 SAIC initially protested the evaluation of Harding’s proposal under the mission 

capability plan and quality control subfactors, but did not respond to the agency’s 

arguments in its comments other than to state that it continues to assert that protest 

ground. We consider this protest ground to be abandoned. Washington-Harris 

Group, B-401794, B-401794.2, Nov. 16, 2009, 2009 CPD ¶ 230 at 5, n.3.