United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: R3 Government Solutions LLC

File: B-404863.2

Date: September 28, 2012

Wayne A. Keup, Esq., Wayne A. Keup, PLLC, for the protester.

William H. Butterfield, Esq., United States Coast Guard, for the agency.

Susan K. McAuliffe, Esq., and Edward Goldstein, Esq., Office of the General 

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

DIGEST

1. Protest challenging agency’s technical evaluation is denied where the record 

reflects that the evaluation was reasonable and consistent with solicitation terms.

2. Protest that agency failed to perform a price realism evaluation as required by 

solicitation is denied where the solicitation provided for realism assessment using 

proposal analysis techniques established under Federal Acquisition Regulation 

(FAR) § 15.404-1, and the agency assessed prices for realism based on 

comparison with prices received, among the methods identified under 

FAR § 15.404-1.

DECISION

R3 Government Solutions LLC, of McLean, Virginia, protests the award of contracts

to six firms (DP George and Company, of Alexandria, Virginia; Crisis1, LLC, of 

Reston, Virginia; Advantage SCI, of El Segundo, California; Information Technology 

Coalition, Inc., of Alexandria, Virginia; Sayres and Associates Corporation, of 

Washington, DC; and Farfield Systems, Inc., of Catonsville, Maryland) under 

request for proposals (RFP) No. HSCG23-11-R-TABS00, issued by the United 

States Coast Guard for support services. The protester challenges the agency’s 

evaluation of its technical proposal and contends that the agency failed to 

adequately evaluate the awardees’ prices for realism.

We deny the protest.

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to 

a GAO Protective Order. This version has been 

approved for public release.
Page 2 B-404863.2 

BACKGROUND

The RFP, issued on December 3, 2010, sought proposals for the award of 

fixed-price indefinite-delivery/indefinite-quantity (ID/IQ) contracts for technical, 

acquisition and business support services; multiple awards were to be made, on 

unrestricted and set-aside bases, for a variety of work domains. RFP at 2, 11, and 

68. This protest concerns the business management, financial management, and 

audit support services domain of the RFP and relates to the contracts awarded for 

work set aside for service-disabled veteran-owned small businesses (SDVOSB). Id.

at 3, 6. Awards were to be made to firms that submitted proposals determined to be 

most advantageous to the agency considering evaluation factors for 

experience/management approach, past performance, and price. Id. at 80. 

Offerors were advised that although the non-price factors combined were more 

important than price, price could become a more important factor for award among 

proposals of similar technical merit. Id. 

Under the experience/management approach factor, the RFP required offerors to 

submit detailed resumes, demonstrating the education and experience of personnel 

proposed for the job positions described in the RFP--including, as relevant to this 

protest, the life-cycle cost estimating and cost analysis qualifications of the senior 

cost analyst. Id. at 73, attach. 10 at 7.

Regarding price, the RFP instructed offerors to propose ceiling hourly rates for 

required labor categories based on agency-provided labor-hour estimates, and 

rates to be applied to agency-provided cost estimates for materials, subcontracts 

(for supplies and incidental services), and travel/other direct costs. Id. at 76. 

According to the RFP, the agency would calculate each offeror’s total evaluated 

price (TEP) as the sum of the offeror’s extended labor prices (i.e., proposed labor 

rates multiplied by the RFP’s labor-hour estimates), and the offeror’s proposed rates 

for the other identified costs multiplied by the dollar-amount estimates provided in 

the RFP. Id. at 82. The RFP advised that proposals would be evaluated for 

accuracy, completeness, and reasonableness, that the agency would evaluate 

“proposed rates and prices to determine if they are realistic using proposal analysis 

techniques consistent with [Federal Acquisition Regulation (FAR)] § 15.404-1[,]” and 

that unrealistic pricing “may be grounds for eliminating a proposal . . . either on the 

basis that the offeror does not understand the requirement or has made an 

unrealistic proposal.” Id. at 81-82. The RFP further established that the agency 

“may reject any proposal that is evaluated to . . . have unrealistically high or low 

costs when compared to Government estimates such that the proposal is deemed 

to reflect an inherent lack of competence or failure to comprehend the complexity 

and risks of the program.” Id. at 82. 

The agency received and evaluated 25 proposals from eligible SDVOSB firms 

under the SDVOSB set-aside portion of the RFP’s business management, financial 

management and audit support services domain. Under the 
Page 3 B-404863.2 

experience/management approach evaluation factor, 14 proposals, including the 

protester’s, were evaluated as satisfactory and were given further consideration for 

award.

In its evaluation of R3’s technical proposal, the agency identified a single strength 

based on R3’s corporate experience, as well as a significant weakness stemming 

from R3’s failure to demonstrate the cost analysis experience and capabilities of its 

senior cost analyst. For past performance, R3’s proposal was rated as exceptional. 

Of the 14 proposals that were rated satisfactory for experience/management 

approach and exceptional, very good, or neutral for past performance, R3 had the 

tenth highest TEP of $412,776,503.08.1 In light of the favorable technical capability 

demonstrated by the six lowest-priced satisfactory proposals, the agency 

determined that the premium of $62 million (as compared to the awardee’s proposal 

with the highest TEP) for an award to R3 was not warranted. Having determined 

that they offered the best value, the agency awarded the contracts to the six firms 

identified above. This protest followed.

DISCUSSION

R3 contends that the agency unreasonably evaluated the experience and 

capabilities of its senior cost analyst.2 In reviewing a protest against the propriety of 

an evaluation, it is not our function to independently evaluate proposals and 

substitute our judgment for that of the contracting activity. Barents Group, L.L.C., 

B-276082, B-276082.2, May 9, 1997, 97-1 CPD ¶ 164 at 6. Rather, we will review 

an evaluation to ensure that it was reasonable and consistent with the evaluation 

criteria in the solicitation and applicable procurement statutes and regulations. Id.

 1 The six awardees’ price proposals were evaluated as follows: DP George and 

Company, at $305,513,800.77; Crisis1, LLC, at $334,949,967.28; Advantage SCI, 

at $335,251,819.28; Information Technology Coalition, Inc., at $339,545,554.80; 

Sayres and Associates Corporation, at $344,004,637.30; and Farfield Systems, 

Inc., at $350,496,357.60.

 

A protester’s mere disagreement with the evaluation does not show it lacked a 

2 R3 also generally contends that since 14 proposals were rated satisfactory under 

the experience/management approach factor, the agency did not meaningfully 

differentiate between the satisfactory proposals and instead awarded the contracts 

solely on the basis of their lower prices. Our review of the record does not support 

the protester’s challenge. The agency report reflects a comprehensive evaluation 

record, including a cost/technical tradeoff analysis of all 25 proposals received 

based on a consensus evaluation report that cites certain proposal strengths and 

weaknesses, and provides general statements of the proposals’ compliance with 

solicitation requirements. The protester has provided no basis to question the 

reasonableness of the satisfactory ratings assigned to the awardees’ proposals. 
Page 4 B-404863.2 

reasonable basis. Id. Our review of the record here provides no basis to question 

the reasonableness of the agency’s evaluation.

As indicated above, the RFP advised offerors to detail the experience and 

qualifications of their proposed personnel with respect to the job descriptions set 

forth in the RFP. For the senior cost analyst position, offerors were to demonstrate 

that the individual proposed had the experience and qualifications to, among other 

things, “provide cost estimating and analysis support in areas such as existing 

pricing and rate structures” and to conduct “analytical studies involving complex 

technical parameters, logistics requirements, schedules constraints and similar 

cost-influencing factors.” RFP attach. 10 at 7. They also had to demonstrate the 

individual’s knowledge of “cost analysis organizations, data sources, and cost data 

utilization.” Id. 

Although the evaluators credited R3’s proposed senior cost analyst for his extensive 

budget management experience, they found his resume reflected minimal relevant 

cost analysis experience. Our review of the record confirms the reasonableness of 

the evaluators’ concerns in this regard. For instance, the resume of R3’s senior 

cost analyst fails to discuss the individual’s specific experience with several of the 

RFP’s descriptions of the position for which he was proposed, such as conducting 

cost analyses of existing pricing and rate structures, or conducting analytical studies 

involving scheduling and logistics. R3’s proposal also did not specifically 

demonstrate that its senior cost analyst has knowledge of cost analysis 

organizations, data sources and cost data utilization, requirements of the position 

set forth in the RFP. Accordingly, the record provides no basis to sustain R3’s 

protest of the agency’s evaluation of its proposed senior cost analyst.3

The protester next contends the agency failed to adequately evaluate the offerors’ 

proposed prices for realism. In this regard, R3 contends that the agency should 

have evaluated the proposed prices based upon a range of sample tasks that may 

be ordered under the contracts, from simple to complex, to confirm that complex 

task orders can be accomplished at the labor rates and prices proposed by all 

offerors. R3’s challenge suggests that the awardees’ lower prices reflect an inability 

to perform more complex requirements.

Where, as here, an 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 

 3 We note that although R3 contends its proposal should have received a rating of 

exceptional under the experience/management approach evaluation factor, our 

review supports the reasonableness of the agency’s satisfactory rating in light of the 

weakness attributed to R3’s senior cost analyst and the agency’s indication that the 

single strength cited in the firm’s proposal did not present a significant benefit to the 

agency.
Page 5 B-404863.2 

(as opposed to a cost-type) contract places the risk and responsibility for loss on the 

contractor. See WorldTravelService, B-284155.3, Mar. 26, 2001, 2001 CPD ¶ 68 

at 3. However, an agency may provide for the use of a price realism analysis for 

the limited purpose of measuring offerors’ understanding of the requirements or to 

assess the risk inherent in an offeror’s proposal. See PHP Healthcare Corp., 

B-251933, May 13, 1993, 93-1 CPD ¶ 381 at 5. The nature and extent of price 

realism analysis ultimately are matters within the sound exercise of the agency’s 

discretion, and our review of such an evaluation is limited to determining whether it 

was reasonable and consistent with the solicitation’s evaluation criteria. See

Rodgers Travel, Inc., B-291785, Mar. 12, 2003, 2003 CPD ¶ 60 at 4. Based on our 

review, we find that R3’s challenge of the agency’s price realism evaluation 

furnishes no basis to question the awards.

The RFP established that price proposals would be evaluated for, among other 

things, reasonableness and realism, and that the agency would evaluate proposed 

rates and prices to determine price realism “using proposal analysis techniques 

consistent with FAR § 15.404-1.” RFP at 81. The agency reports that a 

comparison of prices was utilized by the evaluators to assess price realism. Price 

Evaluation Report at 4-5. Such a comparison is among the proposal analysis 

techniques that may be used under FAR § 15.404-1, and “can be appropriate in a 

price realism analysis.” Islandwide Lanscaping, Inc., B-293018, Dec. 24, 2003, 

2004 CPD ¶ 9 at 2. More specifically, the evaluators used the agency’s estimated 

labor hours (multiplied by an offeror’s proposed labor rates) and the agency’s 

estimated costs for materials, subcontracts and travel/ODCs (multiplied by an 

offeror’s proposed rates) to calculate a TEP for each offeror.4

 4 The agency explains that its initial total cost estimate was not used in the 

evaluation of the proposals because it was based on higher General Services 

Administration Federal Supply Schedule (FSS) rates and the RFP specifically 

advised offerors that the agency sought substantially lower prices than were 

available under FSS contracts for similar work. While the protester challenges the 

agency’s decision in this regard, we find the agency’s failure to question the realism 

of the proposed rates merely because they were lower than FSS rates 

unobjectionable where the protester has not provided any basis to question the 

firms’ understanding of requirements or performance risk. 

 The evaluators 

compared each offeror’s TEP to the others received, as well as to the median TEP, 

to identify outlier (high or low) pricing that indicated a lack of understanding of the 

work requirements or that otherwise provided performance risk to the agency. The 

awardees’ prices were not found to be outliers; rather, the agency concluded that 

they fell within a relatively close range of prices among at least 10 of the 14 

satisfactory proposals considered for award. For instance, the agency determined 

that each awardee’s TEP was no more than approximately 15-percent less than the 

median TEP, and that all six awardees’ prices were within approximately 12-percent 
Page 6 B-404863.2 

of each other.5 Price Evaluation Report at 7. The evaluation record also shows 

that the awardees were found to have demonstrated relevant experience and 

familiarity with the RFP requirements and to have provided sound approaches to 

the work, thus providing no reason to question the firms’ understanding of the 

requirements. 

Although R3 asserts that the agency’s price realism evaluation was inadequate, it 

has not shown that more was required. See Islandwide, supra; Mindleaf 

Technologies, Inc., B-294242, B-294242.2, Aug. 24, 2004, 2004 CPD ¶ 157 at 3; 

see J&J Maintenance, Inc., B-244366.2, Mar. 7, 1994, 94-1 CPD ¶ 177 at 8. For 

instance, R3 has not challenged the awardees’ rates, shown that those rates are

insufficient to perform as proposed by those firms, or that the rates should have 

indicated to the evaluators a lack of understanding of requirements. Rather, the 

protester contends that the agency was required to evaluate proposed rates against 

a sample range of tasks to assess possible variations in pricing for simplistic versus 

complex tasks. The RFP, however, did not provide for the type of analysis sought 

by R3 and, as noted above, the extent of a price realism analysis is within the sound 

exercise of the agency’s discretion. Rodgers Travel, Inc., supra. R3 has provided 

no basis to sustain its challenge of the agency’s price realism evaluation.

The protest is denied.

Lynn H. Gibson

General Counsel

 5 The protester’s TEP was 14-percent higher than the median TEP. Id.