United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: Lulus Ostrich Ranch 

File: B-403874.2

Date: January 13, 2011

William R. Hayward for the protester.

Tina M. Pixler, Esq., Department of the Army, 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

Agency did not mislead offeror to increase its price during discussions by asking the 

protester to confirm whether its prices for certain contract line item numbers were 

in error, and that it understood the requirements, since its pricing for these items 

was low as compared to the agency’s historical price information.

DECISION

Lulus Ostrich Ranch, of San Marcos, Texas, protests the award of a contract to 

Immediate Supply General Trading Co., of Hawally, Kuwait, under request for 

proposals (RFP) No. W52P1J-10-R-0199, issued by the Department of the Army, U.S. 

Army Materiel Command, for pallet cleaning and repair services. The protester 

contends that during discussions with the agency it was misled to increase what 

otherwise would have been the winning price.

We deny the protest.

The RFP contemplated the award of an indefinite-delivery/indefinite-quantity 

fixed-price contract for a base year and four 1-year options. Pursuant to the RFP, 

award was to be made to the offeror that submitted the lowest priced technically

acceptable proposal.1

 1

The RFP established the following technical evaluation factors: technical 

capability, quality control plan, management plan, and transition plan. RFP at 36. 

 RFP at 2. Offerors were required to propose separate prices 

for contract line item numbers (CLIN) listed in the RFP’s price schedule and the RFP 

advised that the agency would evaluate offerors’ prices by adding all CLIN prices for 
Page 2 B-403874.2 

the base and option periods and calculating a total evaluated price. RFP, attach. 4, 

at 4. The RFP further advised that an offeror’s price would be evaluated for 

reasonableness, and cautioned that unrealistic offers, reflecting a failure to 

comprehend requirements, as well as those demonstrating significantly unbalanced 

prices among CLINs, quantities or performance periods, could be rejected. RFP, 

attach. 4, at 2, 4.

The agency received seven proposals in response to the RFP and four, including the 

protester’s, were found to be technically acceptable. By letter dated September 2, 

2010, the agency sent Lulus written discussion questions informing Lulus that it did

not submit its prices for the surge requirements under CLIN 0007 (as well as the 

related option year CLINs) consistent with the RFP, since Lulus did not provide unit 

prices for four separate surge ranges set forth in the price schedule. In response, the 

protester submitted a revised proposal with a total price of $7,660,225.50. By letter 

dated September 8, the agency again informed Lulus that its pricing for the surge 

CLINs was inconsistent with the price schedule because it had not provided unit 

prices for the ranges identified. In that September 8 discussions letter, the agency 

also informed Lulus that

[d]uring review of your [p]rice [p]roposal it appears that your prices for 

CLIN[s] 0001 and all option years, Pallet Cleaning and 0006 and all 

option years, Pallet Repair may be in error. It is perceived as low when 

compared to current historical pricing. Please confirm that the prices 

as proposed are correct and that the requirements of these line items 

are fully understood and reflected in the proposed prices.

Discussions Letter, Sept. 8, 2010, at 1 (emphasis added). 

In response to the agency’s September 8 discussions letter, Lulus confirmed its

previously proposed prices for pallet cleaning under CLIN 0001 (and all related 

option year CLINs). Lulus also provided unit prices for the range of potential surge

requirements, as requested. Lulus did not, however, confirm its previously proposed 

prices for the pallet repair CLINs (CLIN 0006 and the related option year CLINs); 

rather, Lulus significantly increased its prices for these CLINs. In this regard, the 

record reflects that Lulus increased its unit price for the pallet repair work by more 

than 125 percent, which increased its total price to $8,238,329.50. Award was made

to Immediate on the basis of its technically acceptable, low price proposal at a total 

evaluated price of $7,834,336.25. After receiving an adverse decision in response to a

protest it filed with the agency alleging that it had been improperly misled during 

discussions to increase its proposed price, Lulus filed the subject protest with our 

Office.

Lulus essentially argues that it was improperly misled by the September 8 

discussions letter to increase its proposed price. In this regard, Lulus asserts that it 

interpreted the statements in the agency’s discussions letter--that some of the firm’s 
Page 3 B-403874.2 

proposed CLIN prices were low as compared to historical pricing information--to 

mean that its total proposed price was too low.

2

 According to Lulus, had it not 

followed the agency’s instruction to increase its price, it would have been the lowest 

priced technically acceptable offeror, since Immediate’s price was slightly higher 

than the price it had proposed before the September 8 round of discussions. 

It is a fundamental precept of negotiated procurement that discussions, when 

conducted, must be meaningful and must not prejudicially mislead offerors. Trusted 

Hand Serv., Inc., B-285355, Aug. 21, 2000, 2000 CPD ¶ 136 at 4. Specifically, an 

agency may not, even inadvertently, mislead an offeror--through the framing of a 

discussion question or a response to a question--into responding in a manner that 

does not address the agency’s concerns; misinform the offeror concerning a problem 

with its proposal; misinform the offeror about the government’s requirements; or, as 

is pertinent to this case, mislead an offeror into raising its price. Id.; SIMSHIP Corp., 

B-253655.2, Dec. 2, 1993, 93-2 CPD ¶ 293 at 4.

The protester’s contention that the agency misled it to increase its price is without 

merit. As set forth above, the agency’s September 8 discussions letter merely asked 

Lulus to “confirm” whether its prices for specific CLINs were possibly in “error,”

since the CLIN prices appeared to be low when compared to the agency’s historical 

price information. The letter further advised Lulus that if its prices were correct, it 

was to confirm its understanding of the requirements. To the extent Lulus contends 

that it interpreted the September 8 discussions letter as advising it (either explicitly 

or implicitly) to increase its total price, its interpretation in this regard was not 

reasonable. The September 8 letter provided Lulus with the option of either 

confirming or revising its pricing for the specific CLINs at issue--simply put, the 

letter said nothing about Lulus’ total price and it did not advise Lulus to increase its 

price for the particular CLINs addressed. The fact that the agency provided the 

protester with a choice is further apparent from the protester’s own actions in 

response to the agency’s discussions letter where it confirmed the prices for certain

CLINs identified by the agency as being possibly in error, yet increased its price for 

 2

To the extent Lulus argues that it was unreasonable for the agency to use historical 

pricing in its evaluation and that the RFP did not provide for evaluation of CLIN 

prices separate from the total evaluated price basis for award, its contentions are 

without merit. The RFP expressly provided for the use of price analysis techniques 

(which includes the use of comparative historical procurement information) for the 

purpose of reviewing offeror’s proposed prices. See Federal Acquisition Regulation 

(FAR) § 15.404-1(b); RFP, attach. 4, at 4. In addition, contrary to the protester’s 

suggestion, the RFP provided for evaluating offeror’s CLIN pricing for unbalancing, 

which implicitly requires the agency to consider whether an offeror’s CLIN prices are 

too high or too low. See FAR § 15.404-1(g); RFP, attach. 4, at 4.
Page 4 B-403874.2 

others.

3

 Given this record, there is no basis for our Office to conclude that the 

agency’s discussions were misleading or otherwise improper. 

The protest is denied.

Lynn H. Gibson

General Counsel

 3 To the extent Lulus argues that the RFP did not provide sufficient information to 

meaningfully propose prices for the pallet repair CLINs, or that the RFP’s pricing 

terms unreasonably skewed the importance of the pallet repair or other work, since 

unit prices had to be multiplied by estimated quantities, these challenges are 

untimely filed and not for our consideration. To be timely, protests of apparent 

solicitation improprieties must be filed prior to the closing time for the receipt of 

proposals. 4 C.F.R. § 21.2(a)(1) (2010).