United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: ValidaTek, Inc.

File: B-407623

Date: January 17, 2013

Cyrus E. Phillips IV, Esq., Albo & Oblon LLP, for the protester.

J. Patrick McMahon, Esq., and William W. Welch, Esq., McMahon, Welch and 

Learned, PLLC, for Zolon Tech, Inc., an intervenor. 

Dennis J. Gallagher, Esq., Department of State, for the agency.

Paul E. Jordan, Esq., and David A. Ashen, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision.

DIGEST

Price realism evaluation of awardee’s proposal was unobjectionable where agency 

reviewed the offeror’s detailed justifications for its proposed level of effort, including 

its unique methods of performance; noted that the proposed labor rates were 

comparable to those under a different agency contract for similar work; and 

concluded that the awardee’s approach represented reasonable economy and 

efficiency.

DECISION

ValidaTek, Inc., of Arlington, Virginia, protests the Department of State’s (DOS) 

issuance of a task order to Zolon Tech, Inc., of Herndon, Virginia, under request for 

proposals (RFP) No. SAQMMA12R0226, for information technology support 

services. Participation in the competition was restricted to section 8(a) small 

disadvantaged vendors holding General Services Administration’s Streamlined 

Technology Applications Resource for Services (STARS) II government-wide 

acquisition contracts. ValidaTek challenges the price realism evaluation.

We deny the protest.

BACKGROUND

The RFP sought performance-based proposals for services in support of the 

administrative management systems (AMS) of DOS’s Bureau of Consular Affairs. 

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-407623 

The AMS are used by the Bureau’s staff to manage resources, personnel, budgets, 

equipment, supplies, and services. The task order’s objective was to provide an 

integrated technical team for on-going technical and analytical support, software 

maintenance, and potential modernization of the AMS. The performance work 

statement included three base tasks (program management, operations and 

maintenance, and enhancement), and two optional tasks (modernization plan and 

modernization of four specific systems). The RFP contemplated issuance of a time 

and materials task order for a base year with 4 option years.

Proposals were to be evaluated under five factors: technical approach, past 

performance, key personnel, project management plan, and cost/price. 

Non-cost/price factors were to be evaluated on an adjectival basis including ratings 

of excellent, good, acceptable, marginal, unsatisfactory, and (for past performance 

only) neutral. The non-cost/price factors, combined, were more important than 

cost/price. Under the solicitation as issued, cost/price was to be evaluated for price 

reasonableness to ensure that proposed prices were consistent with industry 

standards for similar requirements and were not excessive by comparison to those 

standards. Issuance of the task order was to be made to the vendor whose 

proposal was considered most advantageous to the government based on a 

trade-off between technical merit and cost/price. 

Two offerors, ValidaTek and Zolon, submitted proposals by the initial closing time. 

ValidaTek’s and Zolon’s initial technical proposals took “very different” approaches 

to proposed staffing to perform the required tasks and applied “very different” labor 

rates, resulting in a “very large differential” in pricing. Agency Report (AR) at 4. 

Based on the initial evaluation, both were evaluated overall as good under the 

non-cost/price factors. To ensure that the benefits and risks associated with the 

differing approaches were properly addressed in the evaluation, DOS amended the 

solicitation to add price realism as an evaluation factor. Specifically, the 

amendment indicated that the agency would evaluate 

[t]he compatibility of proposed cost/price with proposal scope and 

effort. For the price to be realistic, it must reflect what it would cost 

the offeror to perform the effort, if performed with reasonable economy 

and efficiency. This evaluation includes a review of the overall prices 

in the offeror’s proposal to determine if the prices are realistic for the 

work proposed; pricing reflects a clear understanding of the 

requirements; and if pricing is consistent with the various other 

elements of the offeror’s proposal. 

RFP, amend. 0006 at 2. 

The agency also conducted written discussions with both vendors, with Zolon’s 

discussions including questions on its proposed staffing and compensation as well 

as the realism of its overall pricing. In the final evaluation, both proposals were 
Page 3 B-407623 

rated as good overall and both were evaluated as demonstrating a clear 

understanding of the government’s requirements, consistent with their unique 

methods of performance. Taking into account the medium risk associated with 

Zolon’s lower price ($14.72 million), and based on the vendors’ equal technical 

ratings, the source selection authority determined to issue the task order to Zolon 

on the basis that ValidaTek’s low risk rating was not considered to provide sufficient 

benefit to the government as to warrant payment of ValidaTek’s much higher price 

($40.65 million). After a debriefing, ValidaTek filed this protest.1 

DISCUSSION

ValidaTek asserts that the price realism evaluation of Zolon’s proposal was flawed. 

According to the protester, Zolon’s proposal does not include a sufficient level of 

effort (LOE) to perform the task order at a realistic price. We have considered all of 

ValidaTek’s specific arguments and find that none warrant questioning the 

evaluation in this regard. 

Where, as here, a solicitation provides for the award of a fixed-price contract, or a 

fixed-price portion of a contract, an agency may provide for the use of a price 

realism analysis for the limited purpose of measuring a vendor’s understanding of 

the requirements or to assess the risk inherent in a vendor’s proposal. Federal 

Acquisition Regulation § 15.404-1(d)(3); see Ball Aerospace & Tech. Corp., 

B-402148, Jan. 25, 2010, 2010 CPD ¶ 37 at 8. The nature and extent of an 

agency’s evaluation in this regard is a matter within the sound exercise of the 

agency’s discretion. Citywide Managing Servs. of Port Washington, Inc., 

B-281287.12, B-281287.13, Nov. 15, 2000, 2001 CPD ¶ 6 at 4-5; Star Mountain, 

Inc., B-285883, Oct. 25, 2000, 2000 CPD ¶ 189 at 6. Our review of a price realism 

analysis is limited to determining whether it was reasonable and consistent with the 

terms of the solicitation. Smiths Detection, Inc.; Am. Sci. & Eng’g, Inc., B-402168.4 

et al., Feb. 9, 2011, 2011 CPD ¶ 39 at 17.

The price realism evaluation here was unobjectionable. The RFP sought proposals 

for a time-and-materials, performance-based task order, and did not specify a 

particular LOE. Instead, the amended solicitation indicated that the agency would, 

as part of its price realism evaluation, consider whether proposals reflected what it 

would cost the vendor to perform with reasonable economy and efficiency, as well 

as whether the proposed pricing reflected a clear understanding of the requirement. 

In response to Zolon’s initial low proposed prices, the agency specifically 

questioned the sufficiency of Zolon’s proposed staffing, its LOE, its labor mix, and 

its labor rates. AR Tab 20, Zolon discussion questions. Zolon responded by 

 

1 Since the value of the task order issued here to Zolon was $14.72 million, the 

procurement falls within our jurisdiction to hear protests related to the issuance of 

task orders valued in excess of $10 million. 41 U.S.C. § 4106(f)(1)(B).
Page 4 B-407623 

providing spreadsheets of its proposed staffing analysis using a software lifecycle 

management (SLIM) tool for estimation purposes; its assumptions in support of its 

proposed LOE; an explanation of its “bottom-up” analysis of the tasks using RFP 

and historical information; and verification of the basis for its discounted labor rates, 

including their consistency with labor rates under another DOS contract for similar 

AMS work. Zolon Discussion Responses and Revised Proposal. 

In finding that Zolon’s proposed approach represented “reasonable economy and 

efficiency,” the evaluators specifically considered that Zolon’s discounted pricing 

was based on the “current economic scenario” and the vendor’s desire “to keep [its] 

pricing structure extremely competitive.” Zolon Price Proposal at 4; 

Recommendation for Award at 14. They also found that Zolon’s proposed labor 

rates were comparable to those used in the firm’s Hybrid Information Technology 

Services for State (HITSS) contract for work that was similar to the AMS task order. 

In this regard, while Zolon proposed lower rates for [deleted], it proposed a higher 

rate for [deleted] positions. Recommendation for Award at 14. 

In reviewing the proposed costs, the agency also used what it terms “function point” 

analysis to validate whether the number of staff proposed and the hours planned for 

the task order were sufficient. In this regard, the evaluators employed the same 

SLIM estimating tool used by both Zolon and ValidaTek. Recommendation for 

Award at 12. Although the evaluators found Zolon’s initial proposal to be 

understaffed, Zolon’s revised proposal significantly increased its staffing level (from 

[deleted]) and its price (from [deleted] to $14.72 million). Recommendation for 

Award at 13-14. Further, Zolon’s revised proposal indicated how it arrived at its 

proposed LOE. For example, Zolon proposed that it would [deleted] eliminating 

downtime; [deleted]; and [deleted], in order to facilitate post-modernization support. 

Recommendation for Award at 14; Contract Specialist’s Memorandum, Nov. 21, 

2012 at 1. Based on their review, the evaluators concluded that Zolon had 

demonstrated a clear understanding of the government’s requirements, consistent 

with its unique methods of performance. Recommendation for Award at 14. 

Although they acknowledged that there was some risk associated with Zolon’s 

continued [deleted] staffing, nevertheless, the evaluators concluded that Zolon’s 

significantly lower priced proposal represented the best value and the SSA adopted 

that view. Recommendation for Award at 15-16. 

Thus, the record indicates that the RFP provided for performance-based solutions 

instead of specifying a set LOE; Zolon provided detailed explanations in support of 

its revised pricing and staffing approach; and the agency thoroughly reviewed 

Zolon’s justifications for its revised proposal, finding that they reflected Zolon’s 

unique methods of performance and resulted in no more than a medium risk to the 

government. In these circumstances, we find no basis for concluding that the price 

realism analysis was insufficiently thorough or otherwise failed to meet the RFP’s 

requirements. See, e.g., Flight Safety Services Corp., B-403831, B-403831.2, 

Dec. 9, 2010, 2010 CPD ¶ 294 at 7-8; Phacil Inc., B-406628, July 5, 2012, 
Page 5 B-407623 

2012 CPD ¶ 202 at 4.2 Nor has ValidaTek furnished any basis for questioning the 

agency’s determination that ValidaTek’s proposal failed to provide additional 

strengths to warrant its significantly higher ($26.24 million higher) price. 

The protest is denied. 

Susan A. Poling

General Counsel

 

2 ValidaTek notes that the agency’s Recommendation for Award included a 

statement that Zolon’s “effort variance demonstrates a fundamental lack of 

understanding [of] the requirements for the AMS system and this represents a 

significant risk to the government.” Recommendation for Award at 12. The agency, 

however, explains that this language was leftover from the initial evaluation as a 

result of an administrative oversight, and that it should have been removed or 

revised to reflect Zolon’s proposal revisions. Contract Specialist’s Memorandum 

at 1. Further, a comparison of the Recommendation for Award and the initial 

evaluation document makes clear that the challenged language in fact predates 

discussions, proposal revisions, and final evaluations. Again, as discussed above, 

Zolon significantly increased its staffing and LOE in its revised proposal, such that 

the government found the risk associated with its approach to be acceptable.