Editor’s note: This is the fourth post in a series focused on protest allegations related to cost and price analyses. The first post explained the basic principles of price and cost realism. The second post focused on the adjustments an agency may make during a cost realism analysis. The third post concentrated on the role of comparisons to benchmarks in price analyses. Planned future posts will discuss price reasonableness and recent protest decisions involving cost/price analysis issues. 

hand-562565_1280If you have read the prior posts in this series, you are aware that agencies conduct realism analyses as part of proposal evaluation for cost-reimbursement contracts to ensure that “the estimated proposed cost elements are realistic for the work to be performed; reflect a clear understanding of the requirements; and are consistent with the unique methods of performance and materials described in the offeror’s technical proposal.” FAR 15.404-1(d). The last element―consistency with an offeror’s proposed technical approach―provides a basis for a protest when a disappointed offeror learns or suspects that an agency failed to consider its technical approach when assessing its proposal for realism. This post describes the facts and rulings in three cases that illustrate the protest issues that can develop from such analyses.

Continue Reading The Intersection of Price & Performance ―Cost Analysis Must Be Consistent with the Technical Proposal

syringe-417786_1280Generally, when a contracting officer (CO) determines that a contractor owes the Government money and issues a decision saying as much, the contractor challenges the decision by filing an appeal with a board of contract appeals or an action in the Court of Federal Claims. Last year, in Beechcraft Defense Co., the ASBCA surprised the Government contracts bar by ordering the agency to file the complaint in the appeal of a CO’s decision and explain (assert) why the company purportedly owed the Government more than $5.8 million for alleged noncompliance with the Cost Accounting Standards. Since Beechcraft Defense, several contractors have brought actions at the ASBCA appealing CO decisions without filing a complaint. In these cases, the contractors have argued that the COs’ decisions assessing liability amounted to Government claims and the Government should file the complaint.

The question arose whether the Beechcraft twist on the typical claim dispute procedure might apply in other contexts. DynPort Vaccine Co. is a recent decision from the ASBCA that provides helpful precedent indicating that contractors confronted with a disadvantageous unilateral modifications might be successful with arguments similar to Beechcraft.
Continue Reading ASBCA Finds Unilateral Modification Was a Government Claim & Orders Government to File the Complaint

2015-0126 Healthcare.govLast week, several press outlets, a well-regarded legal blog (albeit one that does not generally focus on Government contracts law/policy), and at least one politician criticized the IRS for the award of a relatively small IT services contract to a company called CGI Federal. CGI was the contractor at the center of the problematic rollout of the healthcare.gov website. Although there were clearly substantial problems with the website development and rollout, some of the criticism of CGI—and the implicit calls for substantial punishment of that contractor—demonstrate a lack of fair consideration of publicly available reports about the sources of the problems with the website and misunderstandings of aspects of procurement law and policy. Continue Reading Questionable Criticism of a Government Contractor—and Unfounded Calls for Severe Punishment

iStock_000019708886LargeEditor’s note: This is the third post in a series focused on protest allegations related to cost and price analyses. The first post explained the basic principles on price and cost realism. The second post focused on the adjustments an agency can make during a cost realism analysis. Planned future posts will discuss the role of an offeror’s technical approach in a price/cost realism analysis, price reasonableness, and recent protest decisions involving cost/price analysis issues. 

Like any buyer, the Government wants to pay reasonable prices for the goods and services that it acquires. Agencies often perform a price analysis as part of that effort. The FAR (15.404-1(b)(1)) explains that “Price analysis is the process of examining and evaluating a proposed price without evaluating its separate cost elements and proposed profit,” and it provides examples of techniques that can be used to ensure a fair and reasonable price. When a disappointed offeror challenges an agency’s price analysis in a bid protest, the Court or GAO will examine whether the analysis was consistent with the solicitation. The depth of an agency’s analysis is usually within the agency’s discretion, but an agency cannot base its analysis on irrational assumptions or critical miscalculations. This post focuses on protest issues that arise with respect to the two most common price analysis techniques. Continue Reading Dare to Compare—Comparisons in Price Analyses

The Federal Supply Schedule (FSS) is supposed to be a way for agencies to streamline procurement. However, achieving the desired efficiency requires that the Government buyer use the right contract vehicle for a given requirement. If the Government uses the wrong schedule—or a contractor proposes to provide goods or services that are not available under its schedule contract, and the agency fails to perform a careful evaluation—litigation may effectively eliminate the desired efficiencies. A recent GAO decision, US Investigations Services provides a good example of how thing can go awry. Continue Reading Bidder Beware—Mind the Details when Using the Federal Supply Schedule

iStock_000014647219LargeEditor’s note. Today, we’re featuring a guest post by several colleagues in Mayer Brown’s Global Mobility & Migration practice; Liz and Paul2 are providing timely analysis of the potential impact on Government contractors of an important security agreement the Government recently entered with Afghanistan and that is now in effect. Continue Reading Guest Post on Important Changes to Immigration Law Applicable to Government Contractors

iStock_000016952672LargeYesterday, the FAR Council issued an interim regulation addressing inverted corporations involved in government contracting. This interim regulation goes into effect immediately, and companies with inverted corporate structures—or those considering a restructuring—need to understand this development. Continue Reading FAR Council Issues Interim Rule Regarding the Prohibition on Certain Corporate Inversions

iStock_000006139533LargeEditor’s note: This is the second post in a series focused on protest allegations related to cost and price analyses. The first post explained the basic principles on price and cost realism. Planned future posts will discuss benchmarks an agency may use in a realism analysis, the role of an offeror’s technical approach in a price/cost realism analysis, price reasonableness, and recent protest decisions involving cost/price analysis issues. 

As discussed in the first post in this series, a cost realism analysis is required when an agency evaluates proposals for a cost-reimbursement contract. The analysis is required for cost-reimbursement contracts because under these contracts, an offeror’s proposed costs are not controlling–the Government will be bound to pay the contractor its actual, allowable, and reasonable costs. To determine the probable cost of performance, an agency may adjust the amounts an offeror proposed for given elements to reflect what the agency believes is realistic–the most probable cost. When an agency adjusts an offeror’s proposed amount and the offeror is not selected for award, those adjustments can become a ground for protest at GAO or the CFC.  Continue Reading Adjustments in Agency Cost Realism Analyses Must Be Rational

Although this blog focuses on numerous issues of interest to the Government contracts community, two types of disputes that get significant attention here are False Claims Act lawsuits and bid protests. Recently, DOJ and GAO issued their annual reports on the volume of activity with respect to such cases, and although these reports are a few weeks old, we wanted to briefly summarize the reports. Continue Reading Recent Annual Reports on FCA and Bid Protest Activity

Editor’s note: This is first post in a series focused on protest allegations related to cost and price analyses. Planned future posts will discuss limits on the adjustments an agency can make, benchmarks an agency may use in a realism analysis, the role of an offeror’s technical approach in a price/cost realism analysis, price reasonableness, and recent protest decisions involving cost/price analysis issues.  

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Disappointed offerors often challenge an agency’s price or cost realism analysis in a bid protest. Contractors should be familiar with the differences between cost and price realism, when each analysis is required, and the relevant FAR provisions. Understanding these foundational concepts is essential when considering or litigating a protest that raises cost or price realism analysis issues; it can be helpful when responding to a solicitation that anticipates a price or cost realism analysis.

Continue Reading Cost & Price Realism—What Are They and When Are They Required?