• R.D. Lieberman,Consultant

Discussions-High Price or an Unreasonable High Price?

Federal Acquisition Regulation (“FAR”) 15.306 states that negotiations with offerors in the competitive range are designed to “maximize the Government’s ability to obtain best value, based on the requirement and evaluation factors set forth in the solicitation.” This section of the FAR also states that the contracting officer must indicate to all offerors in the competitive range the deficiencies, significant weakness and adverse past performance information to which the offeror has not yet had an opportunity to respond. The idea is to make discussions “meaningful.” In a Government Accountability Office (“GAO”) decision, World Wide Technology, Inc., B-417909, Dec. 14, 2020, the protest related to divulging information about the offeror’s price in relation to other offerors.

The remainder of FAR 15.306 includes the following statements:

"The contracting officer also is encouraged to discuss other aspects of the offeror’s proposal that could, in the opinion of the contracting officer, be altered or explained to enhance materially the proposal’s potential for award. However, the contracting officer is not required to discuss every area where the proposal could be improved. []

The contracting officer may inform an offeror that its price is considered by the Government to be too high, or too low."

World Wide protested the award of a contract to Hewlett Packard Enterprise Co. under a Defense Informational Systems Agency (“DISA”) solicitation for enterprise storage solutions. The protester contended that the agency’s discussions were misleading and not meaningful. World Wide argued that discussions failed to inform them that its proposed price was unreasonably high. During discussions, World Wide’s initially proposed price was reduced from $615,666,219 to $226,624,799. DISA did not advise World Wide that it believed its final proposed price was unreasonably high. DISA reported that World Wide’s final price was third lowest of the four final proposals, and compared to the average price of all other offerors, World Wide’s price was 8% higher. DISA also stated that World Wide’s price compared favorably to the independent government cost estimate, i.e. 73% below the $833 million government estimate.

The GAO denied the protest, stating that there was no basis for DISA to have discussed World Wide’s price in discussions. “Unless an offeror’s proposed price is high so as to be unreasonable or unacceptable, an agency is not required to inform an offeror during discussions that its proposed price is high in comparison to a competitor’s proposed price, even where price is the determinative factor for award.” That was not the case here as shown by the price comparisons with other offerors and the independent government estimate..

Takeaway: A contracting officer is not required (but could make a determination) in discussions to tell you that your price is high. However a contracting officer must tell you that your price is unreasonable or unacceptable, for example if you are significantly above the independent government estimate.

For other helpful suggestions on government contracting, visit:

Richard D. Lieberman’s FAR Consulting & Training at https://www.richarddlieberman.com/, and Mistakes in Government Contracting at https://richarddlieberman.wixsite.com/mistakes.

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The website of Richard Donald Lieberman, a government contracts consultant and retired attorney who is the author of both "The 100 Worst Mistakes in Government Contracting" (with Jason Morgan) and "The 100 Worst Government Mistakes in Government Contracting." Richard Lieberman concentrates on Federal Acquisition Regulation (FAR) consulting and training, including  commercial item contracting (FAR Part 12), compliance with proposal requirements (FAR Part 15 negotiated procurement), sealed bidding (FAR Part 14), compliance with solicitation requirements, contract administration (FAR Part 42), contract modifications and changes (FAR Part 43), subcontracting and flowdown requirements (FAR Part 44), government property (FAR Part 45), quality assurance (FAR Part 46), obtaining invoiced payments owed to contractors,  and other compliance with the FAR. Mr.Lieberman is also involved in numerous community service activities.  See LinkedIn profile at https://www.linkedin.com/in/richard-d-lieberman-3a25257a/.This website and blog are for educational and information purposes only.  Nothing posted on this website constitutes legal advice, which can only be obtained from a qualified attorney. Website Owner/Consultant does not engage in the practice of law and will not provide legal advice or legal services based on competence and standing in the law. Legal filings and other aspects of a legal practice must be performed by an appropriate attorney. Using this website does not establish an attorney-client relationship. Although the author strives to present accurate information, the information provided on this site is not guaranteed to be complete, correct or up-to-date.  The views expressed on this blog are solely those of the author. FAR Consulting & Training, Bethesda, Maryland, Tel. 202-520-5780, rliebermanconsultant@gmail.com

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