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By Nick Wakeman

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Nick Wakeman

Pricing argument falls on deaf ears

When MCR Federal lost a competition to Odyssey Systems Consulting they complained to the Government Accountability Office that the Air Force was unreasonable in how it analyzed its pricing.

As is often the case, especially in low price, technically acceptable contracts, the Air Force adjusted the pricing bidders submitted. In this case, MCR’s pricing ended up higher than Odyssey’s so as an LPTA, the award -- $107 million – went to Odyssey.

The contract is for advisory and assistance services for the Air Force Life Cycle Management Center. The Air Force used GSA’s OASIS small business vehicle to run the competition.

In the solicitation, the Air Force asked the company to provide direct labor rates for 43 labor categories. The bidders were to provide a summary of proposed costs, a synopsis of the estimating methodology and data sources used to develop the costs.

Here is where the Air Force and GAO said MCR fell short.

In evaluating the MCR bid, the Air Force found that the justification material was inadequate to support the rates MCR and one of its major subcontractors submitted.

The rates were lower than expected, and the Air Force adjusted them upwards. But to do that, it used what the Air Force determined to be the most probable labor rates.

MCR’s rates and its original pricing were deleted from the decision as was the Air Force’s adjusted pricing. But MCR’s rates were higher than Odyssey’s after the Air Force adjusted the pricing for both companies.

Odyssey’s original bid was $100.4 million and the adjusted price was $107.4 million.

The decision doesn’t describe the methodology the Air Force used to adjust Odyssey’s pricing, but I have to assume given MCR’s protest that MCR’s original price was lower than Odyssey’s.

MCR argued that it used a salary survey to establish its labor rates, but that wasn’t adequate for the Air Force. One of MCR’s subcontractors also failed to provide adequate data supporting its rates.

Here, too, details are sketchy as portions of the decision describing how the subcontractor said it justified its rates were deleted. Even the name of the subcontractor was deleted.

MCR also argued that the Air Force should have entered into discussions with the company, but GAO ruled that the solicitation was clear in that price adjustments could be made without discussions.

It’s noteworthy that several pertinent portions of the decision were deleted, almost all of them dealing with MCR.

I suppose the argument is that because this was a task order competition under OASIS, that MCR doesn’t want any proprietary pricing information released because it would hurt its chances with future OASIS task orders.

As the winner, Odyssey doesn’t have that protection, plus the decision doesn’t describe what the company’s methodology is, only what its final prices are.

A lesson that I think can be drawn from this protest decision is the need to make sure you understand what the agency means about justifying your pricing, because you’re likely to only get one shot at it.

Posted by Nick Wakeman on Jan 08, 2016 at 9:29 AM

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