Faster than the person next to you?

[Programming Note: Apologies for the slightly delayed post this week. The holiday and some unexpected work threw off my schedule. I'm going to be off next week, but back on a normal calendar the week after!]

There's a classic joke, awkwardly told by Alan Turing in the Imitation Game, involving two campers and a grizzly bear:

There are two people in a wood. And they run into a bear. The first person gets down on their knees to pray. The second person starts lacing up his boots. The first person asks the second person, "My dear friend, what are you doing? You can't outrun a bear." The second person responds, "I don't have to. I only have to outrun you."

The joke is funny because most people tend to think about competition in absolutes; can you outrun a bear or can you not outrun a bear. In government contracting, however, competition is relative. When bidding on a government solicitation, the question isn't whether a proposal is the best possible proposal, it's about whether the proposal is good enough to be better than the other proposals. You only have to outrun the other proposers.

We've talked about this dynamic a few weeks ago, when I wrote that, "you don't always need to be the best. You just need to stay in the game."

But, thanks to a recent decision from the GAO, there's now a new wrinkle to this narrative. Allow me to explain.

Our story starts with a solicitation from the Library of Congress (LOC) for a multiple-award, indefinite-delivery, indefinite quantity contracts for "agile software development services." The LOC planned to evaluate vendors based on a combination of corporate experience, past performance, technical approach, and price, and make a best-value determination to make multiple awards.

In response to the solicitation, LOC received 51 responsive proposals and, of those vendors, the LOC established a competitive range of 14 vendors. Notably, in a perfect example of the Lake Wobegon Effect in action, all 14 vendors in the competitive range had "highest possible adjectival ratings for all non-price factors."[1]

At that point, though, the contracting officer decided to rank the 14 vendors according to their price, from lowest price to highest. Then, the contracting officer "selected the eight offerors with the lowest prices, and then performed a best-value tradeoff among those eight offerors, ranking them in terms of best value." For vendors ranked 9th through 14th, they were compared to the vendor in 8th place. As the government explained "if an offeror did not represent a better value than the lowest ranked of the current prospective awardees, that offeror was eliminated because 'it is certain that at least [eight] other offerors exceed that offeror’s value.'"

Now, this approach has a logical appeal. If everyone's basically equal at the top except for price, you might presume the only thing that really matters is price. After all, the theory goes, you don't need to outrun the bear, you just need to outrun the last person.

But Deloitte and Softrams, which were in 9th and 10th place, took issue with the approach. They protested. And GAO sustained.

For the most part, the opinion is standard fare for protests. Deloitte and Softrams argued that LOC evaluated the vendors differently, assigning certain strengths to some but not others. Yawn. The protestors also raised concerns about how the government evaluated price. There, too, GAO sustained the protest. But it's kinda run-of-the-mill stuff.

The really interesting part of the opinion, however, is this:

Subsequently, the agency only compared the six remaining offerors to the lowest-ranked of the eight lowest-priced offerors. As a result, the best-value tradeoff only documents a best-value tradeoff between the protesters and the lowest-ranking of the eight awardees (22nd Century). Even these limited best-value tradeoffs were inadequately documented, as they included no substantive comparison of the proposals, merely noting the large price difference between the protesters and the eighth-ranked offeror.


Moreover, because the agency only compared the protesters to the lowest-ranked proposal, the record contains no comparison of the protesters’ proposals to any of the other awardees, several of whose prices and ratings were either similar or arguably inferior to the protesters. When conducting a best-value tradeoff an agency must determine whether the merits of a technically superior, higher-priced proposal warrant the price premium. Even assuming, for the sake of argument, that the agency reasonably concluded that the protesters’ technical merit was not worth the significant price premium between their proposals and 22nd Century’s proposal, it does not necessarily follow that the protesters’ technical strengths did not warrant paying a smaller price premium over other awardees whose proposals were closer in price. This is especially true given that 22nd Century proposed the second lowest price of the offerors in the competitive range.

In other words, the LOC only evaluated Deloitte against the lowest ranked bidder, but the GAO expected the LOC to rate Deloitte against all of the winners.

This result represents a new risk for the government when establishing cut lines for multiple award contracts. Even if the government perceives that all the vendors are pretty great, the government needs to actually rank all vendors in the competitive range. The government can't just compare the top against the lowest.

In fact, after this decision, it's not quite correct to say that you need to be as fast as the slowest winner. Instead, you need to make sure that no one behind you can catch up.

If I am in the government, the moral of the story here is that if you're doing a best-value evaluation and, eventually, you're planning on selecting based on lowest price, you will still need to document that you're getting the best value. Them's the breaks.

But another moral of the story might be this: if Deloitte starts lacing up their boots, run!

[1] When I read this opinion, I spat out my tea when I read that one vendor was cited as having strengths of "never missed a deadline" and "always been within budget." I don't know who needs to hear this, but anyone who's never missed a deadline and has always been within budget has never had a deadline or a budget.

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