Highlights
United Capital Investment Group (UCIG), a business of Dubai, United Arab Emirates, protests the award of a contract to Stonewin Capital LP, a business of Edinburgh, Scotland, under request for proposals (RFP) No. SPE60524R0206, issued by the Defense Logistics Agency (DLA) for various types of fuel. The protester contends that the agency unreasonably "either did not perform a price realism analysis" on the awardee's price "or performed a faulty price realism analysis." Protest at 1.
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. The entire decision has been approved for public release.
Decision
Matter of: United Capital Investment Group
File: B-423169; B-423169.2
Date: February 13, 2025
Christopher R. Shiplett, Esq., Randolph Law, PLLC, for the protester.
McKenzie F. Miller, Esq., and Scott M. Heimberg, Esq., Akin Gump Strauss Hauer & Feld LLP, for Stonewin Capital LP, the intervenor.
Kelsey Brown, Esq., Steven M. Sosko, Esq., and Brian V. Beirne, Esq., Defense Logistics Agency, for the agency.
Hannah G. Barnes, Esq., and Christina Sklarew, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
Digest
Protest that the agency unreasonably failed to evaluate whether awardee’s pricing was realistic is denied where the solicitation did not expressly require the agency to conduct a price realism analysis, and where the protester’s factual assertions regarding the awardee’s pricing is not supported by the record.
Decision
United Capital Investment Group (UCIG), a business of Dubai, United Arab Emirates, protests the award of a contract to Stonewin Capital LP, a business of Edinburgh, Scotland, under request for proposals (RFP) No. SPE60524R0206, issued by the Defense Logistics Agency (DLA) for various types of fuel. The protester contends that the agency unreasonably “either did not perform a price realism analysis” on the awardee’s price “or performed a faulty price realism analysis.” Protest at 1.
We deny the protest.
BACKGROUND
The agency issued the RFP on April 15, 2024, under Federal Acquisition Regulation part 12, acquisition of commercial items. Agency Report (AR), Tab 3, RFP at 1. The agency sought the procurement of burner fuel oil, diesel fuel, and automotive gasoline at various locations in Germany. Id. at 5-6. The RFP contemplated the award of a fixed-price with economic price adjustment requirements contract, to be performed from the date of award through September 30, 2028. Id. at 1.
Award would be made on a lowest-price, technically acceptable (LPTA) basis, considering price and a technical capability factor, which included three subfactors: a statement of compliance, a certificate of analysis or certificate of quality, and a licensure and supply commitment letter. Id. at 32-33. Offerors were to submit unit prices in Euros for each line item, which would then be multiplied by the estimated quantity to produce a total price for the line item. Id. at 34. The RFP advised that the lowest price would be determined by evaluating each line item independently and provided that an individual award would be made for each line item. Id. As relevant here, the solicitation stated that DLA “reserves the right to conduct a price realism analysis” and cautioned offerors that if a submitted price was too low, the contracting officer “may reject a proposal as unacceptable or assess it as a technical risk to the [] proposal.” Id. at 1. Further, the RFP advised that the agency “may review prices to determine whether they are so low that they reflect a lack of technical understanding of the requirement.” Id.
For each line item, offerors were required to submit a statement of compliance stating that the provided fuel would meet the applicable solicitation specifications, a certificate of analysis or certificate of quality demonstrating the offeror’s ability to provide fuel meeting the acceptable specifications, a statement confirming that the offeror possesses all required certifications and licenses, and supply commitment letters from the relevant transportation companies and petroleum suppliers. RFP at 33.
On April 3, prior to issuing the RFP, the agency completed an independent government cost estimate (IGCE) for the procurement, which calculated an estimated total value for this requirement as €65,733,915 Euros. AR, Tab 2, IGCE at 1-2. As relevant here, this estimate used average market prices in Germany for the three types of fuel sought by the RFP. Id. Further, as part of its market research, the agency examined the Argus Oil Market Report for Germany, an aggregate index approximating the prices of fuel in different regions of Germany. Contracting Officer’s Statement and Memorandum of Law (COS/MOL) at 2; AR, Tab 1, Oil Market Report at 1. The RFP included “base reference prices” that were the high weekly posting prices from the week of January 1, 2024, to January 5, 2024, as published in the above-referenced aggregate index. RFP at 9.
More specifically, the RFP provided different reference prices, derived from the Argus Oil Market Report aggregate index, for each of the three types of fuel, considering the various regions in Germany where the fuel was to be delivered. RFP at 9. The agency used the index’s high weekly posting prices for four different regions of Germany to yield these base reference prices. COS/MOL at 2-3.
The agency received nine proposals by the June 28 due date for receipt of proposals and subsequently entered into discussions with offerors. COS/MOL at 4. As relevant here, on August 7, the agency sent discussion letters to both Stonewin and UCIG, asking both firms to confirm the accuracy of their offered prices and to confirm their ability to satisfactorily perform all contract obligations at those submitted prices, as well as requesting that both offerors reevaluate their submitted prices in an effort to provide a 3 percent price reduction. AR, Tab 16, UCIG First Discussion Letter at 1; AR, Tab 17, Stonewin First Discussion Letter at 1. With respect to the requested price reduction, the agency advised both offerors that it did not expect them to submit a price for which they could not successfully perform for the duration of the contract period. Id. Both Stonewin and UCIG responded to these discussion letters by confirming the statements and providing updated pricing. COS/MOL at 5-6.
On September 4, the agency reopened discussions with offerors, providing another opportunity to revise prices; both UCIG and Stonewin submitted responses and provided updated pricing. Id. at 6; see AR, Tab 24, UCIG Response to Second Discussion Letter; AR, Tab 25, Stonewin Response to Second Discussion Letter. As relevant here, both before and after entering these discussions, the agency reviewed Stonewin’s and UCIG’s prices. When DLA evaluated initial offers, the agency noted that all of Stonewin’s and UCIG’s prices exceeded the base reference price for each line item. COS/MOL at 5; see AR, Tab 26, Initial Abstract. Further, the agency determined that “[a]t no point were Stonewin’s prices so low as to indicate a lack of technical understanding or [to] require a price realism analysis.” AR, Tab 35, Declaration of Contracting Officer at 2.
On October 23, the agency completed its final technical evaluation and rated both Stonewin’s and UCIG’s proposals acceptable under the technical capability factor, including under each of the subfactors. COS/MOL at 6. On October 31, the contracting officer signed the source selection decision document (SSDD), finding that Stonewin provided the lowest-price technically acceptable offer for 44 of the RFP’s line items, while UCIG provided the lowest-price, technically acceptable offer for the remaining 18 line items. Id. at 7; AR, Tab 32, SSDD at 1. That same day, the agency sent UCIG an unsuccessful offeror letter for the 44 line items that it was not awarded. AR, Tab 33, Unsuccessful Offer Letter at 1-2. UCIG did not request a debrief. COS/MOL at 8. This protest followed.
DISCUSSION
The protester argues that the awardee’s price was unrealistically low and asserts that the agency should have conducted a price realism analysis. Protest at 3-4. In support of its contentions, UCIG refers to solicitation language advising that “DLA Energy may review prices to determine whether they are so low that they reflect a lack of technical understanding of the requirement.” Id. at 3 (citing RFP at 1). The protester asserts that the awardee’s price is so low that it reflects a lack of technical understanding of the requirements and contends that the agency unreasonably failed to conduct a price realism analysis or, alternatively, conducted a flawed price realism analysis. Id. at 3-4.
The agency responds that the solicitation’s price realism language is permissive, not mandatory, and that DLA properly exercised its discretion in deciding not to perform a price realism analysis. COS/MOL at 10. The agency argues that its decision not to perform a price realism analysis was reasonable because neither Stonewin’s nor UCIG’s prices were so low as to indicate a lack of technical understanding. Id. at 12. The agency asserts that it included the solicitation language giving it the discretion to conduct a price realism analysis “to account for situations in which offerors bid significantly below the [base reference price]”; and the awardee’s prices all exceeded the base reference price. Id.; AR, Tab 35, Declaration of Contracting Officer at 1. The agency also contends that because it used the high market price for the week from the Argus Oil Market Report aggregate index to establish its base reference prices, offerors were more likely to propose close to the base reference price “because in addition to securing lower prices from their suppliers, offerors could anticipate paying prices closer to the low or average rather than the high.” AR, Tab 35, Declaration of Contracting Officer at 1. In addition to accounting for the possibility of discounts due to deals with local suppliers, the agency asserts that it specifically noted Stonewin’s recent successful past performance on a fuel supply contract in Germany in determining that Stonewin’s prices did not reflect a lack of technical understanding of the solicitation requirements. COS/MOL at 13. Finally, the agency argues that all of the awardee’s prices were “within a reasonable range of both UCIG’s [prices] and the IGCE” and that DLA reasonably exercised its discretion not to conduct a price realism analysis. Id.
In response, the protester argues that the agency did conduct a price realism analysis. Comments and Supp. Protest at 2. UCIG asserts that this alleged price realism analysis was flawed because it compared the prices of offerors “without any reference to their respective technical solutions.” Id.
In asserting that the awardee’s prices were so low as to require a price realism analysis, UCIG relies on price analysis concepts involving “differentials” and “premiums” to argue that the agency failed to consider the “controllable portion of the overall cost” of each line item, such as “transportation costs, overhead, and profit.” See Comments and Supp. Protest at 3. The protester contends that the agency failed to factor these concepts--differentials and premiums--into its price realism analysis to discern if the awardee understood the technical requirements of the RFP. Id. at 4. Differentials and premiums, however, are concepts that do not exist in the RFP, which directs offerors to propose a single price per unit for each line item. See RFP at 34. In this respect, the protester is asserting that the evaluation of prices should have used a methodology that appears nowhere in the RFP. See Id. As a result, the allegation is not supported by the requirements of the RFP and consequently, does not provide us with a basis to sustain the protest.
Our decisions have explained that where, as here, an agency states in a solicitation that it “reserves the right” to conduct a price realism analysis, the agency is under no obligation to conduct such an analysis because the terms of the RFP do not mandate one, and because price realism analyses are not required for fixed-price contracts, absent such terms. Guident Techs., Inc., B-405112.3, June 4, 2012, 2012 CPD ¶ 166 at 13 n.9. Further, an agency’s decision to conduct or not to conduct a price realism analysis where a solicitation “reserves the right” to the agency is afforded broad discretion, which we generally will not review. US&S-Pegasus JV, LLC, B-421681.8, B‑421681.9, Nov. 19, 2024, 2024 CPD ¶ 284 at 6; see HeiTech-PAE, LLC, B‑420049.9, B‑420049.10, June 8, 2022, 2022 CPD ¶ 162 at 4 n.3 (dismissing as legally insufficient an allegation that an agency failed to conduct a price realism evaluation where the solicitation provided only that the agency “reserved the right” to perform that analysis).
Here, we find that the agency reasonably exercised its discretion not to conduct a price realism analysis. The RFP advised that the agency “reserves the right to conduct a price realism analysis” and “may review prices to determine whether they are so low that they reflect a lack of technical understanding of the requirement.” RFP at 1. Although the protester alleges that Stonewin’s prices for the line items it was awarded were essentially only a very small fraction of UCIG’s prices, and therefore so low that the agency could not reasonably forego analyzing the prices for realism, the record does not support this allegation. See Protest at 3. Instead, as described above, both Stonewin’s and USIG’s unit prices were above the base reference prices in the RFP. In addition, the record shows that the agency compared offerors’ prices to the solicitation’s base reference prices and to the IGCE and considered other factors, such as the awardee’s successful recent past performance with a similar procurement, in reasonably determining that a price realism analysis was unnecessary and concluded that “[a]t no point were Stonewin’s prices so low as to indicate a lack of technical understanding.” COS/MOL at 12‑13; AR, Tab 35, Declaration of Contracting Officer at 1‑2. In sum, we have no basis to conclude that the agency acted unreasonably or contrary to the terms of the solicitation in deciding not to conduct a price realism analysis.
The protester also speculates, in its supplemental protest, that the agency did not perform a responsibility determination of Stonewin’s subcontractors, as required by the solicitation. Comments and Supp. Protest at 4-5; see RFP at 33. The agency responds that it did fulfill any necessary affirmative responsibility determinations, including for Stonewin’s subcontractors, pointing to documentation of Stonewin’s affirmative responsibility determination and the evaluators’ conclusion that Stonewin submitted all required licenses and statements. Supp. COS/MOL at 2.
Our Office does not review affirmative determinations of responsibility, except where the protester alleges that definitive responsibility criteria in the RFP have not been met or identifies evidence of a type not presented in this protest. 4 C.F.R. § 21.5(c); JCB Inc., B-404946.4, Sept. 16, 2011, 2011 CPD ¶ 179 at 3. UCIG has not alleged that definitive responsibility criteria in the RFP, such as specific licensing or certification requirements, have not been met by either of Stonewin’s subcontractors. To the extent the protester desired further documentation, we note that the FAR does not require contracting officers to contemporaneously document, or provide a written explanation for, an affirmative responsibility determination. FAR 9.105-2(a)(1); Fidelis Logistic and Supply Servs., B‑414445, B-414445.2, May 17, 2017, 2017 CPD ¶ 150 at 5. Accordingly, we dismiss this protest argument for failing to state a valid legal or factual basis for protest. See 4 C.F.R. § 21.1(c)(4) and (f).
The protest is denied.
Edda Emmanuelli Perez
General Counsel
This is a verbatim capture of GAO's own published decision. Nothing is summarized or reworded, and the sections run in the order GAO wrote them. One thing is moved: GAO collects its numbered notes at the foot of the document, and each is shown here under the paragraph that first cites it, with its own number carrying you back. A note the decision never cites stays where GAO printed it.