Two weeks ago, I was shopping for a grill at Target. After mulling over the options for fifteen minutes, I walked away. Mystified, my shopping partner asked why I was leaving without the thing we came for—a grill. I explained that I planned to go home and comparison shop online to make sure I was getting the best deal.
While federal procurements are often more impactful than a new grill, a recent GAO decision confirms that the government may also comparison shop.
Today’s example of federal price checking comes from GAO’s decision in DCR Development, LLC, B-419608 et al. (Comp. Gen. May 28, 2021).
The procurement involved a lease for hanger space to support United States Marshals Service (“USMS”) operations around Huston, Texas. The hanger was required to accommodate four USMS planes, as well as provide adjacent office space.
DCR Development submitted the only response to the proposal. It subsequently negotiated with USMS regarding the terms of its proposed lease, which resulted in a revised lease proposal.
While reviewing the revised proposal, USMS learned that other companies were leasing similar properties as significantly lower rates. USMS subsequently reviewed DCR Development’s revised pricing more closely. It discovered that pricing for general office space—not shared hanger and office facilities—had mistakenly been used during the price evaluation. USMS decided to conduct additional market research to verify DCR Development had proposed reasonable prices.
While USMS was conducting additional market research, the contracting officer accidentally sent a lease to DCR Development through DocuSign. DCR Development subsequently signed the lease, but USMS never countersigned.
Based on the results of the new market research, USMS elected to reopen the competition. After making a few amendments to the solicitation, a second offer was received. An award was made to the second offeror.
DCR Development subsequently protested. Among its protest grounds an allegation of bad faith. It argued that USMS had misled DCR Development by conducting additional market research, despite, making an apparent award to DCR Development through DocuSign.
GAO did not agree. The bad faith allegation was quickly rejected. As GAO explained, “government officials are presumed to act in good faith and a protester’s claim that an agency official was motivated by bias or bad faith must be supported by convincing proof.” GAO found no evidence of bad faith on the part of USMS in conducting additional market research.
Important to GAO’s decision was the fact that no lease contract existed between USMS and DCR Develop through the DocuSign mistake. The Request for Lease Proposals was clear that “[n]o Lease shall be formed until the LCO executes the Lease and delivers a signed copy to the Offeror.” Since the contracting officer never countersigned the DocuSign lease, there was never an effective lease contract between USMS and DCR Development.
Attention then shifted to whether it was reasonable for USMS to conduct additional market research after receiving proposals. On this point, GAO turned to the FAR. As relevant to this case, the FAR requires that contract awards be made at “fair and reasonable prices.” Since USMS was required to verify that the award to DCR Development was made at fair and reasonable prices, it was reasonable for USMS to conduct additional market research to support its reasonableness decision. Thus, DCR Development’s protest was denied.
This decision highlights how the federal procurement process has been developed to mirror commercial transactions to the greatest extent possible. Just like an individual, an agency is free to continue reviewing available information to determine whether it’s paying a reasonable price for its goods or services after an offer is made. Until the contract is signed, there’s nothing wrong with comparison shopping.
Speaking of comparison shopping, I should head back to Target to collect my new grill.