In a recent bid protest decision, the Government Accountability Office (GAO) dismissed a protest filed by Quadrant Training Solutions, JV (Quadrant), asserting that the U.S. Air Force failed to consider the performance risk associated with the awardee’s proposed low price. Aviation Training Consulting, LLC (Aviation) was selected for the contract award with a proposed price of $159 million—more than $120 million lower than Quadrant’s price. Quadrant argued that Aviation’s low- priced proposal was an indicator of inadequate staffing and wages, which would have adverse impacts on contract performance. GAO determined that Quadrant failed to state a valid basis for protest since the solicitation did not include any provisions requiring a price realism evaluation and expressly stated no such analysis would be performed. In dismissing the protest, GAO explained that proposing below-cost prices is not inherently improper, but rather, a business decision when competing for a fixed-price contract. Thus, in the absence of a solicitation provision advising offerors that price realism will be evaluated, the government is neither required nor is it permitted to perform a price realism analysis. GAO also noted that, to the extent that Quadrant considered the solicitation’s lack of a price realism evaluation improper, a challenge should have been raised through a pre-award protest before the proposal submission deadline.  

POV: Offerors should carefully review solicitations for fixed-price contracts to determine whether the agency will evaluate proposals for price realism. If the solicitation does not contemplate a price realism analysis, offerors should be prepared for the possibility that competitors could submit low-priced proposals that may ultimately be selected for award. Should this happen, a post-award protest alleging the agency unreasonably failed to consider the performance risk of the low-priced offer is unlikely to succeed.