On March 4, 2025, the U.S. Government Accountability Office (GAO) sustained a protest challenging the Air Force’s determination that the awardee’s labor rates, although lower than the incumbent, would support contract continuity, uninterrupted work, and staff availability. The protest involved the award of a $121.4 million communications support task order from the U.S. Air Force to Trace Systems Inc. (Trace Systems). Specifically, the task order requested communications support services for the Combined Air and Operations Center (CAOC) of the Air Force’s Central Command. Notwithstanding the lower labor rates, GAO sided with MicroTechnologies LLC (MicroTechnologies), holding that the record did not support the conclusion that the proposed professional labor rates submitted by Trace Systems could “maintain program continuity, uninterrupted high-quality work, and the availability of competent professional staff” as required by Federal Acquisition Regulation (FAR) 52.222-46 (Evaluation of Compensation for Professional Employees), because the Air Force did not reasonably evaluate Trace Systems’ professional employee compensation plan or non-professional employee labor rates. GAO held that the Air Force did not conduct a proper price risk analysis as required by Defense Federal Acquisition Regulation Supplement (DFARS) 252.204-7024 (Notice on the Use of the Supplier Performance Risk System).  In support of its decision, GAO pointed to the Air Force’s “conclusory statement” that the rates submitted by Trace Systems were within 8% of the incumbent labor rates, which, as GAO’s decision made clear, was insufficient to support a finding that the Air Force conducted a reasonable evaluation. 

POV: When an agency fails to show its work by properly explaining or justifying its choice of a lower-priced proposal, unsuccessful offerors may be able to successfully protest the award decision, especially when an agency does not provide sufficient evidence that the selected proposal is supported by a thorough and appropriate price risk analysis.