GAO Rules That “Highest Technically Rated Offeror” Source Selection Methodology is Permissible in a Task Order Procurement Under FAR Subpart 16.5

In Sumaria Systems, Inc., B-418796 (Sept. 9, 2020), the Government Accountability Office (GAO) ruled that agencies may award task orders under Federal Acquisition Regulation (FAR) subpart 16.5 to the highest technically rated offeror (HTRO) with a realistic and reasonable price.  The HTRO methodology is different from more common source selection methods, such as the traditional “best value” method and lowest price technically acceptable (LPTA) procedures which are described in the FAR.

Although the FAR does not expressly identify the HTRO methodology, GAO has previously held that it is a permissible evaluation scheme in a negotiated procurement under FAR part 15.  See Sevatec, Inc. et al., B‑413559.3 et al., Jan. 11, 2017, 2017 CPD ¶ 252 at 6-7.  The Sumaria decision confirms that the HTRO method is also permissible in a task order competition conducted pursuant to FAR subpart 16.5 among multiple indefinite-delivery indefinite quantity (IDIQ) contract awardees.

GAO’s Decision

Sumaria involved a fair opportunity proposal request (FORP) issued by the Air Force under FAR subpart 16.5 to small businesses holding IDIQ contracts under the General Services Administration’s “One Acquisition Solution for Integrated Services” (OASIS) program.  The FORP contemplated the award of a cost-plus-fixed-fee task order to provide services in support of F-15 aircraft.

The FORP included two evaluation factors: technical and cost/price. The technical factor used a point-scoring system to measure the offeror’s prior experience and quality of past performance.  The FORP stated that the Air Force intended to award the task order to the highest technically rated offeror with a realistic and reasonable price.

Prior to the proposal submission deadline, Sumaria filed a protest challenging the HTRO source selection methodology.  Sumaria asserted that the HTRO procedure violated FAR 16.505(b)(1)(ii)(E), which provides that agencies must “[c]onsider price or cost under each order as one of the evaluation factors in the selection decision.”  Sumaria argued that the FORP did not provide for any consideration of price because it did not contemplate a tradeoff between cost/price and the technical factor.

GAO denied Sumaria’s protest and held that the Air Force’s use of the HTRO source selection method was permissible.  GAO explained that “FAR 1.102(d) provides that an agency’s chosen procurement procedure that is not prohibited by law or regulation is assumed to be permissible, and FAR subpart 16.5 does not prohibit an HTRO methodology.”  Further, GAO noted its prior decision in Sevatec and the decision of the Court of Federal Claims (COFC) in Octo Consulting Group, Inc. v. United States, 117 Fed. Cl. 334 (2014), which endorsed the use of the HTRO method as permissible in negotiated procurements under FAR part 15.

In Sevatec, GAO specifically held that the HTRO method complied with the requirement under the Competition in Contracting Act (CICA), 41 U.S.C. § 3306(c)(1)(B), that solicitations must “include cost or price…as an evaluation factor that must be considered in the evaluation of proposals.”  GAO concluded in Sumaria that there was no “meaningful difference” between that requirement under CICA and the requirement under FAR subpart 16.5 to consider cost/price as an evaluation factor in task order procurements.  Thus, GAO ruled that the Air Force’s use of the HTRO source selection method was permissible.

Conclusion

Sumaria reflects a trend toward increased use of non-traditional source selection procedures.  As the Sumaria decision illustrates, GAO has generally given deference to agencies to experiment with new evaluation schemes so long as they do not violate law or regulation.  In the aftermath of Sumaria, contractors may continue to see more frequent use of Highest Technically Rated Offeror procedures in task and delivery order competitions.

Although the HTRO method has been deemed permissible in FAR part 15 and FAR subpart 16.5 procurements, GAO ruled earlier this year that it cannot be used in Federal Supply Schedule (FSS) procurements under FAR subpart 8.4.  See Noble Supply & Logistics, Inc., B-418141 (Jan. 16, 2020).  FAR 8.404(d) contemplates that agencies will consider “the lowest overall cost alternative” when making a best value determination.  In light of this provision, GAO’s decision in Noble Supply distinguished Sevatec and concluded that FSS procurements must include a comparative assessment of prices to weigh the value and benefits of a vendor’s approach against its cost the government.

Finally, it should be noted that FAR part 15 was recently amended to include an exception to the general requirement that cost/price be considered as an evaluation factor.  See 85 Fed. Reg. 40068 (July 2, 2020).  Under that exception, Title 10 agencies (DoD, NASA and the Coast Guard) are no longer required to consider cost/price as an evaluation factor for the award of certain multiple-award task order contracts that are for the same or similar services if the Government intends to make an award to each and all qualifying offerors.  See FAR 15.304(c)(1)(ii).  If the Government exercises that discretionary authority, it must include cost/price as an evaluation factor in the selection decision for each task order.