Agency Reasonably Made Upward Cost Adjustments to Proposals That Did Not Reflect True Impact of Low Proposed Labor Rates; GAO B-412020.16, Trident Technologies LLC; Test Engineering Strategic Technologies LLC

Protests that the agency conducted a flawed cost realism analysis are denied, where the agency reasonably found that one protester’s reliance on attrition to lower labor costs presented a performance risk, and where the agency reasonably found another protester’s reliance on uncompensated overtime resulted in unrealistic pricing.

Trident Technologies LLC and Test Engineering Strategic Technologies LLC protested the Army’s award of a contract to TNT Premier Partnership for test engineering and analytical services. Trident and TEST argued that the agency unreasonably made upward adjustments to their proposed costs after flawed cost realism analyses. Trident also challenged the agency’s evaluation of TNT’s cost proposal.

Trident argued that the agency unreasonably made an upward adjustment to its most probable cost because it failed to accept approximately 100 pages of data supporting Trident’s cost model that relied on employee attrition to reduce labor rates.  The Army asserted that it did consider the information but did not find it compelling. Specifically, the agency argued that even though Trident’s cost model was mathematically supported, real-world application could prove riskier for the agency, since dropping labor rates based on attrition was unlikely to attract and retain qualified personnel. As a result, the agency made an upward adjustment to Trident’s most probable cost.

GAO found that, even though the agency pointed out this flaw to Trident during discussions, Trident continued to base its cost model on personnel attrition to reduce labor rates. As a result, the agency reasonably determined Trident’s proposed model required an upward adjustment.

TEST asserted that the agency improperly made an upward adjustment to its proposal to account for uncompensated overtime rather than accepting TEST’s own accounting procedures. The agency argued that it was required to make an adjustment for uncompensated overtime, and to consider whether the use of uncompensated overtime resulted in unrealistic pricing. GAO found no reason to object to the agency’s approach. The solicitation required the agency to consider the true cost of labor, including the proposed use of uncompensated overtime. The upward adjustment reflected the agency’s reasoned determination that TEST’s proposal was unrealistic in that regard.

Trident also challenged several of TNT’s proposed costs, including its use of a 401(k) plan and its labor mix. GAO found the agency’s evaluation of these areas to be reasonable, and denied those grounds of protest as well.

Trident Technologies LLC is represented by Jon D. Levin, J. Andrew Watson III, Brian Chapuran, and Matthew B. Reeves of Maynard Cooper & Gale PC. Test Engineering Strategic Technologies LLC is represented by R. Thomas Dawe of Gallagher, Casados & Mann, P.C. TNT Premier Partnership is represented by Roderic G. Steakley, Fred L. Coffey, Jr., and Benjamin R. Little of Sirote & Permutt, PC. The government is represented by Evan C. Williams and Major Bruce H. Robinson of the Department of the Army. GAO attorneys Paula J. Haurilesko and Laura Eyester participated in the preparation of the decision.

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