Protest spotlight

(This regular feature highlights protests decided by the Government Accountability Office.)

Agency: Air Force

Awardee: East/West Industries

Protester: AGE Logistics Corp.

What GAO found: AGE Logistics protested the Air Force's award to East/West Industries for multi aircraft canopy cranes, arguing the service "failed to reasonably evaluate whether East/West's price was too low," according to the GAO report.

East/West's evaluated price was $7.3 million, well below AGE's $9.6 million and an unnamed third offeror's $9.8 million.

The source selection authority deemed East/West the best value, noting that "although AGE received a more favorable past performance rating, East/West’s price was $2,327,330 lower that AGE’s price -- a differential of 31.83 percent," GAO writes. The source selection authority "concluded that '[a] $2.33M premium for AGE Logistics’ proposal is not warranted in order to obtain a higher confidence rating.'"

Though AGE contended the Air Force's price reasonableness analysis was defective and that East/West submitted an offer below its costs, GAO denied the protest, noting the contract is a fixed-price one.

A "fixed-price contract places the risk and responsibility for contract costs and resulting profit or losses on the contractor," the report finds. "Moreover, even assuming that East/West did submit an offer that is below anticipated costs, there is no prohibition against an agency accepting below-cost prices on a fixed-price contract."

The decision: http://www.gao.gov/assets/680/674345.pdf