Undisclosed Independent Government Cost Estimate IGCE FAR Requirements

Can the agency use an undisclosed independent government cost estimate (IGCE FAR) to evaluate your proposal?  Take a more meaningful approach hen challenging the government contract price estimations and source selection methods.

In previous GAO bid protest rulings, it has made it clear that an agency must give enough information in a solicitation so that you can compete intelligently and on a relatively equal basis. 

It has also stated that agencies may evaluate technical or price proposals against an undisclosed government estimate for staffing needed to perform the solicitation requirements provided the RFP notifies offerors that staffing is an area of evaluation. Trajen, Inc.; Maytag Aircraft Corp., B-296334 et al., July 29, 2005, 2005 CPD ¶ 153 at 7-8.

The question becomes what is a reasonable IGCE and how does one analyze contract price?  The facts of each case are different.  The first line of reasoning is to see whether the solicitation provided workload data sufficient enough for you to adequately prepare your proposal. In a bid protest, the agency will always say that it did.  Note, that giving generic dollar thresholds for unrealistic time periods can be a problem for the government.

The legal application to decide a bid protest should be whether the agency used a mechanical application of an undisclosed independent government estimate to evaluate your proposal

Mechanical Applications of Undisclosed Independent Government Cost Estimate FAR IGCE Not Allowed for Contract Price Awards.

GAO itself stated that, because absolute reliance on estimates for contract price awards can have the effect of arbitrarily and unfairly penalizing an innovative or unusually efficient offer, it is inappropriate for an agency to determine the acceptability of proposals by the mechanical application of an undisclosed Independent Government Cost Estimation  (IGCE FAR). See Doss Aviation, Inc.; Dominion Aviation, Inc., B-275419 et al., Feb. 21, 1997, 97-1 CPD ¶ 117 at 5-6.

Detailed agency consideration of IGCE needed: Instead of simply relying on an undisclosed independent government cost estimate (FAR IGCE), government contracting agencies must also consider whether your proposed workforce is particularly skilled and efficient, or whether, because of a unique approach, your company could satisfactorily do the work with staffing different from that estimated by the agency. See AFARS Subpart 5107.90.

A deeper analysis should be whether the agency actually gave any serious consideration to your staffing approach. The independent government estimate includes only direct and indirect cost. If the bottom line is that they simply state that your approach did not meet the undisclosed estimate without explanation, it would seem that a court would reject that argument. 

The agency is required to give a reasonable analysis of the specific areas where the proposed staffing is inadequate. Conclusory statements by the agency should not be enough.  The Court of Federal Claims made this clear in its decisions.

If your bid proposal includes a substantial difference than what the government estimated then you may have a problem when filing a bid protest. Keeping in mind that an estimate is just that –an estimate.

The agency sometimes uses its undisclosed independent government cost estimate as a rigid measurement tool. This takes away the substantive meaning of the word “estimate.” Typically, if you fall short by a slight margin, your bid proposal would more than likely be adversely rated. A correct analysis for the government is to state in its proposal that if you fall below a certain number.

Proving Your Independent Government Cost Estimate FAR Challenge in a Bid Protest

COFC standard: The U.S. Court of Federal Claims ruled that  “[T]o show entitlement to relief on a claim that the agency used undisclosed evaluation factors, plaintiff must prove that the government evaluated the proposals received on a significantly different basis than announced in the solicitation and that the plaintiff has been prejudiced as a result.” Hydro Eng’g, Inc. v. United States, 37 Fed. Cl. 448, 471 (1997) (emphasis added).

Historical data and government cost estimations

First, in a perfect world, the government should at least give you some level of historical data or other estimates data for you to gauge the level of your staffing and technical approach. This would be especially true  for task order contract. This is especially true if the solicitation indicates that the government will be using an independent government estimate for a requirement that is commercially available to evaluate bid proposals.

More times than not, the government never tells you this. Oftentimes, the government also allows for questions and answers that may address certain issues of staffing or technical requirements.

Practically, what the agency discusses in a question and answer session should be binding on the agency. However, many court decisions never address these issues. See Information about Responding to Government Cure Notices.

To even stand a chance of prevailing in a GAO bid protest based upon undisclosed IGCE FAR estimates, you would have to show why the government’s estimate was flawed. Given recent decisions, your chances of challenging the agency estimate are low.

The response from GAO will be that the burden on you is to submit an adequately written proposal for the agency to evaluate. GAO will then cite Agile Def., Inc., B-408029, B-408029.2, May 31, 2013, 2013 CPD ¶ __ at 6.

A clear reading of Orion Technology, Inc.; Chenega Integrated Mission Support, LLC should show how the analysis for using undisclosed estimates should be. 

In that case, GAO stated that the agency must assess whether a firm’s proposed workforce is particularly skilled and efficient, or whether, because of a unique approach, a firm could satisfactorily perform the work with different staffing than estimated by the [government].”

In Orion, a deficiency or weakness was identified in a staffing plan and was because the proposed staffing was less than the level the government found to be necessary to perform the requirement in its undisclosed Independent Government Cost Estimate . Even with a slight variation (downwards). What happens when the variation is significantly upwards?

In Orion, the government mechanically applied its undisclosed staffing estimates to the offerors’ proposed staffing to evaluate and determine the acceptability of the proposals. This means that if you fell slightly short, then the agency deemed your proposal unacceptable. See information about Bid Protest Of Proposed Staffing Levels

In Orion, GAO held the agency accountable because there was no explanation of record regarding the apparently inconsistent conclusions regarding the adequacy of the proposed staffing and acquisition plans.

Can Your Bid Proposal Meet Your Challenge of  Undisclosed Independent Government Cost Estimate FAR Requirements in A GAO Protest?

Despite the recorded precedent, recent cases suggest a change. Thus, requiring bidders to be extremely careful when submitting technical proposals.  It has always been the rule that comparison of prices to a government estimate is a legitimate means of determining price reasonableness. See FAR 15.404-1(b)(2)(v).

The question becomes whether it is generally reasonable for an agency to rely on data from an incumbent’s performance on a predecessor contract in formulating its estimate. Case law says yes.

However, going forward in bidding government contracts, you may want to focus more on explaining your approach and why you approach and staffing will meet the government’s requirement.

Although your experience or knowledge from a previous contract could be used as your basis for structuring your proposal, one would suggest to carefully analyze your pricing a level of staffing. For insight on how your experience should count, see GAO’s decision in NCI Information Sys., Inc., B-405589, Nov. 23, 2011, 2011 CPD ¶ 269 at 5.

Protecting Yourself Against Undisclosed Independent Government  Cost Estimates

 Given the recent variations in court decisions, never just state that the agency’s independent government estimate was flawed, you must also state facts as to how you came up with your proposed hours, proposed staffing or related approach.  See, Cantu Services, Inc.B-408012,B-408012.2, May 23, 2013. However, you run the risk that your explanation will be thrown out. Your factual basis will be still up against the independent government cost estimate.

Budgetary Control Suggestions for Bid Proposal Estimating

In your proposal writing efforts, look to see if the solicitation provides sufficient information to help you to fairly compete but still maintain budgetary control. This is especially true when you are competing with the incumbent.

If you believe that the solicitation information is insufficient, look to see if there is a question and answer period. If questions and answers do not satisfy your ability to bid fairly, your only option is to challenge the solicitation in a pre-award protest. Waiting for a post-award protest to challenge the reasonableness of information not disclosed by the government minimizes your chances of winning despite precedent. 

For additional concerns about an undisclosed Independent Government Cost Estimate from federal contracting officers, call Watson & Associates’ IGCE FAR attorneys at 1-866-601-518. FREE INITIAL CONSULTATION.