The Government Accountability Office (“GAO”) releases an annual report to Congress. In the report, the GAO lists the most common reasons for sustaining bid protests, which vary from year to year. There are usually about five reasons bid protests are successful.

The typical top five reasons for a successful bid protest are as follows:

  1. unreasonable cost or price evaluation;
  2. unreasonable past performance evaluation;
  3. failure to follow evaluation criteria;
  4. inadequate documentation of the record; and
  5. unreasonable technical evaluation.

The first successful basis for a bid protest—unreasonable cost or price evaluation—is relatively common in construction bid protests. For example, in Glen Mar Construction, Inc., B-410603 (Comp. Gen. Jan. 14, 2015), the Department of Veterans Affairs (“VA”) awarded a contract for construction of a medical center building to Hanke Constructors (“Hanke”)—the contractor the VA determined was the lowest-priced bidder in a sealed-bid procurement. The contractor with the second-lowest price—Glen Mar Construction, Inc. (“Glen Mar”)—filed a bid protest and argued that the award to Hanke was improper because it was based on the price for additive options that the VA knew it did not have the funding to exercise.

The GAO agreed with Glen Mar and sustained the protest, concluding that the VA’s price evaluation improperly included the price of nine additive options, even though the VA did not have the funding to award all nine options. The GAO noted that when using sealing bidding procedures, an award must be based on the lowest cost to the government measured by the actual and full scope of the work to be awarded. Since the VA’s price evaluation was based on the total of the base work plus all nine options (despite the fact that the VA would not be awarding all nine options due to a lack of funding), the GAO reasoned that the VA could not determine which bid offered the lowest price to the government.

Ultimately, the GAO recommended that the VA conduct a new price evaluation to determine which bidder submitted the lowest price for the based construction and the additive options the VA reasonably believed it had the funding to purchase. The GAO also recommended that the VA reimburse Glen Mar’s costs incurred in pursuing its bid protest, including its attorneys’ fees.

Bottom Line: In a sealed-bid procurement, you should be especially alert as to how the agency evaluates the bidders’ prices. If the agency acts unreasonably with its evaluation, quickly file a bid protest and make sure the project is awarded to the correct contractor.