DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order.
This redacted version has been approved for public release.
Matter of: Office Depot, LLC
File: B-419809, B-419809.2
Date: August 5, 2021
John G. Horan, Esq., Faegre Drinker Biddle & Reath LLP, for the protester.
Michael L. Sterling, Esq., Anthony J. Mazzeo, Esq., and Daniel A.D. Salmon, Esq.,
Vandeventer Black LLP, for Mancon, LLC, the intervenor.
Philip Rappmund, Esq., Leslie Jefferson, Esq., and James P. Winthrop, Esq.,
Department of the Navy, for the agency.
Heather Weiner, Esq., and Jennifer D. Westfall-McGrail, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
1. Protester’s post-award protest challenges to the price evaluation methodology
set forth in the solicitation are dismissed as untimely.
2. Protest alleging that the agency failed to adequately consider the risks posed
by awardee’s unbalanced pricing is denied where the record reflects that the agency
evaluated the risk of unbalanced pricing and reasonably determined that the risk associated
with a single overstated unit price was low.
3. Agency’s post-proposal submission exchanges with awardee regarding price
proposal were clarifications rather than discussions where the errors corrected were
obvious on the face of the awardee’s proposal.
Office Depot, LLC, of Columbia, Maryland, protests the award of a contract to Mancon,
LLC, of Virginia Beach, Virginia, under request for proposals (RFP) No. N00189-21-R-0011,
issued by the Department of the Navy, Naval Supply Systems Command, to operate a commercial
retail store at Naval Station Norfolk, Virginia. The protester argues that the agency
failed to conduct a proper price evaluation and asserts that the best-value tradeoff and
source selection decision was unreasonable. The protester also contends that the
agency engaged in discussions with the awardee, which obligated the Navy to engage in
discussions with all offerors.
We dismiss in part and deny in part the protest.
The RFP, issued on December 2, 2020, contemplated award of a single indefinite-delivery,
indefinite-quantity fixed-price contract, with economic price adjustment provisions, on a
best-value tradeoff basis.
Agency Report (AR), Tab 1, RFP at 1, 23; Contracting Officer’s Statement and
Memorandum of Law (COS/MOL) at 1. The solicitation sought proposals for services and
supplies necessary to operate a commercial retail store at the Naval Station Norfolk,
Virginia, called the Norfolk Super Servmart (Servmart). RFP at 70.
Offerors were advised that proposals would be evaluated under four factors:
technical management approach, past performance, small business participation plan, and
price. Id. at 16, 18-20. The technical management approach factor was
significantly more important than past performance, and past performance was more important
than the small business participation plan. Id. at 23. The non-price
factors were significantly more important than price. Id.
Of relevance here, the total evaluated price was to be calculated by adding an offeror’s
proposed prices for a test market basket, comprised of items commonly sold at the
Navy’s Servmart; and the total material price, reflecting discounted commodity
Id. at 28. The solicitation explained that the total evaluated price would be
the sum of the total material price and the total test market basket price. RFP at
21-22. The solicitation instructed that price was to be evaluated for reasonableness,
in accordance with Federal Acquisition Regulation (FAR) section 15.404-1(b), and the method
of evaluation was “solely within the discretion of the [c]ontracting [o]fficer.”
Id. at 27. The RFP required that the test market basket pricing be
“representative of the offeror’s pricing methodology throughout the term of the contract.”
Id. at 21.
Offerors were to include in their price proposals a completed copy of attachment five to
the RFP, proposing pricing for the items in the test market basket and the total material
(commodities) price. In addition, offerors were to include a copy of any current
catalogs proposed to be used during the first year of the resulting contract.
The agency received timely proposals from three offerors, including Office Depot and
Mancon, by the closing date of January 19, 2021. AR, Tab 5, Business Clearance
Memorandum (BCM) at 21. The final evaluation ratings and prices of the two proposals
were as follows:
Technical Management Approach
Small Business Participation Plan
Total Evaluated Price
Id. at 49.
In performing the best-value tradeoff analysis, the Navy conducted a detailed comparison
of Office Depot’s and Mancon’s proposals under each factor. Id. at
50-53. Ultimately, the contracting officer, who was also the source selection
authority for this procurement, found that “because Mancon was the lowest price proposal”
and Office Depot’s “higher priced offer[ ] [does] not contain any advantage” that justifies
“a significant price premium of 40%,” Mancon’s proposal represented the best value to the
government. Accordingly, the contracting officer selected Mancon for award.
On April 23, 2021, the agency notified Office Depot that its proposal had not been
selected. Protest, exh. 1, Unsuccessful Offeror Notice at 1. After receiving a
debriefing, Office Depot timely filed this protest with our Office.
Office Depot raises various challenges to the award to Mancon. Office Depot argues
that the agency’s price evaluation was unreasonable because the agency failed to evaluate
the items in the proposed test market basket, or calculate the total material price, in
accordance with the terms of the RFP. Office Depot also challenges the Navy’s price
evaluation of Mancon’s proposal on the basis that the agency failed to adequately consider
the risks posed by Mancon’s unbalanced pricing. In addition, the protester asserts
that clarifications with Mancon constituted discussions, which obligated the Navy to engage
in discussions with all offerors, including Office Depot. Finally, Office Depot
challenges the agency’s best-value tradeoff and source selection decision. While our
decision may not specifically discuss each argument or variation of an argument, we have
considered all of Office Depot’s assertions and find no basis to sustain the protest.
Office Depot challenges the agency’s evaluation of Mancon’s price proposal in three
respects. First, the protester contends that the agency improperly failed to analyze
the proposed items for the test market basket in accordance with the terms of the
RFP. Second, the protester asserts that the agency improperly failed to calculate the
total material price as required by the solicitation. Finally, Office Depot argues
that the agency failed to consider the risk of unbalanced pricing in Mancon’s
proposal. For the reasons discussed below, we dismiss the first two arguments because
they are untimely challenges to the terms of the solicitation. For the third
allegation, concerning unbalanced pricing, we find no basis to sustain the protest.
Test Market Basket
In its initial protest, Office Depot argues that the Navy “did not analyze offerors’
pricing or supporting materials to ensure that Test Market Basket pricing was based on
comparable products.” Protest at 12. The protester asserts that “[d]espite
having the offerors’ catalogs and stock number or manufacturer’s part number for the items
in the offerors’ market basket,” the agency failed to “analyze either the quality of the
proposed items, or the quantity available of the proposed items.” Id. at
15. The protester maintains that the “pricing disparity between Office Depot’s and
Mancon’s [total] evaluated prices indicates that Mancon likely offered lower quality or
lower priced items in limited quantities for the Test Market Basket to obtain a low
evaluated price.” Id.
The Navy requests dismissal of this protest ground as an untimely challenge to the price
evaluation scheme. The agency points out that the “quantities of each test market
basket item was provided to all offerors in tab 3 of [the RFP’s pricing spreadsheet], and
was not subject to change.” Req. for Dismissal at 7; RFP; attach. 5, Pricing
Spreadsheet, tab 3. The agency also notes that, “[w]ith respect to the ‘quality’ of
the proposed items, the solicitation stated that the ‘Government does not require a
particular brand name for the Test Market Basket items’” and “offerors were thus simply
required to provide compliant items.” Req. for Dismissal at 7; RFP at 20. The
agency therefore maintains that the protester’s assertion–that the agency should have
evaluated the quantity available, or the quality of, the proposed test market basket
items–is an “attempt to modify the evaluation criteria after the date for the submission
of proposals.” Req. for Dismissal at 7.
In its response to the dismissal request, Office Depot asserts that this protest ground
was not an untimely challenge to the terms of the solicitation. The protester,
however, fails to provide any substantive argument to support this assertion.
See Opposition to Req. for Dismissal at 5. Instead, Office Depot raises a new
challenge to the agency’s evaluation of the test market basket. Rather than asserting
that the agency improperly failed to evaluate the quantity available, or the quality of,
the proposed test market basket items, to ensure the Test Market Basket pricing was based
on comparable products, the protester’s new argument alleges that the Navy failed to
evaluate whether the proposed test market basket items even met the solicitation’s minimum
“descriptions and quantity requirements.” Id.
Our Bid Protest Regulations contain strict rules for the timely submission of protests.
These rules reflect the dual requirements of giving parties a fair opportunity to present
their cases and resolving protests expeditiously without unduly disrupting or delaying the
procurement process. Verizon Wireless, B‑406854, B‑406854.2, Sept. 17, 2012,
2012 CPD ¶ 260 at 4. Our timeliness rules specifically require that a protest based
upon alleged solicitation improprieties that are apparent prior to the closing time for
submission of proposals must be filed before that time. 4 C.F.R. § 21.2(a)(1); see
AmaTerra Envtl. Inc., B‑408290.2, Oct. 23, 2013, 2013 CPD ¶ 242 at 3.
Based on our review, we conclude that both the protester’s initial and new protest
allegations concerning the test market basket are untimely. With regard to the first
allegation (that the agency should have evaluated the quantity available, or the quality
of, the proposed test market basket items), as discussed above, the RFP clearly advised
offerors that they were required to submit pricing for the items in the test market basket
“in the quantities and units of issue specified” in the RFP. RFP at 20-21. As
also previously discussed, the solicitation required only that the items proposed “meet the
minimum salient characteristics shown in the description.” Id. To the
extent the protester asserts that the evaluation should have assessed whether the proposed
market basket items exceeded the RFP’s minimum salient characteristics or considered the
quantity of an offeror’s inventory, the protester’s argument is untimely because it was not
raised prior to the time for submission of proposals. 4 C.F.R.
As for the protester’s “new” argument, as also previously discussed, Office Depot
contends that the Navy failed to properly evaluate whether the proposed test market basket
items met the solicitation’s minimum “descriptions and quantity requirements.” This
argument essentially contends that the agency did not evaluate price proposals in
accordance with the terms of the solicitation. Although the protester raises this
argument in response to the agency’s request for dismissal, the protester was on notice of
the information providing the basis for this argument as of its April 27 debriefing.
See Protest, exh. 2, Debrief Letter. Because the protester failed to raise
this issue within 10 days of that date, it is untimely. Bid Protest Regulations,
4 C.F.R. § 21.2(a)(2) (requiring protest issues be filed within 10 days after the
basis is known or should have been known); Vigor Shipyards, Inc., B-409635, June 5,
2014, 2014 CPD ¶ 170 at 5 (explaining that where a protester initially files a
timely protest, and later supplements it with new grounds of protest, the later-raised
allegations must independently satisfy our timeliness requirements, since our Regulations
do not contemplate the piecemeal presentation or development of protest issues).
Accordingly, this protest ground is also dismissed.
Total Material Price
The protester contends the agency failed to calculate the total material price for the
price evaluation in accordance with the terms of the RFP. The protester asserts that
the agency improperly calculated the total material price by applying the offerors’
proposed service charges and discounts to the “plug-number dollar estimates” provided by
the agency for each commodity and sub-commodity group, rather than applying them to the
list prices, or average list prices, in an offeror’s catalog. Protest at 15; Comments
& Supp. Protest at 19.
As noted above, the RFP clearly advised offerors that the “[t]ab 2-Total Material Price
in Attachment 5 contains the estimated sales for each commodity and sub-commodity group”
and specified that offerors “shall apply [their] proposed discounts and Government-sourced
item service charges to the estimated sales in Tab 2-Total Material Price of Attachment
5-Material Price Submission Worksheet.” RFP at 22. To the extent the protester
disagrees with this evaluation scheme, this argument is untimely because it was not raised
prior to the time for submission of proposals. 4 C.F.R. § 21.2(a)(1).
Accordingly, this protest ground is also dismissed.
Office Depot also challenges the Navy’s unbalanced pricing analysis, asserting that it
was “very limited.” Comments & Supp. Protest at 18-19.
With respect to unbalanced pricing, the FAR requires that contracting officers analyze
offers with separately-priced line items or subline items to detect unbalancing.
FAR 15.404-1(g)(2). Where unbalancing is detected, the contracting officer
must then consider the risk posed, including the risk of paying an unreasonable price, and
must consider whether to reject the offer if the risk is unreasonable. FAR
15.404-1(g)(2). While both understated and overstated prices are relevant to the
question of whether unbalanced pricing exists, the primary risk to be assessed in an
unbalanced pricing context is the risk posed by overstatement of prices because low prices
(even below-cost prices) are not improper and do not themselves establish (or create the
risk inherent in) unbalanced pricing. See AIS Eng’g, Inc., B-410246,
B-410246.2, Nov. 21, 2014, 2015 CPD ¶ 5 at 3.
Here, as noted above, the record shows that the contracting officer conducted an
unbalanced pricing analysis of the awardee’s price proposal as required by the FAR.
The contracting officer compared Mancon’s unit pricing for each item to the unit prices of
the other offerors. AR, Tab 4, Price Analysis. After concluding that Mancon’s
unit prices for two items could be considered “unbalanced,” the contracting officer
considered the risk associated with the unbalanced pricing. AR, Tab 5, BCM at 43;
COS/MOL at 13. The contracting officer found the risk to be low as Mancon’s prices
for the two items made up only 1.28 percent of the test market basket. AR, Tab 5, BCM
Additionally, the contracting officer explained that “the primary risk to be assessed in
the context of unbalanced pricing is the potential for overstated prices,” and “only one
item (cutlery kit) accounting for only 0.96% of the test market basket [ ] appeared to be
highly priced.” AR, Tab 5, BCM at 43; COS/MOL at 13. The contracting officer
stated that “[t]his one isolated product out of the tens of thousands of items expected to
be sold is not expected to place the Government at significant risk of paying unbalanced
prices.” AR, Tab 5, BCM at 43. Additionally, the contracting officer noted that
the overstated price of the cutlery kit was likely due to an “unintended error in the
pricing of the item,” particularly “since the price of the cutlery kit in Mancon’s current
catalog is only $26.69 (as opposed to $160.60).” Id.; COS/MOL at 13.
Ultimately, the contracting officer “assessed that the small percentage of this one highly
priced item in relation to the total estimated value of the contract reflected a low
overall risk of unbalanced pricing.” COS/MOL at 13. In addition, the
contracting officer “observed that the pricing mechanisms and requirements of the contract
are designed to mitigate any risk associated with the contractor pricing items too highly
since the Servmart is not a required source of supply for customers at Naval Station
Norfolk and it is in the contractor’s interest to price items competitively with other
sources.” AR, Tab 5, BCM at 44; COS/MOL at 13.
In our view, the agency has satisfied the requirements of the FAR to conduct an
unbalanced pricing analysis by reasonably determining that the risk posed to the government
was not significant enough to render Mancon’s proposal unacceptable. Office Depot has
failed to establish that any additional analysis was required here. We will not
disturb an agency’s assessment of the risk posed by unbalanced pricing when, as here, the
agency reasonably considers the relevant circumstances. See, e.g., Gulf
Master Gen. Trading, LLC, B-407941.2, July 15, 2013, 2013 CPD ¶ 210 at 5.
Accordingly, we find no basis to sustain the protest.
In its supplemental protest, filed after receipt of the agency report, Office Depot
argues that the record shows the Navy improperly engaged in discussions with only
Mancon. The record confirms, and the Navy concedes, that the agency contacted Mancon
after offerors submitted their proposals, but our review of the exchange leads us to
conclude that the agency’s communication was a request for clarification, not
Section 15.306 of the FAR describes a spectrum of exchanges that may take place between
an agency and an offeror during negotiated procurements. Clarifications are “limited
exchanges” between the government and offerors that may allow offerors to clarify certain
aspects of proposals or to resolve minor clerical errors. FAR 15.306(a)(2).
Discussions, on the other hand, occur when an agency indicates to an offeror
significant weaknesses, deficiencies, and other aspects of its proposal that could be
altered or explained to enhance materially the proposal’s potential for award. FAR
15.306(d)(3). The “acid test” for deciding whether discussions have been held is
whether it can be said that an offeror was provided the opportunity to modify its proposal.
National Beef Packing Co., B-296534, Sept. 1, 2005, 2005 CPD ¶ 168 at 11;
Park Tower Mgmt. Ltd., B-295589, B-295589.2, Mar. 22, 2005, 2005 CPD ¶ 77 at 7.
As indicated above, for the price proposal, the solicitation instructed offerors to use
a pricing worksheet, included as attachment 5 to the solicitation, to submit their pricing
for the total material price and the test market basket. RFP at 21. The
solicitation explained that the total evaluated price would be the sum of the total
material price and the total test market basket price. Id. at 21-22.
As also previously noted, the test market basket was a sampling of 282 items to be sold
at the Norfolk Super Servmart. Offerors were to provide prices for the 282
items. The 282 items were selected for inclusion in the test market basket based on
the frequency with which they were sold at the Servmart. The government provided the
quantities for each item, and the offeror was to provide a price for each item, among other
figures (such as proposed discount, service charge, etc.). RFP, attach. 5, Pricing
Spreadsheet, tab 3.
The contracting officer explains that during the evaluation of Mancon’s test market
basket, she noticed three items for which the proposed unit price led her to believe that
Mancon had committed a “clerical error” by proposing “a unit price for a different unit of
measure than the test market basket required.” Supp. COS/MOL at 2. For example,
the test market basket required offerors to propose a unit price for a dozen identification
(ID) card holders. Supp. COS/MOL at 2; RFP, attach. 2, Price Worksheet at tab 3,
line 63. The contracting officer explains that she thought “Mancon’s proposed
unit price of $2.95 appeared to be an obvious clerical error as market research found
pricing for a dozen ID card holders to be $42.09.” Supp. COS/MOL at 2. The
contracting officer states that this “led [her] to surmise that Mancon had inadvertently
proposed a unit price for one (1) ID card holder instead of 12.”
Similarly, the test market basket required offerors to propose a unit price for 1,000
specimen bags. The contracting officer found that “Mancon’s proposed unit price of
$19.14 appeared to be an obvious clerical error” since “market research found pricing for
1000 specimen bags to be $175.88.” Id. The contracting officer states
that this led her to assume that “Mancon had inadvertently proposed a unit price for a
hundred (100) specimen bags.” Id.
On April 9, 2021, the Navy sent an email to Mancon asking the offeror to clarify the
unit of measure for each of the following three proposed unit prices in its test market
1.For Item #63, is your Proposed Unit Price of $2.95 in
Column J for one (1) 36 Retractable ID card reel, badge holder, NSN [national stock
2.For Item #75, is your Proposed Unit Price of $19.14 in
Column J for one hundred (100) Specimen Bags, NSN 6530013075430?
3.For Item #85, is you Proposed Unit Price of $11.52 in
Column J for one hundred (100) Absorbent Liquid Pouches, NSN 6530013049754?
AR, Tab 6, Clarification Email at 1.
By email, dated April 12, 2021, Mancon confirmed that its proposed unit price of $2.95
was for a single badge holder and its proposed unit price of $19.14 was for 100 specimen
bags. Id. For the third question, Mancon responded that the proposed
unit price was for a box of 100 pouches. Id.
The contracting officer states that, after she “verified that Mancon had inadvertently
quoted the incorrect quantity” for the first two items, she “corrected the clerical error
in the price analysis.” Supp. COS/MOL at 3. Specifically, “since Mancon
confirmed [the] proposed price for (1) ID Card Holder,” the contracting officer “multiplied
Mancon’s proposed unit price by the applicable quantity . . . to determine a corrected unit
price.” Supp. COS/MOL at 3; AR, Tab 5, BCM at 36. The contracting officer
states that she made the same correction to Mancon’s proposed unit price for the specimen
Office Depot argues that the exchange between the Navy and Mancon allowed Mancon to
revise its price proposal, and that therefore, discussions took place. We
An agency may allow an offeror to correct a clerical error in a cost or price proposal
through clarifications, as opposed to discussions, where the existence of the mistake and
the amount intended by the offeror are clear from the face of the proposal. IPlus,
Inc., B-298020, B-298020.2, Jun. 5, 2006, 2006 CPD ¶ 90 at 5; Joint Threat
Servs., B‑278168, B‑278168.2, Jan. 5, 1998, 98-1 CPD ¶ 18 at 12-13.
The record reflects that the agency believed that Mancon’s proposed unit price of $2.95
was for a single card holder and of $19.14 was for 100 specimen bags, and Mancon’s response
to the agency’s questions confirmed that those unit prices were proposed for those
quantities. The record also shows that none of Mancon’s proposed unit prices changed
as a result of the clarifications. Rather, the clarifications allowed the contracting
officer to verify that Mancon made an error in proposing the incorrect quantity for these
two items; the contracting officer therefore corrected the clerical error in the quantity
for these two items in the price analysis. As for the test market basket, it was
provided as part of the price evaluation to assess and compare the proposed prices of the
offerors; the RFP established the quantities. Further, the correction of the error
did not competitively prejudice Office Depot since it had the effect of raising, not
lowering, Mancon’s total evaluated price. Officemax, Inc., B-299340.2, July
19, 2007, 2007 CPD ¶ 158 at 8 (“[O]ur Office will not sustain a protest absent a reasonable
showing of competitive prejudice, that is, unless the protester demonstrates that, but for
the agency’s actions, it would have a substantial chance of receiving award.”). Under
these circumstances, we find that this exchange did not constitute discussions, but rather
was a clarification of an obvious error. On this record, we find no basis to sustain
Best-Value Tradeoff Analysis
The protester also argues that the Navy conducted an unreasonable best-value tradeoff
analysis based on its flawed price analysis and its failure to consider the advantages
associated with Office Depot’s proposal.
As a general matter, source selection officials enjoy broad discretion in making
tradeoffs between the comparative merits of competing proposals in a best-value evaluation
scheme; such tradeoffs are governed only by the test of rationality and consistency with
the solicitation’s evaluation criteria. Coastal Int’l Sec., Inc., B-411756,
B-411756.2, Oct. 19, 2015, 2015 CPD ¶ 340 at 14. In a best-value procurement,
such as this, it is the function of the source selection authority (SSA) to perform a
price/technical tradeoff to determine whether one proposal’s technical superiority is worth
a higher price. Raytheon Co., B-414062.3, Feb. 21, 2017, 2017 CPD ¶ 71 at 6.
When proposals are compared for purposes of a best-value tradeoff decision, the
number of identified strengths is not dispositive; rather, it is the qualitative
information underlying the ratings that the SSA should consider in assessing whether and to
what extent meaningful differences exist between proposals. National Gov’t Servs.,
Inc., B‑412142, Dec. 30, 2015, 2016 CPD ¶ 8 at 18-19.
On this record, we find no basis to question the reasonableness of the agency’s tradeoff
decision. The record demonstrates that the SSA conducted a detailed comparison of
Office Depot’s and Mancon’s proposals under each factor. The SSA recognized that both
proposals were rated acceptable under the technical management approach factor, with both
proposals receiving a weakness and two strengths under this factor. AR, Tab 5, BCM at
50. With regard to past performance, both Mancon and Office Depot received
substantial confidence ratings based on strong references. Id. at 51.
For the small business participation plan, both proposals received a rating of “good” with
the contracting officer finding that both proposals “demonstrated a thorough approach and
understanding of the small business objectives.” Id. at 52. With regard
to price, Office Depot’s total evaluated price was $37,827,261, and Mancon’s total
evaluated price was $26,918,559. Id. at 49.
The SSA explained that, after conducting a comparison of the proposals under each
factor, including a comparison of the strengths and weaknesses under the technical
management approach factor, the technical evaluation board found a strength assessed for
Office Depot’s “proposed custom website to be modeled on [its] commercial website] to be
unique and advantageous to the government.” Id. at 51. Ultimately,
however, the SSA concluded that this benefit alone does not warrant paying “a significant
price premium of 40%[.]” Id. at 52-53. Accordingly, the contracting
officer concluded that Mancon’s proposal represented the best value to the
government. Id. Based on the record presented, we find no basis to
object to the contracting officer’s tradeoff decision.
The protest is dismissed in part and denied in part.
Edda Emmanuelli Perez