In T3i, Inc., the Government Accountability Office (GAO) denied T3i’s protest after the Air Force excluded T3i’s low-priced, technically acceptable proposal because the agency found 25 of T3i’s 129 unburdened (gross) hourly labor rates unrealistically low. GAO held that the Air Force’s price realism review was reasonable and consistent with the solicitation, and it rejected T3i’s claim that the Air Force had to rely on T3i’s pricing narrative in the realism analysis.

Background

The Air Force completed a task order for support services for its aircrew training readiness program (CRAFT). The contractor had to staff 129 full-time equivalent roles across 13 locations. This was a lowest-price, technically acceptable competition. Technically acceptable meant the proposal was acceptable if it proposed the required 129 roles. After that, the Air Force looked at price. It would pick the lowest total evaluated price that was also fair, reasonable, balanced, and realistic.

T3i proposed the 129 roles and offered the lowest total price of about $73.6 million. The Air Force then checked whether T3i’s unburdened hourly pay rates were realistic. The Air Force decided 25 rates were too low, removed T3i from the competition, and awarded to LMR Technical Group LLC at its price of about $77.6 million.

Why GAO Denied the Protest

First, T3i argued the solicitation required a pricing narrative, so they reasoned that the Air Force had to consider that narrative when deciding whether T3i’s rates were realistic. T3i also said its narrative showed how it could do the work at its proposed rates. GAO disagreed and pointed to the solicitation’s process. After finding the low offeror technically acceptable, the agency would evaluate unburdened hourly labor rates for realism. The solicitation gave the Air Force flexibility on how to do that analysis, but it did not say the agency had to evaluate the pricing narrative during the realism step. GAO said that without clear language requiring it, the Air Force was not obligated to do it.

GAO also noted that the solicitation did not call for a detailed technical review. Technical acceptability was only about proposing the right number of positions, so the Air Force did not have to evaluate a unique technical approach as part of price realism. GAO reviewed T3i’s narrative and found it too general. It said T3i talked about market research in broad terms, but did not explain, job by job, how it would staff the roles at those low rates and still meet the requirements.

Second, T3i disagreed with the Air Force’s evaluation method, but GAO said the method was reasonable.

The Air Force compared T3i’s unburdened hourly rates to market data, and GAO said agencies have discretion in how deep to go on price realism, and their approach matched what the solicitation allowed. GAO also mentioned the Air Force made one typo when copying one of T3i’s rates, which would have made that single rate acceptable if corrected. But it did not matter because the agency still found 24 other unrealistic rates.

Lastly, T3i claimed that the Air Force used the wrong benchmark job category. GAO disagreed and said that the choice was reasonable. T3i also argued the Air Force used unstated criteria by comparing the human performance specialist roles to an organizational psychologist category in the pay data. GAO disagreed. The Air Force explained that the human performance specialist roles were new and there was no perfect match in the database, so it used market research and picked the closest category based on education, responsibilities, and expected pay. The Air Force also set a broad range and compared T3i to the low end of the range. GAO said that was a reasonable way to do the realism check and fit within the solicitation’s stated evaluation.

Practical Takeaways

This decision is a reminder that price realism can be a true gatekeeper, and agencies can exclude an offeror whose rates look too low if the solicitation permits. If you win on price, you still must look like you can hire people at your proposed rates. If your unburdened rates are far below the market, the agency can reject your proposal if the solicitation allows a realism check.

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