News

Lower Price or Better Technical Proposal? MSBCA Upholds Award to Higher Priced Contractor

The appeal of Shirley Contracting Company, MSBCA 2932 (2015) arose out of an RFP issued by the State Highway Administration for intersection improvements in Prince George’s County. The RFP made clear that this was a “best value” procurement that would consider both price and certain evaluation factors set forth in the RFP. The RFP also emphasized that the technical evaluation factors would weigh heavier than the financial considerations in SHA’s evaluation.

After submission of the RFPs, SHA employed three teams to evaluate each of the three technical factors:  (1) project schedule and project management; (2) project technical elements and approach and (3) environmental approach. These three factors were each rated differently. “Project schedule and project management” was considered “significant.” The “project technical elements and approach” was considered “critical,” and the “environmental approach” was considered “good.”

After review of the proposals, Shirley Contracting Company had the lowest price but had scored slightly lower than another contractor, Concrete General Inc., on “project schedule and project management” as well as on “environmental approach.” Overall, CGI had received a “Good” technical rating and Shirley received a “Good” technical rating. Thus, Shirley had a lower price, but a worse technical rating.

Shirley’s appeal essentially argued that its lower price made up for the difference in technical rating.  This argument was a non-starter given that the RFP was clear that technical review outweighed the financial review. The MSBCA did give some attention to the possibility that CGI may have been given “double credit” for its earlier completion date as SHA had included a liquidated damages formula that reduced the financial advantage of Shirley by assessing per day LDs to its overall price for the difference between CGI’s completion date and Shirley’s completion date to account for “the daily loss of public benefit.” The rationale for this argument was that the technical evaluation also included consideration of project schedule, and thus the inclusion of a reduction in financial benefit for later completion amounted to consideration of project schedule twice.

The MSBCA stated that “if a deliberate estimate of the precise full valuation of that benefit was already included in SHA’s calculation of adjusted prices used in its financial comparison of the proposals, it would have been improper for SHA in the technical evaluation to give further advantage to CGI for the same factor.”  However, during the hearing the procurement officer testified that the LD amount was “not intended to include the entire value of earlier project completion.” Thus, the MSBCA concluded that there was no double counting and the appeal was denied.

For further questions, contact Matt Hjortsberg at (410) 583-2400 or Hjortsberg@bowie-jensen.com.

icon-location

210 W. Pennsylvania Avenue, Suite 400
Towson, Maryland 21204