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Not All Errors Are Fatal: GAO Finds No Prejudice in DFARS Risk Oversight

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In Chugach Logistics and Facility Services JV, LLC, B-423690 (Nov. 20, 2025​), CLFS protested an $80 million award by the Department of the Navy to CCS King George 2 LLC (CCS KG) for base operations support at Naval Base Coronado. CLFS alleged that the Navy unreasonably evaluated proposals under the corporate experience, past performance and price factors, and improperly failed to consider certain performance data that it claimed was “too close at hand.” GAO rejected all of CLFS’ challenges, finding that the Navy acted within its discretion and in accordance with the solicitation.​

The Decision
GAO denied the protest, ruling that:

  1. JV and Affiliate Experience Was Properly Considered: CLFS argued that the awardee’s experience should have been discounted because the past performance and corporate experience references were submitted by prior joint ventures and corporate affiliates. GAO disagreed. The record showed the agency understood and properly documented which legal entities performed the work and that King George LLC—CCS KG’s mentor and managing JV partner—“self-performed” the vast majority of the work of each project “as the prime contractor.” GAO found no requirement in the RFP barring reliance on JV or affiliate experience, and confirmed that mentors in 8(a) JVs may receive credit for work performed through previous JV structures, provided the agency evaluates it reasonably.
  2. No Disparate Treatment in Awarding Strengths: CLFS alleged disparate treatment because CCS KG received a strength for not relying on corporate affiliates, while CLFS used a “sister subsidiary” as one of its references. GAO found the agency’s distinction justified: The RFP defined “corporate affiliates” to include sister subsidiaries, and CCS KG did not rely on such entities, while CLFS did.
  3. Too-Close-at-Hand Doctrine Didn’t Apply to CLFS’s Mistaken CPARS: CLFS submitted the wrong CPARS report for one of its projects. GAO rejected the argument that the Navy was obligated to seek out the correct version or apply the “too close at hand” doctrine. GAO emphasized that this doctrine does not excuse offerors from submitting required documents, particularly when the information isn’t already known to the agency evaluators or clearly reflected in the record.
  4. Agency Not Required to Review All CPARS: CLFS also claimed the Navy was required to independently review all CPARS records. GAO disagreed, citing RFP language stating the agency “may” review all CPARS evaluations but was not obligated to search for or evaluate CPARS not submitted with the proposal. GAO found the Navy reasonably limited its review to what was provided in accordance with the solicitation.
  5. Past Performance Evaluation of the Awardee Was Reasonable: CLFS argued the Navy ignored poor performance by CCS KG’s mentor on a prior contract at the same base. But GAO found the contract fell below the $10M annual threshold and didn’t meet the RFP’s relevance criteria. Therefore, the agency properly excluded it from its past performance analysis.
  6. Failure to Perform DFARS 252.204-7024 Price Risk Analysis Was Not Prejudicial: CLFS asserted that the Navy failed to perform a price risk analysis required by DFARS 252.204-7024, which was incorporated by reference. GAO acknowledged the agency’s error but found no competitive prejudice, noting that no meaningful Supplier Performance Risk System price data existed for the relevant service code. Because the protester did not show how the lack of this analysis impacted the outcome, GAO denied the claim.
  7. No Price Realism Analysis Required: GAO rejected CLFS’s attempt to convert the DFARS price risk analysis requirement into a de facto price realism requirement. The solicitation did not contemplate such an analysis, and the DFARS clause alone did not create that obligation. GAO reaffirmed that without express solicitation language, agencies may not conduct price realism on fixed-price contracts.

Key Takeaways for Contractors

  1. JV and Affiliate Experience Is Permissible (With Proper Documentation): When relying on JV or affiliate performance history, ensure your proposal clearly explains roles, responsibilities, and corporate relationships. GAO will defer to agency judgments if those relationships are well-documented.
  2. Don’t Count on the Agency to Fix Your CPARS Mistake: Offerors must provide the correct CPARS reports as required. Failure to do so may disqualify the project from evaluation, and the “too close at hand” doctrine won’t rescue it.
  3. SPRS Risk Assessments Must Be Tied to Prejudice: If an agency fails to run a DFARS price risk analysis, you must still show that it mattered. This serves as another reminder that, without prejudice, even admitted evaluation flaws won’t lead to a sustained protest.
  4. “May” Means “May,” Not “Must”: Agencies are afforded significant discretion and GAO will not turn a discretionary obligation—signified by “may” language—into a mandatory one.
  5. Price Realism Analysis Is Not Automatic Under DFARS 252.204-7024: Unless the solicitation explicitly calls for a price realism analysis, DFARS 252.204-7024 does not convert a fixed-price competition into one where low pricing must be explained or penalized.