Low-Ball Pricing Tarnished $7 Billion Freight Award, XPO Says

XPO Logistics Worldwide Government Services told an appeals court that Crowley Logistics Inc. improperly received a $7 billion freight transport contract because the awarding defense agency didn’t adequately assess pricing (XPO Logistics World Gov’t Servs. LLC v. United States, Fed. Cir., No. 17-2506, opening brief filed11/22/17).

The U.S. Transportation Command’s failure to consider Crowley’s expected usage rates, which erroneously caused the agency to believe that Crowley offered better pricing, demands vacating the award, XPO said.

The agency ignored Crowley’s “low-ball, unbalanced pricing” for services it wouldn’t likely order, and should have disqualified Crowley from the competition, XPO said.

The agency reasonably selected Crowley’s $7.1 billion total evaluated price over XPO’s $7.7 billion price, the U.S. Court of Federal Claims ruled.

XPO asked that court to stay Crowley Logistics Inc.’s performance of the contract while it appeals a decision backing the award (XPO Logistics Worldwide Gov’t Servs. LLC v. United States, Fed. Cl., Nos. 17-452, 17-1080, motion for limited stay pending appeal made available11/22/17).

A stay is justified given the substantial issues to be raised on appeal, and it wouldn’t disrupt Crowley’s preparation efforts, XPO said.

$600 Million Difference

The U.S. Transportation Command’s failure to consider unbalanced pricing in Crowley’s proposal, which can pose a risk to government agencies, violated the Federal Acquisition Regulation, XPO said.

A proper pricing analysis wouldn’t have resulted in the favorable pricing gap for Crowley, XPO said.

XPO had a pricing advantage over Crowley with regard to trucking deliveries, which constituted the majority of work for the contract, but still lost the total evaluated pricing comparison by more than $600 million, XPO said.

Using a pricing calculation based on estimates that were disconnected from historical and projected workload data means that the agency would likely pay more to Crowley, XPO said.

Claybrook LLC and Crowell & Moring LLP represented XPO.

To contact the reporter on this story: Daniel Seiden in Washington at dseiden@bgov.com

To contact the editor responsible for this story: Daniel Ennis at dennis@bgov.com