GAO Sustains Protest Over CIA’s Faulty Cost Realism Evaluation
In a recent bid protest decision, Markon LLC, B-423767-.4, December 12, 2025, the Government Accountability Officer (GAO) delivered a pointed reminder about the limits of agency discretion in cost realism evaluations. In this case, which involved a solicitation for business operations, information technology engineering support, and business enterprise modernization services, the Central Intelligence Agency (CIA) had upwardly adjusted Markon’s proposed costs on the grounds that the company offered “efficiencies” in its technical approach that were unrealistic and inconsistent with oral guidance CIA provided during pre-solicitation one-on-one meetings with offerors. However, those oral instructions were never incorporated into the final RFP. Of course, agencies must evaluate proposals strictly against the criteria in the solicitation, not against informal, unpublished guidance. Because the CIA relied on unstated evaluation criteria to adjust Markon’s proposed price upwards, the CIA’s cost realism analysis, and its resulting award decision, could not stand.
GAO also concluded that the CIA failed to evaluate Markon’s costs for realism in light of Markon’s actual proposed technical approach. The technical evaluation team had credited Markon with strengths for efficiencies Markon proposed in connection with its modernization and efficiency strategy, yet the cost evaluators disregarded those same efficiencies and added back all associated labor costs to Markon’s evaluated price. GAO emphasized that a proper cost realism review must assess whether costs are realistic for the offeror’s unique approach, not whether they align with the agency’s internal assumptions or preferences that are omitted from the RFP. Here, nothing in the RFP prohibited the efficiencies Markson proposed—in fact, the solicitation generally encouraged modernization and process improvements.
For contractors, the Markon decision underscores two critical points: first, agencies cannot rely on informal or oral guidance to evaluate proposals; and second, cost realism adjustments must be grounded in the offeror’s proposed technical solution, not in agency “expectations” or “requirements” that were not actually included in the solicitation.
GAO’s decision is available here.