Bid Protest Law

Thinking Outside the Box: Construction ID/IQ Contracts?

Sheila Armstrong — Wed, 03 Feb 2010 16:49:57 -0800

The United States Court of Appeals for the Federal Circuit affirmed a ruling from the Court of Federal Claims that an ID/IQ contract is an appropriate vehicle for construction of military housing. Rejecting assertions that ID/IQ contracts apply only to acquisition of supplies and services, which excludes construction, and that using an ID/IQ contract for construction constituted improper bundling in violation of the Small Business Act, the court held that use of ID/IQ contracts for new construction projects does not violate any procurement regulations.

ID/IQ Construction Contracts Are Not Prohibited by the FAR

Plaintiff argued that the FAR authorized use of ID/IQ contracts only for supplies and services, and that “services” did not include construction. Plaintiff identified several regulations that applied to “supplies, services and construction” arguing that a reading of “services” to include “construction” rendered the addition of the word “construction” as superfluous in other regulations. The court was not convinced. Instead it took an entirely different view of the issue finding that because there are no regulations that specifically prohibit the use of ID/IQ contracts for construction projects, such use is proper. In fact, the court praised the Corps’ approach finding its approach “innovative.”

Construction Does Not Constitute Improper Bundling

Plaintiff further argued that use of ID/IQ contracts to procure new construction constituted improper bundling in violation of the Small Business Act. In rejecting this argument, the court first noted that the Small Business Act only prohibited “unnecessary and unjustified” bundling. Furthermore, the court found that the cited provisions of the Small Business Act did not apply to contracts for new construction. Finally, the court went on to examine the small business subcontracting requirements in the solicitation and found the anticipated ID/IQ contracts very beneficial to small businesses.

Tyler Construction Group v. U.S., 2009 WL 1796702 (Fed. Cir. June 25, 2009)

GAO Clarifies Scope of Expanded Bid Protest Jurisdiction

Sheila Armstrong — Mon, 29 Jun 2009 09:45:37 -0800

GAO recently clarified the scope of its newly acquired jurisdiction over task and delivery orders in excess of $10 million under indefinite-delivery/indefinite quantity (IDIQ) contracts. GAO rejected the agency's jurisdictional challenge holding that it was authorized to consider the protest under section 843 of the National Defense Authorization Act of Fiscal Year 2008 (NDAA), Pub. L. 110-181, 122 Stat. 3, 236-39 (2008), which modified the Federal Acquisition Streamlining Act of 1994's (FASA) prior limitations on task and delivery order protests. GAO further clarified that its newly acquired jurisdiction under the NDAA was not limited in scope, and instead conferred "the same substantive protest jurisdiction conferred by [the Competition in Contract Act of 1984 (CICA) and FASA]."

NDAA Modified FASA's Jurisdictional Limitations for Task and Delivery Orders

FASA acknowledges that contractors holding IDIQ contracts "shall be provided a fair opportunity to be considered" for award of delivery and task orders; however, FASA limits jurisdiction over such protests to those challenging an increase in the scope, price or maximum value of the underlying contract. See 10 U.S.C. § 2304c(b), (d). NDAA created a second exception to FASA's prior jurisdictional limitation by allowing protests of task and delivery orders valued in excess of $10 million.

In addition, NDAA expounded on the "fair opportunity to be considered" requirement by clarifying that agencies soliciting for task and delivery orders in excess of $5 million must provide, at a minimum:

(1) a notice of the task or delivery order that includes a clear statement of the agency’s requirements;

(2) a reasonable period of time to provide a proposal in response to the notice;

(3) disclosure of the significant factors and subfactors, including cost or price, that the agency expects to consider in evaluating such proposals, and their relative importance;

(4) in the case of an award that is to be made on a best value basis, a written statement documenting the basis for the award and the relative importance of quality and price or cost factors; and

(5) an opportunity for a post-award debriefing consistent with the requirements of section 2305(b)(5) of this title.

GAO Rejects Agency's Limited Interpretation of New Bid Protest Jurisdiction

The agency sought to limit GAO's bid protest jurisdiction to a procedural review of whether the process for issuing the task or delivery order properly provided notice of NDAA's newly enumerated requirements. Relying on the definition of "protest" as defined in CICA and FASA, GAO rejected this argument holding that its bid protest jurisdiction for task and delivery orders valued in excess of $10 million is substantively the same as the jurisdiction conferred by CICA and FASA.

Bay Area Travel, Inc.; Cruise Ventures, Inc.; Tzell-AirTrak Travel Group, Inc., B-400442; B-400442.2; B-400442.3; B-400547; B-400547.2; B-400547.3; B‑400564; B-400564.2; B-400564.3, Nov. 5, 2008, 2008 CPD

Is Soliciting From Three Sources Sufficient Under Simplified Acquisition Procedures? Maybe Not

Sheila Armstrong — Mon, 08 Jun 2009 18:34:50 -0800

GAO sustained the protest of an excluded potential bidder finding that solicitation from three sources may not be enough to meet the requirement that agencies "promote competition to the maximum extent practicable" under simplified acquisition procedures. GAO found that the acquisition specialist "clearly knew" protester was interested in providing the required products and she did not have a reasonable basis to exclude them. GAO sustained the protest on this basis even though the agency solicited bids from three sources as required by FAR 13.104(b).

Known Bidders Must Be Solicited Unless Reasonable Basis to Exclude

This protest involves the acquisition of fluorescent lamp starters used on Eagle F-15 aircraft. Protester was previously awarded a contract to supply lamp starters but the contract was subsequently canceled when the agency learned that the product offered by protester did not comply with foreign sourcing requirements. After cancellation of its original order, protester unsuccessfully responded to a separate RFQ issued by the agency.

The RFQ that is the subject of the protest was issued on an urgent and compelling basis. The contract specialist contacted Coordinated Defense, a bidder who also had previously bid on an RFQ for lamp starters, but she did not contact protester. After receiving three bids, the agency awarded the contract to Coordinated Defense and this protest followed.

The agency offered several reasons why it did not contact the protestor including that protester had never performed on a contract for the item and its previous contract history for the item was negative (i.e., it misrepresented the country of origin of its proposed item). GAO rejected all of the agency's reasons for not soliciting protester and held:

[W]e fail to see a reasonable basis in the record for the acquisition specialist’s decision not to solicit a quotation from the protester, which she knew to be interested in competing to supply the fluorescent lamp starters and whose ability to furnish the items she did not have a reasonable basis to doubt.

This holding opens the door for any bidder who is known to an agency, yet not solicited to bid on an RFQ issued on an urgent and compelling basis, to file a protest even if they do not learn about the award until after the closing date for proposals. This holds true even if the agency receives bids from three sources as required by FAR 13.104(b).

Solutions Lucid Group, LLC, B-400967, Apr. 2, 2009, 2009 CPD

Discussions Were Improper When "Discussion" Questions to One Offeror Seemed "Contrived"

Greg Vogel — Mon, 08 Jun 2009 17:25:16 -0800

In its May 2, 2009 decision, GAO sustained the latest in a series of protests by American K-9 Detection Services, Inc. (AK-9) on the grounds that the Army improperly limited discussions and in doing so, failed to give AK-9 the opportunity to submit an improved final proposal revision addressing the significant weaknesses or deficiencies in its proposal that were noted in the Army’s award decision. The protest was the sixth of AK-9’s protests against the award of a fixed-price indefinite-delivery, indefinite-quantity contract for contractor working dog services in Afghanistan. Award of the one-year contract with four option years was made to EOD Technology, Inc. (EODT) at a price of $38,350,935.

The Army issued the solicitation on June 13, 2008 and subsequently awarded the resulting contract to EODT. In its first protest and supplemental protest (B-400464 and B-400464.2), AK-9 attacked the Army’s past performance evaluation. The Army took corrective action, in response to these protests, permitting the offerors to resubmit relevant past performance information, and GAO dismissed the protests as moot. The Army’s reevaluation confirmed its initial award to EODT and AK-9 again protested, primarily on the grounds that the required kennel master/project manager (KM/PM) offered by EODT did not meet the solicitation’s minimum requirements and that the Army considered more than five of EODT’s previous contracts in evaluating past performance (the solicitation limited past performance submissions to five similar contracts). (B-400464.3 and B-400464.4).

In response, the Army again took corrective action, volunteering to reconsider the offerors’ proposals. The Army reduced the competitive range to AK-9 and EODT, and then requested that each offeror provide limited information relating to their proposed KM/PMs. In EODT’s case, the discussions permitted EODT to submit, for the first time, a compliant proposal. In AK-9’s case, however, there had been no concern regarding its proposed KM/PM, and the Army expressed concerns – later determined to be unfounded – that AK-9’s KM/PM would not be able to perform the contract and that he did not meet the minimum solicitation requirements. AK-9 responded that the KM/PM would perform, that Army personnel had personal knowledge that the KM/PM was compliant and that the Army’s question did not constitute discussions. AK-9 filed another protest (B-400464.5) which was dismissed as premature because award had not yet been made.

As a result of the Army’s actions, EODT was permitted to effectively submit a revised proposal, whereas AK-9 was not afforded the opportunity to address any of the significant weaknesses or deficiencies that resulted in another award to EODT.

Discussions between federal agencies and offerors have long provided fertile ground for protesting awards. GAO has consistently held discussions must be “meaningful, equitable, and not misleading.” American K-9 Detection Services, Inc. (citing The Boeing Co., B-311344, et al., June 18, 2008, 2008 CPD ¶ 114 at 49). This GAO precedent is not a particular stretch; the FAR specifically provides that discussions must identify for each offeror in the competitive range the deficiencies, significant weaknesses and adverse past performance information so that the offeror has the opportunity to respond. FAR 15.306(d)(3).

GAO long has held that agencies may not conduct unequal discussions – for example, discussions that are meaningful to some offerors, but are not to other offerors. In some cases, agencies may reasonably limit discussions to a particular aspect of offerors’ proposals (here, the KM/PM). Nonetheless, GAO also has held that offerors may submit revised proposals in response to discussions that revise aspects of a proposal that were not the subject of discussions. Here, the Army engaged in discussions with the original awardee, EODT, in a manner that permitted EODT to provide a compliant proposal, even though it did not identify the significant weaknesses or deficiencies that purportedly prevented AK-9 from receiving the award. AK-9 noted several areas of its proposal that it would have improved had proper discussions been held and had it had the opportunity to submit a revised proposal, and GAO therefore held that discussions were improperly limited.

GAO’s decision was particularly critical of the Army; not only did GAO sustain the protest, stating that the Army’s sole discussion question for AK-9 “seem[ed] contrived,” but GAO also independently listed three aspects of the record that concerned it and that it suggested should concern the Army when it performs this third round of recommended corrective action. GAO, which generally crafts its decisions narrowly in response to specific protested issues and often does not address protested issues when not necessary to reach a decision (see, e.g., Engineering Management & Integration, Inc., B-400356.4, B-400356.5, May 21, 2009, 2009 CPD ¶, at footnote 4), identified these potential problems, perhaps as a road map to assist the Army to avoid yet another protest in this procurement.

First, the solicitation listed “technical capability” as an evaluation factor, but it did not list any technical subfactors. The Army assessed the offerors’ technical capability by considering 10 separate “categories.” GAO expressed the concern that the use of unstated subfactors may violate CICA’s requirement that solicitations include “a statement of all significant factors and subfactors that will be considered in the evaluation, as well as their relative importance.” 10 U.S.C. 2305(a)(2)(A); FAR 15.304(d).

Second, AK-9 argued in its protest that the Army considered more than five of EODT’s previous contracts in evaluating past performance, despite the solicitation’s limitation of past performance submissions of two to five contracts performed in the previous five years. GAO agreed that the Army may want to consider the scope of appropriate past performance evaluation in correcting the procurement.

Finally, GAO recognized that the Army, in failing to consider possibly poor past performance of EODT, stated that the performance in question was halted by a stop work order and that no negative evaluation was warranted. However, in defending the earlier noncompetitive award to AK-9 for services during the procurement process, the Army apparently had noted past performance problems with EODT (the relevant past performance information is redacted from GAO’s public decision). GAO advised that the Army should reconcile its divergent opinions on EODT’s past performance in performing its new source selection.

American K-9 Detection Services, Inc., B-400464.6

GAO Protest Filings Up, Sustains Down in 2008

Sheila Armstrong — Mon, 05 Jan 2009 12:19:43 -0800

GAO's report to congress outlining bid protest activity at GAO for fiscal years 2004-2008 reveals that while bid protest filings were up 17% in 2008, GAO's sustain rate was only 21%, the lowest seen since 2004. Of the 1,652 cases filed at GAO in 2008, 87 were attributable to its expanded bid protest jurisdiction for task orders, A-76 protests and TSA protests. However, even without this expanded jurisdiction, filings were still up by 10.9%. GAO also saw its lowest percentage of hearings in 2008, with hearings held in only 6% of cases.

IMPACT: Contrary to some recent published comments, this report demonstrates that the GAO sustain rate in fact is down. Nonetheless, we believe that the coming year will see a continued increase in protest activity given the economic climate. Disappointed offerors in each instance should consider the pros and cons of filing protests at GAO, the agencies at issue or the United States Court of Federal Claims.

www.gao.gov/special.pubs/bidpro08.pdf

A Calamity of Errors: GAO Sustains Boeing's Protest of the Refueling Tanker Contract

Sheila Armstrong — Fri, 21 Nov 2008 13:08:25 -0800

Citing 10 reasons in a 67-page opinion, GAO sustained a protest filed by The Boeing Company (“Boeing”) of the highly-publicized award by the Air Force to Northrop Grumman Systems Corporation (“Northrop”) for its new generation aerial refueling tankers. Boeing prevailed on several garden variety protest grounds often seen, but usually unsuccessful in GAO protests. Here, GAO found that the Air Force made “significant errors” in evaluating proposals, engaged in inadequate and unequal discussions, improperly evaluated costs, and therefore made an improper source selection decision. GAO also addressed several other arguments, including those related to timeliness and document requests under GAO regulations.

The Agency Made Several Errors In Its Evaluation of Proposals

Boeing’s protest included several specific grounds related to evaluation of both proposals. Boeing prevailed on many of these grounds. In sustaining Boeing’s protest, GAO pointed to several flaws in the agency’s evaluation of proposals, finding that: (1) the agency did not assess the relative merits of proposals in accordance with evaluation criteria; (2) the agency gave credit to Northrop for exceeding a performance objective when the RFP specified that no credit would be given for exceeding objectives; and (3) the agency unreasonably determined that the awardee could meet the requirements of the solicitation.

First, Boeing objected to the agency’s evaluation of both proposals under the key system requirements subfactor, one of the most important subfactors in the procurement. The RFP directed offerors to meet “as many ….requirements as possible” under this subfactor. GAO found that the record did not demonstrate that the agency had given any credit to Boeing for meeting more of the subfactors than Northrop. GAO rejected the agency’s argument that the assignment of adjectival ratings generally should not be based on a simple counting of strengths and weaknesses finding that when, as here, the RFP specifically requires offerors to satisfy as many requirements as possible, consideration should be given to the offeror meeting that requirement.

Second, GAO addressed Boeing’s argument that the agency gave credit to Northrop for exceeding the aerial refueling subfactor. Here, GAO found that the RFP advised offerors “unambiguously” that proposals would not receive additional credit for exceeding proposal objectives. Yet, the agency gave Northrop additional credit for exceeding the aerial refueling specification contained in the RFP. GAO sustained the protest on this ground, finding that “this was a key reason supporting the SSA’s determination that Northrop Grumman’s proposed aircraft was more advantageous than Boeing’s aircraft…”

Third, GAO found that the agency unreasonably determined that Northrop could meet the solicitation requirements for aerial refueling. Specifically, Northrop’s proposed aircraft could not meet the air speed required for refueling. Northrop attempted to explain during discussions how this objective could be achieved. However, GAO found that the Air Force did not understand Northrop’s response made during discussions. Accordingly, GAO found the agency’s evaluation of this subfactor as unreasonable and sustained the protest on this ground.

Finally, GAO found that Northrop’s proposal was technically unacceptable under the Product Support subfactor and thus could not form the basis for award because Northrop had refused to commit to the RFP’s two-year time frame required for establishment of depot-level maintenance support. GAO agreed with Boeing that Northrop’s refusal to commit to the two-year time frame was a material solicitation requirement and that Northrop’s failure to make such a commitment rendered its proposal technically unacceptable. Northrop and the Air Force argued that Northrop’s failure to commit to this requirement was an “administrative oversight.” GAO was not convinced. Relying on the record and testimony at the hearing, GAO concluded: “the Air Force improperly accepted Northrop Grumman’s proposal, where that proposal clearly took exception to a material solicitation requirement.”

The Agency Engaged In Inadequate and Unequal Discussions

GAO found that the agency conducted inadequate discussions because it informed Boeing during negotiations that Boeing had fully satisfied all of the thresholds under one of the proposal’s objectives (KPP No. 7). However, it later changed its evaluation of Boeing under this objective. The agency argued that because it had changed its evaluation of Boeing after the close of discussions, it did not have an opportunity to inform Boeing of its failure to satisfy this objective. GAO rejected this argument, holding that the agency could not change its conclusion that Boeing had met this objective without affording Boeing the opportunity to correct this requirement. Furthermore, GAO found that the Air Force had treated offerors unequally by providing Northrop continued discussions on the same issue (KPP No. 7). Considering the great weight given to this factor in the evaluation of proposals, GAO found the Air Force’s misleading and unequal discussions prejudicial.

The Agency’s Cost Realism Evaluation Was Flawed

Boeing complained, and GAO agreed, that the Air Force’s evaluation of MILCON costs was flawed. To determine MICLON costs, the Air Force visited four air force bases prior to the receipt of proposals. The Air Force used information based on the commercial version of the two aircraft proposed to determine MILCON costs. It then extrapolated these results to additional air force bases including two OCONUS bases. GAO first noted that the Air Force admitted to certain errors made in the calculation of MILCON costs during the protest which collectively rendered Boeing as the offeror with the lowest MPLCC. GAO went on to find that the record did not support a finding that the Air Force’s cost determinations were reasonable. Furthermore, the Air Force adjusted Boeing costs upward without first finding those costs to be unreasonable. GAO found that the Air Force could not make such a cost realism adjustment without first finding Boeing’s costs to be unreasonable.

The Limited Scope of Discovery In Bid Protest Cases

In addition to the substantive issues addressed in this protest, GAO addressed some procedural issues raised by the parties. GAO denied a document request submitted by the Air Force to Boeing, finding that the request was overly broad. GAO emphasized that agency document requests in a protest setting are very limited. In contrast to the Federal Rules of Civil Procedure, GAO protest document requests are limited in scope to “a specific relevant document or documents, of which the agency is aware and does not itself possess.” Because the documents request by the agency here was broad in scope, GAO denied the request.

Protest of Evaluation Is Timely If Filed Within 10 Days of Debriefing Regardless of When Basis for Protest Is Known

Filing deadlines in GAO protests are jurisdictional. If a protest is not timely filed, it generally must be dismissed. Here, the agency and Northrop sought to have significant portions of Boeing’s protest dismissed as untimely. They argued that several of Boeing’s protest grounds were either challenges to solicitation requirements, or that Boeing was allegedly aware of the improprieties during the competition because it had learned of the agency’s evaluation of its proposal during the competition. GAO rejected all of these arguments and found that Boeing’s protest was timely filed.

First, GAO found that Boeing was not objecting to the evaluation criteria themselves, but the evaluation of proposals in accordance with those criteria. Then GAO addressed the agency’s argument that Boeing’s protest was untimely because Boeing knew of the Air Force’s view of the merits of its proposal during the competition. Here, the agency argued that because Boeing’s protest was filed more than 10 days after it learned of the agency’s view of its evaluation, Boeing’s protest was untimely. GAO rejected this argument, finding that challenges to procurements conducted on competitive proposals where a debriefing is required if requested, a protest is timely if filed within 10 days of the required debriefing even if the protestor had knowledge of the protest grounds during the procurement process.

The Boeing Co., B-311344; B-311344.3; B-311344.4; B-311344.6; B-311344.7;
B-311344.8; B-311344.10; B-311344.11, June 18, 2008, 2008 CPD __.

CO's Determination of TAA Compliance Was Arbitrary and Capricious Says the Court of Federal Claims

Sheila Armstrong — Thu, 20 Nov 2008 13:00:28 -0800

The Court of Federal Claims issued a permanent injunction prohibiting purchase by the Marine Corps System Command of up to 300 Large Field Refrigeration Systems (“LFRS”) from Sea Box, Inc. (“Sea Box”) finding that the agency’s determination that the LFRS’ were compliant with the Trade Agreements Act (“TAA”) was arbitrary and capricious. After GAO denied its protest, Sea Box filed a motion in the Court of Federal Claims (“CFC”) to enjoin the agency from proceeding with the procurement. The agency agreed to voluntarily stay the procurement pending the CFC protest. The CFC entered a permanent injunction, finding that the award to Sea Box was “arbitrary, capricious, and not in accordance with the law.”

Reasonableness of Award Decision is Based on Proposals as They Stood at Time of Award

The CFC agreed with Klinge that in a bid protest, proposals must be evaluated as they stood on the day of award. It rejected Sea Box’s offer to alter its method of manufacture after the filing of the protest and in response to the CFC’s remand order seeking clarification of the place of manufacture of the LFRS proposed by Sea Box. The CFC held that a contractor could not turn a clarification into a modification of its proposal and rejected Sea Box’s offer to attempt to cure the deficiencies in its original proposal as submitted.

Matters of Contract Administration Are Protestable When a Patent Deficiency Exists

In a footnote, the CFC rejected the government’s argument that the protest should be dismissed as a matter of contract performance. Here, the government argued that the indicators of non-compliance were insufficient to create a protestable issue. The CFC rejected this argument holding: “[w]e agree with the government that certification issues are typically matters of performance…however, an exception arises when the deficiency is patent.”

Agency Has Duty to Inquire if There is Reason to Believe the Contractor Will Provide Non-Compliant Products

The CFC noted several inconsistencies in Sea Box’s proposal regarding the place of manufacture of the LFRS. Notably, Sea Box’s original proposal identified China as the final place of assembly and testing. In its discussion questions, Sea Box explained that the refrigeration unit was shipped from Singapore to China where it was “mechanically and electrically” integrated into the container. Finally, Sea Box refused to unequivocally state that it intended to supply 100 percent compliant replacement parts. Instead it stated that “substantially every one” of the replacement parts were manufactured in the United States. In a situation like this, “where an offeror’s submission contains information that calls into question its TAA compliance, the agency has a duty to make reasonable inquiry and satisfy itself that the product offered meets the terms of the act. Failure to do so in the face of clear indications of non-compliance would be arbitrary and capricious and not in accordance with law.”

Klinge Corp., B-309930.2, Feb 13, 2008, 2008 CPD 102

(Klinge Corp. v. United States), 82 Fed. Cl. 127 (2008)

Task and Delivery Orders Are Subject to Small Business Set-Aside Requirements

Sheila Armstrong — Mon, 17 Nov 2008 14:10:57 -0800

Using its new authority to hear protests of task and delivery orders involving procurements over $10 million, GAO sustained the protest of Delex Systems, Inc. (“Delex”) of the Department of Navy, Naval Air Systems’ (“NAVAIR”) issuance of a delivery order under a multiple award contract as unrestricted. Delex argued, and GSA agreed, that task and delivery orders issued under multiple-award schedule contracts are subject to the small business set-aside provisions of FAR § 19.502-2(b) and that the contracting officer’s determination that the agency had no reasonable expectation of receiving offers from two responsible small businesses was unreasonable.

The Small Business Set-Aside Provisions Apply to Task and Delivery Orders Issued Under Multiple Award Schedule Contracts

The Navy argued that task and delivery orders were exempt from the requirements of FAR Subpart 19.5 because that Subpart only applies when the full and open competition requirements of FAR Part 6 apply, and FAR Part 6, by its own terms, does not apply to task and delivery orders. GAO rejected this argument, finding that the small business set-aside requirements are not merely requirements of the regulations but also of the Small Business Act.

GAO went on to explain that the “rule of two,” a rule designed to implement the requirement of the Small Business Act according to GAO, applies to task and delivery orders issued under multiple award schedule contracts. GAO reasoned that this was the case because a task or delivery order is an “acquisition” and the rule of two applies to “acquisitions.” The rule of two requires that all procurements over $100,000 be set aside for small businesses so long as there is a reasonable expectation that offers will be obtained from at least two responsible offerors at reasonable prices.

Agency’s Determination That it Would Not Receive Two or More Small Business Offers Was Unreasonable

Recognizing that an agency is entitled to great deference in determining whether it expects to receive offers from at least two responsible small business contractors, GAO found that the contracting officer’s decision here was unreasonable. Here, the original multiple award contracts had been awarded to eight contractors -- four small business contractors and four large business contractors. After SBA’s realignment of small business size status, two of the four small business contractors were reclassified as other than small businesses. The contracting officer determined that Delex likely either would not bid on this procurement because it had not bid on the last delivery order, or that Delex was not a responsible contractor because it had previously submitted an unsatisfactory proposal. GAO ultimately rested its conclusion that the contracting officer had acted unreasonably on a finding that the Navy had not adequately documented the basis for its decision.

Delex Systems, Inc., B-440403, Oct 8, 2008, 2008 CPD.

The Price Was Not Right - Resulting Award Decision Therefore Unreasonable

Greg Vogel — Wed, 16 Jul 2008 11:41:08 -0800

GAO sustained a protest by Fedcar Company, Ltd (“Fedcar”) of the General Services Administration’s (“GSA’s”) award to Duke Realty Limited Partnership (“Duke”) of a 15-year contract for the construction and lease of a “fully-serviced FBI campus facility.” GAO held that GSA’s source selection decision was not reasonable because it used an incorrect calculation to determine Duke’s price. GAO also held that the evaluation of the relative merits of the proposals was insufficiently documented.

Agency Evaluation Unreasonable When Based On An Incorrect Calculation

Fedcar protested that GSA’s price evaluation was unreasonable because it was based on an incorrect calculation. The solicitation stated that offerors’ price would be “evaluated based upon the ‘present value’ ANSI/BOMA [American National Standards Institute/Building Owners and Managers] office area per square foot cost of the offers.” The ANSI/BOMA international standard for office area was defined by the solicitation as “the area where a tenant normally houses personnel and/or furniture, for which a measurement is to be computed.” Fedcar alleged that in determining Duke’s present value ANSI/BOMA, GSA inserted incorrect numbers into the price evaluation spreadsheet and that this error favored Duke.

GSA admitted the error but asserted that the error did not prejudice Fedcar, arguing that it was inconsequential and that the outcome of the award process would be the same regardless of Fedcar’s increased price advantage resulting from use of the correct pricing figures. GAO disagreed, noting that GSA’s rationalization of the error as inconsequential was made in the heat of litigation, and that because the solicitation stated that price could become more important if proposals were technically closely evaluated, the procurement could, in fact, have ended with award to Fedcar. GAO added, “Where a source selection authority bases his or her source selection decision on figures that do not reasonably represent the differences in costs to be incurred under competing proposals, the source selection decision is not reasonably based.”

Documentation Of Award Decision Deficient

GAO also found that GSA’s evaluation was not reasonably justified because it did not compare the differences in the relative strengths and weaknesses between the proposals of Fedcar and Duke. While the source selection decision document addressed Duke’s strengths, it did not address Duke’s weaknesses, nor Fedcar’s strengths and weaknesses. GSA’s failure to document any consideration of the proposals’ relative merits was not sufficient to support award to Duke.

Timeliness And Standing As Intervenor In Previous Protest

An interesting side note to this protest is that GSA and Duke (as an intervenor in the protest) argued that Fedcar’s protest was untimely. Because Duke had earlier protested a previous award to a third offeror, GSA and Duke argued that Fedcar had the responsibility to diligently pursue its grounds of protest by intervening in the earlier protest. Fedcar’s failure to do so and the resulting failure to obtain information relating to its grounds of protest, argued GSA and Duke, meant the Fedcar’s protest was now untimely. GAO points out in a footnote in the decision that the definition of “intervenor” as “an awardee if an award has been made” under GAO’s Bid Protest Regulations precluded Fedcar from intervening in Duke’s earlier protest. 4 C.F.R. § 21.0(b)(1). Fedcar’s protest, filed within 10 days of notification of award to Duke, was therefore timely.

Effect Of No Termination For Convenience Clause; But Counteroffer, Not Acceptance

Another interesting aspect of GAO’s decision was its approach to the lack of a Termination for Convenience clause in Duke’s lease contract. Customarily, according to the decision, GAO will determine that remedial action disturbing the award of a contract lacking a Termination for Convenience clause is “not feasible.” However, in awarding the contract to Duke, GSA did not unconditionally accept Duke’s offer. Instead, GSA notified Duke that it had received award and simultaneously provided a draft lease to Duke that contained changes from the terms of the solicitation and Duke’s offer. GAO found that these changes were material. Therefore, GSA never unconditionally accepted Duke’s offer an thus a contract was never formed; rather, GSA’s draft lease was a proposed counteroffer to Duke.

Fedcar Company, LLC, B-310980, B-310980.2, B-310980.3, Mar. 25, 2008, 2008 CPD 70.

Bureau Of Indian Affairs Has Discretion To Interpret Standards For Buy Indian Act, But Not To Ignore A Mandatory Solicitation Requirement

Greg Vogel — Tue, 01 Jul 2008 11:31:39 -0800

GAO sustained the protest of Native American Industrial Distributors, Inc. (“NAID”) of the Bureau of Indian Affair’s (“BIA’s”) award of a fixed-price contract to Chenega Federal Systems, LLP, for information technology infrastructure services. BIA set aside the solicitation under the Buy Indian Act, which permits a preference in purchasing the products of Indian industry. NAID challenged BIA’s determination that Chenega was eligible for awards of contracts set aside under the Buy Indian Act. GAO disagreed, upholding BIA’s method for determining eligibility. NAID added a supplemental protest after BIA provided the administrative record challenging Chenega’s failure to provide required letters of commitment from proposed key personnel. GAO sustained on this basis, but as can be seen below, a sustained protest does not always yield the outcome a protester wants.

Buy Indian Act Eligibility

NAID protested Chenega’s eligibility for award under the solicitation, which was set aside under the Buy Indian Act. Relying on a court case and GAO precedent (Colorado Constr. Corp., B-290960, Sept. 6, 2002, 2002 CPD ¶ 162), NAID argued that Chenega could not be eligible for a Buy Indian Act set-aside unless it had “(1) at least 51 percent American Indian ownership; (2) American Indians involved in the daily management of the firm; and (3) an American Indian recipient of the majority of [Chenega’s] earning.”

GAO disagreed, finding that BIA was “entitled to considerable deference in determining the standards to apply” in a Buy Indian Act set-aside, and that neither the statute nor the solicitation required NAID’s interpretation of Buy Indian Act requirements. Therefore, GAO held that Chenega, as a wholly-owned subsidiary of an Alaska Native Corporation, was entitled to award of a contract under a Buy Indian Act set-aside.

Letters Of Commitment Required By The Solicitation

Despite finding Chenega eligible for set-asides under the Buy Indian Act, GAO did not agree with BIA’s handling of the letters of commitment required by the solicitation that Chenega failed to provide. The solicitation required letters of commitment from offerors’ key personnel, along with non-disclosure agreements from all contractor personnel. Notably, a third offeror not involved in the protest was cited with a deficiency for failing to provide letters of commitment, and consequently received a rating of “unacceptable” under the solicitation’s “personnel resources” evaluation factor.

Chenega did not provide the letters of commitment as part of its original offer, nor as part of its revised proposal, which was submitted after BIA took corrective action in response to an earlier NAID protest. Initially, BIA argued that it did not review the letters as part of Chenega’s revised proposal because it had reviewed them as part of Chenega’s initial proposal. BIA quickly corrected itself upon realizing that Chenega had not provided the letters until after the protest was underway. BIA’s fallback position was to argue that the failure to provide the letters was inconsequential, and that NAID was not prejudiced by this failure because Chenega would have been selected anyway.

GAO found this explanation insufficient. First, BIA excluded another offeror on the basis of the “unacceptable” rating received due to that offeror’s failure to include letters of commitment. Second, GAO noted that BIA’s fallback position was belied by its initial argument that it had received and reviewed letters of commitment as part of Chenega’s original proposal. This argument implied that the letters of commitment were important to BIA, and that BIA’s fallback consisted of post hoc rationalizations made in the heat of litigation. GAO therefore sustained NAID’s protest on this basis.

A Footnote on Interested Party Status

BIA initially requested that GAO dismiss NAID’s protest on the grounds that NAID’s technical score was lower than a third offeror, and therefore NAID was not an interested party next in line for contract award if the protest were to be sustained. As is often seen, GAO refused to dismiss the protest because the procurement was conducted on a best value basis. In best value procurements, GAO does not necessarily require that a protester be the “second place” offeror because GAO’s holding could result in a reordering of the evaluated offers. In this case, even though another offeror had a higher technical score than NAID, NAID’s lower price meant that NAID was potentially in line for award if BIA were required to reperform a best value analysis.

A Remedy?

This protest may not result in the happy ending hoped for by NAID. In the final section of GAO’s decision, titled “Conclusions and Recommendations,” GAO suggested that BIA may have overstated its requirements by requiring letters of commitment for all key personnel. If that is the case, GAO noted that BIA may amend the solicitation to reflect its diminished requirements. Additionally, GAO noted that both Chenega and NAID were concerned about whether BIA adequately communicated to them the weaknesses of their proposals. GAO therefore stated that BIA should consider conducting discussions with the competitive range offerors and then reqesting final proposal revisions. Chenega was therefore still permitted to provide a revised proposal and BIA may still award the contract to Chenega despite its failure at the outset to provide the required letters of commitment. GAO recommended that BIA reimburse NAID’s protest costs.

Native American Industrial Distributors, Inc., B-310737.3, B-310737.4, B-310737.5,
Apr. 15, 2008, 2008 CPD ¶ 76.