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Stan Hinton |
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2007 Procurement Review: Protests |
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Contents
Unsuccessful GAO protests are legion, as are the ways to lose. This portion of the review focuses on the rare winners. By my unofficial count (and excluding decisions regarding protest costs), the GAO announced decisions sustaining 26 protests in 2007. Of these, 13 involved a faulty evaluation by the contracting agency; 3 involved small business or SDVOSB status; 3 concerned delivery or task orders; 2 involved unsatisfactory corrective action by the agency in response to a prior protest; and 1 each involved (i) a mistake-in-bid issue, (ii) a late, qualified quotation; (iii) the "Limitations on Subcontracting" clause, (iv) responsiveness, (v) discussions, and (vi) the agency's improper cancellation of a solicitation. Sikorsky Aircraft Company and Lockheed Martin Systems
Integration-Owego won their protest
against the Air Force's award to The Boeing Company of a contract for
the Combat Search and Rescue Replacement Vehicle because the Air Force
did not evaluate "operation and support" costs in the manner
required by the solicitation. The GAO wrote: "In reviewing
protests against allegedly improper evaluations, it is not our role to
reevaluate proposals. Rather, our Office examines the record to
determine whether the agency�s judgment was reasonable and in accord
with the RFP criteria and applicable procurement statutes and
regulations. See Rolf Jensen & Assocs., Inc., B-289475.2,
B-289475.3, L-3 Communications Titan Corp. successfully challenged an Army evaluation on the
basis of the use of unstated evaluation benchmarks and unequal treatment
of offerors. The GAO wrote: "While the evaluation of proposals is
primarily within the discretion of the contracting agency, an agency may
not announce in the RFP that one evaluation scheme will be used, and
then follow another; once offerors are informed of the criteria against
which their proposals will be evaluated, the agency must adhere to those
criteria in evaluating proposals and making its award decision. Preferred Sys. Solutions, Inc., B-292322 et al., Aug. 25, 2003, 2003 CPD � 166
at 6; Trijicon, Inc.,
B-244546, General Dynamics Information Technology won its protest against an award to Raytheon because the agency's price evaluation of Raytheon's proposal was irrational. Earl Industries won a protest based on a faulty cost/technical trade-off analyses and faulty cost realism evaluations. The GAO finally published its decision in the TVI Corp. protests (involving flawed past performance and small business participation evaluations), which was originally decided in April 2006 (sometimes those redactions take awhile). GlassLock won a GAO protest against the evaluation of a task order quotation because the agency gave the awardee credit for past performance outside the five-year time limit specified in the solicitation and also gave it experience/past performance credit twice--under the appropriate evaluation factor and again under another evaluation factor. Pemco Aeroplex successfully challenged the agency's failure to evaluate certain changes in the awardee's final cost proposal in a negotiated procurement. The GAO did not address the protester's allegation of bias by the Source Selection Official because he had apparently committed suicide, and the matter was still under investigation. Discussions In a negotiated procurement, if an agency conducts "discussions" with some offerors in the competitive range, it must conduct them with all such offerors and then allow revised proposals. Often, the trick is deciding what constitutes discussions, as opposed to mere "clarifications," which are not subject to the same requirements. The GAO concluded that asking questions regarding some offerors' subcontracting plans and permitting subsequent revisions constituted discussions, but only because those plans were to be evaluated under one of the solicitation's evaluation factors. The GAO's reasoning is worth noting (footnotes omitted): FAR sect.
15.306 describes a range of exchanges that may take place between an
agency and an offeror during negotiated procurements. Clarifications are
�limited exchanges� between the agency and offerors that may allow
offerors to clarify certain aspects of proposals or to resolve minor or
clerical mistakes. FAR sect. 15.306(a)(2). Discussions, on the
other hand, occur when an agency indicates to an offeror significant
weaknesses, deficiencies, and other aspects of its proposal that could
be altered or explained to materially enhance the proposal�s potential
for award or to obtain information from the offeror that is necessary to
determine the proposal�s acceptability. See FAR sect.
15.306(d)(3); Nu-Way, Inc., B-296435.5, B-296435.10, Here, the record shows that the majority of the small business subcontracting plans submitted by the offerors were found to be unacceptable by the agency, and that, as a result of the agency�s exchanges on this subject with the 10 highest rated offerors (including the awardees), those firms revised their proposals, such that the proposals became acceptable. [The
procuring agency] does not disagree that a majority of the offerors,
with whom exchanges were conducted regarding their subcontracting plans,
revised their plans to become acceptable. The agency contends, however,
citing a number of decisions of our Office, that exchanges regarding the
acceptability of a required small business subcontracting plan--even the
submission of a revised plan--relate to an offeror�s responsibility
and therefore are not discussions. See General
Dynamics-Ordnance & Tactical Sys., Inc., B-295987, B-295987.2, It is true that in each of the cases cited by [the agency] we found that exchanges concerning an offeror�s small business subcontracting plan were not discussions because those plans were only evaluated as part of the agency�s responsibility determination. See, e.g., General Dynamics-Ordnance & Tactical Sys., Inc., supra, at 10 (�A request for, or providing of, information that relates to offeror responsibility, rather than proposal evaluation, does not constitute discussions and thus does not trigger the requirement to hold discussions with other competitive range offerors. �) (footnote omitted). However, in each of these cases, unlike the RFP at issue here, the solicitation did not include a technical evaluation factor under which the comparative merits of offerors� small business subcontracting plans would be considered to determine which proposal represented the best value to the government and thus entitled to award. Thus, under the circumstances of each of these cases, the assessment of offerors� small business subcontracting plans could only be done as part of the agency�s responsibility determination. In contrast, the RFP here provided for a comparative assessment of the offerors� small business subcontracting plans as part of the agency�s technical evaluation to determine which proposal represented the best value to the government. "Limitations on Subcontracting" Clause TYBRIN Corp. won its protest of an award on a small-business set-aside because the successful offeror proposed subcontract efforts in excess of those permitted by the "Limitations on Subcontracting" clause. The SBA, which had concluded as part of a responsibility determination that the awardee would comply with the clause during performance, contended the GAO did not have the authority to decide matters of responsibility. The GAO agreed but noted it was not deciding a question of responsibility in this case. Instead, it was examining the limited question whether what the awardee clearly had proposed in its offer complied with the solicitation's requirements. Since the offeror had proposed that only 42.3% of the contract work would be performed by its employees, its proposal was noncompliant on its face. The GAO sustained another protest because the successful offeror's proposed helicopter could not meet the solicitation's payload requirements without exceeding the manufacturer's payload limitations. The GAO reasoned as follows: "[I]n determining the technical acceptability of a proposal, an agency may not accept at face value a proposal�s promise to meet a material requirement, where there is significant countervailing evidence that was, or should have been, reasonably known to the agency evaluators that should create doubt whether the offeror will or can comply with that requirement." Citing, SeaBeam Instruments, Inc., B-253129, 93-2 CPD � 106; Interspiro, Inc., B-247919.5, B-247919.6, 92-2 CPD � 150, recon. denied; National Draeger, Inc.--Recon., B-247919.7, 92-2 CPD � 325." Bid mistakes discovered after bid opening but prior to award may be corrected only in certain, well-defined situations. First, the Contracting Officer may allow a bidder to
correct a mistake if the bidder presents clear and convincing evidence
not only that a mistake occurred, but also the manner in which it
occurred and the intended bid price. A & J Constr. Co., Inc.,
B-213495, 84-1 CPD � 443. Since the authority to correct such alleged
mistakes is vested in the procuring agency, and because the weight to be
given the evidence in support of an asserted mistake is a question of
fact, the GAO will defer to the agency�s determination unless there is
no reasonable basis for it. Secondly, a clerical error that is apparent on the
face of a bid may be corrected by the contracting officer prior to
award, if he can ascertain the intended bid without input from the
bidder. See SCA Servs. Of Georgia, Inc., B-209151, The GAO found the Forest Service improperly allowed correction of a bid mistake because the mistake satisfied neither of the criteria described above. Executive Protective Security Service won its protest against issuance of a task order because the agency's determination that the awardee was doing business primarily in the area affected by a disaster (pursuant to the Stafford Act) was unreasonable. The Caddell Construction protest involved interpretation of the Omnibus Diplomatic Security and Antiterrorism Act of 1986. This was a winning protest only briefly as the Court of Federal Claims essentially overturned the GAO's conclusions in the Grunley Walsh decision because it disagreed with the GAO's interpretation of the statute. Twice, the GAO spanked the agency for taking inadequate corrective action in response to an earlier, successful protest. The GAO sustained Midland Supply's second protest after the agency's reevaluation proved less than satisfactory. The GAO also handed Lockheed Martin and Sikorsky another victory when they protested the corrective action the agency took in response to their earlier successful protest. The GAO sustained another protest partially on the basis that it believed the agency's stated reason for canceling a solicitation after a protest was filed was merely a "pretext." There is plenty of good black letter analysis of the standards governing recovery of protest costs at the GAO in the T Square Logistics Services opinion.
Timeliness/Standing/Jurisdiction The Tucker Act, 28 U.S.C. � 1491(b)(1) (as amended by the Administrative Dispute Resolution Act of 1996 (�ADRA�), Pub. L. No. 104-320, 1110 Stat. 3870, 3874-76) gives the Court of Federal Claims �jurisdiction to render judgment on an action by an interested party objecting to . . . the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.� Under the ADRA, the court reviews the legality of an agency�s decision in accordance with the standards set forth in the Administrative Procedure Act (�APA�), 5 U.S.C. � 706 (2000). 28 U.S.C. � 1491(b)(4) In particular, the court will "hold unlawful and set aside agency action, findings, and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.� 5 U.S.C. � 706(2)(A). The court treats the "interested party" requirement essentially as a test of standing, i.e., whether the protester is in line (or has a "substantial chance", or at least is "in the zone of consideration") for award if its protest is sustained. The precise wording of the test depends upon the individual judge. Precision Images, LLC failed the "substantial chance" test. Dismas Charities was not an interested party because it proposed a 240 day start-up period in contrast to the 120 day start-up period specified in the solicitation, even though the agency evaluated the offer on its merits and rated it acceptable in all areas. Emerald Coast Finest Produce initially convinced the court that the agency should be required to re-evaluate proposals in accordance with the solicitation's evaluation scheme but later lost its standing to continue its protest when it sold its assets. Standing is not immutable. The most interesting decisions of the year on the standing issue are those in the Shirlington Limousine cases (which rely on the reasoning in Rex Service Corp). In Shirlington, the protester filed a protest at the GAO against the terms of a solicitation well before offers were due and then, during the pendancy of the protest, delivered its offer to the wrong address. After losing at the GAO, Shirlington Limousine filed suit. The court noted that, to have standing, the company must be "an actual or potential offeror." According to the court, the protester chose which forum to use (the GAO) while it was a "potential offeror" and, therefore, could not use that status to confer standing at the court. The only possible remaining status was as an "actual offeror," but, since the protester had delivered its offer to the wrong address, it was not an actual offeror and, therefore, lacked standing. The court's reasoning concerning choosing a forum as a potential offeror seems a bit broad. Suppose that the agency had stopped the procurement before receiving offers during the pendancy of the original GAO protest, and the protester had then filed its court suit after receiving the GAO's decision but still before the agency had restarted the procurement? It still would have been a "potential offeror" at that point, wouldn't it? Moreover, in both the original decision and in response to Shirlington's motion for reconsideration, the court cited a GAO rule as authority for the proposition that "[s]ince Plaintiff chose GAO as the forum of resolution, Plaintiff effectively relinquished the ability to file a timely protest in the United States Court of Federal Claims. That GAO rule cited by the court reads as follows:" The GAO will dismiss any case where the matter involved is the subject of litigation before, or has been decided on the merits by, a court of competent jurisdiction. GAO may, at the request of a court, issue an advisory opinion on a bid protest issue that is before the court.� 4 C.F.R. 21.11(b) Call me dense, but I don't see how a GAO rule that is designed to prevent GAO proceedings from interfering with a court case should be used to decide whether a protester has standing to file in federal court. Brian X. Scott also filed a protest prior to the due date for receipt for proposals and did not submit an offer. In analyzing the standing issue, the court first found he did not have a "substantial chance" for award. The court arrived at this conclusion by conducting its own responsibility evaluation, which seems odd. The plaintiff argued unsuccessfully that this prong of the standing test should not apply to pre-bid protests because it is the agency that should be making responsibility determinations later in the solicitation process. The court said that, even if it was wrong to apply the test in this situation, the plaintiff was not an actual or prospective offeror because he had not submitted an offer by the due date for receipt of offers. I realize I'm tilting at windmills, but I've never seen the point of this approach. One could very reasonably interpret the phrase "prospective offeror" in the statute as referring to a firm that would bid on the solicitation if the errors it claims are present were removed. To read the language "prospective offeror" as meaning "actual offeror by the time offers are due" seems much more strained to me. Moreover, it creates a situation in which anybody who believes a solicitation's terms are improper must submit an offer based on that impropriety in order to have a court hear the argument that the terms are improper and then be required to submit another offer based on a revised solicitation if the court concludes the protester was correct. Why not simply say that a firm refrains from submitting a bid at its own risk? The court will still hear the protest, but, if the protest is denied, a bidder who chose not to submit an offer is too late to submit a bid. Avoid the temptation to read the Shirlington Limousine decisions as precluding the court from taking a second look at a matter decided by the GAO. In the Ravens Group decision, the court wrote in part as follows: "Bid protest jurisprudence permits a disappointed bidder to have a second bite in this forum if its GAO challenge is not successful." In the Grunley Walsh case, the court essentially overturned the GAO's decision in the Caddell Construction bid protest, as contravening the plain meaning of a statute. The court's decision in The Centech Group bid protest includes a good discussion of the difference between (i) an agency's procurement action taken on the basis of a GAO recommendation (which the Court has jurisdiction to review) and (ii) the GAO recommendation, by itself (which it does not). The CoFC set aside and dissolved the Forest Service's override of an automatic stay related to a GAO protest and permitted the protest to continue at the GAO with the stay intact. The GAO has very specific rules concerning timeliness of protests. Things are more fluid at the court. One thing is certain in both forums: your time does not begin to run until you have reason to know of your grounds of protest, witness L-3 Communications' timely protest filed eight years after a protested action (because the protester did not learn of the grounds of protest until shortly before it filed suit). Another timeliness rule is equally certain after the Federal Circuit's holding in the Blue & Gold, Fleet case--regardless whether you are protesting at the GAO or in court, you must challenge obvious improprieties in a solicitation before bids are due. See, e.g., Benchmade Knife. In the Distributed Solutions case, the Government initially published a Request for Information for certain contract work, then decided to add that work to an existing ID/IQ prime contract rather than contracting for it directly. Although the Government participated with the prime in evaluating and awarding subcontracts (and subsequently worked closely with the prime and the subcontractors), the court had no jurisdiction over protests against the subcontract awards because the prime paid the subs and directed their work and they had no direct rights against the Government. The court held it did not have jurisdiction over a protest of the plaintiff's failure receive an award in the SBIR Phase II program. Prejudice/Eligibility for Award Generally, the court will set aside an agency's award decision if the protester can show either that (i) the agency's decision lacked a rational basis or (ii) the procurement process involved a clear and prejudicial violation of a statute or regulation. The standard for showing lack of a rational basis is very difficult to meet because the court pays great deference to the agency's evaluation. One decision described the standard of proof for lack of a rational basis in a negotiated procurement involving a performance evaluation as a "triple whammy." Overstreet Elec. co. v. United States, 59 Fd. Cl. 99, 117 (2003). The standard for the second type of complaint is rigorous as well. After all, The Government makes mistakes in every procurement. If every mistake made for a successful bid protest, the procurement process would collapse. Therefore, most mistakes are found to be "harmless." It is not enough for the protester merely to establish that the agency's action lacked a rational basis or violated a regulation or procedure (although it is necessary to show one of those two things). To prevail, plaintiff also must show �a significant, prejudicial error in the procurement process.� Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999). Or, as the GAO put it in its General Dynamics Information Technology decision: "Prejudice is an essential element of every viable protest." Proving an error was prejudicial is often difficult. See, e.g., the Hamilton Sundstrand case; and the Precision Images, LLC decision. Protesters have a difficult time challenging an agency's failure to abide by internal documents. In Manson Construction, the protester demonstrated that the Government did not follow its Evaluation Plan for the procurement, but the court was unimpressed because the Plan was an internal document that did not confer rights on offerors. Similarly, in Knowledge Connections, the procuring agency's failure to consult with user agencies regarding their needs, as it had stated it would in its Business Plan, was not a sufficiently "material" error to entitle the protester to relief. Moore's Cafeteria Services complained that the Army did not follow the policies included in a Joint Report to Congress, but the court found that those procedures would not bind the Army until promulgated as regulations. In Erinys Iraq, the court found one part of the agency's evaluation arbitrary and capricious, but also held the errors did not prejudice the protester because another part of the protester's proposal was sufficiently deficient to justify not awarding it the contract. The lesson is: you may be upset at losing out on a procurement, but take a deep breath, count to ten, and then listen to reason before deciding to protest. One firm counted way too far past ten and then failed to listen to reason: it filed a protest about a year late, conceded it was ineligible for an award, and asked the CoFC for a remedy that would violate federal procurement law (awarding it an SDVOSB contract even though it conceded it was not such a firm)! In Geo-Seis Helicopters, the court held that a Contracting Officer may not extend the date for receipt of proposals after the deadline for receipt is passed in order to accept a proposal that arrived after that deadline. The court reached this conclusion after a thorough analysis of the FAR's "late is late" rule: FAR � 52.215-1(c)(3)(ii)(A). In Aeolus Systems, one issue was whether the SBA was within its rights to use a HUB-Zone status protest as an occasion to interpret its own definition of "employee," instead of formally amending what the protester claimed was an unclear regulation. (Coincidentally (?), on January 26, 2007, the SBA issued a proposed rule that would amend the definition of "employee.") In Dyncorp International, the court found that exchanges between the Government and one offeror concerning matters of responsibility were not discussions and that "a procuring agency has the discretion to decline to enter into clarifications with an offeror, even if the agency has engaged in clarifications with another offeror." See the section covering the discussion/clarification distinction in the GAO discussion above. Heritage of America won its protest (and the court directed the agency to recompete the out-year requirements rather than exercise the contract options) because the solicitation was unclear and, thus, violated the requirement in FAR 15.304(d) that the evaluation factors and their relative importance be set forth "clearly" in the solicitation. Protest Costs/EAJA and Bid and Proposal Costs Section 1491(b)(2) of the Tucker Act permits the Court to �award [a successful protester] any relief that the court considers proper, including declaratory and injunctive relief except that any monetary relief shall be limited to bid preparation and proposal costs.� The Beta Analytics International decision includes good discussions of (i) the history of the court's current ability to award bid and proposal costs to successful protesters, as well as its use of the FAR cost principles as non-binding guidance in such cases and (ii) several categories of disputed costs in this case, including staff time, consultants' costs, and publishing support services costs. Might you be able to recover your bid and proposal costs as a consolation prize if you lose your contract because of another firm's successful protest? Check out the Centech Group decision. Apart from its bid and proposal costs, a protester may be entitled to recover its costs of pursuing its protest under the Equal Access to Justice Act (EAJA) if it qualifies under that Act's size standards and if it "prevails," which is sometimes difficult to determine. Witness the Rebecca Ryan case. She challenged the HUB Zone small business status of an awardee and, after the case was remanded to the agency for additional investigation into the matter, the awardee gave up its claim to that status. Since the record did not disclose why it did so, the court found the plaintiff was not a "prevailing party" under the tests announced by the Supreme Court in Buckhannon Bd. and Care Home Inc., v. W. Va. Dep�t of Health and Human Res., 532 U.S. 598, 606 (2001). Knowledge Connections' application for attorneys' fees was found to be premature because the court had ordered the agency to examine certain issues and that process was not yet completed. Subsequently, the protester lost that protest. On the other hand, the court found the attorneys representing the plaintiff/intervenor in the Information Science's Corp. case had achieved "excellent results" (even though the plaintiff had not prevailed in all respects) and were thus entitled to recover fully compensatory attorneys fees. The Government had fought this application for fees in almost every conceivable way. Another prong of the test for recovery of protest costs is whether the agency's position was "substantially justified." In the Geo-Seis Helicopters case, the court held that the agency's reliance on a line of GAO decisions was not enough to satisfy this test. Axiom Resource Management involved issues of conflicts of interest and unfair competitive advantage and plenty of black letter discussion of each. The court requested the FTC's Bureau of Competition to submit its views on the issues raised in the case as an amicus. The CWT/Alexander Travel case includes a good discussion of the application of the "cardinal change" theory in bid protests. Under that theory, a contract modification may be protested if it is beyond the scope of the contract so that a new procurement should have been undertaken instead of modifying the current contract. ARINC Engineering Services failed to convince the court that the incumbent contractor improperly benefited from an organizational conflict of interest. The court concluded as follows: "While difficulties sometimes may be encountered in distinguishing between the benefits of incumbency and unequal access of the sort that gives rise to an organizational conflict of interest, such is not the case here � as Locke once said, �[t]hough no man can draw a stroke between the confines of night and day, still light and darkness are on the whole tolerably distinguishable.� Nice one, judge. In the Weeks Marine decision, the court sustained a pre-award protest against the Corps of Engineers' decision to switch from its historical practice of sealed bidding to the use of a multi-year ID/IQ contract for dredging operations. Given the avalanche of multi-year ID/IQ contracts in government contracting in recent years, could this decision be the beginning of a paradigm shift in the way courts view this contracting method? Court of Appeals for the Federal Circuit In the Blue & Gold, Fleet case, the court made clear that the rule regarding protesting errors in the terms of a solicitation is the same at court as it is at the GAO, i.e., you must protest before bids are due. (A list of other Federal Cirucuit 2007 protest decisions (with subject areas) can be found here.)
SBA Office of Hearings and Appeals (OHA) Two 2007 decisions are especially noteworthy because each explicitly overrules a longstanding precedent: (i) the ASRC Airfield and Range Services decision, overruling K-Mar Industries (a 1994 decision concerning the need to generate revenues to be considered to be in business); and (ii) the Ross Aviation decision, overruling Spectrum Landscape Services (a 1998 decision regarding mootness of a size appeal after a contract is awarded). In King's Thrones, LLC, the OHA held that a NAICS appeal filed more than 10 days after a solicitation was issued was, nonetheless, timely because the small business set-aside solicitation failed to include any NAICS code, and, therefore, the solicitation was "continuously defective."
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