United States: Don’t Be Misled: What Contractors Should Know About Misleading Discussions

Last Updated: September 9 2014
Article by Michelle E. Litteken

Keywords: CFC, FAR, GAO

Editor's note: This is the third post in a series of posts focused on protest allegations related to discussions with offerors. The first post addressed differences between clarifications and discussions. The second post focused on the requirements for discussions to be meaningful. Planned future posts will cover what constitutes unequal discussions and a round up of recent protests involving discussions.

Agencies often engage in discussions with offerors as part of the procurement process. Discussions can be useful to contractors because the questions asked and issues raised can direct an offeror to areas of its proposal needing improvement. In some situations, discussions can help a contractor turn an unacceptable proposal into a successful offer. However, information provided by an agency during discussions can also lead an offeror in the wrong direction. If the agency selects another proposal, the disappointed offeror may file a protest and argue that the discussions were misleading. But what qualifies as misleading discussions? How specific does an agency need to be when it engages in discussions? These are issues that contractors should be mindful of as they engage in discussions—and that they must understand to frame potential protest issues when they are not the prevailing offeror.

Although the FAR does not define misleading discussions, decisions from GAO and CFC provide guidance on when discussions are misleading. Both forums have stated: "An agency may not inadvertently mislead an offeror, through the framing of a discussion question, into responding in a manner that does not address the agency's concerns; or that misinforms the offeror concerning its proposal weaknesses or deficiencies; or the government's requirements."

The application of this standard is straight forward in some circumstances. For example, in KPMG LLP, GAO held that the CIA engaged in misleading discussions when the agency instructed KPMG during discussions that it must propose 14 FTEs in each contract year and that resumes should be provided for all personnel proposed to perform over the life of the contract but did not require resumes for all proposed personnel from all offerors. GAO rejected the CIA's argument that it did not mislead KPMG because its instruction that KPMG should submit resumes did not reflect a mandatory requirement.

Similarly, in Metro Machine Corporation, GAO held that the Navy misled the protester when it issued discussion questions about its proposed use of its Norfolk facilities but did not inform the protester that relying on its Norfolk facilities rendered its proposal technically unacceptable. GAO noted that the RFP did not set forth a geographic limitation for the location, and if the agency believed that the RFP required the facilities to be near Jacksonville, it should have informed the protester of that position.

To succeed in a misleading discussions protest, the protester must show that the allegedly misleading discussions were prejudicial, i.e., made its proposal less competitive. For example, in Tech Systems, Inc., the protester claimed that the agency misled it by focusing on its proposed technical approach, which led the protester to overemphasize management, but refused to discuss pricing, which proved to be the determinative factor in source selection. The court rejected the protester's argument that the discussions misled it into proposing a high-cost approach because the protester did not show that is costs were higher because of the management-centric approach the agency purportedly encouraged it to propose.

Applying the discussions requirements can be less clear when a protester argues that the agency misled it by failing to direct it to areas of its proposal that were deemed significant weaknesses or deficiencies. As discussed in the second post in this series, both GAO and CFC often state that an agency is not required to "spoon-feed" an offeror, but the level of specificity required in discussions is not always clear.

In West Sound Services Group, LLC, GAO held that the agency misled the protester when it directed the protester to amplify its approach with respect to six sub-annexes under one annex but did not mention the concerns it had with the protester's approach under another related annex. GAO found that the discussions did not put the protester on notice that it needed to address the second annex. In contrast, in D&S Consultants, Inc., the CFC rejected the protester's argument that discussions were misleading because the agency asked questions about its unrealistically low labor rates but did not ask about the way it allocated labor hours or its approach to mapping labor categories to the Service Contract Act (SCA)–areas for which the agency assessed risks. The court stated:

Although the IFN did not specifically identify problems with plaintiff's allocation of hours and SCA mapping, both issues ultimately affected the overall price and various labor rates. Therefore, that the IFN directed plaintiff to concerns about its labor rates was enough to "lead" it to the area of its proposal encompassing those issues.

As is the case in challenges to the meaningfulness of discussions, the amount of specificity required to avoid misleading an offeror is highly fact dependent. Contractors should be aware of an agency's obligation to refrain from misleading offerors as they engage in discussions and litigate bid protests.

Originally published September 8, 2014

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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