United States: Discussions Round-up: Recent Protests Challenging Discussions

Editor's note: This is the fifth and final post in a series focused on protest allegations related to discussions with offerors. Previous posts in the series addressed (1) differences between clarifications and discussions, (2) the requirements for discussions to be meaningful, (3) misleading discussions, and (4) unequal discussions. It's been fun, but there's only so much to discuss about discussions (for now).

As this series has shown, disappointed offerors often raise protest allegations related to discussions. Although protesters frequently allege that discussions were unequal, misleading, or not meaningful, challenges based on these allegations can be difficult to win. In researching decisions to include in this round-up, I found only two decisions issued in 2014 sustaining a protest based on a discussions issue: Kardex Remstar LLC, which was discussed in the series' first post, and Marathon Medical Corp.). Of course, although many of the protests discussed didn't result in sustained protests based on the facts presented, they often provide useful insights for contractors in developing new claims and are worth close study.

When Does an Agency Cross the Line from Clarifications into Discussions?

Windstream Communications illustrates that it is often difficult to determine whether exchanges between an offeror and an agency constitute clarifications or discussions. The 2014 protest followed a 2013 protest in which Windstream challenged the exclusion of its proposal from the competitive range. The agency took corrective action, and during the reevaluation, the agency contacted Windstream about its pricing. After reevaluating Windstream's proposal, the agency assessed two deficiencies under the "technical and management approach" subfactor and determined that Windstream's proposal was unacceptable. Windstream argued that the agency failed to engage in meaningful discussions because it raised concerns about Windtsream's prices but not the technical and management approach deficiencies. The Agency argued that it was not required to address the deficiencies with Windstream because it did not engage in discussions–the exchanges were clarifications. Windstream attempted to bolster its claims that the exchanges were discussions by pointing to the fact that it had submitted new detailed pricing information in response to the agency's questions–thereby revising its proposal–the "acid test" for discussions. However, in its submission to the agency, Windstream wrote: "We did not change any of our prices.". GAO denied the protest, finding that although the format of the pricing information was different, the elements and its proposed price were the same. As such, the exchanges were clarifications–not discussions–and the agency was not required to address the proposal's deficiencies

What Does It Take for Discussions to Be Meaningful?

In our What Is Required for Discussions to Be Meaningful? post, we discussed Sentrillion Corp., a decision in which GAO sustained the protest because the agency failed to raise its concerns about the completeness of some of Sentrillion's business license applications. Based on GAO's recommendation, the agency reopened the competition and issued discussion letters. In its letter to Sentrillion, the agency stated that if Sentrillion was proposing to partner with other companies to perform the work, it must submit evidence of a partnership agreement along with any business licenses or applications. During the reevaluation, the agency deemed Sentrillion's proposal technically unacceptable because the teaming agreements it had submitted—which provided that the parties would negotiate a subcontract if Sentrillion was awarded the contract—were not binding partnership agreements. Sentrillion protested at the CFC, asserting (among other protest grounds) that the discussions were not meaningful because the agency never told Sentrillion to submit binding subcontract agreements or that teaming agreements were unacceptable. The court denied the protest, finding that the discussion letter adequately conveyed the need for finalized agreements.

What Constitutes Unequal Discussions?

In Bannum Inc., the agency determined that because the awardee was rated slightly better for past performance and technical/management, the benefits of its proposal justified paying a three percent price premium. During discussions, the agency had told the awardee that its proposed price was high but did not comment on the protester's pricing, and the protester asserted that discussions were unequal. GAO denied the protest, stating: "unless an offeror's proposed price is so high as to be unreasonable or unacceptable, an agency is not required to inform an offeror during discussions that its proposed price is high in comparison to a competitor's proposed price, even where price is the determinative factor for award." GAO stated that the requirement to conduct discussions does not depend on how an offeror's proposed price compares to the Independent Government Estimate (IGE). However, in support of its decision, GAO noted that the protester's price was the lowest received and less than the IGE–and the awardee's initial proposed price had been above the IGE.

No Matter What, a Protester Must Show Prejudice

As is the case in all bid protests, prejudice is a central requirement in challenging the way in which an agency conducted discussions. In some instances, GAO or the CFC may not address whether the agency violated the FAR provisions governing discussions because the protester failed to demonstrate how it was prejudiced by the alleged violation. For example, in Inchape Shipping Services, the protester argued that the agency engaged in unequal discussions because it allowed the awardee to revise its proposal by replacing the individual proposed for a key personnel role with another employee after the individual it initially proposed was placed on leave. GAO determined that it need not decide whether the change in key personnel constituted discussions because the protester had not demonstrated competitive prejudice.

That's All Folks

Although there have not been many sustained protests based on discussions-related allegations recently, it does not mean that agencies aren't engaging in unequal or misleading discussions or otherwise failing to comply with the FAR's requirements. Rather, it may be that once an agency reviews the procurement record and the protester's discussion-related allegations, it determines that corrective action is appropriate. Protests with strong arguments related to discussions should lead to corrective action when an offeror shows that it was denied an equal or fair opportunity to compete, and the offeror can claim it would have corrected whatever rendered its proposal unacceptable, and thus establish prejudice. As such because of the prevalence and importance of discussions in bid protests, contractors should be familiar with the requirements governing discussions.

Tags: CFC, GAO, Meaningful Discussions

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