United States: March 2017 Protest Roundup

Our March bid protest round-up brings you disparate treatment, undocumented agency rationales, the duty of candor to courts, the unusual timeliness rules for protests of Organizational Conflicts of Interest (OCIs), and (once again) the Late Is Late rule.

  1. CSR, Inc., B-413973; B-413973.2, Jan. 13, 2017:  GAO affords agencies great deference in their value judgments as to the comparative merits of different offerors' proposals.  It ordinarily is extremely difficult to convince GAO that your rating for a particular factor should have been excellent rather than good, or that your technical approach was actually better than the awardee's, despite an agency finding to the contrary.  The protest of CSR, Inc., however, demonstrates two arguments that – when backed up by the record – can overcome that deference: disparate treatment and insufficient Under the Past Performance factor, the protester argued that the agency ignored positive past performance information not expressly cited in the proposal.  The agency countered that it considered only the most recent evaluation of the past performance references identified in the protester's proposal.  Although GAO permits agencies reasonably to limit their past performance review, the record revealed that, for the awardee, the agency did consider past performance information not referenced in the awardee's proposal.  Because this disparate treatment of the offerors reasonably could have resulted in prejudice to the protester, the GAO sustained this ground of the protest.  CSR also objected to the Source Selection Authority's (SSA) identification of Corporate Experience – for which the protester and awardee received the same rating and similar strengths – as a technical discriminator justifying award to a higher priced offeror.  Nothing in the record, however, substantiated any real difference between the awardee's and protester's Corporate Experience.  Although SSAs are not bound to the findings of evaluators, an SSA must explain and document any difference between the documented evaluation and the SSA's best value tradeoff analysis, especially when that divergence is a basis of the award decision.  Because the SSA failed to explain why she thought the awardee's Corporate Experience was meaningfully superior to the protester's, GAO sustained the protest on this ground, as well, and recommended that the agency re-evaluate proposals.

Takeaway:  If an agency engages in disparate treatment or fails to document the basis for its procurement choices, a protester may be able to overcome the deference ordinarily accorded to agency evaluations and tradeoff decisions.

  1. Harmonia Holdings Grp., LLC, B-413464; B-413464.2, Nov. 4, 2016:  In the case above, the agency failed to document the basis of a key finding in the best value tradeoff analysis.  In Harmonia, the agency apparently did not conduct one at all.  In an ordinary best value procurement, when no single offeror is both lowest priced and highest rated, the SSA must conduct a best value analysis in accordance with the procurement's announced evaluation scheme.  That analysis, which must be documented, includes a tradeoff between cost/price and merit under the non-cost/price evaluation factors.  In Harmonia, the agency received five quotations.  The agency made award to the offeror that had the highest technical score, but also the highest price.  The protester, which had the second highest technical score and the second lowest price, protested.  The record contained only a comparison of the offerors' relative technical scores, but no price/technical comparison between the awardee and any other offeror, and no explanation for why the awardee's technical superiority was worth the $3 million price premium over the protester's quote.  Because the record did not establish that the agency conducted any best value tradeoff at all, GAO sustained the protest.

Takeaway:  Agencies are required to document their best value analyses, including the rationale for any cost/price-technical tradeoffs, and failure to do so is a basis for sustaining a protest.

  1. Level 3 Communications, LLC v. United States, No. 16-829 (Fed. Cl. March 16, 2017):  In a follow-up to a December 2016 opinion (Level 3 Communications, LLC, v. United States, 129 Fed. Cl. 487 (2016)), the Court of Federal Claims recently issued a ruling on counsel's duty of candor to the court.  In July 2016, an incumbent contractor filed a bid protest in the court, challenging a contract award to a competitor for "construction and maintenance of a Structured, High Availability Telecommunications Circuit between Wiesbaden, Germany and Arifjan, Kuwait."  Because performance stays are not automatic in Court of Federal Claims bid protests, the parties disputed whether the court should enter a Temporary Restraining Order (TRO) to halt performance pending adjudication of the protest.  The Government represented to the court that the awardee was currently getting subcontracts in place and securing necessary permits "so that it can begin performance on December 1, 2016."  In reliance on the representation that no significant performance would occur before December 1, the court did not issue a TRO.  On November 9, the court's clerk contacted the parties to request an update on whether the awardee still intended to commence performance on December 1, 2016.  The Government surprised the court by responding that the awardee had completed the circuit on November 1, and the Government had accepted the circuit and would "start using it any day now."  The judge then entered a TRO staying performance, ordered the procuring agency to submit its files to the Inspector General, and ordered the Government to show cause why Rule 11 sanctions should not be imposed.  In this month's ruling, the court accepted the Government's argument that counsel's representations failed to meet the strict standards for imposing Rule 11 sanctions.  The court nevertheless found that those representations violated the general duty of candor to the court.  The court then ordered the Government lawyer's supervisor to determine whether the lawyer should receive an adverse annual performance review "to impress, not only on him, but on other Government lawyers who practice before the United States Court of Federal claims and other federal courts, that the duty of candor matters."

Takeaway:  Orders such as this are rare in public procurement cases and are good reminders to the Government and private bar alike of the duty "to be truthful, direct, and complete in all communications with federal judges" and other tribunals, and to recognize that courts may expect you to apprise them promptly of changed circumstances that are reasonably likely to be material to the proceedings.

  1. Concourse Group, LLC v. United States, No. 17-129C (Fed. Cl. March 3, 2017):  In this case, the Court of Federal Claims addressed a post-award protest ground alleging various OCIs due to the incumbent awardee's allegedly "unusually close" relationship between the awardee's proposed subcontractor (the incumbent) and the procuring agency.  The court found that the protester knew or should have known of the grounds of its protest "well before contract award."  Two documents upon which the protester relied in making its allegations were public documents accessible before contract award, and the court likewise found the protester was aware of the awardee's interest in the procurement and its relationship with the incumbent contractor.  Citing Blue & Gold Fleet L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007), the court held that the protester waived these OCI grounds by failing to raise them before contract award.

This holding is similar to that of Honeywell Tech. Solutions, Inc., B-400771; B-400771.2, Jan. 27, 2009, 2009 CPD ¶ 49, where GAO held that, although alleged OCIs generally are raised as post-award grounds, a different rule applies "where a solicitation is issued on an unrestricted basis, the protester is aware of the facts giving rise to the potential OCI, and the protester has been advised by the agency that it considers the potential offeror eligible for award."  at 6.  In such cases, GAO requires the grounds to be raised before the next date set for receipt of proposals.  Id. It is not always easy to determine whether a particular OCI concern is a pre- or post-award protest ground.  Here, for example, the Concourse court did not find that the agency advised the protester that it considered the potentially conflicted firm eligible for award while the procurement was still pending – a prerequisite to a pre-award OCI protest under GAO's Honeywell rule.  This raises the possibility that GAO would have found the same OCI ground timely as a post-award protest, even though the Court required it to have been raised as a pre-award protest.  The difficulty in distinguishing pre-award and post-award OCI grounds in each protest forum is a strong reason for discussing such concerns early on with your lawyer.

Takeaway:  If you are aware a competitor has an impermissible OCI, you may be found to have waived the protest ground if you wait until after contract award to file a protest, particularly at the Court of Federal Claims.  Identify potential OCI protest grounds early in the procurement and discuss the possibility of protest with your government contracts attorney.

  1. Peers Health, B-413557.3, March 16, 2017:  The "Late is Late" rule ensures that GAO will never run out of bid protests to deny.  As we have discussed before, agencies ordinarily will reject any proposal not received at the location and by the time specified in the solicitation, regardless of when the offeror submitted the proposal.  In Peers Health, quotations were due by high noon on November 28, 2016, either by email to a specified email address or by regular or overnight mail.  The solicitation incorporated the provision at FAR 52.212-1, which articulates the "Late is Late" rule.  The protester submitted its quotation by email at 11:59 a.m. on the due date specified in the solicitation.  For an unexplained reason, the protester's email was not received by the email address designated in the solicitation until nearly four hours later, at 3:49 p.m.  The agency rejected the quotation as late, and the offeror protested to GAO.  The outcome was not surprising:  regardless of the time the protester submitted the quotation, and regardless of the fact that the quotation apparently spent a few hours in a Government email server before being delivered to the destination address, the dispositive fact here was that the quotation did not reach the designated email address by the established deadline.

The protester argued that the exception for proposals "under the Government's control" in FAR 52.212-1(f)(2)(i)(B) should excuse the late receipt because the quotation was received by a Government server, and was therefore under Government control, prior to the time set for the receipt of quotations. GAO rejected this argument, reaffirming its precedent that this exception does not apply to electronic submissions.  GAO also noted that the quotation could not benefit from FAR 52.212-1(f)(2)(i)(A)'s exception for electronically submitted proposals that are "received at the initial point of entry to the Government infrastructure" by 5:00 p.m. on the preceding workday, as the protester waited until last moment to hit the send button.  "In this regard," GAO observed, "where a vendor waits until one minute before offers are due to submit its quotation, it should expect the possibility that there will be a delay in transmitting it to the specified location, which will result in the quotation being received late."

Takeaway:  Don't wait until the last minute to submit your proposal.  Leave yourself enough time to confirm receipt and, if necessary, to resend in case there are delivery problems.  For electronic submissions, consider submitting your proposal before 5 p.m. the workday before proposals are due to avail yourself of the special exception in FAR 52.212-1(f)(2)(i)(A).

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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