United States: June 2017 Protest Roundup

In June 2017, the Government Accountability Office ("GAO") and the U.S. Court of Federal Claims ("COFC") issued decisions covering a number of issues. We address the decisions below on the following issues of interest: (1) price evaluation; (2) Federal Supply Schedule contracting; (3) standing and prejudice; and (4) agency discretion in evaluating technical proposals.

Price Evaluations

Next Tier Concepts, Inc.; MAXIMUS Federal Services, Inc., B-414337; B-414337.2, May 15, 2017

Next Tier Concepts, Inc., and MAXIMUS Federal Services, Inc. (MFS) protested the award of a contract to Primus Solutions, LLC ("Primus") on the grounds that the Office of Personnel Management (OPM) misevaluated price proposals and made other errors. The GAO sustained the protest because the source selection authority and the technical evaluation team failed to consider and address the concerns of the agency's price evaluation team that the awardee's significantly low prices might have reflected a lack of technical understanding. OPM primarily argued that it was not required to conduct a price realism evaluation under the RFP. The GAO rejected that argument. Although the GAO did not discuss whether the concerns of the PET were justified or reasonable, and the GAO agreed that the RFP did not require a price realism evaluation, the GAO concluded that the provision stating that the agency "may conduct a price realism analysis" allowed for one. As a result, because the price evaluation team in fact conducted a price evaluation and raised concerns, neither the technical evaluators nor the source selection authority was free to ignore the team's findings.

PAE Applied Technologies, LLC, B-414624, June 12, 2017

PAE Applied Technologies, LLC ("PAE") protested the award of a contract by the Air Force for base operations support services at Keesler Air Force Base, arguing that the agency's price evaluation was flawed and the agency conducted inadequate price discussions. The decision illustrates how difficult it is to challenge an award decision under a lowest price technically acceptable RFP when both the awardee and the protester are judged to be technically acceptable. The RFP provided for a lowest price technically acceptable source selection process. The Air Force found PAE's proposal to be technically acceptable, but selected another technically acceptable offeror because its evaluated price was approximately $2.6 million lower than PAE's.

PAE made four price-related arguments, and the GAO dismissed each of them. First, PAE argued that the Air Force should have conducted a price realism analysis, but the GAO found the RFP's statement that "proposed prices shall be based on the offeror's technical approach and its provision for evaluating the adequacy of offerors' proposed staffing was insufficient to permit a price realism analysis. As such, the Air Force did not err when it did not conduct one. Second, PAE claimed that the Air Force did not adequately assess whether pricing was unbalanced, but the GAO dismissed this argument as well because PAE did not allege whether the awardee's prices were overstated or unbalanced. Third, PAE alleged that the Air Force did not meaningfully evaluate price because the allocation of labor between fixed-price and cost-reimbursable CLINs and the burden on the cost-reimbursable contract line item numbers (CLINs) were important. The GAO dismissed this argument as an untimely challenge the RFP's scheme for evaluating pricing. Fourth and finally, PAE argued that the Air Force's discussions were not meaningful because it did not disclose how it was evaluating prices. The GAO pointed out that the Air Force was under no obligation to inform PAE that its price was too high.

Red River Computer Company, Inc., B-414183 et al., June 2, 2017

In Red River Computer Company, the protester challenged the Department of Homeland Security's selection of three contractors for blanket purchase agreements for computing services. Protester alleged flawed technical and price evaluations.

The GAO sustained the protest of Red River challenging the agency's price evaluation, and denied all other protest grounds. On the technical front, the GAO found that the agency properly qualified Red River's strengths and that the agency was not required to ask Red River about the lack of detail in Red River's customer service approach, as this would constitute discussions.

However, the GAO agreed that an awardee failed to comply with a material requirement of the solicitation. The Request For Quotation (RFQ) forbade offerors from using reserved instance pricing, yet the awardee based most of its pricing model on one-year reserved pricing, instead of "on demand" pricing. The GAO found that the agency should have eliminated the awardee or accepted revised pricing quotations from all offerors. Agency discretion does not go so far as to allow an agency to ignore a material deviation from a solicitation's requirements.

Federal Supply Schedule Contracting

Knight Point Systems LLC, B-414183.3; B-414183.5, May 31, 2017

Knight Point Systems LLC (KPS) protested the award of blanket purchase agreements (BPAs) to three other offerors for Infrastructure-as-a-Services cloud services because the Department of Homeland Security (DHS) improperly determined that KPS did not list all of the required services on its Federal Supply Schedule (FSS) contract. The RFQ allowed the use of subcontractors, but prohibited the prime contractor from offering "services for which it does not hold a Schedule contract." KPS offered a cloud system offered by itself, as well as cloud systems offered by its subcontractors. DHS noted that the services offered by KPS's subcontractors were not listed by brand name on its FSS contract, and thus did not give KPS any credit for them in the evaluation. KPS protested that its FSS contract included these services with generic product names and descriptions, and the fact that the FSS contract did not list the brand names was irrelevant. The GAO agreed and sustained the protest.

Standing and Prejudice

Cleveland Assets LLC v. United States, COFC 17-277C, June 1, 2017

In Cleveland Assets, the protester challenged the terms of the General Services Administration's request for lease proposals for property to house the FBI's Cleveland Field Office. COFC denied the protest on all counts. First, COFC found that the protester lacked standing to argue unfair communications when the injury was to other offerors and not itself. This case reemphasizes the need for competitive prejudice. Pointing out agency wrongdoing is not enough, the harm must happen to the protester, not the other offerors. Here, Cleveland Assets asked the agency questions and received answers that the agency did not share with other offerors.

Second, COFC found that the protester did not have standing to argue that the agency solicitation exceeded its congressionally approved prospectus because the statute was designed to help Congress oversee money and not to protect contractors' interests.

Finally, the Court was unconvinced by Cleveland Assets' argument that the rental rate per square foot was unreasonably low, as the agency had expended considerable effort to establish this cap and it was within the agency's discretion to attempt to achieve the lowest rate. Additionally, the agency could go no higher because Congress had approved a prospectus with that rental rate.

Agency Discretion

FreeAlliance.com, LLC, B-414531, June 19, 2017

FreeAlliance emphasizes the great power of agency discretion. In sum, the agency rejected a proposal as unacceptable for offering more than required and for not explaining how a key employee would do his job.

FreeAlliance challenged the Army's rejection of its proposal as technically unacceptable because it had failed to describe its approach to one PWS requirement and to differentiate its excess services from the required services under another PWS requirement. The protester argued that it had proposed an incumbent key personnel employee with a resume showing him capable of completing the work. Nevertheless, the agency wanted offerors to describe a technical approach for fulfilling each requirement. Proposing a technician capable of completing the requirement was not the same as describing the offeror's approach to meeting the requirement. The GAO found this reasonable and indicated that FreeAlliance should have described how the technician would complete the requirements of the PWS.

FreeAlliance also challenged the agency's conclusion that it lacked an adequate technical approach because it proposed excess services that were in the incumbent contract but not in the current PWS. The protester argued that the extra services added value, while the agency said it questioned the protester's understanding of the PWS because the excess services were not identified as such. GAO agreed with the agency, affording it great discretion to find a proposal unacceptable. The GAO indicated that FreeAlliance's arguments were mere disagreement with the evaluation and it was reasonable for the agency to question the protester's understanding of the PWS.

Offerors should keep in mind that proposals should be as clear as possible and follow all instructions, as agencies are often justified to be meticulous when vetting proposals.

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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