United States: 2017 Protest Roundup

In addition to our regular recap of key protest decisions by the Government Accountability Office (GAO) and Court of Federal Claims this month, we have compiled a year-end recap of key bid protest decisions from 2017. The number of protests, merits decisions, and sustained protests dropped slightly in 2017 from years past, yet the overall protest effectiveness rate—that is, the percentage of protests that either were sustained or resulted in the agency voluntarily taking corrective action—rose to 47 percent. This suggests that protestors are protesting less frequently but on more meritorious grounds.

DECEMBER

Protection Strategies, Inc., B-414648.2; B-414648.3, Nov. 20, 2017

The GAO sustained this protest because the record did not adequately explain the evaluation or the best-value tradeoff decision. The Department of Health and Human Services (HHS) issued a Request for Quotations (RFQ) under the Federal Supply Schedule (FSS) for background investigative services in July 2016. The RFQ was limited to FSS vendors and anticipated a one-year blanket purchase agreement with fixed-price and time and material task orders and four potential one-year options. The RFQ stated that offers would be evaluated based on three factors in decreasing order of importance: (1) technical approach; (2) management approach; and (3) corporate capability. These factors, when combined, were significantly more important than cost or price. HHS received four quotations and selected Skyhawk for award. The award was protested and the agency opted to take corrective action. Following reevaluation of the vendors' offers, the source selection authority (SSA) decided that although PSI's quotation had more strengths, they did not merit a $250,000 price increase. HHS again awarded the contract to Skyhawk.

PSI raised five challenges in its second protest of the award to Skyhawk and the GAO found that the agency's technical evaluation of the awardee and the best-value tradeoff decision were unreasonable and sustained the protest. First, the agency unreasonably assigned Skyhawk a strength under the management approach subfactor for some of the specifically named personnel exceeding the agency requirements for experience. GAO found that the record did not explain why the agency found that the experience exceeded requirements, especially as resumes were not provided for two of them. Second, the award decision does not reasonably explain why PSI's higher-rated quotation was not worth a price premium as compared to Skyhawk's quotation. The Source Selection Authority (SSA) minimized the significance of the strengths of PSI without a reasonable basis to do so.

Takeaway: While agencies are afforded great discretion in trade-off decisions and evaluations, the GAO requires reasonable explanations. When the SSA disagrees with evaluators, shemust be careful to document why a strength is actually not a strength and ensure that her explanation is consistent with the solicitation.

Latvian Connection LLC—Reconsideration, B-415043.3, Nov. 29, 2017

Only months after its first year-long suspension ended, Latvian Connection LLC was suspended again from protesting at the GAO for two years due to abusive protest practices. GAO found that Latvian Connection had not learned its lesson from its first suspension and continued to file multiple protests where it could not establish it was an interested party. Should Latvian Connection do the same after its two-year suspension, the GAO has threatened to ban the firm permanently.

Latvian Connection protested an Air Force award on August 28, 2017. The Air Force requested dismissal because the protest was untimely, as the protest was filed a month after Latvian Connection learned of its bases of protest. The GAO attorney allowed Latvian Connection to file a response to the request for dismissal and suspended the requirement of an agency report while the request was considered. Latvian Connection objected to the suspension of the agency report and argued that it was a violation of the GAO Protest rules. Latvian Connection demanded the GAO attorney recuse himself. When he did not do so, Latvian Connection filed a complaint with the Office of the Inspector General requesting an investigation of the GAO attorney for "waiving the Agency Report prematurely against the Bid Protest Rules." GAO dismissed the protest as untimely on September 19, 2017, finding that Latvian Connection had actual knowledge of the basis of its protest on July 24 and therefore should have filed by August 3, 2017.

Latvian Connection filed a request for reconsideration on September 21, 2017 because the decision "does not comply with prior GAO decisions regarding constructive notice." The request for reconsideration was "largely comprised of lengthy excerpts from...WorldWide Language, interspersed with derogatory and abusive remarks towards procuring agency officials, the GAO attorney assigned to the protest, and GAO generally." The GAO dismissed the request for reconsideration for failing to provide factual or legal grounds upon which reversal or modification of the decision is warranted. GAO also went a step further and dismissed the action for continuing abuse of GAO's bid protest process. Latvian Connection was previously suspended August 18, 2016 for one year for abuse of process. The company clearly did not learn its lesson, in spite of the GAO writing Latvian Connection on August 18, 2017 to remind the firm of the legal requirements for protests. Latvian Connection filed 10 protests since its suspension ended on August 18, 2017 and repeatedly failed to show it was an interested party. The GAO, fed up with Latvian Connection's frivolous protests, suspended them for two years this time, since one year was clearly insufficient.

Takeaway: GAO does not appreciate being harangued and threatened. If a protester repeatedly files protests that are not legally sound and wastes GAO's time, that protester may find itself suspended from the protest forum.

Sky Quest Aviation LLC, B-415383, Dec. 4, 2017

GAO denied a protest on the merits filed by Sky Quest Aviation LLC (Sky Quest) of an award by the Department of the Air Force for helicopter flight services, after finding that the protester was an interested party.

The Air Force issued an RFP on August 7, 2017 and received proposals from seven offerors. Six of the offerors' proposals were found technically unacceptable, so the agency conducted discussions with all offerors and received revised proposals. After revisions, five offerors were found to be technically unacceptable and the Air Force chose the lower-priced of the two technically acceptable offerors for award. SQA, one of the technically unacceptable offerors, protested the award.

The GAO disagreed with the Air Force's argument that SQA was not an interested party to bring the protest because SQA's proposal was technically unacceptable and SQA's protest did not challenge the evaluation of its own proposal. SQA's protest argued that the agency failed to give consideration to solicitation requirements that would have rendered the final two offers technically unacceptable as well. Thus, a resolution of the protest in SQA's favor would result in no acceptable proposals and would require the agency to resolicit its requirement, giving SQA an opportunity to bid again. Because SQA would be eligible to compete for award under such circumstances, GAO found that SQA was an interested party and eligible to protest. GAO then denied the protest on the merits.

Takeaway: Protesters must make sure that they are interested parties in order to pursue a protest with the GAO. Under the Bid Protest Regulations, a protester must be an actual or prospective offeror whose direct economic interest would be affected by the award of the contract. 4 C.F.R. 21.0(a).

Year in Review

GAO received less protests in fiscal year 2017 (FY17) than 2016, but was still rather busy. According to GAO's Bid Protest Annual Report, GAO received 2,596 cases filed in fiscal year 2017, 256 of which were attributable to GAO's restored take order jurisdiction. GAO produced 581 merits decisions, only 17 percent of which sustained the protest, a 6 percent drop from FY 2016. In spite of the drop in sustained protests, the effectiveness rate rose to 47 percent, suggesting that agencies are more likely to take corrective action or engage in alternative dispute resolution (ADR). In fact, 81 cases used ADR and had a success rate of 90 percent.

GAO offered the following list of the most prevalent reasons for sustaining protests in FY 2016:

  1. Unreasonable technical evaluation
  2. Unreasonable past performance evaluation
  3. Unreasonable cost or price evaluation
  4. Inadequate documentation of the record
  5. Flawed selection decision

With this in mind, here is our list of key protests to remember from 2016, ordered by date and not by significance:

Threat Management Group, LLC, B-413729, Dec. 21, 2016

MoFo successfully litigated this interesting case involving an out-of-scope task order award. When protestor's contract came to an end, the agency decided to award a task order under an Indefinite-Delivery Indefinite-Quantity (IDIQ) contract for explosive ordnance disposal support services rather than holding a new competition for the ongoing requirements. The protestor challenged the task order as outside the scope of the IDIQ contract under which the task order was issued, and argued that the Competition in Contracting Act required the agency to compete the work on a full and open basis.

Normally, GAO compares the statement of work (SOW) of the protested task order to the underlying IDIQ contract to determine if the task order is out of scope. GAO was unable to do so in this case because there was no SOW for the task order at all. GAO reviewed what documentation it could and found the work to be outside the scope of the IDIQ performance work statement (PWS). Given the dearth of documentation, contradictory declarations by agency personnel, and evidence suggesting the work was out of scope, GAO sustained the protest.

Walker Development & Trading Group, Inc., B-413924, Jan. 12, 2017

Agencies enjoy great discretion in deciding to cancel a solicitation, and GAO seldom sustains a protest challenging such a decision. GAO sustained this protest, however, where the agency canceled a solicitation (and simply gave the work to the incumbent contractor, who the protester alleged "always receives these laundry contracts") but failed to give GAO a consistent explanation or sufficient documentation of the true reason for the cancelation.

The protest arose after the agency canceled a solicitation due to "legal guidance" and extended its existing laundry contract. The protester argued that the solicitation was canceled so that the agency could make a de facto sole source award to the incumbent. On the date the agency report was due, the agency instead filed a response and motion to dismiss with only three attachments, including the extension of the contract to the incumbent which bore the solicitation number of the canceled solicitation. After three requests for additional information did not yield any helpful results, the GAO made the adverse inference that no rational explanation existed and sustained the protest.

More details on this case and Walker Development are available in our January 2017 Protest Roundup.

CSR, Inc., B-413973; B-413973.2, Jan. 13, 2017

The protest of CSR shows that two arguments have the ability over overcome agencies' great deference when it comes to evaluating proposals: disparate treatment and insufficient evidence. The protester argued that the agency neglected to consider positive past performance information not expressly cited in its proposal. While agencies generally may reasonably limit their past performance review, the record showed that the agency had considered the past performance information of the awardee. This disparate treatment of offerors could have prejudiced the protester and the GAO sustained this protest ground. Additionally, the GAO found that the record failed to substantiate a discriminator justifying award to the higher-priced offeror. The SSA must always explain and document differences between the documented evaluation and the best value tradeoff and the SSA failed to do so here.

More information on the CSR decision is available here.

Starry Associates, Inc. v. United States, COFC No. 16-44C, Apr. 10, 2017

This protest had many phases but most interestingly ended with the Court of Federal Claims granting the protester enhanced fees because the government engaged in behavior to deceive the protester and the GAO. Though an agency's decision to cancel a solicitation is granted the highest level of deference by the court, the agency needs to offer a rational and contemporaneously documented reason for doing so. In this case, there was no basis in the record to rationalize the cancellation. Additionally, the court allowed rare depositions of agency officials because the protester made colorable allegations of bias or bad faith. Usually, supplementing the administrative record is not permitted without good reason. The testimony revealed sufficient bias for the court to grant the protester enhanced costs for distasteful behavior on the agency's part. While allegations of bad faith will often water down stronger arguments, here the protester managed to meet the extraordinarily high burden of proof.

More details on the court's decision in Starry Associates are available here.

Bluewater Mgmt. Grp., LLC, B-414785, Sept. 18, 2017, 2017 WL 4174397

In Bluewater, the agency attempted to award an order for transportation requirements and lodging under GSA FSS contracts. However, the awardee only had an FSS Schedule 48 contract with a special item number for lodging and housekeeping services, not transportation. While the agency argued that it could purchase transportation services as other direct costs, the GAO was not convinced. The GSA Ordering Guidelines state that "[t]o the extent possible, all anticipated ODCs associated with performance and within the scope of the GSA Schedule contract should be offered as separately listed items, and have an established contract price." GAO held that the transportation services were required to be listed on the awardee's schedule with an established contract price according to the Ordering Guidelines and sustained the protest. GAO's decision shows that it will look closely at GSA schedule contracts to ensure they cover all of the items and services the awardee proposed to provide.

More on this decision is available here.

McCann-Erickson USA, Inc., B-414787, Sept. 18, 2017

McCann is a rare example of the GAO accepting a protester's argument that the agency's evaluation was mechanical, finicky, and focused on minor or clerical errors in the protester's proposal. The agency had removed the protester from the competition during the first of two phases for various errors that did not comply with the RFP. While two of the supposed deviations were erroneous, the third was true: the protester submitted its cost/price proposal in PDF instead of Excel format. Notwithstanding recent precedent (see Herman Constr. Grp., Inc., B-408018.2; B-408018.3), GAO here concluded that the Army's evaluation was unreasonable. Despite boilerplate language that award would be made to an offeror that "conforms to the solicitation requirements," the RFP did not notify offerors that the agency would reject proposals without performing a substantive evaluation. Also, it was unclear why the agency could not evaluate the PDF version or allow the protester to substitute an Excel version of the cost/price proposal. It is unusual for the GAO to put such a burden of proof on the agency and this may have created space for protesters in the future who were disappointed by hyper-mechanical evaluations.

Booz Allen Hamilton, Inc., B-414822.5, October 13, 2017

This case highlights the poor position corrective action can put protesters in, because it can be unclear whether to protest immediately and be early or to wait and be untimely. In this case, the protester objected to the proposed corrective action of the GSA after the GAO indicated during outcome prediction that it would likely sustain the protest. The protest had asserted unmitigated organizational conflicts of interest (OCIs) and a flawed technical proposal, but the protester argued that the proposed corrective action did not bind GSA to a course of action to address the issues with OCI and the technical evaluation. The GAO dismissed the protest as academic because the protester could protest the results of the corrective action if it was dissatisfied when the time came. Protester filed another protest the next business day which GAO also dismissed because it was premature and contained unsubstantiated claims of bad faith.

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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