United States: January 2017 Bid Protest Roundup

Last Updated: February 9 2018
Article by Sandeep N. Nandivada and Locke Bell

The Government Accountability Office ("GAO") started off the new year by reaffirming old rules pertaining to organizational conflicts of interest and discussions. GAO's decisions show that while time marches forward, old habits die hard.

Organizational Conflicts of Interest

GAO issued three decisions in January 2018 addressing OCI evaluations.

1. Superlative Techs., Inc.; Atlantic Sys. Grp., Inc., B-415405 et al., January 5, 2018, 2018 WL 585679.

In Superlative, the protester alleged the awardee and its proposed subcontractor had unequal access to information, biased ground rules, and impaired objectivity OCIs. The protester claimed the awardee and its subcontractor had an unequal access to information OCI because both had access to sensitive, non-public information through previously awarded task orders, including access to broad information concerning other offerors and access to strategic level documents. With respect to the biased ground rules OCI, the protester contended the awardee and its subcontractor performed requirements analysis and other activities under previously awarded task orders that led to the development of requirements under the subject solicitation. Finally, the protester claimed the awardee and its subcontractor had impaired objectivity due to their broad range of programming, planning, and budget system activities under previously awarded task orders that would require the awardee and its subcontractor to evaluate their own work.

GAO denied all three allegations. GAO held there was no unequal access to information OCI because the information the awardee and its subcontractor possessed was that normally attendant to incumbent contractors. GAO emphasized that an offeror "may possess unique information, advantages, and capabilities due to its prior experience under a government contract—either as an incumbent contractor or otherwise—and the government is not necessarily required to equalize competition to compensate for such an advantage, unless there is evidence of preferential treatment of other improper action."

GAO similarly denied the protester's biased ground rules OCI allegation, finding there was no evidence the awardee and its subcontractor provided input into the subject solicitation. GAO rejected the protester's mere speculation in favor of the evidence of the Agency's record-based explanation showing the solicitation was developed by government employees based on a performance work statement that was prepared before the awardee and its subcontractor performed previously awarded task orders.

GAO rejected the impaired objectivity OCI allegation because the record showed the agency considered the work performed by the awardee and its subcontractor under previously awarded task orders and concluded they would not be evaluating their own work. GAO found that "[g]iven the considerable discretion afforded contracting officers, and the absence of any 'hard facts' to the contrary," there was no basis on which to find unreasonable the contracting officer's determination that an impaired objectivity OCI did not exist.

KEY TAKEAWAYS: OCI determinations are committed to agency discretion and a protester's challenge to such a determination will fall short unless the protester can identify "hard facts" showing the existence of an actual or potential OCI. In addition, the ordinary advantages of incumbency do not necessarily create an OCI.

2. CACI, Inc.-Federal; General Dynamics One Source, LLC, B-413860.4 et al., January 5, 2018, 2018 WL 460785.

In CACI, the protesters reprised prior allegations that the agency failed to adequately investigate whether the awardee had unequal access to information, impaired objectivity, and biased ground rules OCIs stemming from its performance of other U.S. government contracts. The protesters' allegations initially were raised in a bid protest filed at GAO in the Fall of 2017. In response to that protest, the agency took corrective action to investigate the alleged OCIs. The agency ultimately determined the awardee did not have any disqualifying OCIs. Notwithstanding this determination, the contracting officer requested that the Head of the Contracting Activity ("HCA") waive the applicability of the OCI rules to the procurement. The waiver request explained that: (1) the contracting officer had performed a detailed investigation into all potential OCIs and found none; and (2) if there was a residual OCI, due to the awardee's role as IT Service Manager, of which the contracting officer was not aware, such OCI was immaterial to the competition because the requirements of that effort and the current effort are fundamentally different. The HCA approved the waiver request and the agency again awarded the contract to the same firm. As a result, the protesters challenged the award decision again, this time protesting not only the OCI investigation, but also the waiver decision. In response, the contracting officer obtained a supplemental OCI waiver from the HCI for any residual OCIs.

GAO denied the protests because the agency's waiver of the application of FAR Subpart 9.5 with regard to all conflicts identified by the protester was authorized by FAR 9.503. GAO explained that the waiver was effective because it: (1) described the specific OCIs being waived; and (2) the waiver was approved by the HCA. GAO expressly rejected the protesters' contentions that the waiver was unreasonable because the underlying OCI investigations were flawed. GAO explained that the "the agency's waiver of the OCIs does not depend on the conclusions set forth in the agency's OCI investigation." GAO also rejected the protesters' allegations that waiver was not in the "best interests of the government," holding that "the FAR commits a determination of the government's best interest to the agency's discretion." In addition, GAO rejected the notion that an agency cannot waive an OCI if it had reason to know of the OCIs prior to award, stating FAR 9.503 "does not set forth a time at which the waiver must take place, nor does the provision prohibit waiver after a particular point in time."

KEY TAKEAWAYS: OCI waivers are virtually bullet proof because FAR 9.503's requirements impose minimal burden on agencies to justify waiver decisions. The only solace is that OCI waivers remain rare.

3. Armedia, LLC, B-415525 et al., January 10, 2018, 2018 WL 572224.

In Armedia, the protester alleged the agency had failed to provide the protester with an opportunity to rebut a potential impaired objectivity OCI identified by agency evaluators. In response, the agency stated that because the protester was not the apparent successful offeror, the contracting officer never determined whether a potential or actual OCI existed. Accordingly, the contracting officer was not required to provide the protester with an opportunity to address OCI concerns. The agency also asserted that, in any event, the technical evaluators and Source Selection Authority never considered the protester's potential OCI.

GAO agreed with the Agency. First, GAO found that although the technical evaluators noted a "potential risk" of an impaired objectivity OCI when evaluating the protester's proposal, the evaluators did not consider such risk when assigning the protester an adjectival rating under the Technical Expertise and Management Approach factor. Moreover, GAO noted that the SSA similarly did not consider the potential OCI when making the award decision. Thus, the protester was not prejudiced by the potential OCI risk noted by evaluators. Second, citing FAR 9.504(e), GAO emphasized that an agency is required to afford only the apparent successful offeror an opportunity to respond to an OCI concern. Where, as here, an offeror is not in line for contract award, there is no need to address OCI concerns that, even if addressed, would not result in award to that offeror.

KEY TAKEAWAYS: Agencies are not required to discuss OCI concerns with unsuccessful offerors. It therefore is best to address OCI concerns proactively by proposing mitigating approaches where an OCI could arise.

Discussions

GAO also issued two notable decisions addressing an agency's discussions with offerors.

1. Red River Computer Company, Inc.; MIS Science Corporation, B-414183.8 et al., December 22, 2017, 2017 WL 6948425

In Red River, one of the protesters argued the agency improperly engaged in discussions with four offerors, but no others, when it sent those offerors letters asking them to address solicitation's statement that the offeror was "responsible for verifying" its proposed cloud service provider agreed to the terms and conditions of the blanket purchase agreement being awarded. According to the protester, the letters constituted discussions because they allowed these select offerors to provide missing information necessary for their proposals to be deemed technically acceptable. And had GAO agreed the information was necessary for an offer to be technically acceptable, the protester might have succeeded on this ground. As GAO reaffirmed in Red River, where an agency has engaged an offeror to obtain information essential to determining its proposal's acceptability, the agency has engaged in discussions and must do so fairly and equitably with all competitive offerors.

GAO concluded that the letters sent in Red River constituted only clarifications—limited exchanges to clarify or resolve minor or clerical mistakes that do not require opening discussions with other offerors—because they sought information unnecessary to determine if the relevant offers were technically acceptable. GAO contrasted the language cited in the letters burdening offerors with the responsibility of validating their cloud service providers' agreement, with other solicitation language affirmatively requiring offerors to submit specific forms or documentation. While the solicitation listed documents to be provided—letters, completed standard forms, and regulatory disclosures—nowhere did it require an offeror to submit any document that logically would include a certification regarding the offeror's cloud service provider's acceptance of terms and conditions. Furthermore, GAO found the contemporaneous record reflected the agency had not found any offeror to be technically unacceptable for failure to provide such assurance; indeed, the agency had flagged 11 offerors for failing to address the statement before sending clarification letters to only four, and the agency did not deem any of the other seven as unacceptable on this basis.

GAO also found the letters did not provide the offerors an opportunity to revise their proposals, as it must to conclude the letters constituted clarifications rather than discussions, but GAO did not elaborate on this point. Because the letters provided no opportunity to revise and only requested additional information not required to be considered technically acceptable, they imposed no obligation on the agency to open discussions with all offerors, and GAO denied the protest ground.

KEY TAKEAWAYS: As an offeror, you should strive to be responsive to all material solicitation provisions, regardless of whether they are called out clearly as requirements for acceptability. As an agency or intervenor defending against a protest alleging an agency's request for additional information constituted discussions, be aware of the reason the agency sought the information; if not to determine acceptability for award, then you may be safe designating the requests as merely clarifications.

2. United Excel Corporation, B-415442, January 4, 2018, 2018 WL 487728

In United Excel, the protester argued the agency misled it in discussions by failing to raise what the agency viewed as a weakness in the protester's revised design concept. After receiving proposals to design and build a new medical facility at the United States Air Force Academy, the agency initially advised the protester that the lack of a corridor connecting the Dental Clinic to the Surgery Center with access to locker rooms, a staff lounge, and a sterile processing and distribution area, as required by the statement of work, constituted a deficiency in the protester's design. The protester fixed this by adding a corridor to its design, but in doing so, the protester restructured its sterile processing and distribution area in a way that conflicted with the solicitation's stated concept of operations. The agency assigned the protester's final proposal a weakness without raising the issue in subsequent discussions. The agency's silence, the protester argued, was misleading.

As a threshold matter, the agency argued it was not bound by the discussion requirements in FAR 15.306 because the procurement was a task order competition under FAR 16.505. GAO agreed that FAR part 15 does not govern task order competitions under FAR part 16, and that FAR 16.505 does not establish specific requirements for discussions. But where an agency conducts discussions in accordance with FAR part 15 nonetheless, GAO will examine the agency's adherence to FAR 15.306 to determine if the exchanges were fair and not misleading.

GAO found that agency met this standard in United Excel. The agency gave a clear description of a deficiency in the protester's proposal and had no obligation later to advise the protester that although the deficiency had been resolved, the resolution remained a weakness. In the first instance, an agency is required to raise only deficiencies and significant weaknesses in discussions, and must simply lead an offeror to the area of its proposal that requires amplification or revision. To put it simply, as GAO often says but did not in United Excel, an agency is not required to spoon-feed an offeror each and every item that could be revised or improved.

KEY TAKEAWAYS: Be careful when addressing evaluation notices or discussion questions to trace the effects of a revision throughout your proposal, bearing in mind all solicitation requirements, to ensure they do not create conflict elsewhere.

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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Sandeep N. Nandivada
Locke Bell
 
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