United States: May 2018 Bid Protest Roundup

Last Updated: June 8 2018
Article by Sandeep N. Nandivada and Locke Bell

This month's roundup features three noteworthy decisions from the Government Accountability Office ("GAO") concerning timeliness, sole source awards, and organizational conflicts of interest ("OCIs"). The first offers some novel thoughts on when a pre-award protest is appropriately brought to GAO, and the others serve as important reminders to contractors about what matters are worth protesting and what matters are not.

Sikorsky Aircraft Corp., B-416027, B-416027.2, May 22, 2018

We recently posted on this blog an in-depth analysis of the data rights ramifications of GAO's decision in Sikorsky, but there is another aspect of the decision worth noting: its discussion on pre-award protest timeliness. Indeed, the unique posture of Sikorsky's data rights challenges presented GAO a full timeliness spectrum – arguments that were too late (untimely), arguments that were too early (premature), arguments that were just right (as far as timeliness, anyways), and even an argument that admittedly was late but arguably was so significant to the procurement community that it might have been worth deciding anyways, had it not been mooted by subsequent events.

The protest grounds in Sikorsky substantively stem from clauses in the Air Force's solicitation for a replacement to the UH-1N helicopter that require offerors to deliver certain technical data and software and grant certain rights in those technical data and software. Typically, GAO's bid protest regulations require such challenges to solicitation terms to be filed prior to receipt of initial proposals, see 4 C.F.R. § 21.2(a)(1), and when Sikorsky filed its agency level protest in December 2017 and its GAO protest in February 2018, it had long since submitted its initial proposal back in September 2017. But GAO's timeliness rule is a little different where, as Sikorsky claimed here, the protester had no basis to know the agency's interpretation of the solicitation was inconsistent with the protester's until after receiving evaluation notices during discussions. In those cases, as in Sikorsky, GAO will examine the agency's interpretation for reasonableness.

But that is not the end of the story, as GAO will dismiss premature challenges to an agency's interim evaluations as speculative. In fact, Sikorsky found itself in a dilemma familiar to many offerors – file now and risk being dismissed as premature, or wait and risk being dismissed as untimely – a dilemma that is aggravated by inconsistency in GAO's past decisions. GAO attempts to draw a line in Sikorsky, with mixed results.

First, GAO says its decisions are "unambiguous" that, where an agency advises all offerors of its interpretation, a protester challenging this interpretation as objectionable or ambiguous must file a protest either before the next round of proposal submissions or, if there is no next round, within 10 days. GAO then admits that its decisions "have come to fact-specific conclusions" when analyzing when an offeror must protest an interpretation advanced by the agency during one-on-one discussions. But, GAO concludes, in cases like Sikorsky where the protester has filed an agency-level protest, the agency's substantive response to that protest "renders the issue sufficiently final such that [GAO's] consideration of the issues during discussions is the most efficient, least intrusive alternative," and a protest filed within 10 days of the agency's decision will be timely. That is, unless the protest is "in essence, an evaluation challenge," or, put another way, is "so inextricably tied to the evaluation of a specific proposal that it would be impossible to resolve without also addressing the embedded evaluation challenge," in which case GAO will dismiss the protest as premature.

Interestingly, GAO does not address what should happen where, as the Air Force did here, an agency incorrectly dismisses an agency-level protest as an untimely challenge to the solicitation but, unlike the Air Force here, foregoes any substantive discussion on the merits. Presumably, by further solidifying the agency's interpretation, even without repeating it, such a decision would be enough to bring a ripe challenge in GAO, while the timeliness of the challenge would be dependent on GAO disagreeing with the agency's dismissal. See 4 C.F.R. § 21.2(a)(3). But perhaps the protester would be back in the realm of "fact-specific conclusions."

Turning to the specific arguments in Sikorsky, GAO found the challenges (1) to the Air Force's requirement to deliver detailed manufacturing or process data and source code, and (2) to the Air Force's determination that the solicitation did not segregate OMIT data (i.e., data necessary for operations, maintenance, installation, or training) from Non-OMIT data at the CDRL level, were not speculative or premature because "the agency effectively has announced how it intends to evaluate proposals." On the other hand, GAO found Sikorsky's challenge to the Air Force's rejection of its proposed attachments identifying configuration items and depot level repairable, which the agency said were not requested or required by the solicitation, was a premature evaluation challenge. The ostensible line drawn by GAO is that the latter is tied specifically to the Air Force's evaluation of Sikorsky's proposal, while the former are generally applicable – but, considering that the Air Force's rejection of attachments should apply equally to all offerors, and that Sikorsky's issues with respect to delivery of technical data and software are based on the Air Force's disagreement specifically with parts of Sikorsky's initial proposal, it is difficult to see the clear distinction.

KEY TAKEAWAY: When faced with interim evaluation results indicating an agency takes an interpretation of the solicitation that conflicts with one's own, and considering whether to protest, offerors should consider filing an agency-level protest first to confirm the agency's interpretation and avoid being dismissed at GAO as premature.

Career Systems Development Corp., B-411346.11 et al., May 18, 2018.

Career Systems Development Corporation ("CSDC") protested the Department of Labor's ("DOL") decision to cancel a solicitation for the operation of a Job Corps Center in Kentucky and instead award the contract on a sole-source basis to Management & Training Corporation ("MTC"). CSDC's protest challenged both the cancellation of the solicitation and the sole-source award.

First, CSDC argued that the DOL did not have a rational basis to cancel the solicitation. GAO, however, disagreed. GAO noted that the contracting officer had prepared a memorandum outlining the rationale for the cancellation. This memorandum explained that the elongated history of this procurement – which included multiple rounds of protests – meant the solicitation's requirements no longer reflected the agency's needs. The contracting officer also noted that the solicitation's requirements did not reflect the requirements of the Job Corps Center's implementing statute, which was enacted after the DOL issued the solicitation. Moreover, the contracting officer explained that the proposals submitted in response to the solicitation had expired, and that the solicitation potentially had ambiguities and inconsistencies due to the multiple amendments made in response to the series of corrective actions taken. GAO found these rationales to be "compelling."

Second, CSDC claimed that the DOL's decision to cancel the solicitation was mere pretext for its true intention to award the contract without competition. GAO again disagreed. GAO found that nothing in the record supported CSDC's contention. Instead, the record showed that the DOL had tried to award the contract on a competitive basis since 2015, and that this remained the DOL's goal, as evident by the DOL's issuance of a new solicitation on a full and open basis in April 2018.

Third, CSDC asserted that the Justification and Approval ("J&A") supporting the sole source award was deficient because the DOL had failed to consider CSDC's capability to perform the contract, and because the sole source was necessary only because of the DOL's lack of advance planning. On this ground, GAO agreed with CSDC in part. Specifically, GAO agreed that the DOL had failed to consider whether CSDC could satisfy the agency's needs before concluding that MTC was the only responsible source available.

The record showed that although the agency published its notice of intent to make a sole source award on January 30, and invited companies to submit capability statements by February 7, the DOL's Chief Procurement Officer signed the J&A, and the DOL entered into a sole-source contract with MTC, just one day after the notice's publication. Although the DOL attempted to justify this decision on the ground that only MTC could "implement a transition immediately and without interruption," GAO held that the DOL's conduct violated the Federal Acquisition Regulation ("FAR"). GAO found that while the DOL could have ultimately concluded that no offeror other than MTC could perform the contract without undue delay, it could not reach that conclusion without first considering CSDC's capability statement. Accordingly, GAO sustained the protest on this ground.

Notably, because the DOL had decided to override the stay of performance required under the Competition in Contracting Act of 1984 ("CICA"), GAO recommended that the DOL promptly assess CSDC's capability to perform before making any determination as to a sole source award to MTC.

KEY TAKEAWAY: GAO's decision in Career Systems Development Corp. is an example of GAO closely scrutinizing an agency's decision to issue a contract on a sole-source basis. It also shows that, unlike the OCI waiver requirements discussed below, the competition requirements in CICA and in the FAR actually have teeth.

ARES Technical Services Corp., B-415081 et al., May 8, 2018.

The National Aeronautics and Space Administration ("NASA") awarded a contract to Millennium Engineering and Integration Company ("MEI") for safety and mission assurance services to be performed at NASA's Goddard Space Flight Center. ARES Technical Services Corp. ("ARES") protested the award on multiple grounds, including that MEI was ineligible for award because it had an impaired objectivity OCI that had not been adequately mitigated.

ARES' protest was the second protest it filed claiming MEI had an impaired objectivity OCI. In its initial protest, ARES asserted that NASA's award of the safety and mission assurance contract to MEI meant that MEI potentially could be required to evaluate its own work, or that of a subcontractor, under other contracts. In response to the protest, NASA solicited a mitigation plan from MEI. Based on its review of that plan, NASA determined that MEI was, in fact, eligible for award, and reaffirmed its source selection decision.

Following NASA's reaffirmation, however, ARES protested again, this time alleging that MEI's mitigation strategy was inadequate. NASA did not agree that MEI's mitigation plan was inadequate, but it elected to execute a waiver of any residual OCI that MEI might have to end the dispute. ARES responded with a challenge to the waiver.

GAO dismissed this protest ground, reiterating the now well-established rule that GAO will only review an agency's waiver of OCIs to determine if the waiver complies with FAR 9.503, which requires that waiver decisions be in writing, set forth the extent of the conflict being waived, and be approved by the appropriate individual within the agency. In so holding, GAO rejected ARES' argument that the waiver was inconsistent with internal NASA policy because internal agency guidance is not subject to GAO's review, and because compliance with internal agency guidance is not one of the requirements for a waiver decision under FAR 9.503.

KEY TAKEAWAY: GAO's decision in ARES tracks its earlier pronouncements in AT&T Gov't. Solutions, Inc., B-407720 et al., Jan. 30, 2013, 2013 CPD ¶ 45, and MCR Federal, LLC, B-401954.2, Aug. 17, 2010, 2010 CPD ¶ 196. It demonstrates that challenges to OCI waivers are effectively a dead end, unless there is evidence the agency simply ignored the FAR's minimal requirements for waiver.

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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