United States: February 2019 Bid Protest Roundup

This month's selection of bid protests includes discussion of: (1) a successful challenge to a subcontracting restriction in the General Services Administration's One Acquisition Solution for Integrated Services (OASIS) solicitation; (2) an explanation of whose experience an agency can consider when a solicitation provides for the evaluation of an "offeror's" experience; (3) an agency's discretion to delete a solicitation's price realism provision and solicit new proposals; (4) how not to conduct a price realism evaluation and best value analysis; and (5) the narrow exception allowing correction of bid mistakes in FAR Part 14 sealed-bid procurements.

Ekagra Partners, LLC, B-408685.18, February 15, 2019

There are recurring disputes over how agencies should evaluate the past performance and corporate experience of joint venture members and proposed subcontractors. Many solicitations are silent on this important question, whereas others impose clear definitions with which some offerors may take exception.

Ekagra Partners involved the General Services Administration's latest competition for award of small business set-aside contracts under the agency's OASIS vehicle. The OASIS solicitation requires each offeror to submit "projects" that demonstrate the offeror's relevant experience. The solicitation includes numerous caveats and restrictions on which projects may be submitted.

The protester here filed a protest prior to the date set for receipt of proposals challenging two of the OASIS solicitation's restrictions: (1) the limits placed on a mentor-protégé joint venture's ability to rely on the projects of its large business mentor; and (2) the outright prohibition on a joint venture's use of any subcontractor that is not one of the joint venture's members. The protester contended that these limits were unduly restrictive of competition, in violation of 41 U.S.C. § 3306(a), and unnecessary to meet the agency's legitimate needs.

After recognizing that no statute or regulation specifically prohibited these restrictions, the GAO then considered whether the agency could articulate a rational justification for the restrictive terms. For the first restriction, the agency explained that it limited the extent to which a mentor -protégé joint venture could rely on the large business mentor's experience to prevent an unfair competitive advantage vis-à-vis other small business competitors that did not have large business mentors. While recognizing that people might disagree with where exactly that line should be drawn, the GAO found the agency's justification was reasonable and withstood logical scrutiny.

As to the prohibition on joint ventures teaming with subcontractors, the agency first argued that FAR 9.602's separate treatment of joint venture teams and prime-sub teams justified the agency's requirement that offerors propose as either one or the other. The GAO rejected that argument as inconsistent with the plain language of the FAR, which imposes no such restriction. The agency also argued that this restriction was necessary to prevent "significant administrative burdens." The GAO, however, observed that the agency failed to explain "why it would be significantly more difficult to distinguish between the members of a joint venture and its first tier subcontractors, as compared to a single prime contractor and its first tier subcontractors." Because the agency could not articulate a rational basis for prohibiting joint ventures from teaming with subcontractors that were not also members of the joint venture, the GAO sustained this ground of the protest.

Takeaway: The GAO shows great deference to an agency's statement of its requirements. To overcome deference shown to restrictive requirements, a protester must demonstrate either that the restriction violates statute or regulation, or that the agency has no rational basis for imposing the restriction. That is a very high legal standard, but not always an impossible one to overcome. Also, note that the protester correctly filed its solicitation challenge prior to the date set for receipt of proposals. If it had not done that, it would have been stuck with the solicitation as-is.

Normandeau Associates, Inc., B-417136, Feb. 6, 2019

What does it mean when a solicitation states that the agency will evaluate "the Offeror's experience," without any further explanation of who "the Offeror" is?

In Normandeau, the Army Corps of Engineers sought proposals for "adult fish counting services." The solicitation provided for a Lowest Price Technically Acceptable source selection. Under the Technical Experience and Management Experience evaluation factors, the solicitation stated that the agency would evaluate "the Offeror's" relevant experience for acceptability. The protester objected when the agency awarded the contract to a company that never had performed a fish counting contract before. According to the protester, that lack of experience should have rendered the awardee technically unacceptable. The agency countered that, although the offeror itself lacked such experience, it had proposed personnel who did have the relevant experience, and the agency attributed the personnel's experience to the offeror.

The GAO agreed with the agency. Where, as here, a solicitation does not define "offeror" or otherwise restrict the agency, the agency enjoys maximum discretion:

Where a solicitation provides for the evaluation of the experience of the "offeror," and does not otherwise contain specific language to indicate that the agency would not consider the experience of an offeror's proposed personnel, or separately consider such information, the general reference to the "offeror" affords the agency the discretion to consider the demonstrated experience of an offeror's proposed personnel or subcontractors because such experience and past performance may be useful in predicting success in future contract performance.

Because the record showed that the proposed personnel possessed the relevant experience, the GAO denied the protest.

Takeaway: Offerors should review past performance and experience evaluation factors carefully to understand what the solicitation says the agency will or will not consider. If the solicitation is silent, the agency has the discretion to evaluate whatever it pleases, within the bounds of reason and the broad contours of the governing regulations. If you have any doubts about or disagreement with what the solicitation says, you must pose your question or raise a challenge before the date set for proposal submission or forever hold your peace.

Navarre Corp., B-414962.6; B-414962.7, Oct. 22, 2018

In a fixed-price procurement, an agency is prohibited from evaluating the realism of an offeror's fixed prices unless the solicitation gives offerors notice that price realism will be evaluated. This is in contrast to cost-type procurements, where agencies always must evaluate the realism of proposed costs and, if appropriate, adjust cost for evaluation purposes. We've discussed price realism before.

Navarre Corp. is an interesting protest where a prior protest had challenged the awardee's (Navarre's) fixed price as unrealistically low. The agency took corrective action because it apparently was not aware that its solicitation included a price realism provision, and the agency did not intend for that provision to be there. The agency announced it intended to modify the solicitation to remove the price realism provision and solicit new proposals. Navarre then protested the announced corrective action to prevent new proposals from being solicited and argued the agency should just perform a price realism analysis (and presumably keep Navarre as the awardee).

The GAO denied the protest. Noting that a solicitation must be amended or canceled if it does not reflect the agency's true needs, and noting an agency's broad discretion both as to the corrective action it takes and as to whether to include price realism provisions, the GAO found that the agency's announced course of action was not unreasonable.

Takeaway: Agencies enjoy broad discretion in tailoring corrective action following a protest. As long as they can articulate a rational basis for what they propose to do – particularly regarding a matter as discretionary as whether to include a price realism provision – a protest is unlikely to succeed.

Apogee Engineering, LLC, B-414829.2; B-414829.3, Feb. 21, 2019

Navarre involved a solicitation where the agency did not intend to include a price realism provision; Apogee involved a solicitation where the agency did intend to include one. In a fixed price labor rate procurement, the protester alleged that the awardee's proposed price (10 percent lower than the incumbent protester's price) was too low and, under the solicitation's stated price realism provision, should have been adversely evaluated. Despite the fact that the contemporaneous evaluation record did not even contain the word "realism," the agency argued that its reasonableness analysis (which considers whether a price is too high) simultaneously considered whether prices were too low by comparing all offerors' proposed prices and determining that the awardee's was not an "outlier."

The GAO sustained the protest, finding that the record failed to document any meaningful consideration of whether the awardee's proposed low price was realistic relative to its own proposed technical approach. In that regard, the GAO noted that a bottom-line price comparison among offerors isn't worth very much where offerors' technical approaches differ and, therefore, could be expected to have different underlying costs.

The GAO also found fault with the agency's source selection decision. The record reflected that the Source Selection Authority simply noted that three proposals all received Exceptional adjectival ratings and therefore were equally rated, making price the deciding factor. The GAO noted that the three exceptional proposals received strengths that differed in kind from one another and thus were not necessarily "equal" despite their identical adjectival ratings. "While agencies may find that offerors' proposals are technically equal, the selection official must explain the basis for why proposals are considered technically equal." Relying exclusively on adjectival ratings is not good enough.

Takeaway: The agency here lost the protest because it took shortcuts in doing its duty with respect to the evaluation, best value analysis, and documentation. After dotting its Is and crossing its Ts in corrective action, the agency may well come to the same ultimate award decision as it did the first time. Or it may decide that the original awardee's low price is a material technical risk, or that the protester's unique strengths really are worth a 10-percent price premium. As long as the agency's process and documentation are reasonable the second time around, it should have little to fear from a second round of protests, regardless of who gets the contract.

Wright & Morrissey, B-417105, Feb. 15, 2019

We frequently are asked if an agency is under an obligation to allow an offeror to fix its proposal mistakes. The rule for negotiated procurements is generally no: an agency may, but is not required to, allow an offeror to correct mistakes in its proposal, whether through discussions or clarifications. The rule is different, however, for sealed bids under FAR Part 14. (We've previously discussed these distinctions, and the Court of Federal Claims' precedents, here.)

Wright & Morrissey involved a sealed-bid procurement for building renovation services. At bid opening, the contracting officer noticed handwritten notations on one bid. The contracting officer calculated total bid prices for all bidders and determined Wright & Morrissey to be the apparently lowest bid. Later that day, the contracting officer contacted the bidder with the annotated bid and sought a clarification. The bidder stated that there was a mistake in its bid and explained, from evidence apparent on the face of the bid itself, what its intended bid was. The contracting officer accepted the clarification and determined that the clarified bid was the lowest, thus displacing Wright & Morrissey as the presumptive awardee.

Wright & Morrissey protested the agency's decision, arguing that the awardee's intended bid price was not clear from its bid, and the bid was nonresponsive. The GAO disagreed.

In a sealed-bid procurement under FAR Part 14, a bidder's request for correction of its bid after bid opening but prior to award may be granted where clear and convincing evidence establishes both the existence of the mistake and the bid actually intended. FAR 14.407-3(a). If correction would displace one or more lower bids, the agency may allow correction only if the existence of the mistake and the bid actually intended are ascertainable substantially from the invitation and the bid itself. The annotated bid here "clearly and convincingly" evidenced a mistake consisting of double-counting the price of two CLINs, making the intended price "evident from the face of the bid" itself. Therefore, the contracting officer did not err by allowing the bidder to clarify its intended bid. The GAO accordingly denied the protest.

Takeaway: Scour your proposals for errors before submitting them. Although an agency may exercise its discretion as appropriate, you generally are not owed an opportunity to correct your mistakes, except under the narrow exceptions applicable to sealed-bid procurements. Under the GAO's case law, offerors in negotiated proposals are not entitled to second chances (although a handful of Court of Federal Claims decisions have scrutinized agency discretion where a simple and obvious proposal error could have been easily addressed through clarifications, and where the added value of that proposal was significant).

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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