United States: June 2019 Protest Roundup

Our monthly bid protest Law360 spotlight will discuss a handful of interesting bid protests from the preceding month, highlighting the most noteworthy aspects of the decisions for companies competing for contracts and agencies seeking procurement.

This installment of our bid protest roundup takes a look at three protest decisions from June.

The first decision is from the Court of Federal Claims, where the Court, in dismissing the protest, was required to evaluate several noteworthy procedural and jurisdictional questions under unique circumstances, including interesting examinations of timeliness, interested party status, and the scope of the Court's bid protest jurisdiction.

The second examines the Government Accountability Office's ("GAO") decision to sustain a protest challenging an award decision where the Agency had to choose between two equally rated offerors. The strength and weaknesses upon which the Agency had to rely to make this close call were not reasonably assigned and the protester was prejudiced as a result.

The final summary looks at another GAO protest, in which the protester's supplemental protest challenging the awardee's small business subcontracting plan was sustained because the awardee's percentages improperly incorporated the prime contractor's fees.

MLS-Multinational Logistic Services, Ltd. v. United States, CoFC Case No. 18-998C (public version issued June 11, 2019).

The Court of Federal Claims dismissed this protest because the protester was not an interested party and lacked standing as a result.

Facts: The Navy solicited proposals for fixed-price, multiple-award indefinite delivery/indefinite quantity ("IDIQ") contracts to perform husbanding services for the Navy and Coast Guard at ports in the Middle East.

Prior to the due date for proposals, MLS-Multinational Logistic Services, Ltd. ("MLS") filed an agency-level protest challenging that certain RFP provisions conflicted with local port regulations. The Navy proceeded to accept proposals on the due date, including a proposal from MLS that did not take exception to any RFP terms. The Navy issued its decision denying the protest several weeks after proposal submission, but before award. Within 10 days of that decision, MLS submitted a bid protest to the GAO. The GAO dismissed the protest as untimely because MLS had constructive knowledge of adverse agency action on its agency-level protest when the Agency proceeded with receipt of proposals. See B-415971 (Mar. 15, 2018).

In April 2018, after the GAO's decision, the Navy awarded nine contracts under the solicitation, including one to MLS. Since award, MLS has received several task order awards. In July 2018, MLS filed its protest at the Court again challenging the same terms of the solicitation as inconsistent with port regulations. MLS filed its complaint nearly four months after GAO dismissed its protest and two and a half months after the Navy made its awards.

The Department of Justice ("DOJ") moved to dismiss the protest on three grounds, asserting that:

  • MLS's protest was untimely because MLS had slept on its rights by protesting when it did;
  • As an awardee, MLS was not an interested party and lacked standing; and
  • MLS's challenges to RFP terms are actually challenges to contract terms and thus involve matters outside the scope of the Court's Tucker Act jurisdiction.

Decision: In a thorough decision from Judge Horn, the Court ultimately dismissed MLS's protest for lack of standing, but the decision includes interesting analyses of several issues.

First, the Court provides an exhaustive recitation of the timeliness and waiver rules based on the Federal Circuit's decision in Blue & Gold and its progeny. Ultimately, the Court concluded that MLS had not waived its right to challenge the solicitation, notwithstanding the fact that MLS's GAO protest was itself untimely and that it filed its complaint months after the GAO's dismissal and months after contract award. The Court was persuaded by the fact that, between GAO's dismissal and its protest to the Court, "[a]t the Navy's invitation, MLS sought to resolve its objections to the solicitation with the appropriate naval authorities over the course of several months." Based on these "good faith discussions" after the GAO's dismissal, the Court found that "MLS had not waived its challenge to the terms of the solicitation."

Second, the Court had to decide whether MLS's challenges to the solicitation were related to contract performance (and thus outside the scope of the Court's Tucker Act jurisdiction) or related to the underlying solicitation (and potentially within the Court's bid protest jurisdiction). Following another extensive summary of relevant case law, the Court ultimately examined the relief MLS was requesting and concluded that its complaint "is more consistent with a pre-award protest seeking to change the terms of the solicitation in advance of contract award, than a post-award protest seeking to redefine the terms of an already awarded and operative contract." This was because MLS, rather than seeking revisions to the contracts' terms, was seeking revision of the solicitation, which would cause the cancellation of the contracts and the awardees' ability to bid on future task orders.

Third, the Court ultimately concluded that MLS was not an interested party because it "neither would be able to demonstrate a non-trivial competitive injury nor prejudice." It seems the Court based this conclusion on the fact that, should MLS prevail on the merits, the remedy would affect the other eight awardees equally, as all of the awards would need to be canceled to proceed with MLS's requested remedy.

In addition to the Court's treatment of these often-disputed procedural issues, the Court ended its opinion with an admonishment to the Navy. Though the Court could not reach the merits, it noted that it "remains troubled by" the allegations and that "MLS raised a serious issue regarding the Port Tariff provisions," which apparently was causing contractors to choose between making inaccurate representations to gain access to foreign ports and being turned away by port authorities.

Takeaway: This case had a highly unusual procedural posture. You do not often see cases where an awardee is trying to prosecute a pre-award protest months after award. As a result, counsel is wise to treat some of the holdings as potentially limited to the facts of the case, but the decision provides interesting and potentially helpful support for the protesters dealing with tricky issues of timeliness and interested party status at the Court.

Information International Associates, B-416826 et al.

The GAO sustained this protest because the agency, in deciding between two similarly rated offerors, unreasonably assigned the awardee a strength and the protester a weakness. The protester was prejudiced by the unreasonable evaluation.

Facts: The Air Force solicited proposals for the collection, analysis, synthesizing, and dissemination of scientific and technical information at the Homeland Defense and Security Information Analysis Center ("HDIAC"). The RFP provided that award would be made to the offeror that proposed the best value to the government based on a technical factor (with three subfactors), past performance, and cost.

The Agency assigned the offerors the same adjectival ratings for the technical subfactors and past performance. The protester's evaluated costs were slightly higher than the awardee's. The Agency's selection was based on a weakness assigned to the protester under the third technical subfactor.

Information International Associates ("IIA") protested the award decision on numerous grounds. As is relevant here, IIA challenged a strength assigned to the awardee under the first technical subfactor and IIA's purported weakness under the third subfactor. The GAO sustained both protest grounds.

The Agency assigned the awardee a strength because its cloud-compatible website would be running on day one, which provided a benefit to the Agency as it "executes its strategy of moving all public-facing websites to a cloud environment." The GAO would "not question the agency's assertion that there is a benefit to the agency from having the HDIAC website by cloud compatible," but the GAO found "little relationship . . . between the RFP's stated requirement for a website and the agency's contention that it could also receive a benefit" by moving other websites to a cloud environment. The GAO also noted the RFP allotted offerors 60 days to have a preliminary website ready, and that there was no requirement or even preference for a website on day one. Accordingly, the GAO found the Agency had unreasonably assigned this strength to the awardee.

The GAO also found the Agency had unreasonably assigned the weakness to IIA. The weakness, which was related to IIA's apparent inability to "obtain feedback on products," was based on features in IIA's solution that were equivalent to the features in the awardee's solution. The GAO thus concluded that the weakness should have been assigned to both offerors or neither.

The GAO rejected the protester's arguments concerning past performance and cost realism, but ultimately sustained the protest based on the errors in the technical evaluation.

Takeaway: Agencies often find themselves choosing between multiple offerors that were rated similarly, or even identically. The GAO will usually defer to how an agency chooses to "split hairs" so long as the basis upon which the agency distinguishes the awardee is consistent with solicitation's criteria and is reasonably grounded in the offerors' proposals. When an agency, however, makes a close call based on proposal features that are not or are only tenuously connected to the RFP's criteria, or evidence a failure to reconcile the proposals, then the GAO will often sustain the protests.

Peraton, Inc., B-417358; B-417358.2

The GAO sustained this protest because the awardee failed to meet a material requirement for small business participation.

Facts and Decision: The Air Force solicited proposals for engineering, development, integration, and sustainment services in support of satellite systems and awarded a single IDIQ contract to Engility Corporation ("Engility"). A disappointed offeror, Peraton, Inc. ("Peraton"), challenged various aspects of the award decision.

Under the program management technical subfactor, the solicitation required the offerors to submit a small business participation plan. The solicitation further noted that "[f]ailure to meet any one of the individual criteria . . . will result in an 'unawardable' rating at the subfactor level." The solicitation established a 25 percent minimum requirement for small business participation.

Engility's proposal stated that its small business subcontracting percentage was 27 percent. In a supplemental protest, Peraton calculated Engility's percentage by dividing its subcontract proposed price by Engility's total labor costs/prices, and Peraton asserted that Engility's actual percentage was under 24 percent. Although the Agency and Engility proffered several theories to support its award, the question came down to whether the prime contractor's fee on the subcontractors' prices should be included in the numerator to determine the subcontracting percentage.

The GAO sided with Peraton and noted that "it is readily apparent that the purpose of a small business subcontracting requirement is to assess the extent to which an offeror proposes small businesses to actually perform, and be paid for, the work required under a solicitation." The GAO said it was "plainly unreasonable" to include prime contractor fees as part of the allotted amounts to small businesses.

Because the Agency could not establish that it had determined Engility met the subcontracting requirement, the GAO sustained the protest and recommended that the Agency either terminate the award to Engility and make an award to Peraton, open discussions and reevaluate proposals, or revise the solicitation.

Takeaways: The protest decision reiterates two important principles: First, offerors ought to scrutinize their proposals closely to ensure they comply with even the more rote solicitation requirements, like ensuring the subcontracting proposal aligns with the RFP's requirements. Second, protesters and their counsel are reminded of the importance of carefully scrutinizing an agency's record. It is likely that the defect in Engility's proposal was not apparent without dissecting the awardee's cost proposal and performing an independent calculation of the subcontracting figures.

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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