United States: Evaluations That Prompt Corrective Action Must Be Documented

We discussed in a previous blog post how the current state of the law at the U.S Government Accountability Office ("GAO") and within the Federal Circuit limits offerors' ability to effectively challenge agency corrective action. See Is There No Balm in Gilead? The Federal Circuit's Decision in Dell Federal Systems L.P. v. United States Reinforces Contractors' Dwindling Options to Effectively Challenge Agency Corrective Action. Specifically, we demonstrated that GAO has adopted a highly deferential, "hands off" position with regard to agency corrective action, holding that "the details of a corrective action are within the sound discretion and judgment of the contracting agency." Northrop Grumman Tech. Servs., Inc., B-404636.11, June 15, 2011, 2011 CPD ¶ 121 at 3. Under governing GAO case law, agencies have discretion to decide the scope of corrective action, including whether discussions will be held, the breadth of such discussions, which offerors shall be included in the corrective action, and the scope of permitted revisions to proposals. Deloitte Consulting, LLP, B-412125.6, Nov. 28, 2016, 2016 U.S. Comp. Gen. LEXIS 348 at *1, *11 (citing Computer Assocs. Int'l., B-292077.2, Sept. 4, 2003, 2003 CPD ¶ 157 at 5). Indeed, GAO will not disturb an agency's proposed corrective action so long as the corrective action is deemed reasonable—that is, so long as the corrective action is "appropriate to remedy the flaw which the agency believes exists in its procurement process." Onésimus Def., LLC, B-41123.3, B-41123.4, July 24, 2015, 2015 CPD ¶ 224 at 5.

Prior to September 2018, the U.S Court of Federal Claims ("COFC") provided offerors a greater chance of successfully challenging corrective action. Specifically, the COFC took the position that in order for corrective action to be deemed reasonable, the evidence in the record must show that the agency: (1) identified a defect in the procurement; and (2) considered the ways in which its corrective action would remedy the defect. See Dell Fed. Sys., L.P. v. United States, 133 Fed. Cl. 92, 101, 104 (2017) (emphasis added). Even where an agency rationally identified defects in its procurement, the COFC required that the agency's corrective action narrowly target the defects it is intended to remedy. Id. at 104 (citing Amazon Web Servs., Inc. v. United States, 113 Fed. Cl. 102, 115 (2013)). Under this COFC authority, an agency cannot use relatively minor defects to justify the full-scale opening of discussions and allowing revisions to quotations that do not relate to the defects. Id.

However, with its decision in Dell Federal Systems L.P v. United States, Nos. 2017-2516, 2017-2535, 2017-2554, Sept. 24, 2018 2018 U.S. App. LEXIS 28240 at *1 (Fed. Cir. 2018), the Federal Circuit rejected the position adopted by the COFC and required it to apply the same deferential, "hands off," attitude toward corrective action that GAO applies. Citing its own precedent, the Federal Circuit held that pursuant to the "rational basis" standard, a court reviewing agency corrective action examines only whether the proposed corrective action is reasonable. Id. at *16–*17 (citing Croman, Corp. v. United States, 724 F.3d 1357, 1363 (Fed. Cir. 2013)). As we previously noted, this highly deferential standard provides agencies that are so inclined to engage in gamesmanship, by which an agency can reassert control over a flawed procurement, in order to avoid a final GAO decision which finds the agency's prior, preferred awardee to be ineligible for award. By taking corrective action which permits all offerors, including the prior awardee, to submit revised proposals, the agency can permit its prior awardee to rehabilitate its noncompliant proposal, and remain in contention for award. This type of corrective action deprives the offeror that is next in line for award from automatically obtaining the contract award.

Recently, however, GAO issued an opinion which may provide offerors who feel shortchanged by corrective action with a chance to preclude such gamesmanship by requiring that any decision to take corrective action that is based upon a reevaluation of proposals be documented. In NavQSys, LLC, B-417028.3, Mar. 27, 2019, 2019 U.S. Comp. Gen. LEXIS 104 at *1, the Army Materiel Command ("AMC") issued an RFP which stated that, in order to respond to the solicitation, offerors must have a valid top secret facility clearance. Id. at *2-*3. NavQSys asked AMC to clarify whether the facility clearance requirement could be satisfied by an unpopulated joint venture, if each joint venture member itself held a facility clearance, but the Army never responded to NavQSys' question. Id.

AMC awarded the contract to NavQSys and another offeror, Semper Valens, filed a protest at GAO alleging that AMC should have disqualified NavQSys for failing to hold a top secret facility clearance at the time of proposal submission. Id. at *3. Shortly thereafter, AMC advised GAO that it intended to take corrective action by terminating the contract with NavQSys and making award to Semper Valens. Id. When GAO dismissed the protest as academic on the basis of this proposed corrective action, NavQSys protested, alleging that the agency's intended corrective action was unreasonable and inadequately documented. Id. at *4.

GAO sustained the protest, holding that AMC's corrective action reflected a reevaluation of NavQSys' proposal. Because AMC did not document this reevaluation, GAO could not conclude that the agency had a reasonable basis for its corrective action. Id. at *8. Specifically, GAO found that prior to taking corrective action an internal AMC e-mail stated that "taking corrective action is our only path forward as the facility clearance solicitation requirement was not met by the awardee." Id. at *6. GAO found that nothing in the record reflected the agency's interpretation of the RFP's facilities clearance provision, how the provision applied to NavQSys' proposal, or AMC's apparent determination that AMC did not satisfy this provision.

NavQSys stands for the proposition that an offeror can protest Agency corrective action where the corrective action is based on a reevaluation of proposals, and the Agency fails to document the reevaluation. Perhaps to preclude a new wave of corrective action protests, GAO was quick to point out that NavQSys presented an atypical case, since the corrective action not only addressed Semper Valens' protest, but also reflects a new agency determination about the proposals of both NavQSys and Semper Valens. As a result, GAO was being asked to consider the reasonableness of "both the corrective action and the new agency determination." Id. at *8, n.4.

Pursuant to NavQSys, offerors who are adversely affected by corrective action can protest when the corrective action is based upon a reevaluation of proposals and the Agency failed to document the reevaluation. However, GAO's holding may be of limited use to offerors since the only remedy that GAO recommended in NavQSys, was that the Agency document the basis for its decision to reject the proposal. Id. at *10-*11. While offerors can subsequently protest the reasonableness of the post hoc explanation offered by the Agency, the success rate of such protests will likely be limited. While NavQSys now requires agencies to document reevaluations that lead to corrective action decisions, it also permits agencies to do so retroactively. This affords procuring agencies that are so inclined to paint their actions in the most favorable light possible, without having to support their post hoc version of events with documentary evidence.

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