United States: October 2022 Bid Protest Roundup: 'Late-Is-Late' Rule, Compensation Plans

This month's Bid Protest Roundup focuses on one recent Court of Federal Claims decision and two Government Accountability Office (GAO) decisions. These decisions involve (1) interpretations of the "late-is-late" rule, (2) past performance evaluation requirement under FAR 16.505, and (3) required evaluation of proposed professional employee compensation plans.

eSimplicity¹

Under the "late-is-late" rule, a proposal must be received by the government by the time stated in the solicitation. If the proposal is late-even by a minute-the government will not accept it. Protestors are usually unsuccessful in their attempts to convince agencies to accept their late proposals; however, there are three exceptions to the rule-an agency may accept a late proposal if (1) it was transmitted through electronic commerce and received one working day before the deadline ("electronic commerce exception"), (2) it was received and under the government's control, before the deadline ("government control exception"), and (3) it was the only proposal received.² COFC recently addressed rule exceptions in eSimplicity, Inc. v. United States where it determined that the agency's rejection of a protestor's allegedly late proposal was improper and the agency failed to properly apply the "late-is-late" rule exceptions.

The procurement at issue in eSimplicity was a solicitation for technical support, issued by the Navy. The solicitation required that proposals be submitted by e-mail no later than April 25, 2022 at 5 PM EST and included instructions for proposal formatting, but did not mention a maximum file size. eSimplicity emailed its proposal to the Navy before the deadline, and its email application confirmed the proposal reached the agency's server. However, the offeror never received a confirmation receipt or delivery failure notification and did not know that the Navy had never actually received its proposal. A forensic investigation later revealed that eSimplicity's proposal had been "bounced back by the destination server because it exceeded the maximum file size."³ The Navy informed eSimplicity that its proposal was late and would be removed from competition for two reasons-the proposal had not been received by the time listed in the solicitation, and the electronic commerce exception was not satisfied. Id. eSimplicity filed a lawsuit at COFC, arguing that the Navy's rejection of its proposal was arbitrary and capricious and prejudicial because it relied on an undisclosed evaluation criterion-file size of proposal. eSimplicity also argued that the Navy misinterpreted and misapplied the "late-is-late" exceptions.

The court agreed. First, the court found that the file size limitation was an unstated evaluation criterion. It stated that agencies must evaluate proposals, "based solely on the factors specified in the solicitation" and "may not rely upon undisclosed evaluation criteria in evaluating proposals," citing citing 41 U.S.C. § 3701(a), FAR 15.305(a), and Banknote Corp. of America, Inc. v. United States, 56 Fed. Cl. 377, 386 (2003).⁴ The court then stated that this obligation extends to all factors that will affect contract award. Although, the government argued that file-size limit is not a "substantive requirement for proposals but, instead an instruction to potentially aid in the delivery of proposal," the FAR's requirement that agencies state evaluation criteria in solicitations is not limited to substantive requirements.⁵ Thus, the file-size limit was an evaluation criterion, and eSimplicity was prejudiced by the Navy's rejection and suffered a competitive injury.

Next, the court addressed the Navy's argument that eSimplicity's proposal was untimely because it received late and did not meet the electronic commerce exception, the only exception available for e-mailed proposals.⁶ eSimplicity argued that the Navy should have considered the "government control" exception, which is available for emailed proposals, where there is acceptable evidence to establish that [a proposal] was received at the Government installation designated for receipt of offers and was under the Government's control prior to the time set for receipt."⁷

In its analysis of whether government control exception applies to electronically submitted proposals, the court discussed the textual distinctions between the two exceptions and found that the two exceptions could overlap. The court suggested that eSimplicity's proposal reaching the initial government may meet the government control exception, but ultimately remanded the case to the Navy to reconsider its decision that eSimplicity's proposal was untimely or whether the government control exception should apply.

Takeaway:

The late-is-late rule is a well-trodden area of law at both COFC and GAO. However, offerors should be cautiously optimistic about eSimplicility. It is the latest "late-is-late" rule case, but does offer some fresh insights. COFC noted that the requirement to state evaluation criteria in solicitations is not limited to substantive requirements; it also refers to non-substantive requirements such as file size limit. Additionally, the court states that the government control exception to the late-is-late rule is potentially available to emailed proposals in certain situations.This does not mean that every agency will apply the exceptions to their procurements. In order to avoid potential litigation, contractors should always submit proposals early and confirm receipt with the agency.

WorldWide Language Resources, Inc.⁸

This decision concerns, among other issues, what factors a contracting officer must consider in evaluating task order proposals under FAR 16.505. In WorldWide Language Resources, the Army issued a request for task order proposals (RTOP) for foreign language interpretation, translation, and transcription services, pursuant to FAR 16.5. The award was to be a single task order, with cost-reimbursement and labor-hour contract line items with a 1-year base period of performance and four 1-year option periods. WorldWide filed a timely pre-award protest, challenging the terms of the solicitation. After alternative dispute, resolution, the Army took corrective action and provided more detail on performance location in the solicitation. The protestor responded that this was not sufficient and continued its protest.

The protestor challenged the solicitation terms, arguing that the RTOP "fails to provide relevant information, and contains various ambiguities and inconsistencies, which prevent offerors from intelligently preparing proposals."⁹ Most relevant here is WorldWide's argument regarding past performance. The protestor argued that the solicitation unreasonably failed to consider past performance as an evaluation factor and the agency "abused its discretion by not including past performance as an evaluation factor in light of FAR 16.505(b)(1)(v)(A)(1)" because the regulation states contracting officers should consider past performance on earlier task orders under contract.

GAO disagreed. First, it found that under the regulation, contracting officers have broad discretion in developing appropriate order placement procedures; this discretion did not require the agency to consider past performance as an evaluation factor at the order level. Instead, the regulation only addresses factors that the contracting officer should consider when developing fair opportunity ordering procedures, and should does not confer a requirement onto the agency.

Takeaway:

In WorldWide, the GAO found that the agency properly applied 16.505(b)(1) to its request for task order proposals and was not required to consider past performance it was up to the contracting officer's discretion. Contractors should be mindful of this distinction between should and must as contracting officers may exercise broad discretion in evaluation for task orders, as compared to other types of solicitations.

Guidehouse, LLP, Jacobs Technology, Inc.¹⁰

In Guidehouse, the GAO sustained a protest challenging the agency's evaluation of proposed professional employee compensation plans because the record did not indicate that the agency conducted an evaluation as required by FAR 52.222-46. The Air Force issued an integration support contract for systems engineering and integration services. The solicitation for the contract stated that award would be made on a best-value trade-off basis and that the agency would consider three factors of descending importance: technical capability, mission capability, and cost. Most relevant here is the mission capability factor; under this factor, the agency would consider workforce management, and the solicitation stated that offerors should submit professional employee compensation plans (PECPs) that would be evaluated under the workforce management subfactor, pursuant to FAR 52.222-46. Guidehouse, Inc. (Guidehouse) and Jacobs Technology, Inc. (Jacobs) submitted their proposals, but neither was selected. The agency explained that although both contractors submitted superior technical proposals, neither justified the increased price, "particularly when many of their technical advantages are unquantifiable."¹¹

Guidehouse and Jacobs filed post-award bid protests at the GAO, challenging several aspects of the agency's evaluation, including that that the agency did not meaningfully evaluate total compensation plans under FAR 52.222-46 and conducted a flawed cost realism analysis. The GAO agreed and found that the agency's consideration and evaluation of PECPs was not congruent with the plain meaning of FAR 52.222-46, which requires the agency to conduct a two-part evaluation of how the proposed compensation compares to incumbent compensation and the cost realism of the proposed compensation. GAO noted that the purpose of FAR 52.222-46 is to evaluate whether offerors will maintain a high quality of professional services for adequate contract performance and whether offerors understand the nature of the work. For existing contracts with recompetes, agencies are required to determine whether a proposal "envision[s] compensation levels lower than those of predecessor contractor" by comparing proposed compensation rates to those of the incumbent," and further evaluating if the awardee's proposal has lower compensation levels than the incumbent, to ensure program continuity and quality.¹² Thus, as a threshold matter, the agency must compare the incumbent professional compensation to proposed professional compensation. Here, the agency failed to do so; it simultaneously decided that it could not compare labor rates from the incumbent contracts to determine whether the offerors were paying less compensation that the incumbent, but also relied on the comparison to conclude that the awardee was not "proposing lower compensation for essentially the same work under the proposed contract."¹³ The agency also did not use a reasonable alternative method to evaluate the professional compensation. For these reasons, the GAO recommended that the Air Force reevaluate proposals and ensure that the PECP evaluation is conducted on a consistent basis for all offerors.

Takeaway:

InGuidehouse, the GAO held the agency did not adequately conduct PECP evaluation in accordance to FAR 52.222-4. The decision serves as a reminder to potential offerors to be mindful of including an adequate PECP for solicitations that include FAR 52.222-4. As the GAO states, the purpose of the regulation is to ensure that offerors maintain a high quality of professional services and to ensure no quality is lost in transition from preceding contracts.

Footnotes

1. eSimplicity, Inc. v. United States, No. 22-543C, 2022 U.S. Claims LEXIS 2347 (Fed. Cl. Oct. 13, 2022).

2. See FAR 52.212-1(f)(2); FAR 52.215-1(c)(3)(ii)(A).

3. eSimplicity, Inc., No. 22-543C at 2.

4. Id. at 5.

5. Id. at 7.

6. Id. at 8.

7. Id.

8. WorldWide Language Resources, Inc. B-420900, 2022 WL 14807784 (Oct. 21, 2022).

9. Id. at 3.

10. Guidehouse LLP; Jacobs Technology, Inc., B-420860.1 et al., 2022 WL 14575439 (Oct. 13, 2022).

11. Id. at 4.

12. Id. at 7.

13. Id. at 9.

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.

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