June 2018 Bid Protest Roundup

Protests and LitigationThis month’s roundup features one noteworthy decision from the Court of Federal Claims (COFC) regarding improper agency corrective action, and two decisions from the Government Accountability Office (GAO) concerning unequal access type organizational conflicts of interest (OCIs).

Court of Federal Claims

Centerra Group, LLC v. United States and Paragon Systems, Inc., No. 18-219C, e-filed June 7, 2018 – Agency’s use of discussions with awardee, but not other remaining offerors, while taking corrective action was “fundamentally unfair and anti-competitive.”

Centerra Group LLC (“Centerra”) filed a protest with COFC challenging the award of a task order to Paragon Systems, Inc. (“Paragon”) for guard services for certain Department of Justice (DOJ or “agency”) facilities. The procuring agency, DOJ, moved for a remand to “reconsider its award decision” in light of the concerns raised by Centerra and agreed to stay transition activities pending its reconsideration. As part of its corrective action, the agency invited Paragon to revise its proposal to address specific issues raised in Centerra’s protest, but the agency did not provide Centerra with an opportunity to revise its proposal. Centerra amended its complaint to challenge the agency’s corrective action in response to its initial protest and the resulting award decision.

In a rather scathing opinion, Judge Campbell-Smith characterized DOJ’s corrective action as “a mockery of fundamental fairness and competitive principles” under the Federal Acquisition Regulation (FAR). Op. at 11. The COFC rejected DOJ’s arguments that (1) FAR Part 15 standards did not apply because the solicitation was conducted under FAR Part 8; (2) even if FAR Part 15 applied, those principles allowed the agency to conduct discussions with a putative awardee in response to a bid protest; (3) the agency’s communications with Paragon during the remand were clarifications; and (4) there was no need to conduct discussions with Centerra because its proposal had no weaknesses.

In general, agencies conducting procurements under the Federal Supply Schedule, FAR Subpart 8.4, are not bound by the principles outlined in FAR Part 15, which govern negotiated procurements. However, where the agency uses FAR Part 15 procedures, the courts and GAO analyze the protests under the standards applicable to negotiated procurements. Under FAR Part 15, when an agency enters discussions with one offeror, at a minimum, the remaining offerors must be permitted to update and revise their proposals.

The COFC analyzed the agency’s action on remand under FAR Part 15 because “[w]here, as here, an agency has already conducted two rounds of discussions with offerors remaining in the competition, and allowed proposal revisions after each round, the overwhelming weight of authority is that the agency must conduct any future discussions in the conformance with the fairness principles enshrined in FAR Part 15.” Op. at 8. DOJ could not conveniently abandon FAR Part 15 principles during the remand by conducting a third round of discussions with Paragon and allowing Paragon to revise its proposal, without offering the same opportunity to Centerra.

Nor was it acceptable under FAR Part 15, or any other FAR provisions for that matter, for an agency to conduct discussions with only an awardee in response to a bid protest. According to the COFC, “there is no fairness or equity in punishing a protestor by allowing its competitor to redress every flaw in its proposal, as pointed out by the protestor, so that the agency’s award decision may withstand review.” Furthermore, the COFC noted that if DOJ had explained its planned course of action in its remand motion, the remand motion would have been denied.

The issue of whether or not the communications with Paragon were discussions was “not a close question” at all given “glaring examples of discussions . . . which provided Paragon an opportunity to materially revise and modify its proposal.” Once Paragon was allowed to revise and improve its proposal through discussions, fairness required that Centerra be given an opportunity to revise and improve its proposal as well, whether or not its proposal contained weaknesses, significant weaknesses, or deficiencies. Therefore, the COFC granted plaintiff’s post-remand motion for judgment on the administrative record, finding that the agency’s actions violated fundamental fairness principles of the FAR, and permanently restrained and enjoined DOJ from acquiring guard services under the solicitation from Paragon.

Takeaway: Even in corrective action, in which agencies often get wide discretion, agencies must adhere to basic principles of fairness. If an agency allows one offeror to revise or modify its proposal, the agency must provide the other remaining offerors with the same opportunity.

Government Accountability Office

Dell Services Federal Government, Inc., B-414461.3, June 19, 2018 – Individual preparing awardee’s proposal had access to competitively useful, non-public information about the protester, giving rise to an unequal access OCI.

Dell Services Federal Government, Inc. (DSFG) protested the award of a task order to SRA International (SRA) under a request for quotations (RFQ) issued by the Department of Education (DOE or “agency”) for information technology (IT) products and services, alleging that the agency should have concluded that SRA had an unmitigated OCI. GAO sustained the protest because the agency failed to consider whether SRA had an unfair competitive advantage as a result of access to competitively useful, non-public information.

DSFG was the incumbent contractor for an IT contract called the Education Department’s utility for communications, applications and technology environment (EDUCATE) contract. After the EDUCATE contract expired, the agency decided to use multiple task or delivery orders under a program called the Portfolio of Integrated Value-Oriented Technologies (PIVOT) to meet its future IT requirements. The solicitation at issue in the protest, referred to as PIVOT I, was one of several solicitations issued by the agency to meet its IT requirements.

Prior to this protest, SRA received DSFG’s proposals that had been submitted to DOE under the prior EDUCATE contract. DSFG filed a pre-award protest arguing that SRA had an impermissible OCI because of the receipt of DSFG’s proposals and that the release of DSFG’s proposals constituted a Procurement Integrity Act violation. There are three types of OCIs: (1) unequal access to information; (2) impaired objectivity; and (3) biased ground rules. An unequal access to information OCI—the type at issue here—exists where a firm has access to nonpublic information as part of its performance of a government contract, and where that information may provide the firm an unfair competitive advantage in a later competition for a government contract. GAO sustained this protest, concluding that SRA could have an unequal access type OCI as a result of its receipt of DSFG’s proposals. GAO recommended that the agency reconsider whether SRA had an OCI.

In response, the agency conducted an investigation from which it concluded that disclosure of DSFG’s proposals did not have an adverse impact on the acquisition because the information in the proposals was outdated and the requirements of the PIVOT program were different from the EDUCATE contract. Furthermore, the agency concluded that SRA did not have an unequal access type OCI because the information in DSFG’s proposals was not competitively useful.

After conducting its investigation and finding that there was no OCI, the agency evaluated the quotations and awarded the contract to SRA. DSFG filed this protest, arguing that the agency should have concluded that SRA had an unequal access type OCI.

During its prior investigation, the agency had learned about an individual identified as Mr. Y, who was the program manager for SD Tech during its performance of a related contract known as EDUCATE IV-&V. Mr. Y had access to nonpublic, competitively useful information in connection with the performance of the EDUCATE IV-&V contract. However, during its investigation, the agency limited its OCI analysis to considering whether Mr. Y shared DSFG’s proprietary information with SRA and failed to consider whether the other non-public, competitively useful information to which he had access could have created an unequal access OCI.

When an individual engaged in proposal preparation activities has access to competitively useful, non-public information of a competitor, there is a potential unequal access type OCI and a presumption of prejudice. Because Mr. Y had access to such information through his role as the program manager of the EDUCATE IV-&V contract and participated in the preparation of SRA’s proposal, GAO concluded that SRA had a potential unfair competitive advantage.

Takeaway: As a result of performing a government contract, a firm or individual sometimes acquires competitively useful, non-public information of other companies. An unequal access OCI may arise if the contractor’s proposal personnel are not prevented from accessing competitively useful information. When an individual has access to competitively useful, non-public information for one offeror, and that individual engages in proposal preparation activities for another offeror, there is a potential unequal access type OCI and a presumption of prejudice. Agencies must consider actual or potential OCIs that may affect a procurement and take steps to mitigate such conflicts before contract award. Unequal access OCIs, such as the OCI at issue in this protest, can generally be mitigated through the use of firewalls to prevent potentially conflicted personnel from assisting in proposal preparation.

Archimedes Global, Inc., B-415886.2, June 1, 2018 – Protest challenging agency’s elimination of protester from consideration for task order because of possible OCI sustained.

Archimedes Global, Inc. (AGI) challenged its disqualification from consideration for award of a task order to perform management and support services for the Department of Homeland Security (DHS or “agency”). AGI alleged that it was unreasonably eliminated from consideration for award based on a non-existent OCI. GAO sustained the protest because the decision was based on an inference of a conflict of interest instead of hard facts.

The request for proposals (RFP) stated that award would be made on a best-value tradeoff basis, with technical approach and key personnel qualifications as the most important factors, followed in descending order of importance management approach and staffing, corporate experience, and price. During the evaluation of proposals, AGI was found to be technically superior to all other offerors. However, AGI’s proposal was excluded from consideration because the agency found that AGI had an apparent OCI.

The predecessor task order required the performing contractor, Ambit Group, LLC (“Ambit”), to have access to procurement sensitive information. For this reason, that task order included a clause permitting the agency to disqualify the incumbent contractor from competing for follow-on requirements. For the follow-on task order, AGI proposed to hire the senior and intermediate program managers working on the predecessor task order for Ambit. The agency concluded that the Ambit employees could have provided AGI with unequal access to non-public, competitively useful information, and, as a result, that AGI had an apparent unequal access type OCI.

When the agency eliminated AGI’s proposal from consideration, AGI filed a protest with GAO alleging that the agency’s actions were improper. The agency took corrective action by allowing AGI an opportunity to provide it with information relating to whether it had an OCI. In light of the agency’s corrective action, GAO dismissed AGI’s initial protest.

The agency again concluded that AGI’s proposal appeared to have a conflict of interest and removed the proposal from consideration. AGI filed this protest, arguing that the agency’s decision to exclude it from consideration was unreasonable because the agency’s analysis ignored the fact that the individuals in question were not AGI employees and did not participate in the preparation of AGI’s proposal.

Timeliness

The agency first argued that AGI’s protest was an untimely challenge to the terms of the solicitation. The agency asserted that two questions and answers that were provided to offerors prior to the submission of proposals put offerors on notice that no Ambit employees could be used in connection with their proposals. To be timely, challenges to the terms of a solicitation must be filed before the deadline for submission of proposals. However, GAO concluded that the two questions and answers failed to put offerors on notice that they were precluded from proposing to use individual Ambit employees in their proposals. Therefore, GAO concluded that the protest was timely because it was filed within 10 days of the agency advising AGI that its proposal had been excluded from consideration.

Merits

GAO stated that “[i]n challenging an agency’s identification of a disqualifying conflict of interest, a protester must demonstrate that the agency’s determination did not rely on hard facts, but instead was based on mere inference or supposition of an actual conflict of interest, or is otherwise unreasonable.” Here, GAO concluded that the agency’s decision to exclude AGI was not based on hard facts, but instead on innuendo concerning the activities of the Ambit employees. Specifically, GAO took issue with the contracting officer’s assumption that because there was a possibility that the two Ambit employees had access to competitively useful, non-public information, that information was provided to AGI. In reaching this conclusion, the contracting officer ignored the fact that the individuals were not currently employed by AGI and there was no evidence to show that the individuals provided AGI with competitively useful, non-public information or otherwise assisted in preparing AGI’s proposal. Therefore, GAO sustained the protest and recommended that the agency reconsider its exclusion of AGI.

Takeaway: An agency’s decision to exclude an offeror from a competition due to an OCI must be reasonable. In order to be reasonable, the decision must be based on hard facts, rather than inference or supposition of a conflict of interest. Because the two Ambit employees were not yet working for AGI, and there was no evidence that they had shared information with AGI, it was unreasonable for the agency to assume that an OCI existed.

 

*Victoria Dalcourt Angle is a Law Clerk in our Washington, D.C. office and not admitted to the bar.