September 2019 Bid-Protest Roundup

security-600This installment of our monthly bid protest Law360 spotlight examines three protest decisions released in September 2019. The first decision, ServeFed, Inc., B-417708, September 18, 2019, 2019 CPD ¶ ___, discusses the Government Accountability Office’s (GAO) task-order jurisdiction. The second decision, Far North Forestry, LLC, B-417502.2, September 25, 2019, 2019 CPD ¶ ___, focuses on agency discretion when implementing corrective action. The third decision, Harmonia Holdings Grp., LLC v. United States, No. 18-1671C (Fed. Cl. September 23, 2019), examines the standard of review for organizational conflicts of interest (OCI) at the Court of Federal Claims.

ServeFed, Inc., B-417708, September 18, 2019, 2019 CPD ¶ ___.

The GAO denied the task-order protest because the issued task order failed to meet the dollar threshold for GAO jurisdiction.

Overview

The U.S. Air Force awarded a contract to ServeFed, Inc. (“ServeFed”), a small disadvantaged business, to provide two full-time emergency service employees at Eglin Air Force Base. The contract had a one-year base period, with four option years. Subsequently, the Defense Health Agency (DHA) awarded 35 Indefinite Delivery, Indefinite Quantity (IDIQ) contracts to small businesses to provide, among other things, medical professional personnel. DHA issued a directive for defense-agency medical treatment facilities to use the IDIQs for all new staffing procurements.

ServeFed completed the base period of its contract, and the Air Force exercised the first option year. However, during the first option year, Eglin’s medical facility determined it only needed one full-time emergency service employee. The contracting officer viewed this scope reduction as a significant departure from the original contract, and notified ServeFed it would not be exercising a second option year. Subsequently, the Air Force issued a new task-order solicitation for one full-time emergency service employee in accordance with the DHA IDIQ directive, and awarded a task order for $807,000 to another contractor.

ServeFed filed a bid protest at the GAO challenging the Air Force’s task-order award, and the GAO promptly dismissed the action. The GAO explained that, per 10 U.S.C. § 2304c(e)(1)(B), the threshold for protests challenging defense-agency task orders is $25 million, and that protests of smaller task-order awards are allowed only where the protester can show the order increases the scope, period, or maximum value of the contract under which the order was issued.

Notably, in dismissing the protest, the GAO rejected ServeFed’s attempt to avoid the task-order threshold issue by styling its protest as a challenge to the Air Force’s violation of the regulatory requirement to award the task order through the 8(a) program. The GAO held that, where the specific procurement involved in a protest “is the issuance of a task order, and the requested remedy would involve termination of the task order, the protest is necessarily ‘in connection’ with that task order.”

Takeaways

Contractors should take notice of task-order valuations under IDIQ contracts when considering a potential protest. As noted above, the task-order threshold for defense task orders is $25 million, which applies to task orders from the Department of Defense, the Department of the Army, the Department of the Navy, the Department of the Air Force, the Coast Guard, and the National Aeronautics and Space Administration. 10 U.S.C. § 2303(a). The threshold for civilian task orders is $10 million, which applies to defense task orders under civilian-agency umbrella contracts. See Analytic Strategies LLC, B-413758.2, Nov. 28, 2016, 2016 CPD ¶ 340. The GAO measures the contract value for purposes of the threshold at the value of the awarded contract. See Goldbelt Glacier Health Servs., LLC, 2014 CPD ¶ 281.

Far North Forestry, LLC, B-417502.2, September 25, 2019, 2019 CPD ¶ ___.

The GAO denied a protest challenging the selection of a lower-rated, lower-priced quotation because the record showed the source-selection authority considered the differences between the vendors’ quotations, but determined the superiority of the higher-rated, higher-priced quotation was not worth paying the associated price premium.

Facts

The Forest Service issued a solicitation for timber-cruise data-collection services, with award to be made based on a best-value tradeoff. The Forest Service received four quotes, including one from PEAK Engineering, LLC (“PEAK”), and one from Far North Forestry, LLC (“Far North”).

Initially, because the Forest Service concluded that PEAK’s proposed price demonstrated a lack of understanding of the requirements and would incur higher expenses due to change orders, the Forest Service awarded the contract to Far North. Following a protest from PEAK, however, the Forest Service took corrective action to address concerns about the procurement. The Forest Service advised the GAO that it would re-evaluate the already-submitted quotations, make a new award decision, and terminate Far North’s contract if a different quotation was selected for award. The agency’s re-evaluation resulted in award to PEAK, and the agency promptly terminated Far North’s contract.

Far North filed a bid protest at the GAO challenging, among other things, the Forest Service’s decision to take corrective action and its subsequent termination of Far North’s contract. According to Far North, the Forest Service’s corrective action improperly addressed aspects of its evaluation that were not challenged by PEAK in its protest.

The GAO disagreed, holding the “details of corrective action are within the sound discretion and judgment of the contracting agency, and we will not object to any particular corrective action, so long as it is appropriate to remedy the concern that caused the agency to take corrective action.” Based on its review of the record, the GAO determined that the agency did, in fact, make an evaluation error in the initial evaluation, and that Far North therefore had failed to demonstrate that the Forest Service erred in its corrective action.

Takeaways

The government giveth, and the government taketh away. Although protesters carry the burden of raising known protest grounds or else risking waiver, a protester’s failure to raise a particular basis of challenge does not preclude an agency from identifying errors in the evaluation on its own. This decision highlights the deference given to agencies to “remedy the concern that caused the agency to take corrective action,” as long as it is “appropriate.”

Harmonia Holdings Grp., LLC v. United States, No. 18-1671C (Fed. Cl. September 23, 2019).

Despite two remands to investigate OCIs, the Court of Federal Claims reaffirmed the principal that a protestor must demonstrate hard facts—and not mere speculation or suspicion—that a conflict of interest exists.

Overview

The Food & Drug Administration (FDA) sought information technology services to support the FDA’s “Emergency Operations Network Incident Management System” (EON IMS). The FDA received five proposals responsive to its solicitation and determined Precise Software Solutions, Inc. (Precise), deserved award.

Harmonia Holdings Group, LLC (Harmonia), filed a bid protest at the Court alleging, among other things, that Precise had received an unfair advantage in the procurement because of alleged personal relationships between FDA employees and Precise employees. Specifically, Harmonia claimed that (1) Precise hired a recently retired FDA employee before the FDA issued its solicitation; (2) Precise employed the sister of an FDA employee; (3) a former Precise employee contacted FDA officials and disclosed that there were irregularities in Precise’s FDA procurements; and (4) a former Precise employee, seeking employment from Harmonia, told Harmonia about certain contracting improprieties regarding Precise and the FDA.

The Court reviewed the contracting officer’s investigation of the conflict allegations and determined that, although not every conclusion in her analysis was beyond dispute, her investigation was reasonably focused on uncovering hard facts that might show that an OCI favored Precise in this procurement. Specifically, the contracting officer found that the former FDA employee, now employed by Precise, had “no access to sensitive information regarding the EON IMS procurement and that his employment by Precise did not constitute a violation of any employment restrictions on federal employees. Moreover, the contracting officer determined the Precise employee who had a sister in the FDA prior to the FDA releasing its solicitation “had no access to sensitive information regarding the EON IMS procurement through her sister’s employment at the FDA,” and there had been no communication “with any FDA employee about the EON IMS procurement.”

In addition, the former employee who cited irregular contracting practices later told the FDA that “he had no evidence of impropriety on the part of Precise, that the calls he made to the FDA . . . were expressions of anger at his termination by Precise, and that he ‘regretted acting impulsively.’”  Finally, the former Precise employee who told Harmonia about contracting improprieties received his information from the disgruntled employee. Accordingly, the Court found there was insufficient evidence to support a finding of a conflict.

Takeaways

Although there are no surprises in this case, the Court’s decision is an important reminder that rumor and innuendo are not grounds for OCIs, and that contracting officers receive substantial discretion when investigating and analyzing potential conflicts of interest. The decision also shows that the mere existence of familial or employment ties between an agency and contract personnel is not enough to demonstrate a client; there must also be a showing of an unfair competitive advantage.