This month’s bid protest roundup highlights one decision from the U.S. Court of Appeals for the Federal Circuit and two decisions from the U.S. Government Accountability Office (GAO).
REV, LLC v. United States clarifies the elements required to establish prejudice and standing in multi-phase, multiple-award protests before the U.S. Court of Federal Claims.
American Material Handling, Inc. and SierTeK-Peerless JV LLC exemplify the golden rule in government procurements: a procuring agency must do what it said it was going to do in its solicitation. If an agency fails to evaluate proposals in accordance with the solicitation’s stated evaluation criteria (or adds unstated criteria), it opens itself up to fertile protest grounds. The same is true if it fails to document its evaluation in the record.
REV, LLC v. United States
The most important case in this month’s roundup concerns a company’s standing to protest an award after the company has been removed from the competition. In this case, the Department of Veterans Affairs (Agency) issued a solicitation to expand the vendor pool for its Transformation Twenty-One Total Technology-Next Generation (T4NG) program. To determine who to add to its vendor pool, the Agency conducted a two-step evaluation of the bids it received. While REV, a veteran-owned small business (VOSB), was among the successful participants in the first stage, REV was eliminated at the second stage, never making it to the competitive range from which awardees were ultimately selected.
REV challenged the Agency’s evaluation of its own bid and the Agency’s award to other bidders in the Court of Federal Claims (COFC). The COFC granted the Agency’s motion for judgment on the administrative record, rejecting on the merits REV’s critiques of the Agency’s evaluation of the strengths of REV’s own proposal and dismissing for lack of standing REV’s challenges to the Agency’s evaluation of rival bidders’ submissions and the Agency’s establishment of the competitive range.
REV appealed the COFC’s decision that it lacked standing to the Federal Circuit, and the Federal Circuit agreed with REV that because REV showed it had a greater than an insubstantial chance of securing an award had certain awardees been excluded from the bid process, which REV alleged they should have been, it had standing.
Background
The Agency intended to on-ramp seven VOSBs into the T4NG program to replenish the pool of vendors but expressly reserved the right to make additional or fewer awards.
After reviewing bids submitted in step one, the Agency created a competitive range of 33 bidders, including REV, to proceed to step two. After the Agency evaluated the submissions for step two, the Agency established a second competitive range of the nine bidders that received an overall technical rating of “Good” or “Outstanding.” REV, which had received only an “Acceptable” technical rating, was excluded. The Agency later awarded all nine of the offerors that had been included in the second competitive range.
In its COFC bid protest, REV contended it was the tenth- or eleventh-highest-rated bidder and that several bidders ranked higher than it should not have been. According to REV, a fair process would have resulted in REV being among the top seven bidders and, therefore, ultimately selected to be part of the award pool. REV alleged that the Agency evaluation process had been arbitrary and capricious because the Agency had: (1) failed to consider whether two offerors were ineligible for award due to an immitigable organizational conflict of interest, (2) failed to consider offerors’ conformance with the Solicitation’s requirements, (3) conducted a faulty past performance evaluation, (4) failed to evaluate proposals equally, (5) failed to give REV’s proposal a fair reading, and (6) made a flawed competitive range determination.
First, the COFC considered REV’s challenges to the Agency’s evaluation of REV’s own bid and its complaint that it had received disparate treatment during the evaluation process. The COFC found that REV had standing but determined, on the merits, that the Agency’s evaluation of REV’s bid was neither arbitrary nor capricious.
Second, the COFC considered REV’s remaining allegations that certain awardees should have been eliminated from the bid process. The COFC did not decide REV’s contentions on the merits because it found REV lacked standing to assert them, as REV could not establish that the company had been prejudiced by any deficiencies that may have plagued the process after REV’s own bid had already been eliminated.
The COFC reasoned that REV’s argument that REV was next in line for admission to the competitive range was insufficient in the multiple-award procurement, because there was no guaranteed number of awards and the exclusion of one offeror from the competitive range did not necessarily ensure the inclusion of another. Therefore, the court concluded that, regardless of the Agency’s evaluation of the other bids, REV could not establish prejudice sufficient to confer standing.
Appeal
REV appealed the COFC’s decision granting the Agency’s motion for judgment on the administrative record, challenging only the COFC’s determination that REV lacked standing.
The Federal Circuit explained that to satisfy the Tucker Act’s standing requirements and demonstrate it is an interested party and sustained prejudice, REV must show at least a substantial chance it would have been a prevailing bidder under the Solicitation if not for the errors it contends plagued the procurement process.
Importantly, the Federal Circuit explained that, in assessing whether a party was prejudiced by purported errors in a procurement process, a court must assume that the party will, if permitted to proceed with its claim, prevail on the merits. This means that the court’s analysis assumes that REV would be successful in its challenges to the inclusion of six of the bidders that REV alleges had been improperly placed ahead of it. The question then becomes, if these six bidders are excluded from the second competitive range, would REV have had a substantial chance it would have been a prevailing bidder? The record established that the Agency rated REV as “Acceptable,” meaning that its bid met all the government’s requirements, and that REV received the tenth- or eleventh-highest rating overall. If the six offerors were excluded, there is a substantial chance that the Agency would have selected for the pool at least the top seven remaining bidders, including REV.
The Federal Circuit agreed with REV that the Agency’s decision on where to draw the line between those who would remain in the process after step two and those who would not was based on the offeror’s relative ratings. The Agency did not set the floor at “Good” until after it determined how many offerors met or exceeded a “Good” rating. Therefore, REV would likely have ended up in the pool of awardees, absent the procedural flaws about which it complains, particularly given that the purpose of the solicitation was to replenish the pool of VOSBs for the T4NG project.
The Federal Circuit concluded that REV demonstrated a substantial chance it would have been one of the awardees if not for the errors it alleged contaminated the procurement process; therefore, REV had shown both prejudice and interested party status, and had standing to be heard on the merits of its claims against bidders who were rated more highly than REV.
The Federal Circuit reversed the COFC’s decision regarding standing and remanded the case for the COFC to address the merits of REV’s claims attacking the Agency’s assessment of competing bids and its establishment of the competitive range.
Takeaways
The Federal Circuit’s decision has given REV another chance to win its protest before the COFC in a $22.3 billion procurement. Unfortunately, this may be a case of justice delayed is justice denied. The Agency informed REV that it was not included in the competitive range and had, therefore, been eliminated from the competition on October 23, 2020. REV filed a protest of its exclusion from the competitive range with the GAO on November 16, 2020. The GAO denied the protest on February 18, 2021, and REV filed a new protest with the COFC on March 1, 2021. The COFC issued its decision on March 21, 2022. Now, the T4NG2 procurement is gearing up to replace the T4NG in the near future, so even if REV succeeds in its protest, it may not see the anticipated benefits.
The Federal Circuit’s decision also clarified how prejudice and standing are assessed in multiple award protests where the disqualification of one or more offerors could result in award to a protester. REV’s success is due to its ability to put forth a non-speculative theory for why six of the nine awardees should have been removed from the competition and show that if the alleged errors in the procurement process were corrected, then it would have a “substantial chance” of receiving one of the awards.
American Material Handling, Inc.
American Material Handling, Inc. (AMH) protested the award of a task order to Caterpillar, Inc. (Caterpillar) by the International Boundary and Water Commission (Agency) for a brand-name or equal Caterpillar 980 wheel loader. The lowest-price technically acceptable (LPTA) request for quotations (RFQ or solicitation) included a two-page specification sheet listing the “salient features or specifications” that the vehicle must meet.
AMH and Caterpillar were the only companies to submit quotations. AMH offered the Volvo L220H wheel loader, and Caterpillar offered the brand-name Caterpillar 980. After receiving quotations, the contracting officer added salient characteristics that were not stated in the RFQ to the technical evaluation form, to be considered during the evaluation. The Agency determined that the Volvo L220H did not meet six salient characteristics, none of which were listed in the solicitation, and awarded the task order to Caterpillar for $660,219. As a result, AMH was not selected for award, even though AMH offered the lowest-priced quotation, and its proposed vehicle met all the salient features listed in the solicitation.
AMH requested a debriefing. In its response, the Agency explained that while AMH was the lowest bidder with a total price of $597,892, the Volvo L22H was technically unacceptable because it did not meet the six salient characteristics. AMH filed an agency-level protest, arguing the Agency unreasonably evaluated its quotations because the Volvo L220H met all the salient characteristics stated in the specification sheet at a lower price. The Agency denied AMH’s agency-level protest, contending that while “AMH submitted the lowest priced item and that the Volvo L220H Wheel Loader met the salient characteristics listed on the specification sheet . . . the specification sheet was not the sole determining factor in an award decision and there were other criteria that deemed [AMH’s] offer technical[ly] unacceptable.”
AMH subsequently filed a protest at the GAO, arguing that the Agency rejected its quotation as technically unacceptable based on unstated salient characteristics. The Agency claimed that the RFQ incorporated the six salient characteristics by reference because the RFQ stated that the wheel loader must meet the salient features of a Caterpillar 980, which necessarily included all of the Caterpillar 980’s characteristics. According to the Agency, these characteristics were easily discoverable on Caterpillar’s website. The GAO disagreed, explaining that “[t]he agency’s argument is misplaced where the solicitation expressly identified the salient characteristics that it required an equal product to meet.”
The GAO found that the language in the solicitation that the wheel loader must meet the salient features of the Caterpillar 980 could not be reasonably interpreted as directing vendors to find and meet additional salient characteristics not expressly stated, especially where the solicitation itself included a list of salient characteristics. Additionally, such an interpretation would conflict with FAR 11.104(b), which requires solicitations to include “a general description of those salient physical, functional, or performance characteristics of the brand name item that an ‘equal’ item must meet to be acceptable for award.”
The record showed that the Agency failed to transparently convey what salient characteristics would form the basis of its evaluation and improperly considered unstated salient characteristics in awarding the task order. The GAO held, “[i]n a brand name or equal acquisition, the contracting agency has an obligation to inform vendors of the characteristics that are essential to the government’s needs and a product offered as an ‘equal’ one need not meet unstated features of the brand name product.” The Agency’s evaluation of quotations based on unstated salient characteristics improperly restricted competition by precluding vendors of equal products from determining what characteristics are considered essential for its item to be accepted.
The GAO sustained the protest and recommended that the Agency terminate the task order issued to Caterpillar for the convenience of the government and make award based on the salient characteristics identified by the solicitation or amend the solicitation to accurately reflect the salient characteristics the Agency required, obtain and evaluate revised quotations, and issue the task order to the firm identified as the successful vendor under the revised solicitation.
Takeaway
Solicitations are a lot like the grading rubrics we all saw in school. If a teacher distributes a grading rubric to her students but adds new requirements after the due date, students are likely to complain. The same is true in procurements. If an agency says it is going to evaluate whether proposed vehicles meet the salient characteristics listed in a specification sheet, it cannot add additional characteristics later. In this case, the GAO observed that the agency “appeared to be deciding what characteristics it considered to be salient for the first time during its evaluation of quotations.” This was a mistake. As the GAO aptly stated, “Once vendors are informed of the criteria against which proposals will be evaluated, the agency must adhere to them.”
SierTeK-Peerless JV LLC
SierTek-Peerless JV LLC (SierTeK) protested the award of a task order to Strativia LLC (Strativia), alleging that the Transportation Security Administration (TSA or Agency) unreasonably evaluated Strativia’s proposal under the prior experience factor and improperly determined that Strativia offered the best value.
The TSA issued a request for proposals (RFP) for support services to maintain the Agency’s property management program. The RFP provided for a best-value tradeoff using five evaluation factors, listed in descending order of importance: prior experience, staffing approach, technical demonstration, technical scenarios, and price.
The RFP instructed offerors to provide a detailed description of their prior experience providing property management support of a similar size and scope as the TSA’s property management program. Correspondingly, the RFP’s evaluation criteria stated that the Agency would assess its level of confidence (high, some, or low) that an offeror provided property management support of a similar size and scope as the TSA’s property management program.
The protester and Strativia submitted the only proposals in response to the RFP. The protester received high confidence ratings in all four non-price factors and had a price of $27.7 million. Strativia received high confidence ratings in the prior experience and staffing approach factors, but only some confidence ratings in the technical demonstration and technical scenarios factors. Strativia submitted a significantly lower price of $19.5 million.
The Agency awarded the task order to Strativia, concluding that the technical superiority of the protester’s proposal did not warrant the associated price premium.
The protester challenged the Agency’s award decision before the GAO, alleging that the Agency unreasonably evaluated Strativia’s proposal under the prior experience factor, resulting in an improper best-value determination. The GAO agreed.
The GAO began its analysis by looking at what the RFP required the Agency to do. The RFP required the Agency to consider the size and scope of an offeror’s prior experience examples as compared to that of the solicited requirement in determining the relevancy of those efforts, and then to assign a confidence rating.
The record, however, did not document the Agency’s consideration of the similarity in size of Strativia’s prior experience examples to the instant requirement.
Because the Agency failed to document its evaluation of the size of Strativia’s prior experience examples relative to the solicited requirement, the GAO determined that the Agency’s evaluation under the prior experience factor was unreasonable and improper.
Turning to prejudice, the GAO concluded that any potential downgrade in the evaluation of Strativia’s proposal under the prior experience factor (the most important factor in the evaluation) could alter the Agency’s best-value determination. Therefore, the GAO sustained the protest and recommended that the Agency reevaluate proposals and make a new source selection decision.
Takeaway
This is another grading rubric case, but instead of adding unstated evaluation criteria like in American Material Handling, the Agency skipped over one of its stated evaluation criteria. The bottom line is: If an agency says it is going to evaluate the similarity in size of offeror’s prior experience examples to the instant requirement, then it needs to do that. Otherwise, the agency runs the risk of being accused in a protest of deviating from the announced evaluation criteria. Furthermore, an agency must document its evaluation. If the analysis is not documented in the record, then it’s as if the analysis did not happen at all.