May 8, 2017 - Protests & Litigation

April 2017 Protest Roundup

LitigationOur monthly bid protest roundup for April identifies decisions by the Government Accountability Office (GAO) and the Court of Federal Claims on issues concerning:  small businesses’ right to a certificate of competency review from the Small Business Administration before being excluded for responsibility-like reasons; how potentially problematic organizational conflicts of interests can and should be mitigated prior to award; an extraordinary decision by the court to award enhanced attorney’s fees based on the government’s intransigence; and, finally, the definition of “adverse past performance.”

Competitive Range Solutions LLC, B-413104.10

Competitive Range Solutions LLC (CRS) challenged the National Institutes of Health’s (NIH) decision to exclude CRS’s proposal from consideration for an information technology (IT) contract because CRS did not sufficiently demonstrate its capabilities or relevant experience related to IT health missions.  NIH deemed CRS’s proposal unacceptable because of the deficient response to the Management Approach criteria, finding that CRS’s examples of IT services and solutions did not establish experience with related IT missions.

According to NIH, its determination that CRS failed to demonstrate relevant capabilities and experience amounted to nothing more than the agency’s reasonable conclusion that CRS submitted a non-responsive and unacceptable proposal.  CRS, on the other hand, argued that NIH’s evaluation and conclusion amounted to a nonresponsibility determination, which should have been referred to the Small Business Administration (SBA) under its certificate of competency (COC) procedures.

Under the Small Business Act, the SBA must certify whether a small business can responsibly perform the contractual requirements.  15 U.S.C. § 637(b)(7)(A).  The responsibility determination includes an assessment of the contractor’s capability, competency, capacity, credit, integrity, perseverance, and tenacity.  The COC regulations state that an agency must refer the small business to the SBA for a COC review prior to rejecting the small business’s proposal when the evaluation is non-comparative (e.g., a pass/fail, go/no-go, or acceptable/unacceptable) and assess whether the small business is responsible or capable of performing the contractual tasks.

NIH argued that the assessment was not a responsibility determination because the agency did not review whether CRS lacked capabilities or was “responsible” rather, it evaluated whether CRS had fully responded to the solicitation requirements by demonstrating sufficient capabilities necessary to perform health-related IT missions.  The GAO disagreed, however, and found that a COC review was required prior to excluding CRS from consideration for award.

First, the GAO focused on the bifurcated nature of the evaluation as evidence that NIH was performing a non-comparative evaluation of CRS’s capability to perform the technical requirements.  The solicitation established a two phase evaluation that required NIH to evaluate proposals on a “go”/“no-go,” non-comparative basis in Phase 1.  This was problematic for the agency because the COC regulations specifically cite a “go”/“no-go” determination as a matter of responsibility.

Second, the GAO found the agency’s record did not support its argument that CRS’s proposal was eliminated because it was not responsive to the solicitation.  The GAO, however, focused on the agency’s evaluation of CRS’s “capability” to perform the contract, which contradicted NIH’s argument that CRS submitted a non-responsive proposal.

Takeaways:  Small businesses should be mindful of possible legitimate protest arguments when they are eliminated from contention for a contract during an initial review or phase of the evaluation.  They should also pay particular attention to how the evaluation is characterized and, if eliminated during an initial phase, be certain to ask questions about the rationale for its exclusion during any debriefing.

Harkcon Inc., B-412936.2

The issue in Harkcon was whether the United States Coast Guard (USCG) reasonably evaluated an alleged organizational conflict of interest (OCI) arising from the awardee’s hiring of a recently retired, high ranking USCG official.  The solicitation sought proposals for Training and Analysis Support Services (TASS) to be provided over a five year period at USCG training centers.

Harkcon’s initial protest largely focused on the perceived OCI created by the awardee’s hiring of the former USCG official.  In response to the first protest, the USCG agreed to investigate the OCI claims.  In December 2016, the USCG notified Harkcon that it had completed its OCI investigation and found no evidence that the awardee had an unfair competitive advantage due to receipt of information from the former USCG official.  The USCG affirmed its award to Metris LLC, which prompted Harkcon to file another protest raising similar concerns.

Harkcon argued that Metris had unequal access to information because Metris hired the recently retired USCG official.  Harkcon argued that the former USCG officer must have provided non-public information because the employee led the USCG’s training division for Forces Readiness Command and had access to “competitively useful, nonpublic information” about Harkcon.

The GAO reviewed the USCG’s investigation of the OCI and found that the investigation had clearly shown that the former USCG employee did not have access to “procurement sensitive or competitively useful information” related to Harkcon’s previous contract.  The GAO also concluded that the USCG investigator reasonably found that, even if the individual had access to the information, it would not have been competitively useful for the new TASS solicitation.

The GAO also found it significant that the former employee had cleared the intent to serve as Metris’s program manager with the agency’s ethics office.  The GAO took the opportunity to re-affirm the notion that mere familiarity with a contract or scope of work due to prior government employment is not evidence of an unfair competitive advantage unless there are additional facts demonstrating such advantage.

Takeaways:  Certain types of OCIs are difficult to overcome and, for that reason, it is imperative to conduct extensive diligence before hiring a former government official.  It is also helpful to try to ensure that the agency has performed any investigative or mitigation steps prior to award.  For disappointed offerors, the protest process is still useful as a tool to verify and confirm that a proper review or investigation of a potential OCI was completed, but, if the agency follows protocol, GAO is unlikely to second guess the agency’s conclusions.

Starry Associates, Inc. v. United States, COFC No. 16-44C, Apr. 10, 2017

This protest began as multiple post-award challenges at the GAO, morphed into a protest of the agency’s decision to cancel the solicitation at the Court of Federal Claims, and finished with a remarkable decision by the court to award protester enhanced fees.  The enhanced costs were warranted because the government engaged in conduct the court described as “an egregious example of intransigence and deception, not just with the regard to the bidder, but to the GAO and to the court.”

Although the court’s decision to award the protester enhanced fees is interesting, it was based on unique and unusual facts.  For practitioners, this case is equally noteworthy because:  (i) it is a rare instance of a successful challenge to an agency’s decision to cancel its solicitation, and (ii) the protester was able to supplement the administrative record with deposition testimony of agency personnel.

An agency’s decision to cancel a solicitation is typically afforded an almost impenetrable amount of discretion by the court.  This level of deference is premised on the fact that the agency (and only the agency) can define its requirements and determine whether those requirements have changed or are no longer necessary.  The agency need only proffer a rational and contemporaneously documented determination and the court will, in nearly all cases, uphold a decision to cancel a solicitation.  Here, however, the record “contains no basis on which can pin the rationality of its decision to cancel.”  127 Fed. Cl. at 551.  All the court could point to were post hoc declarations and testimony from agency personnel that offered little more than conclusory assertions that the requirements were no longer necessary.

Also, the facts in this case present the unusual circumstances necessary for the court to grant limited discovery – in this case, depositions of agency officials.  Under the Federal Circuit’s Axiom decision and its progeny, the Court of Federal Claims may only permit the supplementation of the contemporaneous agency record when necessary for effective judicial review.  One of the few instances in which the court will permit supplementation with discovery is where the plaintiff has raised colorable allegations of bias or bad faith, as such evidence would not typically be reflected in an agency’s documentation.  Here, Starry proffered sufficient facts of bias, and, although the court did not reach the issue of bias, the court used the deposition testimony to not only sustain the substance of the plaintiff’s challenge to the solicitation’s cancellation, but also as the basis for granting the extraordinary remedy of enhanced costs as the deposition revealed the “intransigence and deception” the court found so distasteful.

Takeaways:  Although offerors and their counsel often reflexively file protests first at the GAO (and for good reason), there are circumstances where filing immediately with the court makes sense.  This may include circumstances where the offeror has colorable and justified concerns about the propriety of the agency’s conduct because the court is better equipped and often more willing to probe such issues.  Potential offerors, however, should be cautious before blindly casting aspersions on the agency.  The burden of proof for bad faith or bias allegations is extraordinarily high, and, more often than not, such contentions weaken or water down otherwise strong arguments on the merits.

Walden Security, Akal Security, Inc., B-413523.6 et al.

This post-award protest involved the award of contracts for the staffing of court security officers for three judicial circuits.  Past performance was, along with the technical factor, the most important evaluation criteria.  The protester Walden and the awardee received identical “Very Good” adjectival ratings for Past Performance, but the agency noted in the narrative evaluation of Walden that it had experienced “some difficulty in ‘maintaining performance while scaling up services.’”  The Source Selection Authority (“SSA”) did not discriminate the awardee’s and Walden’s past performance in its tradeoff decision and instead reasoned that the awardee’s slight premium was justified in light of its slight yet clear technical advantages.

Walden challenged, among other things, the agency’s evaluation of its past performance.  Even though Walden’s Past Performance was rated Very Good overall, and its Past Performance evaluation did not factor into the SSA’s tradeoff decision, Walden argued that the negative aspects of the narrative description of its experience were unreasonable.  Typically, such arguments find no traction at the GAO, which affords agencies broad discretion to interpret and evaluate offerors’ past performance.  Here, however, the Solicitation provided that “[o]fferors will be given an opportunity to address adverse past performance information to which the offeror has not previously had an opportunity to respond.”

The agency argued, among other things, that Walden’s past performance information was not “adverse” because it was overall very positive and did not result in the protester receiving “an unfavorable or less than satisfactory” rating.  The GAO disagreed because, notwithstanding the overall rating, “the agency relied on the[] same performance concerns in determining that Walden’s past performance was not a discriminator” over the awardee.  For this reason, the GAO determined that the information was “sufficiently adverse that the agency should have provided Walden with an opportunity to respond.”  The GAO found competitive prejudice in the error because, had Walden had an opportunity to respond, it could have increased its Past Performance rating from Very Good to Exceptional.

Takeaways:  Where agencies are required to afford offerors an opportunity to respond to adverse past performance, whether as a result of an RFP requirement or as a result of discussions under FAR subpart 15.3, protesters and their counsel should not view adverse past performance in a vacuum, but assess it under the circumstances of the overall competition.  Protesters ought to consider whether an improvement to otherwise positive past performance ratings could have improved their chances for award.  Although this places agencies in a difficult spot because it requires they forecast what may or may not be deemed “sufficiently adverse” before award, it should be seen as an opportunity for protesters.