September 10, 2020 - Protests & Litigation

August 2020 Bid Protest Roundup (Law360 Spotlight)

Protests and LitigationThis month’s bid protest roundup (featured on Law360) examines three recent decisions by the Government Accountability Office (“GAO”). The first, Solers[i], examines potential conflicts of interest arising out of the government’s reliance on contractors in its acquisition process. The second and third, Prudential Protective Services[ii] and CGI Federal[iii], offer precautionary tales for would-be protesters. In Prudential, the protester’s failure to monitor postings on beta.SAM.gov caused it to miss its short window to protest a sole-source award to its competitor. In CGI Federal, the GAO dismissed two protests challenging the U.S. Patent and Trademark Office’s exclusion of parties as potential bidders under the Office’s unique market research and procurement authority.

Solers Inc., a Peraton Company

The close intermingling of government and contractor personnel within the government’s acquisition workforce often gives rise to organizational conflicts of interest (“OCIs”), which, if not monitored closely and either avoided or properly mitigated, can significantly limit a contractor’s future business opportunities. Contracting officers have a responsibility to preserve the integrity of the procurement process by identifying and addressing—or, after reasonable consideration, waiving—all such OCIs, whether caused by a contractor’s access to nonpublic information about a procurement (an “unequal access to information” OCI), its involvement in preparing work statements or other procurement materials (a “biased ground rules” OCI), or its evaluation of its own work or that of its affiliates (an “impaired objectivity” OCI). If not mitigated or waived, a potential OCI, or even just a perceived OCI, can render a bidder ineligible for award, as the prime contractor should have been, according to the protesters in Solers. The GAO disagreed.

The alleged OCI arose from the government’s reliance on employees of VISTA Technology Services as advisors to the government team evaluating proposals for a task order under the Department of Defense’s ENCORE III contract vehicle. According to the protesters, VISTA’s close relationship with the prime contractor impaired VISTA’s ability to provide impartial advice to the government evaluation team and possibly gave the prime contractor access to information about other competitors’ proposals. After investigation, the contracting officer found neither an impaired objectivity nor unequal access to information OCI existed, a conclusion the GAO found no reason to overturn.

The contracting officer’s investigation, which the agency undertook as a voluntary corrective action to a previous protest filed by Solers, involved communications with executives of both VISTA and the prime contractor, sworn statements by the VISTA employees involved with the evaluation, and consultation with agency legal counsel.

Although VISTA and the prime contractor shared three subcontracts on other government programs and a teaming agreement that could potentially lead to another, and although the prime contractor had designated VISTA in its Favorable Small Business Initiative, the contracting officer found no relationship related to the ENCORE III contract. The companies confirmed that neither VISTA nor its executives would benefit, financially or otherwise, from the prime contractor’s receiving the contract award. Furthermore, the VISTA employees assisting the government evaluation team swore, under penalty of perjury, that they provided only document review and administrative services, and did not evaluate proposals or make an award recommendation. Thus, no impaired objectivity OCI existed.

With regard to the alleged unequal access to information OCI, the parties agreed VISTA employees had access to “all aspects of the proposals,” but the contracting officer concluded, based on a nondisclosure agreement signed by VISTA’s President and Chief Operating Officer and the relevant employees’ sworn statements, that no proposal information had been shared with anyone outside the task order procurement.

Where, as in Solers, an agency has given meaningful consideration to whether an OCI exists, the GAO has stated it will not upend a contracting officer’s conclusion absent “clear evidence” that the agency’s conclusion is unreasonable. Thus, despite Solers’ disagreements with the extent and conclusions of the contracting officer’s OCI investigation, the GAO found that disagreement did not establish either was unreasonable, and denied the protest accordingly.

Key Takeaway: The GAO’s decision in Solers offers a helpful reminder to both agencies and contractors that apparent or perceived OCIs can be addressed in an agency’s evaluation, but only if the agency knows about them. Bidders have a thin tightrope to walk in this regard: Do I flag in my proposal something that I know is not an OCI, but might be perceived as others to be one, and risk being excluded from award; or do I avoid calling attention to it, running the risk that the agency will not do its due diligence, leaving it susceptible to a protest later? Customers vary, especially in their sensitivity to potential OCIs, but a documented OCI investigation can be nearly protest-proof, if done correctly, as demonstrated in Solers.

Prudential Protective Services, LLC

The GAO enforces its timeliness rules strictly, sometimes with harsh results. If a protester objects to the terms of an agency’s solicitation, it must file its protest before the date set for proposal submission; other protests must be brought within 10 calendar days after the basis of protest is known or should have been known, except in competitions where a post-award debriefing is required, in which case the protester has 10 days from the close of the debriefing to file. For challenges to an agency’s award of a sole-source contract, like in Prudential Protective Services, this means the protest generally must be filed within 10 days after publication of the agency’s justification on beta.SAM.gov (or previously on www.fbo.gov). Because the protester in Prudential Protective Services did not file until 14 days after publication, even though it was not aware of the posting, its protest was dismissed.

Prudential Protective Services’ position is a sympathetic one. Earlier this year, it filed a timely protest challenging the Census Bureau’s issuance of a sole-source task order, through the General Services Administration (“GSA”) Federal Supply Schedules, to North American Security, Inc. (“NAS”), a California company, to provide protective security officers at the Bureau’s National Processing Center in Jeffersonville, Indiana. The agency voluntarily took corrective action, cancelling the task order and announcing that it would issue a new competitive solicitation for the requirement.

In the months that followed, Prudential and its counsel repeatedly contacted the agency to inquire about the status of corrective action, which the agency confirmed would take the form of a new competitive solicitation. In the meantime, unbeknownst to Prudential, the contracting officer prepared a justification to issue a seven-month, sole-source task order to NAS through the end of the year, which the contracting officer deemed necessary to provide the agency enough time to implement its corrective action without a lapse in armed guard services. The agency deemed NAS the only source capable of providing the services at the level required by the agency.

Rather than publish the justification on GSA’s e-Buy website, where the agency had published all prior notices related to the procurement, the agency only posted the notice on beta.SAM.gov, which is the official government-wide point of entry (“GPE”) website designated by statute and regulation as the official public medium for providing notice of federal contracting actions. Prudential claimed to have learned about the notice “only by chance” and argued that, because the agency failed to publish the justification not only on the GPE but on “the Web site of the ordering activity agency,” as required by FAR 8.405-6(a)(2), it had no reason to know of the publication or its basis for protest.

The GAO disagreed, finding no regulatory obligation to post the notice on GSA e-Buy, a GSA website, not a website of the ordering activity, the Census Bureau. The GAO noted its longstanding holding that posting a sole-source justification on the GPE places all potential protesters on constructive notice, a presumption of notice in law that cannot be rebutted. Because the notice was posted on June 15, any protest had to be filed by June 25. Prudential filed its protest on June 29, and thus it was dismissed as untimely.

Key Takeaway: Contractors must vigilantly monitor beta.SAM.gov, which has replaced FedBizOpps (FBO.gov) as the authoritative source for federal contracting opportunities and related notices, and soon will also replace the Federal Procurement Data System (FPDS.gov) as the primary source for federal contract data reports. Failing to do so can have costly results.

CGI Federal, Inc.; Ascendant Services, LLC

The GAO has a limited mandate from Congress to adjudicate bid protests challenging solicitations “for offers for a contract for the procurement of property or services” and awards made or proposed under those solicitations.[iv] As a result, the GAO will not hear bid protests of solicitations or awards for agreements other than procurement contracts, such as other transaction agreements, or OTAs (although it will review protests alleging an agency is improperly using such non-procurement instruments to procure goods or services).[v] The GAO also will not review protests challenging actions early in the procurement process, like a prequalification certification or a request for information (“RFI”) of the kind at issue in CGI Federal.

In that case, two firms, CGI Federal and Ascendant Services, protested their exclusion from the U.S. Patent and Trademark Office’s (“USPTO”) preselected list of potential bidders for its business-oriented software solutions (“BOSS”) procurement. The USPTO expects to award up to $2 billion across multiple indefinite-delivery, indefinite-quantity (“IDIQ”) BOSS contracts over 10 years, and is doing so pursuant to its unique Alternative Competition Method procurement authority, set out in The Patent and Trademark Office Efficiency Act of 1999. Under that authority, the USPTO is expressly exempt from the Federal Acquisition Regulation (“FAR”) and the general procurement laws in Title 41 of the U.S. Code, including the Competition in Contracting Act of 1984 (“CICA”). As a result, the USPTO is not required to invite or consider proposals from the entire field of potential competitors for its requirements, and instead may solicit proposals from as many or as few offerors as it chooses.

To establish a pool of vendors “most likely to successfully meet the agency’s needs” for the BOSS procurement, the USPTO issued an RFI for interested vendors to submit a corporate proposal and character-limited responses to 11 questions. The RFI stated it was “not a solicitation and [did] not constitute a request for quotation or proposal,” and added that the USPTO was “not seeking or accepting unsolicited proposals.” It also reminded vendors that “[s]ubmission of an RFI response [did] not guarantee a vendor’s eligibility to complete for [the] BOSS” requirement. From the 229 vendors submitting responses, the USPTO selected 24 to receive the future BOSS solicitation.

When CGI Federal and Ascendant Services found out they had not made the cut, each filed a protest at the GAO, arguing that the agency had abused its discretion by violating both the terms of its RFI and internal agency operating procedures. Both suggested that the GAO should assert jurisdiction over the protests because the RFI was, in effect, a “down-select,” eliminating offers from the competition and thereby an extension of the final solicitation. The GAO disagreed. Noting the RFI did not seek proposals or pricing and omitted any evaluation criteria, and recognizing the USPTO has no mandate to seek competition among the full field of potential offerors, the GAO found the USPTO’s uniquely authorized process for information gathering to limit the field of potential offerors for a future solicitation was simply market research and beyond its review. Although Congress did not exempt USPTO procurements or its solicitations from the GAO’s review, the GAO found this RFI was not a solicitation. Accordingly, the GAO dismissed both protests without reaching their merits.

Key Takeaway: Some questions are outside the GAO’s purview. That does not mean excluded vendors are entirely without a forum for relief; the USPTO’s exclusion of a would-be offeror could be challenged in the U.S. Court of Federal Claims, if based on an alleged violation of statute or regulation, or if not, possibly in a federal district court of general jurisdiction under the Administrative Procedure Act. But such lawsuits can be significantly more involved—and expensive—than a typical bid protest at the GAO, making it difficult for disappointed bidders to challenge unreasonable or improper agency actions. Of course, that protection from litigation over providing full-and-open competition is exactly the sort of efficiency Congress seemingly intended when establishing the USPTO’s unique procurement authority.

[i] Solers Inc., a Peraton Company, B-418500.2 et al., July 31, 2020

[ii] Prudential Protective Services, LLC, B-418869, Aug. 13 2020

[iii] CGI Federal, Inc.; Ascendant Services, LLC, B-418807; B-418807.2, Aug. 18, 2020

[iv] See 31 U.S.C. § 3551(1)(A)

[v] See 4 C.F.R. § 21.5(m)