July 31, 2017 - Protests & Litigation

July 2017 Protest Roundup


In July 2017, the Government Accountability Office (GAO) and the U.S. Court of Federal Claims issued decisions covering a number of issues.  We address the decisions below on the following issues of interest: (1) agency discretion not to engage in clarifications; (2) Procurement Integrity Act (PIA) and Organizational Conflicts of Interest (OCIs); (3) overly broad corrective action; (4) non-required debriefings and timeliness; and (5) evaluation changes after corrective action.                                                    

Agency Discretion Not to Engage in Clarifications

Valkyrie Enterprises, LLC, B-414516, June 30, 2017:  A single flaw – even an easily corrected one – can result in the rejection of an otherwise outstanding proposal.  In Valkyrie, the protester submitted a proposal that inadvertently truncated the résumé of one of the protester’s key personnel.  The truncation caused the résumé to reflect only 11 years of relevant experience, rather than the 12 required by the solicitation (when in fact he had 19 years of relevant experience).  The protester argued before the GAO that the agency should have conducted clarifications to resolve what the protester characterized as a clerical error.  The GAO disagreed, even though the agency apparently conceded that the proposed employee did in fact have the requisite experience, and the GAO agreed that clarifications (rather than full-blown discussions) could have resolved the issue.  After rejecting the protester’s argument that the clerical error was evident on the face of the proposal, the GAO further noted agencies are under no obligation to engage in clarifications for the resolution of minor clerical errors, even when they are disqualifying.  In response to two further arguments, the GAO held that agencies are not required “to infer information from an inadequately detailed proposal,” nor were the evaluators required to use their allegedly independent knowledge of the proposed employee’s experience to remedy a deficiency in the written proposal.  Thus, regardless of how advantageous Valkyrie’s proposal might have been, it was not unreasonable for the agency to reject it.

Yes, the proposed employee was compliant; yes, the error easily could have been corrected through clarifications; but, at the end of the day, the submitted proposal was imperfect, and the agency was free to reject it on that account.  The Court of Federal Claims has been willing to question an agency’s refusal to engage in clarifications to resolve clerical issues of this sort in certain circumstances, but the GAO shows no sign of budging.

Takeaways:  The GAO’s deference to agency discretion in cases like this reminds one of Justice Holmes’s observation:  “Men must turn square corners when they deal with the Government.”  Offerors should check and double-check the quality and completeness of proposals before submitting them.  A thorough quality review might not catch every error, but it will reduce the risk of adverse evaluations and outright rejection of a proposal for easily avoided clerical errors.

Procurement Integrity Act and Organizational Conflicts of Interest

Dell Services Federal Government, Inc., B-414461; B-414461.2, June 21, 2017:  As a general rule, it is not improper for one offeror to have a competitive advantage as a result of its unique capabilities or experience, including advantages gained through performance of other government contracts.  Advantages derived from violations of the Procurement Integrity Act (PIA) or from Organizational Conflicts of Interest (OCIs) are a different matter.  In Dell Services, the protester alleged that the agency failed adequately to investigate allegations that another offeror was tainted by both issues, and the GAO agreed.

The PIA provides inter alia that “[e]xcept as provided by law, a person shall not knowingly obtain contractor bid or proposal information or source selection information before the award of a Federal agency procurement contract to which the information relates.”  41 U.S.C. § 2102(b).  An agency’s deficient investigation of a potential PIA violation may be raised as a GAO protest ground only if the protester brought the alleged violation to the contracting officer’s attention within 14 days after the date when the protester discovered the possible violation.  In Dell, one of the competitors disclosed to the contracting officer that an employee of one of its teammates had recently provided it with two Dell proposals from previous procurements.  Dell, when advised of the issue, timely notified the contracting officer that it considered this a potential PIA violation.  The agency conducted an investigation and determined that release of the proposals would not adversely affect the current acquisition.  Dell then protested the adequacy of the agency’s investigation.  Review of the record showed the agency did not consider how detailed information in the Dell proposals – including pricing approach, labor rates, and staffing strategies – might relate to the current and future procurements.  The GAO also noted that certain representations in the offeror’s self-disclosure conflicted with the record developed in the protest.  Because the agency did not document a reasonable investigation of whether information in the Dell proposals adversely affected the procurement, the GAO sustained this protest ground.

Based upon information in the record, the protester also filed a supplemental protest arguing that the other offeror suffered from an unequal-access-to-information OCI, as well as a biased-ground-rules OCI, based upon the offeror’s teammate’s possession of Dell’s proposals and the teammate’s prior work assisting the agency in identifying its IT acquisition approach.  Although OCI allegations generally are post-award protest grounds at the GAO, here the protester was on notice that the agency had completed the related PIA investigation and nevertheless considered the other offeror to be eligible for award.  The GAO treated this as tantamount to a determination that the agency had considered the alleged OCI and determined it not to be an obstacle to award.  For the same reasons it sustained the PIA protest ground, the GAO found that nothing in the record documented agency efforts to investigate, avoid, neutralize, or mitigate any possible unequal access OCI arising from the protest allegations.  Without concluding whether there also was a biased-ground-rules OCI, the GAO further recommended that it would be prudent for the agency to investigate this allegation during the unequal-access OCI investigation it would have to undertake as part of corrective action.

Takeaways:  This decision is a useful reminder of (1) the special rule that a protester must have informed the contracting officer within 14 days after learning of a potential PIA violation before it can use the alleged violation (or the government’s investigation of it) as a basis of protest to the GAO; (2) the exception to the general GAO rule that OCI allegations normally are post-award protest grounds; and (3) the various risks that can arise if an offeror comes into possession of a competitor’s bid or proposal information, or has not thoroughly vetted its teammates for potential OCI and related issues.

Overly Broad Corrective Action

APPELLATE UPDATE: The Federal Circuit subsequently reversed and vacated the Court of Federal Claims’ judgment in Dell Federal Systems.

Dell Fed. Sys., LP v. United States (July 13, 2017):  In another win for Dell, the company successfully challenged the scope of corrective action taken by an agency in response to GAO bid protests by 21 disappointed offerors (out of a pool of 58 total offerors, where there were nine awardees).  The GAO protesters had argued that the solicitation was ambiguous, leading all but nine offerors to be found technically unacceptable – several only for spreadsheet errors that allegedly could have been readily corrected if the agency had requested clarifications or engaged in discussions.  Rather than fight the protests, the agency announced it would open discussions with “virtually all of the offerors,” and solicit revised proposals with new pricing – nearly guaranteeing that all the offerors could make their proposals technically acceptable, and thus jeopardizing the original nine awards.  The agency’s internal documentation cited litigation risk regarding two perceived procurement errors as the justification for the corrective action:  (1) the spreadsheet that so many offerors filled out incorrectly was ambiguous and (2) the agency should have conducted discussions in the first place given the size of the procurement, in accordance with DFARS 215.306(c).  Dell and five of the other original awardees then went to the Court of Federal Claims to protest the announced corrective action, arguing that it was not appropriately tailored to the narrow problems the agency discerned in the procurement.

The court first found the agency had a rational basis for determining that a spreadsheet form in the solicitation was ambiguous and that the agency may have erred in not conducting discussions in a procurement of this size.  The court disagreed, however, with the scope of the corrective action.  Citing its own precedent, the court held that “[e]ven where an agency has rationally identified defects in its procurement, its corrective action must narrowly target the defects it is intended to remedy.”  Even though the agency perhaps should have conducted discussions before awarding contracts, the court held it did not follow that post-award discussions were the appropriate remedy for the error:   “After all, constructing a henhouse gate is not an appropriate remedy after the fox has done its work—one instead needs new chickens.”  In this case, it would be appropriate for the agency to conduct limited “clarifications” with those offerors whose otherwise acceptable proposals were rejected simply because of clerical noncompliance with the ambiguous spreadsheet; it was not appropriate to open full discussions and request proposal revisions from all offerors, including those whose proposals were rejected for substantive reasons.  The court therefore enjoined the agency from pursuing its announced corrective action, but provided a roadmap for tailoring a more appropriate remedy.

Takeaways:  Agencies enjoy broad discretion in designing corrective action to address perceived procurement errors.  Although the GAO is traditionally very (but not absolutely) deferential to that discretion, the Court of Federal Claims has shown itself to be more willing to reject corrective action that is not narrowly tailored.  This difference in approach may inform a protester’s choice of forum when considering a corrective action challenge.

Non-Required Debriefings and Timeliness

Global Aerospace Corporation, B-414514, July 3, 2017:  In our GAO bid protest primer series, we recently discussed debriefings and some of the traps for the unwary they can cause with respect to filing deadlines.  As a general rule, in competitive procurements where a debriefing is required if timely requested, a protest is timely if filed within 10 days after the close of a timely requested and required debriefing – even if the basis of protest was known or should have been known earlier.  Not all debriefings are required, however.

In Global Aerospace, a participant in the Small Business Innovation Research (SBIR) program had completed Phase I of its SBIR project and had submitted a proposal for a Phase II follow-on project for a glider to explore Saturn’s giant moon, Titan.  NASA evaluated proposals and informed Global that its proposal had not been selected for award.  Global requested a debriefing, which the agency provided eight days later.  Global then filed a protest at the GAO – within 10 days after the close of its debriefing, but more than 10 days after it learned the identity of one of the awardees, which Global challenged as ineligible for award.  Analyzing the underlying SBIR statute, the GAO held that SBIR competitions are not procurements “conducted on the basis of competitive proposals,” but rather are procurements utilizing “other competitive procedures.”  Therefore, the GAO’s debriefing exception did not apply, and Global should have protested the awardee’s eligibility within 10 days of the award notice.  Therefore, the GAO dismissed this protest ground as untimely.

The protester fared better on its other grounds, alleging that the agency failed to evaluate proposals reasonably and in accordance with the terms of the solicitation.  In particular, the protester proposed a glider for exploring the moon Titan.  The agency evaluated those features, and also noted the glider’s potential for use on the planet Venus.  The evaluation board briefed the source selection authority (SSA) on the evaluations, and the SSA selected the awardees based upon the evaluators’ recommendations.  Because there was no documentation of the rationale for the recommendations to the SSA, the agency submitted a post hoc declaration in response to the protest, which expounded on the risks of the Global glider with respect to exploring Venus and did not discuss the proposal’s merits for exploration of Titan.  The declaration also appeared to indicate that Global’s proposal was downgraded for meeting certain Titan-specific requirements, which the agency thought might make it less suitable for Venus.  The GAO observed that the dearth of documentation made it appear that Global’s proposal was not selected because the SSA, based on the evaluators’ recommendation, mistakenly understood that the protester had proposed a glider to explore the planet Venus, when it fact the proposal was for exploration of the moon Titan.

Takeaways:  Some form of “competition” and submission of “proposals” does not necessarily mean a procurement has been conducted “on the basis of competitive proposals,” and thus your GAO protest may be due within 10 days after notice of award, rather than 10 days after the close of your debriefing.  Agencies should take away the lesson that, even in simplified procurements such as those under the SBIR program, it is important to adhere to the terms of the solicitation and appropriately document the basis for source-selection decisions.

Evaluation Changes After Corrective Action

Aurotech, Inc., B-413861.4, June 23, 2017:  This protest is noteworthy only for a lesson on evaluations conducted after corrective action.  The agency made award to Aurotech.  The other firm in the competitive range protested, and the agency took voluntary corrective action, which included the reopening of discussions, proposal revisions, and reevaluation.  The second time around, Aurotech lost the contract and filed its own protest. Among other things, the protester objected to the fact that certain of its ratings dropped in the re-evaluation, even though the corresponding sections of its proposal had not changed and there apparently was no documentation explaining the inconsistency.  Many might find that suspicious or unreasonable.  Under the GAO’s case law, however, “it is implicit that a reevaluation can result in different findings and conclusions. . . . The overriding concern for our review is not whether the final ratings are consistent with an earlier set of ratings, but whether they reasonably reflect the relative merit of quotations.”  The GAO observed that the protester failed to demonstrate that the final evaluation was inconsistent with the solicitation or otherwise unreasonable, and so rejected this and all of the protester’s other grounds.

Takeaways:  This decision underscores both the significant discretion evaluators enjoy and the unpredictability of agency corrective action.  As long as the last set of ratings, standing alone, is not completely irrational or undocumented, it generally does not matter if an earlier, pre-corrective action set of ratings was significantly different – the agency will win, and the GAO will find the protester to offer nothing but “mere disagreement” with the agency’s reasonable judgments.