December 6, 2019 - Protests & Litigation

November 2019 Bid Protest Roundup (Law360 Spotlight)

Protests and LitigationThis installment of our monthly bid protest Law360 spotlight examines four protest decisions released in November 2019.  In Inserso, GAO clarifies that a technical acceptability requirement is not equivalent to a lowest-price technically acceptable procedure.  In Chromalloy, the Court of Federal Claims decided that the technical requirement of an intellectual property license from a third party was acceptable and not an undue restriction on competition.  The protester in Becton failed to successfully challenge the use of Buy American and Trade Agreements Acts for small versus large businesses.  Finally, the GAO held in Blue Origin that a paired evaluation of proposals was ambiguous and violated the requirement for solicitations to provide sufficient information to allow offerors to fairly compete.

Inserso Corp., B-417791, B-417791.3, Nov. 4, 2019

In Inserso Corp., a protestor argued that a solicitation for information technology (IT) services violated the 2017 National Defense Authorization Act (NDAA) restriction on lowest price, technically acceptable (LPTA) awards.  According to protester, the Agency utilized LPTA criteria in its solicitation by failing to provide a tradeoff between price and technical factors.  The GAO denied the protest.

The 2017 NDAA restricts “to the maximum extent practicable” the use of LPTA procedures in the acquisition of IT services, personal protective equipment, or knowledge-based training.  The Air Force issued a request for quotations (RFQ) on July 9, 2019, to holders of a General Services Administration (GSA) 8(a) Streamlined Technology Acquisition Resources for Services (STARS) II contract, seeking to acquire information technology (IT) services and service-based solutions.  The RFQ sought quotations to provide personnel, services, and technical and management support to operate and maintain servers and computer systems at Air Force Installations.  Quotations were to be evaluated first on price, ranked from lowest to highest, and then screened for technical acceptability under the two subfactors: management approach and staffing and retention plan.  Finally, the Agency would evaluate past performance for recency, relevancy, and quality, and compare past performance to price.  The Agency contemplated awarding a one-year base firm fixed-price contract with three one-year option periods to the offeror whose quote was responsive, technically acceptable, and considered to be the best value based on a price/past performance tradeoff.  Quotations were due July 29, 2019 and protester filed its protest on July 25, 2019.

The GAO found the use of price with a technical acceptability determination did not violate the 2017 NDAA’s restriction on LPTAs in this case because the Air Force did not contemplate award the order on that basis.  Rather, the agency intended to award on the basis of a best-value tradeoff between price and past performance.  In particular, the GAO reasoned that the statute did not specifically preclude past performance as a technical tradeoff factor.  Additionally, FAR 15.101-2 expressly states LPTAs may not use past performance as part of a comparative assessment.

Takeaways:

Although LPTAs remain unpopular for IT, personal protective equipment, or knowledge-based training, this does not preclude solicitations with go/no-go technical acceptability factors.  As long as there is a tradeoff between price and non-price factors, the solicitation will not be viewed as an LPTA.

Chromalloy San Diego v. United States, No. 19-974C (Fed. Cl., Nov. 8, 2019)

In Chromalloy, the protester alleged three counts of agency misconduct in violation of CICA and FASA.  Chief Judge Sweeney found that national security concerns would have prohibited injunctive relief even had the protester succeeded on the merits.

After GE successfully persuaded the Government that the Government could not provide technical data to any offeror without the required license, the Navy revised its solicitation for overhaul services of the LM2500 gas turbine engine to require the offeror to possess a current GE Level IV license in order to be technically acceptable.  Chromalloy unsuccessfully challenged the revised solicitation at the Government Accountability Office.  Chromalloy then protested the solicitation at the Court of Federal Claims, claiming the solicitation was unduly restrictive because it required independent access to GE technical manuals, GE manufactured special tools, and GE-certified spare parts.  GE was the original equipment manufacturer (OEM) of the engine at issue.  Chromalloy had previously serviced the same engines for the Navy under another contract.  At the time of the solicitation, however, market research showed only three potential offerors—of which Chromalloy was not one—met the key requirement of being a GE Level IV licensed commercial depot.

Chromalloy challenged access to the technical manuals on two grounds.  First, the requirement exceeded the government’s “minimum needs” in doing so because adequate research would have revealed the engines were developed with public funds, granting the Navy sufficient rights to allow disclosure of the manuals to its contractors. Second, requiring independent access was a non-competitive procedure that the government failed to properly justify.

The Court found the Navy had conducted more than a de minimis investigation into its data rights, and therefore could reasonably require offerors to demonstrate either GE Level IV licensure or independent access to the technical manuals.  On the second point, the Court held that independent access was a technical requirement, not a noncompetitive procedure, relying on the Federal Circuit’s distinction in National Government Services, Inc, 923 F.3d 977 (Fed Cir. 2019).  In National Government Services, the procuring agency implemented workload caps, limiting the amount of contract responsibility any one contractor could win, as evaluation criteria.  The Court held that a solicitation requirement is not noncompetitive simply because it has the effect of excluding some offerors.  The workload caps were based on the agency’s attempt to divvy up contracts in a way to ensure business continuity and a competitive market and were unobjectionable.  Similarly, the Navy’s independent access requirement for GE technical data is a technical capability requirement such that CICA restrictions are inapplicable.

Chromalloy also contended that the GE special tool requirement violated the Competition in Contracting Act (CICA) as being unduly restrictive of competition because the Federal Aviation Administration permitted the use of equivalent tools for maintaining aircraft engines, and the Navy had previously procured similar services without such a requirement.  The Court held this argument abandoned, because in its motion on the record, the protestor had switched to arguing that FAR provision 11.105 prohibited requiring brand-name products.  On that alternative argument, the Court found it fatal to the argument that FAR 11.105 applies only to the acquisition of end products, not the products used to perform services.

When Chromalloy next argued that the requirement for special tools was inconsistent with standard commercial practices in violation of the Federal Acquisition Streamlining Act of 1994 (FASA), the Court held it dispositive that Chromalloy had failed to satisfy the protester’s burden of establishing the existence of such a customary commercial practice.  Because Chromalloy conceded that it did not own, or have access to certain required, GE-manufactured tools, the Court found Chromalloy’s failure to prove the special tool requirement violated CICA or FASA was independently fatal to Chromalloy’s cause.  Furthermore, because Chromalloy could not meet the requirements of the solicitation, its challenge of the GE-certified spare parts requirement was moot.

Finally, the Court pointed out that even had Chromalloy succeeded on the merits of its arguments, the injunctive relief it sought was beyond the Court’s power to grant, because national security required timely maintenance to support critical missions such as Anti-Air Warfare, Undersea Warfare, Naval Surface Fire Support, and Surface Warfare, on account of the Navy’s “entire fleet” having installed the LM2500 engines.

Takeaways:

This case demonstrates the importance of knowing and protecting intellectual property rights, because it was on the basis of these technical data rights that the case ultimately pivoted.  GE came down swift and hard when it heard the solicitation considered awarding the maintenance contract to an unlicensed offeror, reminding the Navy of contractual commitments to protect GE’s trade secrets, the disclosure of which would “irreparably undermine” the “mutually advantageous relationship” existing between the Navy and GE.

Additionally, protesters should ensure that they are following up on arguments from their claims to their motions on the administrative record.  Failure to do so will result in an argument being deemed abandoned.

Becton, Dickinson and Company, B-417854, Nov. 15, 2019

Despite a creative argument, Becton, Dickinson and Company (BD) had its protest against the Department of Veterans Affairs (VA) dismissed by the GAO for failing to state a claim when it argued that the Trade Agreements Act (TAA) rather than the Buy American Act (BAA) should be applied to small businesses when a non-manufacturer rule (NMR) wavier is issued.

The Department of Veterans Affairs (VA), seeking to supply patient exam room instruments and supplies, issued a request for quotations (RFQ) to establish a blanket purchase agreement (BPA).  Quotes were to be evaluated through a tiered method, considering first Service-Disabled Veteran-Owned Small Businesses (SDVOSB), then Veteran-Owned Small Businesses (VOSB), other small business concerns (SBC), and finally large businesses. Given the tiered evaluation method, not all clauses applied to every offeror.  The solicitation included clauses for both the BAA (which applied only to small businesses) and the TAA (which applied only to large businesses).  Furthermore, an NMR waiver had been granted, allowing small businesses to supply the products of any size business without regard to the place of manufacture.

The protester argued that unequal treatment results if the BAA is applied to small businesses and the TAA to large businesses when an NMR waiver has been granted, because the BAA then allows SBCs to propose products from non-TAA countries such as China, whereas large businesses are restricted to domestic or TAA designated-country end products.  The GAO dismissed the complaint, finding the protester alleged facts that, even if contradicted, failed to show the VA violated applicable statutes or regulations because the VA was simply following the FAR, which explicitly states that the BAA applies to SBCs and the TAA does not.

Takeaway:

Given that the GAO’s jurisdiction is limited to ensuring that the statutory requirements for full and open competition are met, the GAO is probably the wrong tribunal before which to bring a policy challenge.  In hindsight, the protestors here may feel their challenge was doomed from the start.  It remains important at the outset of a legal challenge to consider the jurisdiction of the tribunal before which one seeks to bring one’s complaint.

Blue Origin Florida, LLC, B-417839, November 18, 2019

The GAO sustained a pre-award protest challenging a methodology of comparing two independently developed proposals against each other to determine best value, rather than each proposal evaluated on its own merits against evaluation criteria.  The protester’s other grounds challenging the solicitation, for undue restriction of competition, ambiguous price evaluation methodology, and provisions contrary to commercial practice, were denied.

The Department of the Air Force issued a request for proposals for the National Security Space Launch (NSSL) Phase 2 Launch Service Procurement, which sought to procure commercial item launch services.  The NSSL program involves a multi-phase strategy.  Phase 1 involved the sole source acquisition of rockets to fulfill launch requirements while NSSL develops, and other transaction agreements issued to awardees to develop and test rocket propulsion systems, launch systems, etc.  Phase II of the program contemplates awarding two firm fixed-price requirements contracts for launch services with annual ordering periods from 2020 to 2024.  The agency did not propose a typical source selection, where the agency would rank proposals and conduct individual tradeoff determinations for the first and second contract awards.  Instead, the solicitation stated that award would be made to the two offerors that, “when combined, represent the overall best value to the Government.”  In other words, the agency did not intend to conduct tradeoffs based on individual proposals, but based on paired proposals.  In the case of four proposals received from offerors A, B, C, and D, the Air Force would then pair each combination up and evaluate them: AB, AC, AD, BC, BD, and CD.  The contracting officer explained that this allows hypothetical leeway, to provide for instances where possibly the two highest individually ranked proposals might not be the best pair in combination.

The protester challenged the “when combined” best-value methodology as ambiguous and divorced from the solicitation’s evaluation criteria.  A competitor cannot intelligently compete for award with no insight into the attributes of another independently submitted proposal and how those attributes may align with the competitor’s.  The Air Force argued that the solicitation was not ambiguous and adequately specifies evaluation factors and weighting.  The “when combined” approach is merely designed to highlight the agency’s discretion in determining which offerors are best value.  The GAO disagreed with the agency.

A solicitation must contain sufficient information to allow offerors to compete intelligently and on equal terms.  The GAO held that the solicitation under this procurement failed to provide an intelligible and common basis for award.  The agency “expressly anticipates not making the source selection decisions based on the evaluation of individual proposals as evaluated against the RFP’s specified evaluation criteria, but rather anticipates evaluating pairings of proposals using the undefined criterion of whether two individually developed and submitted proposals are the most complementary of one another.”  The contracting officer’s example of the top two proposals not being the best value “when combined” demonstrates that the enumerated evaluation criteria or relative weights may not be the basis for the selection decision.

Takeaway:

Always read solicitations carefully to determine whether there are any ambiguities.  Ambiguities should first be raised in the question and answer (Q&A) portion of the procurement process.  If that fails, pre-award protests must be filed with GAO prior to the deadline for receipt of proposals.

*Markus Speidel is a Law Clerk in our Washington, D.C. office and not admitted to the bar.