November 9, 2020 - Protests & Litigation

October 2020 Bid Protest Roundup (Law360 Spotlight)

Protests and LitigationIn the latest installment of our bid protest spotlight (featured on Law360), we analyze three Government Accountability Office (GAO) decisions that provide important reminders for companies considering whether to protest a contract award. In Chronos Solutions, LLC, the GAO held it was unreasonable for an agency to construct its procurement without regard for the changed circumstances resulting from the ongoing COVID-19 pandemic. MicroTechnologies, LLC, on the other hand, highlights the significant deference the GAO affords an agency’s technical judgment. Finally, Silver Investments, LLC provides a cautionary tale about informal agency-level “protests” and timeliness for protests at an agency or the GAO.

Chronos Solutions, LLC

Chronos Solutions concerned a Department of Housing and Urban Development (HUD) solicitation for asset management services. HUD intended the procurement to facilitate the management and sale of foreclosed single-family homes with mortgages insured by the Federal Housing Administration (FHA). The solicitation contemplated the award of 11 indefinite delivery, indefinite quantity (IDIQ) contracts on a best-value basis.

Three asset management companies challenged the solicitation’s terms at the GAO, contending that HUD failed to consider major economic changes stemming from the ongoing COVID‑19 pandemic that would materially affect the procurement. In particular, the protesters noted that on March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which included a foreclosure moratorium for certain properties (including those FHA-insured properties covered by the solicitation). Moreover, on April 1, 2020, HUD announced mortgage payment relief options related to COVID-19. Yet, when HUD amended the solicitation on April 27, 2020, to make various unrelated changes, it did not acknowledge the COVID-19 pandemic, the forbearance mandated by the CARES Act, or the mortgage payment relief options HUD had just announced.

The three asset management companies alleged HUD’s solicitation did not accurately reflect the agency’s needs in light of the ongoing COVID-19 pandemic. The protestors asserted HUD had failed to recognize that, because of the CARES Act, the volume of foreclosures would be drastically lower than anticipated during the mandatory forbearance period, and then significantly higher than anticipated after the mandatory forbearance period expired.

The GAO sustained the protest, holding HUD had failed to reasonably consider the changed circumstances. The GAO noted there was sufficient evidence that HUD was aware of the potential impacts of COVID-19 on foreclosures, but nevertheless failed to update the solicitation accordingly. Although HUD argued an update to the solicitation reflecting more realistic foreclosure projections was not necessary because of the IDIQ structure of the contract, the GAO disagreed, concluding the solicitation’s minimum quantities must be “established in good faith and based upon the best available information.” Accordingly, the GAO recommended that HUD review relevant changes in the law, its policies, and market conditions, and determine an appropriate amendment to the solicitation.

Takeaways: This decision is an important reminder that procurements do not take place in a vacuum. Agencies cannot plan for a procurement with their eyes shut to ongoing developments that may affect the continued validity of stated requirements. Prospective offerors should keep track of developments that affect not only their ability to compete for a contract, but also to perform the contract effectively.

MicroTechnologies, LLC

MicroTechnologies, LLC involved a task order award to provide information technology support services to the United States Space Force. Disappointed offeror MicroTechnologies argued the Space Force improperly evaluated its proposal because the agency assessed a significant weakness for what the protester alleged were “minor inconsistencies” in its proposal. MicroTechnologies also alleged the agency based the significant weakness on unstated evaluation criteria and failed to assign warranted strengths. The GAO denied the protest.

First, the GAO rejected MicroTechnologies’ assertion that its proposal contained only “minor inconsistencies” and not material issues worthy of a significant weakness. In particular, the GAO found that the agency was justified in taking MicroTechnologies’ proposal at face value. The solicitation required that proposals contain both a staffing matrix and a labor category description document. MicroTechnologies submitted the required documents, but the staffing matrix contained information about security clearances for various positions that did not meet the solicitation’s requirements, while the labor category description document contained information that conflicted with the information in the staffing matrix. Noting the well-established rule that an offeror bears the risk of submitting a well-written proposal, the GAO found the inconsistencies in MicroTechnologies’ proposal – which MicroTechnologies did not dispute – reasonably raised concerns about whether MicroTechnologies’ proposal complied with the solicitation’s requirements.

Second, the GAO rejected MicroTechnologies’ argument that the Space Force had considered unstated evaluation criteria when assigning the significant weakness. Specifically, the GAO concluded there was no evidence that the agency considered information not contemplated by the solicitation to justify the significant weakness. Instead, the agency assigned the significant weakness because MicroTechnologies submitted a staffing matrix and a labor category description document that contained conflicting information that undermined the agency’s confidence in MicroTechnologies’ ability to comply with requirements.

Finally, the GAO denied MicroTechnologies’ argument that it should have been awarded additional strengths, concluding MicroTechnologies had offered no basis for the claimed strengths beyond unsupported, self-promoting statements.

Takeaways: The GAO’s decision in MicroTechnologies shows the high burden protesters face when challenging an agency’s technical judgments. Where an agency evaluates a proposal consistent with the solicitation’s requirements, the judgments that result generally will be difficult to upset without stark evidence of irrational decision-making. Often, the best way to demonstrate such irrational decision-making is to demonstrate disparate treatment. This is especially the case when asserting an agency failed to assign warranted strengths, as the GAO is loath to make such technical assessments on behalf of the agency.

Silver Investments, Inc.

Silver Investments, Inc. involved a solicitation for leasing office space to the Department of Agriculture (USDA). When it did not receive the award, Silver Investments, LLC filed a protest at the GAO alleging the awardee’s proposed facilities did not meet the solicitation’s requirements. The GAO, however, dismissed the protest as untimely.

Months prior to the award, the USDA informed Silver Investments that its proposed facilities did not meet the necessary requirements and therefore requested a revised proposal. The USDA warned Silver Investments that if it did not submit a revised proposal within the specified timeframe, the agency would assume Silver Investments was no longer pursuing the procurement. Silver Investments did not submit a revised proposal. Instead, it sent multiple emails to the agency asserting that its facilities, in fact, did meet requirements, contrary to the agency’s determination.

When the USDA notified Silver Investments that it had awarded the lease to another offeror, Silver Investments responded by contacting the agency via email and voicemail to indicate its belief that the awardee’s facilities did not meet requirements and threaten legal action. The agency responded to the emails and voicemails by informing Silver Investments that its correspondence did not comply with applicable bid protest regulations and advising Silver Investments of the available avenues for a bid protest, including an agency-level protest, a protest at the GAO, or a protest at the Court of Federal Claims. The agency also referred Silver Investments to FAR 33.103’s bid protest requirements. Despite the agency’s response, Silver Investments did not file a protest with the GAO until over 20 days after award.

In dismissing the protest as untimely, the GAO noted that the protester’s post-award emails and voicemails did not constitute an agency-level protest because neither the emails nor the voicemails clearly conveyed “a specific expression of dissatisfaction with the agency’s actions and a request for relief.” The GAO added that “a letter that merely expresses a suggestion, hope, or expectation,” or “highlights an aggrieved offeror’s intention to file a protest at some future date,” does not constitute an agency-level protest.

Moreover, the GAO held that even if the informal correspondence constituted an agency‑level protest, Silver Investments still would have been required to file a protest with the GAO within 10 days of the agency’s response, a deadline that had long passed. Thus, Silver Investments missed the deadline to file a timely protest at the GAO.

Takeaways: Time is of the essence when filing bid protests with an agency or at the GAO. Contractors therefore should know the process and rules for filing timely bid protests, especially when navigating the interplay between agency-level protests and subsequent protests at the GAO. Of course, even when a protest would be untimely at an agency or the GAO, the Court of Federal Claims – which does not have stringent timeliness requirements – remains a viable option, assuming it has jurisdiction.

*Michaela Thornton contributed to this blog post. Michaela is a full-time law student at The George Washington University Law School and a Law Clerk with Morrison & Foerster’s government contracts practice group.