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January 07, 2019 - Protests & Litigation

2018 Protest Roundup

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

In this post, we not only provide our regular recap of key protest decisions from December 2018, but also discuss some of the key decisions from 2018 as well as a few take-aways from the GAO’s Fiscal Year 2018 report on its bid protest decisions.

GAO Report on Fiscal Year 2018

The GAO’s busy workload continued in Fiscal Year 2018.  According to GAO’s Bid Protest Annual Report to Congress for Fiscal Year 2018, GAO received slightly more protests in fiscal year 2018 (“FY18”) than 2017.  The GAO received 2,607 cases in FY18: 2,474 protests, 55 cost claims, and 78 requests for reconsideration.  GAO closed 2,642 cases during FY18, 2,505 protests, 53 cost claims, and 84 requests for reconsideration.  Of the 2,642 cases closed, 356 were attributable to GAO’s bid protest task order jurisdiction.

Out of the 2642 closed cases, GAO produced 622 merits decisions, 15 percent of which were sustained.  Although the 15 percent sustain rate was a slight decrease from FY 2017, it remained consistent with most of the part years’ rates (with the exception of an anomalous 2016).  The effectiveness rate, which is the percentage of protests that result in the protester obtaining some form of relief from the agency (and is, therefore, more telling) remained largely flat from prior years at 44 percent (which was down slightly from the past two years).

One additional trend of note was that the use of hearings by the GAO in bid protests continued to decline.  In FY2018, the GAO conducted only five hearings, which reflected 0.51% of fully developed cases (i.e., those protests in which the GAO receives an agency report, whether or not a merits decision is issued).  This was down once again from the 17 cases in FY2017 (1.7%) and the 42 cases (4.7%) in FY 2014, leading one to wonder if hearings will soon be a thing of the past.

December Cases

Safeguard Base Operations, LLC, B-415588.6, B-415588.7, Dec. 14, 2018

In Safeguard Base Operations, LLC, B-415588.6, Dec. 14, 2018, the protester alleged that the agency unreasonably rejected its proposal as ineligible for award because it failed to comply with the solicitation’s requirements for the price volume.  Safeguard submitted a proposal in response to a request for proposals (“RFP”) for dormitory management services issued by the Department of Homeland Security.  The contract was awarded on a best-value tradeoff basis to another offeror.  In its protest, Safeguard alleged that “the agency unreasonably found its proposal to be noncompliant with the solicitation requirements because the solicitation did not advise that price proposals would be rejected for failing to include government-provided amounts for the reimbursable CLINs.”

When reviewing a protest challenging the rejection of a proposal, GAO considers whether the agency’s judgment was reasonable and in accordance with the solicitation criteria.  Here, the price schedule identified two reimbursable contract-line-item-numbers (“CLINs”) for service work requests and equipment replacement, and advised offerors not to submit pricing information for these items.  Instead, the solicitation referenced a government-provided “not-to-exceed” amount and required offerors to include that amount on their price schedules.  However, the solicitation did not provide any amounts for these CLINs.  The agency later amended the solicitation and provided a table with amounts for each of the CLINs to be included in offerors’ price schedules.  However, Safeguard’s price proposal omitted the government‑provided amounts from its price schedule, and left the abovementioned CLINs blank.

The GAO denied the protest because the evaluation criteria warned offerors that their prices would be evaluated to determine whether they were “complete” and in compliance with the price volume instructions in the solicitation.  Furthermore, the GAO concluded that the agency reasonably rejected the protester’s proposal because it did not comply with the proposal preparation instructions.

Takeaway: When an offeror fails to provide required information, they run the risk that their proposal will be rejected by the agency as ineligible for award.  Here, the protester’s mistake appears to be a result of a failure to review the amendment to the solicitation thoroughly.  Contractors must carefully review the solicitation, as well as any amendments to the solicitation, to ensure that they follow proposal preparation instructions to a T.

Seventh Dimension, LLC, B-415311.4, Nov. 29, 2018

Seventh Dimension, LLC, submitted a proposal in response to an RFP for instruction and instructional support services issued by the Department of the Army.  When Seventh Dimension was excluded from the competitive range, it filed a protest with the GAO challenging the Army’s evaluation of its proposal and the competitive range determination.  The Army took corrective action and the GAO dismissed Seventh Dimension’s protest as academic.  During the corrective action, the agency discovered that one of the evaluators was married to an employee of another offeror, SOLKAO, Inc.  To resolve this potential conflict, the agency selected new evaluators to re-evaluate technical proposals.  The contract was then awarded to SOLKOA.  In Seventh Dimension, LLC, B-415311.4, Nov. 29, 2018, Seventh Dimension challenged the Army’s resolution of the potential organizational conflict of interest (“OCI”) and the Army’s evaluation of its key personnel resumes.

First, Seventh Dimension argued that the awardee, SOLKAO, Inc., should have been excluded from the competition because the evaluator’s spouse’s employment with SOLKOA provided the awardee with a competitive advantage.  The GAO denied the protest because the agency adequately investigated the potential OCI and reasonably mitigated it by selecting new evaluators to re-evaluate technical proposals.

Second, Seventh Dimension challenged the Army’s evaluation of its key personnel.  The GAO found that the evaluations assigned Seventh Dimension the challenged deficiency because Seventh Dimension’s program manager’s resume failed to demonstrate a minimum of ten years of documented program management experience.  Similarly, Seventh Dimension’s deputy program manager’s resume failed to demonstrate a minimum of seven years of successful management experience.  The RFP provided specific criteria for each key personnel position.  The GAO concluded that the agency evaluated key personnel resumes in accordance with the RFP in finding that protester did not demonstrate the required years of experience. The GAO, therefore, denied the protest.

Takeaway: Agencies have significant discretion in selecting methods for addressing potential OCIs.  The FAR provides contracting officers discretion to consider the particular facts of a situation and determine the appropriate means for resolving any OCIs.  So long as the Contracting Officer performs this analysis in a reasonable manner, the GAO is highly unlikely to upset its result.  Here, the GAO found that the agency took sufficient steps to resolve the potential OCIs, so the protester’s challenge was dismissed.

Integral Consulting Services, Inc., v. United States, No. 18-977C, Dec. 13, 2018 and Telesis Corp. v. United States, No. 18-1119C, Dec. 18, 2018

In Integral Consulting Services, Inc., v. United States, No. 18-977C, Dec. 13, 2018, the plaintiff, Integral Consulting Services, Inc., alleged that its proposal was improperly evaluated because the General Services Administration (“GSA”) deducted points that Integral claimed for possessing relevant experience.  The GSA required offerors to submit a Document Verification and Self Scoring Worksheet.  In the Scoring Worksheet, offerors were required to claim points for meeting specific criteria identified in the solicitation.  Offerors then had to provide the agency with supporting documentation showing that they met the relevant criteria entitling them to the claimed points.  The COFC granted the defendant’s motion for judgment on the administrative record because the GSA acted in accordance with the terms of the solicitation when it concluded that Integral did not validate its relevant experience and, therefore, deducted the associated points.

Similarly, in Telesis Corp. v. United States, No. 18-1119C, Dec. 18, 2018, the protester alleged that the GSA improperly evaluated its proposal by deducting points Telesis claimed for possessing relevant experience without first seeking clarification regarding the missing information.  Specifically, Telesis argued that its failure to include substantiating email messages in its proposal to support the points it claimed on its Scoring Worksheet was an apparent clerical error and that the GSA abused its discretion by not seeking clarification regarding the missing emails.  The COFC granted the defendant’s motion for judgment on the administrative record because the omission was not an obvious error and the GSA’s decision to conduct (or not to conduct) exchanges is within its discretion.

Takeaway: Because procurement officials are granted broad discretion, the court’s review of a procuring agency’s decision is highly deferential.  In both of these cases, the agency required specific documentation to support the points claimed by the offerors in their proposals.  The agency reasonably exercised its discretion in deducting points that the offerors claimed without sufficient documentation.

Year in Review

The past year included a number of interesting protests with important lessons to be learned for future years including on Other Transaction Authority, corrective action, data rights, and timeliness.

Oracle America, Inc., B-416061, May 31, 2018

In Oracle America, Inc., the GAO examined the DoD’s unique authority to enter into other transaction agreements (“OTAs”) for prototype projects and the DoD’s ability to provide for follow-on production work in the prototype OTA itself.  Specifically, the GAO considered whether the Army properly awarded, without competition, a $950 million production OTA for cloud migration and operation services.  The GAO sustained the protest concluding that the Army’s award was not proper for two reasons.  First, the Army had failed to “provide for” the follow-on award in the initial OTA.  Second, prototyping under the initial OTA was not yet complete.  Explicitly providing for the follow-on award in the prototype OTA and successfully completing the prototype prior to production are both statutory prerequisites to DoD’s follow-on production authority.  The GAO determined that the prototype OTA at issue in Oracle did not “provide for” follow-on production work because the language of the prototype OTA itself did not contain a provision contemplating a follow-on award.  In other words, the magic language expressly providing for follow-on production work was missing, and this omission was fatal.  More information about the Oracle case is available in Soothsaying Oracle: What GAO’s Decision Concerning DoD Prototype OTAs Means for DoD and Beyond.  Relatedly, in Blade Strategies, LLC, B-416752, 2018 WL 4584111 (Comp. Gen. Sept. 24, 2018), GAO clarified its jurisdiction and standard of review for protests of OTAs. We discussed that GAO decision in GAO Sharpening its Blade [Strategies] on OTA Review.

Dell Federal Systems, L.P., et al. v. United States, No. 2017-2516 et al. (Fed. Cir. Oct. 5, 2018)

In Dell Federal Systems, L.P., the Federal Circuit reversed a COFC decision and held that agencies are not required to “narrowly tailor” corrective action.  Instead, agencies need only to meet a rational basis threshold for their corrective actions.

In this case, several offerors protested an award decision made by the Army at the GAO.  The Army subsequently decided to take corrective action by reopening the procurement, conducting additional discussions, and making a new award decision.  Two of the original awardees appealed this corrective action decision to the COFC.  The COFC found that even though there were procurement defects that required correction, the agency’s proposed corrective action was overbroad.  The COFC held that corrective action must narrowly target the defects it is trying to remedy.

The Appellants appealed the Federal Circuit and argued that the COFC applied the wrong standard in considering whether the corrective action was narrowly targeted and the corrective action was “rationally related to the procurement defect.”  The Federal Circuit agreed with Appellants that the COFC had applied an incorrect heightened standard beyond the Administrative Procedure Act’s (“APA’s”) rational basis review.  The Federal Circuit’s decision reinstituted the great deference of the APA rational basis rule.  This decision will likely make it more difficult to challenge the breadth of agency corrective action going forward.  More information about Dell Federal Systems is available in our October 2018 Bid Protest Roundup.

Sikorsky Aircraft Corp., B-416027, B-416027.2, May 22, 2018

Sikorsky Aircraft Corp. concerned a protest of the Air Force’s solicitation to replace the UH-1N helicopter.  The GAO’s decision denying in part and dismissing in part Sikorsky’s protest had significant data rights ramifications, as it ultimately endorsed a provision requiring broad delivery of both technical data and software necessary for operations, maintenance, installation, and training activities (defined in the solicitation as “OMIT Data”).

The unique posture of this case also raised all too familiar timeliness issues.  As mentioned above, the protest primarily concerned the clauses in the Air Force’s solicitation that required offerors to provide deliverables and grant rights in certain technical data and software.  Normally, offerors must challenge solicitation terms before submitting initial proposals.  However, Sikorsky had no basis to know the agency’s interpretation of the solicitation was inconsistent with the protesters until after receiving evaluation notices during discussions.  As a result, Sikorsky had to decide whether to file before initial proposals were due and risk being dismissed as premature, or wait and risk being dismissed as untimely.  More on the GAO’s discussion of data rights is available in our article: Sikorsky: What the GAO Said and Did Not Say About Soliciting Data Rights.  The GAO’s discussion of pre-award protest timeliness in Sikorsky is also discussed in our May 2018 Bid Protest Roundup.

Decisions Highlighting the Continued Importance of Timeliness

Finally, we frequently discuss the various timeliness traps that can undermine bid protests.  In Global Dynamics, LLC v. United States, 137 Fed. Cl. 105 (2018), the Government raised an unusual defense, a laches defense in a pre-award protest, and the COFC upheld the defense.  The case arises from a long string of drawn out protests at the GAO.  The decision makes reference to two significant COFC bid protest timeliness issues: (1) the waiver doctrine set forth in Blue & Gold Fleet, L.P. and (2) the equitable doctrine of laches.  The COFC has used Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007) and its progeny to hold that, when a party is aware of a solicitation impropriety, that party must raise the issue “prior to the close of the bidding process,” or else it waives its ability to protest the issue after award.  The COFC has used the equitable doctrine of laches to dispense with late protests when the defendant shows both (1) an unreasonable and unexcused delay by the plaintiff and (2) a resulting economic or defense prejudice to the defendant.

The Government argued that the protester’s challenge to the rationality of the GAO findings and recommendation of corrective action was prejudicially delayed and therefore barred by laches.  The protester countered that, because the court treats corrective action generally as a pre-award issue, and revised proposals were not requested, this protest ground was timely under Blue & Gold because it was filed prior to the new award decision.  The court rejected the protester’s suggestion that Blue & Gold established the only timeliness rule for pre-award protests.  The court found that the delay between the previous GAO decision (and beginning of corrective action) and the filing of the protest a year later was an unreasonable and unexcused delay. The Court found that the protester’s delay resulted in economic prejudice because the Agency incurred the costs of reevaluating the plaintiff’s technical proposal and past performance as recommended by the GAO.  Therefore, the court barred the plaintiff’s challenge to the GAO’s corrective-action recommendation under the doctrine of laches. While this case presented “unique circumstances” and is unlikely to significantly alter protest timeliness rules, it adds a new timeliness trap for protesters to be aware of.

Untimeliness has always been a common theme in bid protest decisions, particularly at the GAO, and 2018 was no exception.  In Savannah River Technology & Remediation, LLC; Fluor Westinghouse Liquid Waste Services, LLC, B-415637 et al., Feb. 8, 2018, the GAO found a number of the protesters’ arguments to be untimely.  First, GAO considered whether an offeror should file a defensive pre-award protest when notified during discussions of a solicitation interpretation or evaluation methodology with which it disagrees.  The takeaway from this decision is where an agency provides information during discussions concerning how it interprets the solicitation or how it intends to evaluate proposals with which an offeror disagrees, the offeror should consider filing a pre-award protest to resolve the issue.  Otherwise, the offeror risks being found untimely.

Second, the decision reminds offerors that the required dates for supplemental protests and for comments will not always align.  The agency in Savannah River Technology provided early document-production to both protesters, meaning that the documents from the administrative record were produced prior to the agency actually submitting its Agency Report.  As a result, the 10-day deadline for the supplemental protest grounds learned from those documents was set based upon when the documents were first produced, rather than from the time of the submission of the Agency Report (which triggers the deadline for the Comments on the Agency Report).  While both protesters apparently submitted timely supplemental protests in response to the early document-production, the protesters later expanded on these arguments in their Comments by raising new challenges to the agency’s evaluation for the first time.  The GAO explained that a disappointed offeror may not file a broad initial protest that is later supplemented with specific examples unless each of those examples independently satisfies the timeliness requirements.

The GAO is particularly strict about the timeliness of protests and this has not changed with the introduction of the Electronic Protest Docketing System (“EPDS”).  For instance, in CWIS, LLC, B-416544, July 12, 2018, the GAO found that protesters must file by 5:30 p.m. through EPDS to be timely.  In this case, counsel for CWIS attempted to file their protest using EPDS at 5:29 p.m., Eastern Time (one minute before the closing time for submission of protests that day before the weekend).  The filer’s attempt was unsuccessful.  At 5:31 p.m., counsel for CWIS contacted GAO by email to advise that the attempt to file the protest using EPDS had been unsuccessful.  At 5:46 p.m., counsel submitted the protest by email to the GAO protest inbox. The GAO concluded that because CWIS did not submit its protest until 5:46 p.m., that did not constitute a “filing” until the following business day.  The takeaway from this case is clear: plan ahead! It can be time consuming to create a user account in EPDS, submit all required information, and pay the $350 filing fee. Therefore, filers should avoid waiting until the last minute to file.  More on GAO’s decision in CWIS is available in our July 2018 Bid Protest Roundup. 

*Victoria Dalcourt Angle is a member of our Government Contracts practice in our Washington, D.C. office and not admitted to the bar.