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February 09, 2022 - Protests & Litigation

Unavailable Key Personnel: Differing Legal Standards at the Gao and Court of Federal Claims

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

An interesting new bid protest decision from the U.S. Court of Federal Claims articulates a rule for pre-award key personnel unavailability that is very different from the one employed by the U.S. Government Accountability Office (GAO). In Golden IT, LLC v. United States, Judge Matthew Solomson held that, absent specific requirements to the contrary in a solicitation, as long as an offeror had a reasonable expectation at the time of proposal submission that its proposed key personnel would be available to perform as proposed, any subsequent unavailability of a key person does not render the offeror’s proposal unacceptable or trigger an obligation to report the unavailability to the procuring agency.

This sensible rule, if other judges on the Court of Federal Claims opt to follow it, diverges sharply from the GAO’s rule that, if an offeror gains actual knowledge before award that a proposed key person is no longer available, the offeror must inform the procuring agency of that fact. Under the GAO’s precedents, once an offeror informs an agency of key personnel unavailability, the agency’s only options are to reject the proposal as unacceptable for failure to comply with a material solicitation requirement, or to (re)open discussions with all offerors in the competitive range and request revised proposals. This rule is particularly harsh (with regard to offerors and agencies alike) given the length of time procurements may take these days, with proposed key personnel being expected to remain available indefinitely. We have discussed the GAO’s much-criticized rule before (herehere, and here, for example).

BACKGROUND FACTS

Golden IT involved procurement of a blanket purchase agreement (BPA) and the first order for information technology support, procured under the Federal Supply Schedule using FAR Part 8 procedures. The request for quotations (RFQ) required offerors to propose named individuals for key personnel positions, including an information specialist/knowledge engineer position. The eventual awardee proposed one of its employees, “Mr. JH,” to fill this role. The RFQ did not require offerors to submit letters of commitment, and the awardee apparently did not request one from Mr. JH.

On May 20, 2021, the awardee submitted its quotation. Also in May 2021 (presumably sometime after quotation submission), Mr. JH quit his job and went to work for a different company. On September 22, 2021, the agency awarded the BPA and first order. It was undisputed that the awardee did not disclose Mr. JH’s unavailability to the agency before award.

After the BPA and order were awarded, the protester filed suit at the Court of Federal Claims, challenging the award on various bases. The protester apparently learned the identities of the awardee’s key personnel from the quotation contained in the administrative record, ran those names through LinkedIn, and in that way discovered that Mr. JH left the awardee’s employ sometime in May 2021. The protester moved to supplement the administrative record with
Mr. JH’s LinkedIn profile and alleged the awardee “misrepresented the availability of Mr. [JH] either when it submitted its quote or because it failed to notify the Agency of the material change to its quote when it had knowledge of Mr. [JH]’s unavailability.” The protester concluded that the awardee “should either have received a significant weakness for this issue or it should be ineligible for award.”

LEGAL ANALYSIS

First, the Court discussed the concept of misrepresentation. After discussing in some detail the precedents of the Court of Federal Claims, the Court of Appeals for the Federal Circuit, and the GAO, the Court summarized the rule by observing that “all of the parties agreed that an offeror may not knowingly misrepresent a material fact in a proposal for the purpose of winning a government contract.” To avoid a misrepresentation, “an offeror must have a reasonable basis for all facts and representations made in its proposal—and may not knowingly or recklessly include false statements of material fact.” The Court emphasized, however, that “a court’s assessment of an offeror’s knowledge of facts and representations . . . is made with respect to the point in time at which the offeror submitted its proposal.”

Applying that rule, the Court concluded the protester failed to meet its burden of proving a misrepresentation. Nothing in the administrative record (even supplemented with the LinkedIn profile) demonstrated that, as of the date of quotation submission, the awardee did not have a reasonable basis for submitting Mr. JH’s name as a key person. The Court rejected as speculative and unsupported by the record the protester’s argument that Mr. JH surely must have given notice of his forthcoming May 2021 departure before the awardee submitted its quotation on May 20, 2021. The Court also agreed with the Government that nothing in the record clearly established that Mr. JH was currently unavailable to return to his old employer to fill the key personnel position. The Court conceded that “[t]he documentation [the awardee] submitted to substantiate Mr. [JH]’s commitment to [the awardee] certainly raises questions regarding what [the awardee] knew about Mr. [JH]’s likely availability to serve as a key personnel and when [the awardee] knew it (i.e., prior to quote submission).”

Although the protester raised many good questions, the Court noted a protester “cannot sustain its claim on questions alone.” The judge observed this likely was a case where he would have granted a request for the protester to conduct limited discovery from the awardee in the form of interrogatories to probe the questions of what the awardee knew and when it knew it. But the protester did not request discovery, and the judge saw no reason to order it sua sponte. Thus, based upon the record before it, the Court found the protester failed to meet its burden of proving the awardee submitted a quotation with knowing or reckless material misrepresentations.

Second, the Court considered whether the awardee should have notified the agency of Mr. JH’s unavailability prior to award. The awardee plainly knew, no later than a few days after quotation submission, and months before award, that its proposed key person was no longer its employee (and presumably had no intention of returning). Under the GAO’s rules, this fact alone likely would have resulted in a sustained protest.

The Court acknowledged that offerors must have a reasonable basis for the representations they include in proposals. And it also acknowledged a “likely” obligation to notify an agency if a key person’s unavailability came to light between submission of an initial proposal and the due date for submitting proposal revisions. But the Court professed an inability to locate any legal basis for the GAO’s rule that offerors must advise agencies of material changes in proposed staffing when the changes are discovered only after the last (or only) proposal submission. The Court also endorsed the view of many in industry, government, and academia that the GAO’s disclosure and disqualification rule is without a legal basis and is “unfair.” The Court stated that it would “not conjure up a rule—and particularly not one untethered from a statu[t]e, regulation, or Federal Circuit decision—requiring offerors or quoters to routinely update the government when facts and circumstances change post-proposal or quote submission, during the course of the government’s evaluation period.”

With that legal point decided, and because the RFQ did not establish any further requirements, the Court concluded that “all that is necessary here is that [the awardee] had a reasonable belief, at the time of its quote, that [it] would deploy Mr. [JH] as key personnel upon contract award.” Because the protester failed to prove the awardee lacked that reasonable belief at that particular time, the Court denied this protest ground.

TAKEAWAYS
  • A word of caution: Until the Federal Circuit weighs in on this issue, Judge Solomson’s holding is not binding precedent for other judges on the Court of Federal Claims, nor is it binding on the GAO. And, even if the Federal Circuit were to endorse the Golden IT holding, it is not certain the GAO would change its rule. But the Golden IT decision is well-reasoned and persuasive authority, will be welcomed by many, and likely will be cited repeatedly in future protests.
  • In Golden IT, the procuring agency did not know of the key personnel’s unavailability until the protester’s LinkedIn sleuthing discovered the unavailability in the midst of a protest. But what if an agency discovers an unavailability before award—perhaps because an offeror follows the GAO rule and dutifully tells on itself? Under Golden IT, it would appear that the agency is not required to choose one of the two options the GAO provides: (i) eliminate the proposal or (ii) open discussions. But if the agency relies on Golden IT and awards to an offeror notwithstanding a known unavailability (and perhaps even awards the offeror a strength for the unavailable person), Golden IT likely will not protect the award from the GAO, which hears the vast majority of bid protests. Will we see agencies decline to follow GAO recommendations to terminate awards based upon the alternative authority provided by Golden IT? Or will they continue to follow the GAO rule and decline to follow Golden IT? And will Golden IT embolden offerors to stop making the pre-award disclosures the GAO insists are necessary? All of that remains to be seen.
  • A corollary to that: Suppose the GAO sustains a protest and recommends that an agency disqualify a proposal with unavailable key personnel or open discussions, and the agency goes the disqualification route. If the newly disqualified offeror then files its own protest with the Court of Federal Claims, challenging the corrective action and the rationality of the GAO’s recommendation, the agency faces serious litigation risk (at least it will if the protest is assigned to Judge Solomson). If the assigned judge thinks the basis of the GAO’s recommendation is a conjured-up rule without any legal justification, the judge is likely to find an agency’s compliance with the recommendation to be arbitrary and capricious. Awardees facing a sustained protest over key personnel unavailability should consider challenging any adverse corrective action at the Court if the Court has jurisdiction over the particular procurement.
  • What if the agency in Golden IT had disqualified the awardee’s quotation—either because it learned of the unavailability before the award or it determined to disqualify the quotation as voluntary corrective action after the protester uncovered the fact? Golden IT stands for the proposition that an offeror need not self-disclose after proposal submission, and the mere fact of unavailability does not compel disqualification. The decision does not address whether an agency has the discretion to disqualify in such circumstances—based upon the GAO’s position that, if named key personnel are material requirements of a solicitation, a proposal with unavailable key personnel is materially deficient and unawardable. Would that decision be an abuse of discretion, given that the GAO’s underlying position is, in the view of at least one judge of the Court, “untethered from a statu[t]e, regulation, or Federal Circuit decision”? Maybe.
  • The Golden IT decision carefully notes that this particular solicitation did not require any documentation, such as letters of commitment, assuring the continued availability of key personnel. Nor did it require offerors to disclose changes in availability after quotation submission (although it did require notice after award if, in the performance of an order, a key person had to be changed as part of contract administration). If a solicitation has more stringent terms than those in Golden IT, the outcome might be different, and disclosure or disqualification might be justified.
  • The Golden IT protester understandably was suspicious of a possible bait-and-switch where a proposed key person left within days of quotation submission. But, because nothing in the record established what exactly the awardee knew or should have known at the time of quotation submission, the protest could not meet its burden of proof for a misrepresentation claim. The judge noted it is very unlikely the administrative record for a procurement would ever contain such evidence and suggested that the protester could have moved to conduct limited discovery from the awardee (and intimated he likely would have granted such a motion). Protesters pursuing misrepresentation claims before the Court should keep that advice in mind.