This month’s bid protest roundup begins with two decisions, one from the Small Business Administration’s Office of Hearings and Appeals (OHA) and another from the Government Accountability Office (GAO), highlighting potential pitfalls that await offerors that undergo a merger, acquisition, or other corporate transaction while a proposal is pending. The first, Odyssey Systems Consulting Group, examines the effect a stock acquisition may have on pending task order proposals under multiple-award contract vehicles. The second, Vertex Aerospace, reiterates the importance of notifying customers when undergoing such transactions and explaining their effect (or lack thereof) on the offeror’s ability to perform as proposed. Our third spotlighted decision, again from GAO, offers a warning to bidders that social media and other public sources, in this case LinkedIn, can and will be used against them if providing information contradicting representations in their proposals.
Size Appeal of Odyssey Systems Consulting Group, Ltd., SBA No. SIZ-6135
It’s no secret that private equity and M&A activity in the United States has boomed in recent years, and the federal sector is no exception. Acquiring or selling a government contractor presents a slew of unique risks and considerations, a list that only grows if the company is a small business. For example, how will the acquisition, and likely resulting change in size status, affect the company’s existing small business set-aside contracts, often its most valuable asset? Will the company remain eligible for future task orders under its long-term multiple-award contracting vehicles? What about pending task order proposals under those vehicles?
In Odyssey, OHA examined these questions specifically with regard to the General Services Administration (GSA) One Acquisition Solution for Integrated Services (OASIS) small business contracts. Many readers will be familiar with the OASIS contracts, which comprise a family of several Unrestricted, Small Business, and 8(a) governmentwide acquisition contracts (GWACs), grouped into “pools,” that allow federal agencies to award task orders for a variety of professional services among hundreds of pre-vetted contract holders. Access to task order competitions on an OASIS Small Business pool can be quite valuable. After an acquisition, however, if an OASIS Small Business contractor becomes other than small for the relevant size standard, it is placed in “Dormant” status: it may continue to perform its existing task orders, but it is not eligible for any future task order awards. It is less clear from the OASIS contract terms how an acquisition affects pending task order proposals, leading us to Odyssey.
The protester in Odyssey argued that an awardee of two OASIS Small Business Pool 5b task orders was actually ineligible for award because, a few weeks after submitting its proposal, the awardee was acquired by a private equity-backed large business. The protester specifically pointed to the OASIS contract terms, which require a contractor to recertify its size status within 30 days of a change in control, and SBA’s regulations, which require recertification of size status prior to award for pending offers. The protester contended that, by creating an obligation for the acquired company to recertify its size status, these provisions also required the acquired company to remain small throughout proposal evaluation to be eligible for award. OHA disagreed.
First, OHA cited SBA’s longstanding rule that size is determined upon initial proposal submission for the underlying contract, and a company that is small for purposes of a long-term contract remains small for all task orders thereunder, unless a contracting officer, in his or her discretion, expressly requests recertification of size for an individual order. See 13 C.F.R.
§§ 121.404(a)(1)(i)(B), (g). By the same token, SBA’s regulations allow for size protests challenging such long-term contracts only in three limited instances: when the long-term contract is initially awarded, when an option is exercised, or where a contracting officer has specifically required recertification in connection with an order. 13 C.F.R. § 121.1004(a)(3). Because the protester in Odyssey was unable to convince OHA that any recertification had been required for the two task orders at issue, its protest was properly dismissed as untimely.
OHA’s decision in Odyssey is significant for its examination of the OASIS contract terms and refusal to read into them a universal task order recertification requirement whenever an offeror undergoes a merger or an acquisition. As OHA notes in its decision, the task order solicitations at issue did not contain any instruction for offerors to recertify or otherwise represent or re-represent size. Although the OASIS contracts include a clause requiring recertification in the event of a merger – which in turn largely implements the requirements of FAR 52.219-28, Post-Award Small Business Program Rerepresentation, standard in most federal contracts – that clause says nothing about recertification in connection with any individual orders or continuing eligibility for issuance of future orders. OHA reminded the protester that it has repeatedly declined to find such references to standard FAR clauses to constitute a request for recertification.
The decision is also significant in its discussion of SBA’s newest recertification regulations in 13 C.F.R. § 121.404(g)(2)(iii), which state that if a merger, sale, or acquisition (including any agreement in principle to carry out the same) occurs within 180 days of a small business set-aside proposal submission, an offeror that can no longer recertify as small will be ineligible for award. The protester in Odyssey argued this new regulation effected its own recertification requirement and precluded the acquired firm from award, given the acquisition had occurred just weeks after submission of the task order proposals. Both SBA and the awardee argued to the contrary, highlighting that SBA’s regulations at 13 C.F.R. § 121.404(g)(4) make an express exception to this new rule for small business set-aside multiple-award contracts like the OASIS Small Business contracts. OHA agreed with SBA and the awardee, finding the most reasonable interpretation of SBA’s regulations to be that the consequence of a merger or acquisition in such cases is not that the contractor becomes ineligible for award of pending or future task orders, but rather merely that the procuring agency cannot claim credit for those orders towards its small business contracting goals.
Takeaways: If you’ve recently been acquired, providing timely notice and recertification of your size status to your government customers is critical. Stakes are particularly high when it comes to pending proposals, and it can be tempting to simply wait for an award decision before providing notice, for fear of rocking the boat. But SBA’s regulations require notice prior to award, and most (if not all) major contract vehicles require notice within 30 days of the acquisition. In many cases, however, a recertifying company will remain eligible for award, as demonstrated in Odyssey. As other cases have shown, it is much easier to protect an award if notice is provided.
Vertex Aerospace, LLC, B-420073; B-420073.2, Nov. 23, 2021, 2021 WL 6337900
The benefits of providing notice after a corporate transaction are underscored again in our second bid protest this month, Vertex Aerospace. At issue specifically in this protest was Amentum Services’ acquisition of DynCorp International and subsequent corporate restructuring, and whether the U.S. Air Force adequately considered how those events would affect DynCorp’s ability to perform under a pending task order proposal for aircraft maintenance at Vance Air Force Base. GAO sustained the protest because the agency was unable to point to anything in the contemporaneous evaluation record to show that it had undertaken that analysis, and even the agency’s belated post-award consideration was legally inadequate.
GAO’s decision is particularly interesting in light of its previous denial of a similar protest involving the same corporate transaction, PAE Aviation and Technical Services, LLC, B-417704.7; B-417704.8, June 8, 2021, 2021 CPD ¶ 293. The diverging outcomes turn on timing and facts specific to each procurement. Amentum acquired DynCorp through a stock purchase in November 2020 and, through a series of internal reorganizations, became DynCorp’s immediate parent company, of which DynCorp remained a separate, wholly owned subsidiary. At the time of this transaction and internal reorganization, the procurement at issue in PAE was ongoing; the proposals at issue in Vertex, however, were not submitted until February 2021. More importantly, in March 2021, DynCorp submitted a request to the Defense Contract Management Agency (DCMA) to novate numerous contracts to Amentum, including the multiple-award contract underlying the task order proposal at issue in Vertex. At that time, award had already been made and protest filed in PAE, while the Air Force was still evaluating proposals in Vertex. DynCorp’s proposal failed to notify the Air Force of this internal restructuring by novation, and the responsible contracting officer apparently did not learn of the novation until directed by DCMA in March 2021 to modify the underlying contract to incorporate the parties’ finalized novation agreement.
In its direction, DCMA informed the Air Force that Amentum had acquired all of DynCorp’s assets and assumed all of DynCorp’s obligations and liabilities related to the novated contracts. DCMA also mentioned upcoming integration and consolidation of contract performance activities between the companies, making reference to the use of intercompany procedures to ensure resources and employees remained available for existing contracts and pending proposals. In this regard, GAO noted DynCorp’s novation request to DCMA even included a memorandum of agreement between DynCorp and Amentum providing several assurances to the Government, including that “DynCorp shall continue to have access to all assets, personnel, and other resources of Amentum and its subsidiaries as necessary to fulfill commitments under its current contract and pending proposals, including as necessary to avoid any material changes to a proposal submitted to the U.S. governments [sic].”
But DynCorp did not provide the same assurances, or any notice at all, to the Air Force contracting officer responsible for its pending task order proposal. Its proposal, submitted in December 2020, did not mention the stock acquisition the month before, nor did it warn of the asset transfer by novation to come. The Air Force learned of the novation request from DCMA only once it was all but complete, and well into its evaluation of task order proposals. At that time, the agency did nothing to document any analysis of the potential impact the corporate transaction may have on DynCorp’s ability to perform the task order. In PAE, upon learning of the corporate acquisition, the procuring agency documented its reasoned conclusion that the ownership changes would not have an impact on its ability to perform as proposed. In Vertex, by contrast, there was no evidence of any substantive pre-award consideration of the corporate transaction or the associated corporate restructuring. The agency’s attempts to rectify this lack of diligence after award, and after a protest was filed, were unpersuasive and inadequate, and GAO sustained the protest. Although, as GAO noted, it could be the case that DynCorp’s ability to perform would not be materially affected by the corporate transaction and restructuring, the record was inadequate to reach that conclusion, leaving GAO unable to assess the reasonableness of the agency’s evaluation.
It must be noted that DynCorp also failed to notify the agency in PAE of its change in ownership. Its proposal and subsequent award were saved, however, because the agency’s procurement team, when learning of the change in ownership during its responsibility due diligence, proactively documented its findings that DynCorp remained registered in the System for Award Management (SAM) with the same Data Universal Numbering System (DUNS) number and Commercial and Government Entity (CAGE) code, with only a change in its immediate owner (recall this was prior to any novation). This convinced the agency that DynCorp was continuing operations as a separate entity, with no indication that the new ownership would change DynCorp’s corporate structure or have an impact on its ability to perform. There is no guarantee each procurement team will be so diligent. Vertex is a testament to that.
Takeaways: Corporate transactions, whether a change in ownership, internal reorganization, or transfer of assets, pose a risk to pending proposals. There’s no way around it, but you can take prudent steps to minimize that risk. One is to provide prompt and forthcoming notice of the transaction to your government customer (or prime contractor) prior to award. Although such notice does not insulate the proposal entirely from the risk that the government may assess weaknesses related to the transaction, it is better than letting the agency find out in a press release or through the grapevine without any context specific to the procurement. Direct notice to your customer allows you to frame the narrative, explain why the transaction will not affect your ability to perform on this specific procurement, and ensure at least something regarding the transaction is in the procurement record for the agency and GAO to rely on in the event of a protest.
Insight Technology Solutions, Inc., B-420133.2 et al., Dec. 20, 2021, 2021 WL 6619306
It may by now be a platitude to note that the internet and social media have had a profound effect on the practice of law. But one potentially unexpected manifestation is the impact of LinkedIn on bid protests, exemplified well in our third decision for this month, Insight Technology Solutions. In procurements where individuals’ educational background, work experience, and other qualifications are a material part of the agency’s evaluation criteria, LinkedIn offers potential protesters a wealth of public information (of varying reliability) to add to their arsenal.
GAO will sustain a protest – indeed, may even recommend disqualification of a party altogether – if it finds a “material misrepresentation” in the awardee’s proposal, that is, (1) a misrepresentation (2) the agency relied upon that (3) likely had a significant impact on the evaluation. That is exactly what GAO did in Insight, where it found the awardee had misrepresented the work experience of its proposed project operations manager. The protester was tipped off to that fact by the proposed individual’s LinkedIn profile, which reflected at most four years and seven months of relevant experience managing projects when the proposal was submitted, substantially less than the nine years touted in the awardee’s proposal and even less than the five years required by the solicitation.
Personal profiles on sites like LinkedIn are only as accurate and up-to-date as the individual user makes them, and they are often very inaccurate. But, as shown in Insight, they can provide plausible evidence on which to base a protest, after which point it becomes incumbent on the challenged party to offer convincing rebuttal information. In response to this allegation, the awardee, as intervenor to the protest, submitted a declaration from its employee to support the employee’s work experience. But GAO found that declaration failed to meaningfully dispute the information on LinkedIn or explain the discrepancy between the employee’s LinkedIn profile and the experience claimed in the declaration. For its part, the agency argued that it was entitled to rely on the awardee’s proposal at face value, and was not required to cross-check representations against potentially unreliable public databases like LinkedIn. GAO, however, found the agency’s argument misstated the issue; in resolving the alleged misrepresentation, GAO was not reviewing a straightforward protest of the agency’s evaluation, but rather addressing a matter of integrity in the procurement system requiring it to consider information not reasonably known to the agency during the evaluation. Having found that material misrepresentation to be confirmed, namely by the awardee’s inability to support its proposed project operations manager’s work experience even under protest, GAO took the extraordinary step of recommending disqualification of the awardee from the competition. As it has in some other limited cases, GAO found the “integrity of the procurement system ‘demands no less’ than the remedy of exclusion.”
Takeaways: GAO’s willingness to rely on LinkedIn as a reliable source of information, at least for purposes of stating a credible protest ground, begets a variety of practical takeaways depending on one’s role in the procurement process. As an offeror, you should make sure your employees, if they have a LinkedIn account, keep their profiles up to date and complete with all relevant experience and qualifications. You might also implement a precautionary review of those profiles prior to submitting a proposal, to ensure they meet solicitation requirements. As a procuring agency, you might consider asking your technical evaluators to check public resources such as LinkedIn to confirm representations made in offerors’ proposals. And lastly, as protest counsel given access to an awardee’s proposal under a protective order, one must consider making it standard procedure to search for named individuals on LinkedIn and any other relevant databases to generate potential supplemental protest grounds.
 See OASIS Small Business Contract (Pool 5b), Updated Oct. 22, 2021, at § G.3.10, available at https://www.gsa.gov/cdnstatic/OASISSB_Pool_5B_Contract_Conformed_Copy_A836_COVID%20Update_101521.pdf.
 See id.; see also FAR 52.219-28 (incorporated into the OASIS contracts).
 13 C.F.R. § 121.404(g)(2)(iii).
 Contrast this with the U.S. Court of Federal Claims’ decision in HWI Gear, Inc. v. United States, 151 Fed. Cl. 668 (2020), where the court held that incorporation of FAR 52.219-28’s text into a solicitation imposed such a recertification requirement and sustained a protest where the awardee had failed to recertify its size after an acquisition while its proposal was pending.
 GAO reached a similar result when reviewing the same case earlier in the year. See Odyssey Sys. Consulting Grp., Inc., B-419731 et al., July 15, 2021, 2021 CPD ¶ 260.
 See HWI Gear, 151 Fed. Cl. at 677 (sustaining protest where awardee did not recertify within 30 days of an acquisition while its proposal was pending); Morgan Business Consulting, LLC, B-418165.6; B-418165.9, Apr. 15, 2021, 2021 CPD ¶ 171 (finding contracting officer properly assigned weaknesses where prime contractor failed to notify the agency of a change in control of its proposed subcontractor).
 The Court of Federal Claims also denied the protest on its second-bite filing. PAE Aviation & Tech. Servs., LLC v. United States, 156 Fed. Cl. 454 (2021).
 The agency was not aware of the corporate restructuring that was to come, which ultimately did not occur until after the protest in PAE had been filed. It is unclear whether the agency’s or GAO’s analysis might have led to a different result had the restructuring also been at issue; a mere change of ownership is often fairly innocuous, whereas corporate restructuring and asset transfers might pose (or at least be perceived to pose) a performance or cost risk.
 See Morgan Business Consulting, LLC, B-418165.6; B-418165.9, Apr. 15, 2021, 2021 CPD ¶ 171 (agency reasonably assigned weaknesses related to a proposed subcontractor’s corporate transaction where prime contractor provided no explanation of the potential impact on its proposal).
 GAO questioned even the relevance of most of those four years and seven months, ultimately finding the awardee could support only 11 months of relevant work experience, far from meeting the requirements of the solicitation.
 Insight, 2021 WL 6619306 at *11 (quoting ACS Gov’t Servs., Inc., B-293014, Jan. 20, 2004, 2004 CPD ¶ 18 at 11).