This month’s Bid Protest Roundup highlights two Procurement Integrity Act (PIA) decisions from the U.S. Court of Federal Claims and one solicitation interpretation decision from the U.S. Government Accountability Office (GAO).
Associated Energy Group v. U.S.
In Associated Energy Group, the Court of Federal Claims rejected a disappointed bidder’s challenge to an agency’s handling of an inadvertent disclosure of source selection information as a PIA violation.
Relevant Facts
In June 2021, the Defense Logistics Agency (DLA) issued a solicitation for a three-year, firm fixed price contract to provide credit cards to military services for purchase of commercial aviation fuel and related items. The solicitation contemplated award based on one preliminary evaluation factor—whether an offeror’s proposal was at no cost to the agency and a best-value tradeoff considering several factors, including technical approach, management approach, past performance, and price.
Associated Energy Group, LLC (AEG) and Kropp Holdings, Inc. (KHI) submitted proposals, and in June 2022, DLA awarded the contract to AEG. KHI protested the award, and the agency took corrective action. After multiple rounds of corrective action and protest, DLA allowed offerors to make unrestricted revisions to their proposals in August 2023.
In September 2023, AEG requested updated historical sales data from DLA, arguing that KHI as the incumbent had an unfair competitive advantage because it had access to more current purchasing data. The contracting officer approved the request and prepared a memorandum of record of her reasoning (Amendment 15 Memorandum), but mistakenly sent the memorandum to KHI. The agency never shared the memorandum with AEG. KHI corporate executives read the memorandum and shared it with their legal counsel. Although KHI admitted that both its executives and legal counsel had opened and viewed the memorandum, it confirmed that legal counsel and KHI executives had deleted the memorandum.
DLA investigated the unauthorized disclosure in accordance with FAR 3.104-7 and found that the memorandum contained general information that provided no competitive advantage. The agency also found that the disclosure was not made knowingly or intentionally. Thus, the inadvertent, unauthorized disclosure had no impact on the procurement.
AEG ultimately filed a protest at GAO alleging: (1) that the disclosure violated the PIA; and (2) DLA and KHI failed to sufficiently mitigate the disclosure. GAO denied the protest, rejecting AEG’s PIA allegation because of the lack of evidence that the disclosure was knowing or intentional. AEG later sought an injunction at the Court of Federal Claims to prevent DLA from proceeding with the procurement.
Court’s Analysis
At the court, AEG argued that DLA made an unauthorized disclosure of competitively useful information and failed to properly mitigate the effects of the unauthorized disclosure, resulting in competitive prejudice. Specifically, AEG alleged the disclosure, when combined with earlier debriefing information revealing AEG’s pricing from the initial award, gave KHI an unfair competitive advantage.
The court systematically analyzed four pieces of information from the Amendment 15 Memorandum that AEG considered competitively useful source selection information, finding DLA reasonably concluded none of it was competitively useful, either separately or combined with the earlier pricing disclosure:
- Disclosure of historical sales data: The fact that AEG used historical sales data to develop its pricing was expected and directed by the RFP. It did not reveal specifics of AEG’s pricing approach.
- Disclosure of AEG’s request for updated sales data: AEG’s request for updated sales data did not alert KHI to any of AEG’s potential pricing previsions.
- Disclosure of DLA’s internal decision-making methodology: DLA’s rationale for releasing the updated data was already apparent and logical.
- Disclosure of AEG and KHI as the only remaining offerors: AEG and KHI remaining as the only offerors was already known or discernable to the parties.
The court emphasized the disclosed information contained no competitively useful information, and that AEG’s arguments relied on improper speculation.
The court then rejected AEG’s demand for further mitigation beyond deletion, finding it was based on the faulty premise that the disclosure provided KHI an unfair advantage when DLA reasonably determined it did not. Having failed on the merits, the court denied AEG’s request for injunctive relief.
Takeaway
Associated Energy Group reinforces agencies’ discretion in handling inadvertent disclosures and assessing competitive impact under the PIA. Contactors should become familiar with the types of information protected under the PIA and remember that disclosure alone is not enough to create a PIA violation.
Additionally, contractors should consider the impact of inadvertent disclosure before pursing a bid protest. Even if an agency does inadvertently disclose confidential information and another party sees it, there must be some sort of competitive harm to be considered a PIA violation.
Clean Team Janitorial Service, Inc. v. U.S.
In Clean Team Janitorial Service, Inc., the Court of Federal Claims addressed the required timeliness for reporting alleged PIA violations and the adequacy of an agency’s investigation into such allegations. The court denied the protest, finding that the protestor timely reported the alleged violations, but the agency’s investigation was sufficient.
Relevant Facts
Clean Team Janitorial Service, the incumbent contractor, protested the award of a follow-on janitorial services contract for a federal law enforcement training facility operated by the U.S. Secret Service (Secret Service). Clean Team alleged that over the course of several months, a contracting agency representative engaged in several inappropriate interactions with its staff:
- During the week of May 30, 2022, the representative approached Clean Team contract supervisor—a janitorial shift supervisor—and inquired about the number of employees on-site. The representative mentioned that he needed to provide the information to a new company taking over the contract.
- On June 2, 2022, the representative asked the supervisor about her salary. When the supervisor declined to disclose the information, the representative returned with a piece of paper he claimed was part of a new contract being prepared and asked if the number was close to her salary. Later, the supervisor expressed her discomfort and suggested that the representative contact Clean Team headquarters.
- On July 4, 2022, the representative approached additional Clean Team staff members and requested salary information.
- Agency engineering staff initiated several inappropriate conversations with Clean Team staff members regarding contract matters.
On August 9, 2022, Clean Team reported the alleged PIA violations to the contracting officer, requesting an investigation and the agency representative’s recusal. The Secret Service procurement division opened an internal investigation, during which the representative admitted to inquiring about the Clean Team supervisor’s salary and mentioning a new contract. The investigation concluded that although the representative engaged in inappropriate market research, his actions did not appear to have been for improper purposes.
Follow-On Procurement
On August 16, 2022, Secret Service reached out to several janitorial services companies in search of potential SBA 8(a) contractors for the follow-on procurement. ICMC Alliance (ICMC) immediately submitted its Capability Statement, and the agency ultimately awarded the contract to ICMC.
Clean Team protested the award three times before the GAO, challenging the sole source nature of the follow-on procurement and the completeness of the agency’s investigation into the alleged PIA violations. In response, the agency took corrective action, and the protests were dismissed as academic. On September 15, 2023, the Secret Service again awarded the follow-on contract to ICMC. Clean Team filed protest at the Court of Federal Claims, alleging, in part, the prior PIA violations.
Court’s Analysis
The court first addressed the timeliness of Clean Team’s reporting of the alleged PIA violations. Under statute, a person may not file a protest against the award or proposed award of an agency alleging a PIA violation, and the GAO may not consider that allegation unless the person, “no later than 14 days after the person first discovered the possible violation, reported to the Federal agency responsible for the procurement the information that the person believed constitutes evidence of the offense.”[1] Clean Team argued that its corporate leadership became aware of the potential violations on July 28, 2022 when janitorial staff first reported the agency representative’s inappropriate inquiries. Under this premise, the company’s August 9, 2022 reporting was timely. In response, the government argued that the 14-day clock began when the interactions between the representative and employees took place, between May 30 and July 4, 2022. The court applied the Federal Circuit’s vicarious liability rule, finding that the timeline began when Clean Team’s headquarters learned of the concerns. The court noted the Federal Circuit’s vicarious liability rule, which states that corporations act through their employees, and an agent’s knowledge is imputed to the principal when employees are acting within the scope of their authority or employment, absent special circumstances. With this rule in mind, it would be inappropriate to impute to a private employer the random musings or questions a government procurement official directs to an on-site member of the janitorial staff. The record did not indicate that the contract supervisor possessed any authority to take official actions on behalf of Clean Team. Thus, the timeline began when Clean Team’s headquarters learned of the concerns. The court reasoned that imputing knowledge of the government official’s inquiries to Clean Team based on the supervisor’s knowledge would force companies to “owlishly monitor on-site employees at every facility or require daily debriefings to mitigate risk, drastically increasing contract prices.”[2]
Next, the court considered the adequacy of the agency’s investigation into the PIA violation allegations. The court found the investigation to be more than sufficient, noting that two sets of federal law enforcement officials reviewed the allegations and interviewed the agency representative on two separate occasions. The court determined that there was no basis in law or fact to find the investigations inadequate.
Finally, the court dismissed Clean Team’s allegations that the agency manipulated its estimated contract value to circumvent competition requirements and that the awardee was not an actual SBA 8(a) participant. The court held that despite errors and corrections to the estimate, the agency reasonably concluded that the anticipated award would fall below the regulatory threshold for competitive bidding.
Takeaways
Clean Team Janitorial Service highlights the importance of timely reporting alleged PIA violations and the deference courts give to agencies in investigating such allegations.
Contractors should also ensure that they use clear internal procedures for employees to report suspected PIA violations. Timely reporting is crucial, as a PIA allegation may not be considered in bid protest if the protestor did not report the alleged violation to the agency within 14 days of discovering it.
Southern Hog Control, LLC
Southern Hog Control, LLC serves as a reminder about an agency’s capacity to broadly interpret its own solicitation terms.
Southern Hog, the protestor, argued – unsuccessfully – that the Department of Veterans Affairs (VA) unreasonably evaluated the awardee’s quotation for wildlife management services because it did not specifically have feral hog experience.
Southern Hog’s Protest
In Southern Hog Control, the VA issued a request for quotations (RFQ) for wildlife management services at Fort Mitchell National Cemetery in Fort Mitchell, Alabama. The agency primarily sought services to address sanitation issues and damage caused by feral hogs, requiring the vendor to trap, reduce, and control the feral hog population using methods delineated in the RFQ.
Bidders were to propose a site manager with at least five years of experience performing all tasks in the scope of work and manage employees. The award would be made to the vendor offering the best value, considering technical capability, past performance, and price.
The technical capability factor included two subfactors: (1) experience and training of personnel and technical services and (2) understanding of work requirement and performance work plan. Past performance was to be evaluated based on the vendor’s submission of at least three past performance references on projects performed within the last three years that were similar in size, scope, pricing, and vendor’s record of meeting contract requirements and reputation for quality work.
The agency selected 3 Squared after evaluating the proposals. In its evaluation, the agency assigned strengths to 3 Squared under the technical capability factor based on its understanding of feral hog control and its current tracking and euthanasia methods and the capabilities of its site manager’s qualifications. It also assigned strengths under the past performance factor for submitting three relevant past performance references—one for feral hog control services.
Southern Hog protested, claiming 3 Squared could not meet the technical capability and past performance requirements because it was not a feral hog control company, lacked feral hog control experience, and allegedly planned a “bait and switch” by contacting other firms to hire subcontractors. The agency countered that the RFQ did not require specific feral hog control experience, but rather a site manager with five years of wildlife management and employee supervision experience, and the awardee’s manager met this requirement. On this point, the GAO concurred, finding the RFQ did not require firms to have feral hog control experience, but instead required a site manager to have at least five years of experience with wildlife management and supervisory experience. 3 Squared demonstrated that it met these requirements, therefore the GAO found that the agency reasonably determined that it met the technical requirements.
Southern Hog also contended that 3 Squared lacked the necessary feral hog control experience within the last three years to satisfy the past performance requirements. However, the GAO determined that the RFQ did not require past performance references to be specifically related to feral hog control, but rather similar in scope to the broader wildlife management work emphasized in the solicitation. 3 Squared’s quotation included three past performance references that met this standard.
GAO also found Southern Hog’s “bait and switch” argument unavailing; the protestor had failed to show that the awardee either knowingly or negligently represented that it would rely on specific personnel without reasonable basis, that the misrepresentation was relied on by the agency, and that the agency’s reliance on the misrepresentation had a material effect on the evaluation results.
Takeaway
Although Southern Hog, seems straightforward on its face, there are a few takeaways that bidders should keep in mind when considering a solicitation.
- Read solicitation requirements carefully: The solicitation’s exact wording is crucial. In Southern Hog, the RFQ did not require the firm itself to have feral hog control experience, but rather the site manager to have wildlife management and employee supervision experience.
- “Bait and switch” allegations are rarely successful at the GAO unless the protestor can show: (1) that the awardee either knowingly or negligently represented that it would rely on specific personnel that it did not have a reasonable basis to expect to furnish during contract performance; (2) that the misrepresentation was relied on by the agency; and (3) that the agency’s reliance on the misrepresentation had a material effect on the evaluation results. Thus, speculation that the awardee may not be able to support the contract is not enough to adequately assert a bait and switch.
[1] 41 U.S.C. § 2106.
[2] Clean Team Janitorial Service, Inc. v. United States, No. 23-1754C, 2024, 2024 WL 1399789 at 9.