This month’s Bid Protest Roundup considers two recent protests: (1) an important decision by the U.S. Government Accountability Office (GAO) concerning the awardee’s misrepresentation of the availability of key personnel, and (2) a U.S. Court of Federal Claims (COFC) protest on remand from the Federal Circuit regarding an agency’s failure to use a mandatory-source supplier under the AbilityOne program.
ASRC Federal Data Solutions, LLC [1]
The most interesting case of December was ASRC Federal Data Solutions, LLC, B-421008 et al. (Dec. 2, 2022). There, the GAO considered whether the awardee’s quotation contained a material misrepresentation concerning the availability of two of its proposed key personnel. Both of the proposed personnel (referred to as Mr. A and Dr. B) had signed exclusive letters of commitment with the protester, ASRC Federal Data Solutions, LLC (ASRC), and yet the awardee had named them in its proposal. The GAO’s decision draws a careful distinction between the two proposed personnel, finding that the awardee’s quotation did not contain a misrepresentation with respect to the availability of Mr. A, but the awardee’s quotation did contain a misrepresentation with respect to the availability of Dr. B because it did not have a reasonable basis on which to expect it would furnish Dr. B during contract performance.
Background
The U.S. Department of Health and Human Services issued a request for quotations under the General Services Administration’s (GSA) Federal Supply Schedule (FSS) procedures seeking quotations from small business vendors holding schedule 70 contracts for IT professional services and health IT services. Selection was to be made on a best-value tradeoff basis, considering the following factors: (1) approach to hypothetical projects; (2) organizational experience and management; (3) personnel technical capabilities and qualifications; and (4) price. The non-price factors were equally important to each other and, when combined, were significantly more important than price.
Under the personnel technical capabilities and qualifications factor, offerors were to submit information detailing the experience, qualifications, accomplishments, and abilities for three critical labor categories: technical point of contact (TPOC); technical lead; and curation lead. The RFQ stated that the agency would identify these positions as key personnel in task orders issued under the resulting blanket purchase agreement (BPA) and that substitution of key personnel would require prior written consent of the agency. However, the RFQ did not require letters of commitment.
The agency received four quotations in response to the RFQ, including from ASRC and Arlluk Technology Solutions, LLC (Arlluk). The agency awarded the BPA to Arlluk, and ASRC subsequently filed its protest.
In a supplemental protest ground, ASRC alleged that Arlluk’s quotation contained material misrepresentations concerning the availability of two of the key personnel identified in Arlluk’s quotation. Specifically, the individuals identified in Arlluk’s quotation for the technical lead and TPOC positions, Mr. A and Dr. B, had signed exclusive letters of commitment with ASRC for this procurement, and those signed letters expressly stated that no other offeror was authorized to use their names or resumes. ASRC’s proposal included copies of these signed letters of exclusive commitment. In light of these letters, ASRC argued that Arlluk had no reasonable basis on which to include Mr. A and Dr. B in its quotation as key personnel, and therefore misrepresented their availability if the agency were to select Arlluk for the BPA. ASRC also argued it was unreasonable for the agency to make the award to Arlluk, as the agency knew these people were exclusively committed to ASRC for this procurement.
The GAO noted the issue of whether personnel identified in an offeror’s proposal will, in fact, perform under the subsequently awarded contract is generally a matter of contract administration that the GAO does not review; however, the GAO will consider allegations that an offeror proposed personnel that it did not have a reasonable basis to expect to provide during contract performance in order to obtain a more favorable evaluation. This type of material misrepresentation (sometimes referred to as “bait and switch”) has a negative effect on the integrity of the competitive procurement system.
To establish an impermissible “bait and switch,” a protester must show that: (1) 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) the misrepresentation was relied on by the agency; and (3) the agency’s reliance on the misrepresentation had a material effect on the evaluation results.
The agency report showed that both ASRC and Arlluk named Mr. A and Dr. B as their technical lead and TPOC, respectively. ASRC’s quotation stated that those individuals had signed “exclusive Letters of Commitment” with ASRC, and that no other company was authorized to use their resumes or names in their quotations. ASRC’s quotation also included copies of these letters signed by Mr. A and Dr. B.
Arlluk’s quotation included statements of qualifications, competencies, experience, education, certifications, and training for Mr. A and Dr. B. Arlluk’s quotation did not contain letters of commitment from those individuals but stated that “[w]e have contingent offers for . . . critical incumbent leaders and proposed them as key personnel.”
The GAO requested additional information regarding the consent of Mr. A and Dr. B to be included in Arlluk’s quotation, as well as whether those individuals had received and accepted contingent offers of employment from Arlluk prior to the submission of Arlluk’s quotation.
In response to this request, Arlluk provided copies of email correspondence between Arlluk and both Mr. A. and Dr. B. Arlluk provided Mr. A and Dr. B with contingent offers of employment in 2021 (more than a year before quotations were submitted), which Mr. A and Dr. B accepted the next day.
Shortly before the RFQ’s response date in July 2022, Arlluk contacted Mr. A to update his offer letter. Arlluk provided Mr. A with an updated contingent offer, which Mr. A accepted on July 8, 2022. Mr. A also provided Arlluk with an updated resume for inclusion in its quotation.
Arlluk similarly contacted Dr. B in July 2022, shortly before the RFQ response date. However, Dr. B responded: “I just signed a mandatory document with ASRC this morning that ‘I am exclusively committed to this effort with [ASRC] as the Prime Contractor. No other company is authorized to use my resume in their proposal.’”
GAO Decision
The GAO’s decision draws a distinction between Arlluk’s representation of Mr. A and Dr. B’s availability to perform. The GAO found that Arlluk did not engage in misrepresentation by including Mr. A’s resume in its quotation because Arlluk had a reasonable basis to expect to furnish Mr. A during performance. It appears Mr. A was playing both sides of the fence. Even though Mr. A accepted an updated contingent offer of employment from Arlluk and provided Arlluk with a copy of his resume, Mr. A also signed an exclusive letter of commitment with ASRC shortly before the due date for quotations. This correspondence between Arlluk and Mr. A shows that Mr. A consented to the inclusion of his name and qualifications in Arlluk’s quotation, and that Mr. A was willing to accept employment with Arlluk if it was awarded the BPA. Therefore, there was no misrepresentation on the part of Arlluk regarding the availability of Mr. A to the agency if Arlluk was awarded the BPA.
ASRC argued that because its quotation included signed letters of commitment, the agency was aware that Mr. A was unavailable to Arlluk and therefore should not have considered Mr. A’s qualifications in evaluating Arlluk’s quotation. GAO dismissed this argument, however, explaining that it “will not review a protester’s allegation that the awardee may violate a non-compete agreement, as it concerns a private dispute that does not involve government action.”
In contrast, the GAO found that Arlluk did engage in misrepresentation by naming Dr. B and including her resume in its proposal because Arlluk did not have a reasonable basis on which to expect it would furnish Dr. B during contract performance. While Dr. B accepted a contingent offer of employment from Arlluk in June 2021, Dr. B later communicated her refusal to allow Arlluk to include her name and qualifications as part of the awardee’s quotation by notifying Arlluk prior to quotation submission in 2022 that she had signed an exclusive letter of commitment with ASRC.
The agency argued that the matter was a private dispute between ASRC and Arlluk regarding the violation of a non-compete agreement. With respect to Mr. A, GAO agreed with the agency that ASRC’s protest concerns a private dispute between ASRC and Arlluk because Mr. A authorized Arlluk to use his name and qualifications in its quotation and accepted a contingent offer of employment. With respect to Dr. B, however, GAO found the agency’s private dispute argument inapplicable; ASRC’s protest did not concern the legal effect and enforceability of Dr. B’s letter of commitment, but rather whether Arlluk had a reasonable basis to include her resume in its quotation.
The GAO concluded that the agency relied upon the misrepresentation in Arlluk’s quotation regarding the availability of Dr. B, and that it had a material effect on the evaluation. Specifically, the agency report showed that the agency assigned Arlluk’s quotation a strength for Dr. B’s qualifications and experience and noted the “strong qualifications” and “extensive experience” of Arlluk’s key personnel (including Dr. B as the proposed TPOC) in conducting the tradeoff. Based on this record, the GAO found that the agency’s evaluation of Arlluk’s quotation relied upon the misrepresentation with respect to Dr. B’s availability, and that the agency’s reliance had a material effect on the evaluation results. Furthermore, the GAO found that ASRC was prejudiced by Arlluk’s material misrepresentation with respect to Dr. B and the effect it had on the agency’s evaluation.
Significantly, the GAO concluded that the appropriate remedy for Arlluk’s misrepresentation was for the agency to terminate Arlluk’s BPA, exclude Arlluk’s quotation from the competition, and make a new award decision. The GAO explained, “where an offeror’s material misrepresentation has a material effect on a competition, the integrity of the procurement system ‘demands no less’ than the remedy of exclusion.”
Takeaway
As the GAO rightfully states, “it is neither unusual nor inherently improper for an awardee to recruit and hire personnel previously employed by an incumbent contractor.” However, offerors cannot name individuals in their proposals without having a reasonable basis on which to expect they will be able to furnish that individual during contract performance, if awarded the contract. Here, once Arlluk was informed of Dr. B’s exclusive commitment letter, it should not have included Dr. B in its proposal. This type of misrepresentation fact pattern may become more common as more offerors ask their key personnel to sign exclusive commitment letters.
Material misrepresentations regarding the availability of key personnel can have a detrimental impact on the integrity of the competitive procurement system and serious repercussions for offending offerors, including exclusion from the competition. Therefore, this is an area where offerors should tread carefully. Additionally, protesters should review the agency record carefully for any sign that any of an awardee’s key personnel are already spoken for.
SEKRI, Inc. v. United States[2]
In this pre-award bid protest on remand from the Federal Circuit, the plaintiff, SEKRI, Inc., alleged that the Defense Logistics Agency (DLA) must procure Advanced Tactical Assault Panels (ATAPs) from SEKRI because it is the mandatory source for ATAPs under the AbilityOne program.
As we previously wrote, the Federal Circuit’s decision contained significant timeliness implications.[3] The DLA initially sought to procure ATAPs using full and open competition. Prior to the date set for receipt of proposals, SourceAmerica emailed DLA that SEKRI was the mandatory source authorized to supply ATAPs in accordance with the Javits-Wagner-O’Day Act and inquired whether DLA would be willing to acquire ATAPs from SEKRI through SourceAmerica. DLA said no, and responded that it would proceed as planned with full and open competition, but SEKRI was free to submit a competitive proposal.
By the deadline for receipt of proposals, SEKRI neither filed a pre-award protest challenging DLA’s competitive solicitation of items it contended had to be purchased only from it, nor did it submit a proposal to compete for the work. Nearly four months later (but prior to contract award), SEKRI filed a bid protest with the COFC, challenging the competitive procurement.
The Federal Circuit found SEKRI’s protest timely because SourceAmerica posed a question on SEKRI’s behalf that constituted a “timely, formal challenge” to the solicitation and put DLA on notice of the alleged solicitation defect prior to the deadline for receipt of proposals. Significantly, the Federal Circuit’s decision suggests that pre-proposal submission email exchanges with the procuring agency may be enough to avoid a Blue & Gold waiver, at least in certain circumstances.
After the Federal Circuit’s decision, the DLA canceled the competitive procurement for ATAPs. On remand, the COFC found SEKRI’s original protest grounds moot. The court explained:
The plaintiff has received all the relief it requested: SEKRI has been declared the mandatory source of supply for the ATAP, the competitive procurement of the ATAP or the TAP was canceled, and the DLA has been engaging with SourceAmerica regarding a potential procurement of the ATAP from SEKRI. Additionally, the legal and factual questions underpinning the plaintiff’s claims have been resolved by the Federal Circuit: if the DLA wishes to procure the ATAP or the TAP, then the DLA must purchase the ATAP from SEKRI or follow other procedures delineated in the Committee regulations.
Because the plaintiff’s original claims have all been decided, and no further relief may be granted on those claims, the COFC dismissed them under Rules 12(b)(1) and 12(h)(3).
Additionally, SEKRI’s supplemental complaint challenged the DLA’s decision not to procure the ATAP from SEKRI immediately following the Federal Circuit’s decision. SEKRI again alleged that it is the mandatory source of supply for ATAP and that the DLA must purchase the ATAP. The agency admitted that it needs ATAP by June 2023 and that SEKRI is the mandatory source, yet it has not awarded SEKRI a contract. The COFC concluded, “Although the DLA needs the ATAP, its decision to purchase any ATAP at all is, legally speaking, discretionary; no statutory or regulatory deadline for such a procurement exists.” While the COFC’s decision criticized the agency’s delay, it concluded that the issue is nonjusticiable and must be dismissed.
SEKRI’s argument that the Federal Circuit’s decision “requires DLA to procure the ATAP from SEKRI” and that DLA is unlawfully withholding the award of a contract to SEKRI was similarly unsuccessful. While the Federal Circuit’s decision made it clear that when DLA wishes to procure the ATAP, it must do so from SEKRI, it did not require DLA to procure the ATAP. The decision whether to procure the ATAP remains vested in the DLA. Therefore, the COFC denied SEKRI’s motion to enforce the decision of the Federal Circuit.
However, the case is not over. At oral argument plaintiff argued (1) the DLA is threatening SEKRI with an unauthorized audit of SEKRI’s production of the ATAP, and (2) after canceling the previous solicitation, the DLA violated an AbilityOne regulation when it began the process of ordering the ATAP from SEKRI but failed to issue a final order. The COFC concluded that SEKRI may amend or supplement its pleadings to address these issues.
Takeaway
The COFC’s decision does not disturb the Federal Circuit’s timeliness ruling. Rather, it finds the protester’s original protest grounds mooted by the agency’s cancellation of the competitive procurement, concluding that no additional relief is available to the protester. SEKRI has effectively received everything it asked for when it initially challenged the competitive solicitation—minus a contract award. Judge Hertling was sympathetic to SEKRI’s frustration, stating:
[A]lthough not unlawful, the DLA’s delay in procuring the ATAP appears facially illogical. … The DLA acknowledges that it will need to acquire the ATAP no later than June 2023. The DLA’s delay serves no apparent purpose and may ultimately harm both the plaintiff and the troops who rely on the ATAP to carry out their national-security missions. The plaintiff’s understandable frustration, however, cannot transform a nonjusticiable claim into a justiciable one.
In other words, the agency’s purchasing decisions are ultimately discretionary, and it cannot be compelled to make a purchase within any particular deadline (or at all).
Victoria Dalcourt Angle is an associate in Morrison Foerster’s Government Contracts practice where she advises clients on various matters including pre- and post-award bid protests, internal and government investigations, contract claims and disputes, suspension and debarment, and compliance with federal statutes and regulations.
[1] ASRC Federal Data Solutions, LLC, B- 421008, B- 421008.2, B- 421008.3, Dec. 2, 2022, 2022 WL 17505197.
[2] SEKRI, Inc. v. United States, No. 21-778 (Dec. 16, 2022).
[3] SEKRI, Inc. v. United States, 34 F.4th 1063 (Fed. Cir. 2022).