This month’s bid protest roundup focuses on two decisions from the U.S. Court of Federal Claims (“Court”) and one decision from the U.S. Government Accountability Office (“GAO”). These decisions involve (1) the Court’s determination that, based on the facts, inconsistencies in an offeror’s proposed labor hours were clerical errors that should be resolved through clarifications, (2) the importance of reading a solicitation as a whole and not raising arguments previously conceded in a GAO protest, and (3) a protester’s successful challenge to the scope of an agency’s corrective action as both vague and unduly limited in scope.
Aspire Therapy Services & Consultants, Inc. v. United States[1]
In this pre-award protest, the Court held that an agency improperly excluded Aspire Therapy Services & Consultants, Inc.’s (“Aspire”) proposal from further consideration because the agency should have sought clarification under FAR 15.306(a) to resolve a “clerical” error resulting from the offeror’s proposed labor hours not matching across two different spreadsheets of its proposal, which the Court considered to be errors that did not materially affect the agency’s evaluation.
On October 5, 2022, the Defense Commissary Agency (“DeCA”) issued a solicitation for loading, stocking, and custodial work at the Dover Air Force Base Commissary. Offerors’ Volume I proposals included a Cost Breakout spreadsheet with their proposed prices and services, and offerors’ Volume II included a Direct and Indirect Labor Summary spreadsheet. Both spreadsheets automatically populated certain data based on contractor-added inputs.
The solicitation repeatedly warned offerors that they were responsible for submitting accurate calculations, that spreadsheets may contain the same information across different proposal volumes, and that failure to comply with these requirements could result in the rejection of their proposals.
On January 6, 2023, DeCA rejected Aspire’s proposal for failure to comply with the solicitation’s instructions because “the hours proposed in the Volume I, Cost Breakout[,] did not correlate with the hours in the Volume II, Direct Labor Summary.”
In its Volume I proposal, Aspire separately entered the anticipated “Cases per Year” and productivity rate for each labor subcategory, which automatically populated the “Direct Productive Hrs Required” for each labor subcategory except for one, “RSHA Coverage for Contractor Work Schedule,” that Aspire manually entered as 81. Using those inputs, the spreadsheet automatically computed the total “Direct Productive Hrs Required” for RSHA Direct Labor, which was 2,366 hours.
In its Volume II proposal, Aspire manually inputted the total hours required of each laborer and the total indirect labor hours—versus breaking out these data by subtasks like in Volume I—to calculate the total RSHA labor hours. Based on those inputs, the spreadsheet automatically computed a sum total of 2,336 direct labor hours, 30 hours less than Aspire’s Volume I proposal. Aspire determined that the discrepancy was due to a typo of inserting 51, rather than 81, which was pulled directly from its Volume I spreadsheet.
In a pre-award written debrief, the agency confirmed that Aspire was disqualified due to the 30-hour discrepancy between its Volume I and II spreadsheets, as the agency concluded “the error was not a minor clerical error pursuant to FAR 15.306 and therefore determined clarifications could not be conducted.” Aspire subsequently filed a complaint with the Court challenging the agency’s disqualification decision.
The Court ultimately held that the “spreadsheet error was both minor and clerical, and DeCA abused its discretion by failing to request a clarification from Aspire.” In reaching this decision, the Court recited the definition of clarifications, which FAR 15.306(a)(1) defines as “limited exchanges, between the Government and offerors, that may occur when award without discussions is contemplated.”
To distinguish between clarifications and discussions, the Court quoted and compared the text of FAR 15.306(a)(2) to the description of negotiations in FAR 15.306(d), the former of which states as follows:
[i]f award will be made without conducting discussions, offerors may be given the opportunity to clarify certain aspects of proposals (e.g., the relevance of an offeror’s past performance information and adverse past performance information to which the offeror has not previously had an opportunity to respond) or to resolve minor or clerical errors.
The Court then turned to the history of these regulations, explaining that although clarifications originally had a “narrower scope,” the 1997 amendments thereto were designed to promote “more open exchanges between the Government and industry,” allowing both parties to better understand the government’s requirements and the industry’s proposed approaches to meeting those requirements. While recognizing that “[c]larifications are not permitted to materially revise aspects of a proposal, such as technical or cost elements,” the Court nevertheless found that the error in Aspire’s proposal was the same type of mathematical, or “typographical,” error in cases previously before the Court and the Federal Circuit that is properly resolved through clarifications.
Next, the Court held that the record lacked any explanation for the agency’s decision to exclude Aspire’s proposal and that the clerical—rather than deliberate—nature of this error “should have been evident to DeCA” given that the differing labor hours of 2,336 and 2,366 were “off by one digit and appear so similar that the error is easily overlooked by the naked eye,” which the Court deemed “a strong indicator” that the error was merely typographical. The Court also noted that the agency could have effectively checked Aspire’s calculations by clicking through the cells and noting the formulas used to reach the underlying numbers.
With respect to the significance of the errors, the Court concluded that the error with Aspire’s proposed hours and price was “minor” and “largely inconsequential to DeCA’s evaluation.” The Court also found it “difficult to see” how a 30-hour error, or a 1.3% difference in labor hours and 0.063% increase in total price, could materially affect the agency’s evaluation, particularly where such an error results in a “modest” price increase, placing the offeror at a competitive disadvantage.
Finally, the Court rejected the government’s arguments that Aspire’s error violated the solicitation’s repeated instructions to ensure that all labor hour numbers matched across proposal volumes, instead finding that the solicitation’s instruction was permissive and did not serve a substantive purpose. The Court further found that even if an offeror’s error affects its price, that alone does not preclude the error from being a minor or clerical that can be resolved through clarifications.
Takeaways
This decision shows a loosened approach by the Court in evaluating when a mathematical error in a proposal constitutes a minor “clerical” error properly resolved through clarifications.
Typically, the onus is on the offeror to submit a well-written proposal free of computational or other descriptive defects, and the Court will not step into the shoes of a contracting officer when evaluating protest allegations. But this decision opens the door for offerors to challenge discrepancies across proposal volumes where the error results in a minor impact to their total proposed price, particularly if correction of the error increases that dollar value. It remains to be seen whether other judges of the Court will accept similar arguments or if they will side with the more stringent standards of the GAO and other Court precedent.
VSolvit, LLC v. United States[2]
In VSolvit, LLC, the Court denied the plaintiff’s challenges to the U.S. Department of Agriculture’s (“USDA”) evaluation and award decision for the provision of Agile Salesforce Portal Development and Support Services. After determining that VSolvit, LLC (“VSolvit”), had standing, the Court rejected VSolvit’s challenges to the USDA’s evaluation under the Technical and Past Performance evaluation factors for not considering the contracts submitted by VSolvit’s subcontractors where the solicitation mentioned an “offeror’s team” “only once within an incomplete phrase” under the Past Performance factor.
On July 20, 2022, the USDA issued the solicitation to four BPA contract holders contractors pursuant to FAR Subpart 8.4. The solicitation directed the USDA to evaluate offerors’ proposals on a best value basis according to three factors, Technical, Past Performance, and Price.
As relevant, the Technical factor consisted of four subfactors, including Experience. The Past Performance factor instructions noted, in part, that it encompassed the “[r]elevant and recent past performance of the offeror’s team.” The solicitation stated that the agency would base its evaluation of the Past Performance factor on the same five contracts identified for the Experience subfactor.
After VSolvit and Deloitte Consulting LLP (“Deloitte”) submitted their initial proposals, the contracting officer emailed VSolvit to verify whether it was the prime contractor on the five contracts it submitted. When VSolvit confirmed that four of its five contracts were for work performed by its subcontractors, the contracting officer notified VSolvit that the agency could only consider the fifth, remaining submission given the agency’s interpretation of the solicitation.
VSolvit subsequently emailed Tiffany Taylor, the USDA senior procurement executive, regarding the agency’s interpretation of the solicitation and negative effect it would have on VSolvit’s evaluation. In response, Ms. Taylor notified VSolvit that she agreed with the contracting officer’s interpretation. Shortly thereafter, the agency awarded the contract to Deloitte.
Nearly two weeks later, VSolvit filed a protest with the GAO challenging, in part, the agency’s decision not to consider the experience of VSolvit’s subcontractors. The GAO dismissed that argument as untimely, finding that the VSolvit’s email to Ms. Taylor constituted an agency-level protest. VSolvit then filed a complaint with the Court, re-raising its arguments and requesting that the agency amend the solicitation and allow offerors to submit revised proposals.
As an initial matter, the Court rejected the government’s and Deloitte’s arguments alleging that VSolvit lacked standing because it alone did not have the requisite prior experience. Although the Court acknowledged that the standing and merits issues overlapped, it concluded that, taking as true VSolvit’s allegations, VSolvit’s proposal would have had “significantly” fewer weaknesses. Given Deloitte’s much higher price, and assuming that the USDA improperly conducted a price realism analysis, as alleged, VSolvit had a substantial chance of receiving the award.
On the merits, the Court determined the solicitation did not require the agency to evaluate the contract submissions of an offeror’s subcontractor under the Past Performance factor and Experience subfactor.
Despite there being a single reference to an “offeror’s team” in the Past Performance evaluation criteria, which VSolvit claimed was a term of art commonly understood to include contractor team arrangements that involve subcontractors, the Court found that VSolvit’s interpretation “ignores the context of the [solicitation] as a whole and does not make sense of all its provisions.” Rather, when read in the proper context, “offeror’s team” refers to the offeror and its employees, as alleged by the Government and Deloitte. A question and answer regarding Past Performance incorporated into the solicitation further reinforced that interpretation, where the answer repeatedly referred to “your company” as opposed to an offeror’s “team” or subcontractors.
The Court reached the same conclusion with respect to the Experience subfactor, which did not refer to a “team” or subcontractors. The Court also reasoned that because the agency would contact only the references listed in the Experience subfactor, the Past Performance factor was “expressly limited” by the Experience subfactor, which did not consider the experience of subcontractors.
Next, the Court rejected VSolvit’s alternative claim that the solicitation was latently ambiguous, finding that the broad use of “team” and language throughout the entire solicitation reasonably would have led an offeror to inquire about why the Experience subfactor did not solicit information from an “offeror’s team.”
Finally, the Court found that even if the matter was remanded to the agency to clarify the meaning of an “offeror’s team,” VSolvit could not demonstrate prejudice because it lacked the necessary experience. In fact, VSolvit’s email to Ms. Taylor conceded as much, where it stated that if the agency considered prime experience only, it would likely receive an evaluation of unknown confidence, and suggested that the agency should modify its policy to permit subcontractor experience so that small businesses could participate. VSolvit’s GAO protest also stated that its “experience alone [did] not meet all the Solicitation requirements.”
The Court denied the remaining challenges to the agency’s evaluation under the Technical factor, finding that they demonstrated VSolvit’s lack of understanding of the solicitation or otherwise failed to satisfy the relevant legal thresholds necessary to succeed.
Although it did not have to decide the propriety of the agency’s price realism analysis given VSolvit’s ineligibility for award, the Court nevertheless found that the agency properly evaluated offerors’ prices. In short, the Court concluded that “a review of risk as part of a best-value tradeoff decision does not necessarily amount to an unlawful cost or price realism analysis.” Thus, the agency properly assessed offerors’ proposed prices against the IGCE to determine whether they were fair and reasonable as well as VSolvit’s pricing schedule against the PWS deliverables to conclude that VSolvit’s proposal demonstrated a lack of understanding of the solicitation’s labor requirements.
Takeaways
This decision offers several important reminders. First, offerors should not assume they can rely on their subcontractors’ past performance in a FAR Part 8 procurement, particularly when the solicitation does not expressly state that doing so is permitted. Instead, offerors should ask the agency clarifying questions. Moreover, offerors must carefully evaluate questions and answers incorporated into a solicitation that address instructions relevant to their proposed approach to meeting the requirements.
Third, challenges to a plaintiff’s standing face a steep—and likely insurmountable—mountain. Finally, protesters must be mindful of concessions made in GAO protests (or otherwise) prior to filing with the Court.
Kupono Government Services, LLC; Akima Systems Engineering, LLC[3]
This decision involves two protesters’ successful challenges to the scope of an agency’s corrective action as both vague and unduly limited in scope. Upon reviewing the agency’s explanations of the evaluation errors and the scope of its corrective action, the GAO concluded that it could not discern what prompted the agency to take corrective action or how the proposed corrective action would appropriately remedy the agency’s unidentified concerns. The GAO therefore recommended that the agency permit offerors to revise their technical and cost proposals given their interrelated relationship and reimburse the protesters the cost of pursuing their protests.
This dispute began when the GAO dismissed as academic three protests contesting the agency’s evaluation of offerors’ cost and non-cost proposals, adequacy of discussions, and source selection decision. Shortly after dismissal, Kupono Government Services, LLC (“Kupono”), filed a new protest challenging the agency’s dismissal request, which permitted offerors to revise their cost proposals only. In response, the agency issued letters to the offerors describing the scope of its corrective action in more detail and setting a deadline to submit revised cost proposals. One day before that deadline, Akima Systems Engineering, LLC, similarly filed a new protest challenging the scope of the agency’s corrective action; in response to the letter, Kupono filed a supplemental protest.
Both protesters argued that they should have been permitted to revise their cost and technical proposals, which they claimed were inextricably intertwined given the requirements of the solicitation and nature of cost-reimbursement awards. The agency disagreed and declined their requests.
The GAO found the agency’s proposed corrective action flawed in two respects. First, the GAO determined that the contracting officer’s declaration failed to provide “substantive details or explanations” that articulate precisely what evaluative errors exist or how those errors impacted its evaluation of initial and final cost proposals. Instead, the agency provided nothing more than “generic references to ‘mathematical errors’ and ‘errors in certain assumptions.’”
The GAO found similar issues with respect to the agency’s explanation of its evaluation of technical proposals, which stated, in relevant part, that the agency had “identified some areas where the evaluations did not follow the applicable provisions of the Solicitation and regulations as fully as they could have,” and that it would “revise those areas of the evaluations” as part of its corrective action, which would not require new or revised information from offerors. Again, the GAO found this type of “generic representation” inadequate because it failed to provide insight into the nature of the errors, identify how the agency intended to remedy those errors, or demonstrate that the agency would perform a meaningful re-evaluation of technical proposals.
Deepening these issues, the GAO asked the agency to produce a privilege log detailing documents it withheld relating to its decision to limit the scope of its corrective action. In response, the agency stated that it had not identified any such documents because the document review was conducted at the direction of its attorneys and the scope of corrective action was discussed in virtual meetings not memorialized in written materials. The GAO found the agency’s explanations inadequate and concluded that the record was devoid of information concerning the identified evaluation errors and scope of corrective action beyond vague explanations from the contracting officer.
Finally, although agencies typically have broad discretion in deciding the scope of corrective action, the GAO rejected the agency’s rationale for not allowing offerors to submit revised technical proposals. The GAO agreed with the protesters’ interpretation of the solicitation, which required the agency to conduct a cost realism evaluation that analyzed, among other factors, whether the cost elements “are consistent with the unique methods of performance and materials described in the offerors’ technical and management proposal.” The record further revealed that the agency’s earlier discussions with both offerors about cost-related questions concerning their technical approaches showed the agency “implicitly” understood the interrelated nature of offerors’ cost and technical proposals.
Takeaways
This decision demonstrates that offerors can successfully challenge the scope of an agency’s corrective action where the agency offers only vague descriptions of the errors committed and how it will rectify them. As the GAO held, “if we cannot tell what the concerns were that gave rise to the agency’s decision to take corrective action, we also cannot tell whether the proposed corrective action is appropriate to remedy the unidentified concerns.”
This decision also illustrates that protesters can succeed in expanding the pool of proposal materials they can revise as part of corrective action where the solicitation or other facts show those materials are intertwined, including, like here, for the award of a cost-reimbursable contract.
[1] Aspire Therapy Servs. & Consultants, Inc. v. United States, No. 23-253, 2023 U.S. Claims LEXIS 1230 (Fed. Cl. May 30, 2023) (reissued June 13, 2023).
[2] VSolvit, LLC v. United States, No. 22-1913, 2023 U.S. Claims LEXIS 1194 (Fed. Cl. May 25, 2023) (reissued June 7, 2023).
[3] Kupono Gov’t Servs., LLC; Akima Sys. Eng’g, LLC, B-421392.9 et al., June 5, 2023, 2023 CPD __.