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September 29, 2017 - Protests & Litigation

Latent Ambiguities and Non-Apparent Solicitation Defects (Post-Award Protest Primer #9)

Agencies Need Not Recertify Small Business Status at Task Order Level

Having discussed protest grounds you cannot or should not raise (here and here), we turn now to the first in a series of grounds that could result in a sustained protest: Latent Ambiguities and Non-Apparent Solicitation Defects.

We’ve previously noted the rule that, to challenge the terms of a solicitation, a protester generally must do so before the date set for receipt of proposals.  This rule is designed to prevent companies from rolling the dice on a bid and then, after they lose, complaining to the GAO about how messed up the solicitation was.  If an offeror submits a proposal against a solicitation it thought was unfair, unclear, or otherwise defective without first objecting, the GAO (and the Court of Federal Claims, for that matter) won’t show any sympathy in a post-award protest.  That’s what pre-award protests are for.

There is, however, an important exception to this rule.  The GAO’s regulation on protests due before the time set for receipt of proposals applies only to “[p]rotests based upon alleged improprieties in a solicitation which are apparent prior to bid opening or the time set for receipt of initial proposals [or revised proposals, for apparent improprieties introduced by an amendment].”  4 C.F.R. § 21.2(a)(1) (emphasis added).  If a solicitation impropriety is not “apparent” until after proposals have been submitted, then the 10-day timeliness clock applies instead.  4 C.F.R. § 21.2(a)(2).

This exception can be triggered when a disappointed bidder learns during a debriefing that the agency applied an apparently clear-cut solicitation provision in an unexpected, but not unreasonable, way.  When a solicitation provision admits of two or more reasonable interpretations, it is ambiguous.  Patent ambiguities – i.e., ambiguities that are “obvious, gross, or glaring” – are deemed to be “apparent” and thus must be challenged before the date set for receipt of proposals, under the normal solicitation challenge timeline.  Colt Def., LLC, B-406696, July 24, 2012, 2012 CPD ¶ 302 at 8.  Latent ambiguities, by contrast, are “more subtle” and may be raised on the 10-day timeline (modified by the debriefing exception, if applicable).  Id.  This allows latent ambiguities to be raised as post-award protest grounds if they are first discovered after award.

The dividing line between patent (“obvious, gross, or glaring”) and latent (“more subtle”) ambiguities is not always clear.  Sometimes evidence of latent ambiguity is reflected in the evaluation record itself, with evaluators documenting a belated realization that the solicitation is ambiguous.  See, e.g., RELI Grp., Inc., B-412380, Jan. 28, 2016, 2016 CPD ¶ 51.  More often, the GAO simply makes a judgment call about whether a reasonable offeror should have noticed the ambiguity before submitting its proposal or not.

The latent ambiguity argument works only if both of the vying interpretations are reasonable.  The protester’s preferred interpretation need not be the better interpretation, but it must be reasonable in light of the solicitation as a whole.  See id. at 6.  The contrary is true, as well.  If the protester’s interpretation is reasonable, and the agency’s is not, there isn’t an ambiguity – the agency simply has failed to comply with the terms of the solicitation.  Because this distinction sometimes is in the eye of the beholder, latent ambiguity is often argued in the alternative:  the agency’s interpretation of the solicitation is unreasonable, but, to the extent it is reasonable, the solicitation was latently ambiguous.

In addition to ambiguities (two reasonable interpretations of the same provision), there also are solicitation improprieties that become apparent only after contract award.  An estimate in a solicitation, for example, may state that an agency anticipates ordering a certain number of items for each of a procurement’s performance years.  The offerors have no reason to doubt the estimate and base their pricing strategies upon it.  After award (perhaps during the course of a bid protest on another ground), it may come to light that, not only was the estimate incorrect, the agency knew its requirements would be materially different from those presented in the estimate but never bothered to correct the solicitation.  Although this is a type of solicitation error, it may be timely challenged within ten days of when it was first known or should have been known.  See, e.g., CGI Fed. Inc., B-410330.2, Dec. 10, 2014, 2014 CPD ¶ 366 at 12-13 (when an agency learns, prior to award, that the solicitation no longer accurately reflects the agency’s requirements, the agency must amend the solicitation and provide offerors an opportunity to submit proposals reflecting the changed requirements).

Finally, merely demonstrating a non-apparent solicitation error or latent ambiguity is not enough to sustain a protest.  The protest must also demonstrate “competitive prejudice” – a showing that, but for the ambiguity, the protester had a substantial chance of contract award.  See SunGard Data Sys., Inc., B-410025, Oct. 10, 2014, 2014 CPD ¶ 304 at 6 (“We will not sustain a post-award protest against an ambiguous solicitation provision where there is no evidence that any offeror was prejudiced by the ambiguity.”).  Competitive prejudice is an essential element of every viable protest, and we’ll encounter it again and again in this series.  In the context of latent ambiguities, demonstrating prejudice generally means the protester must explain how it would have changed its proposal if the solicitation had properly made clear the agency’s interpretation, and how that change would have given the protester a substantial chance at award.

When a protester convinces the GAO that a latent ambiguity or non-apparent solicitation impropriety has caused it competitive prejudice, the agency generally must amend the solicitation to remedy this issue and allow offerors to submit revised proposals in response to the changed or clarified requirement.  Corrective action of this sort can result in a significant change in competitive position after a re-evaluation of proposals.