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November 14, 2023 - Protests & Litigation

October 2023 Bid Protest Roundup: Instructions, Jurisdiction, Scrutiny

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

This month, we feature three bid protest decisions—two from the U.S. Government Accountability Office (“GAO”) and one from the U.S. Court of Federal Claims (“COFC”). Though each of these decisions focuses on a different fundamental point of procurement law, all share a common theme: they pertain to agency awards of indefinite-delivery, indefinite-quantity (“IDIQ”) contract vehicles or task orders thereunder. 

New Generation Solution, LLC

In New Generation Solution, LLC,[1] the GAO considered whether a protester had been properly eliminated from competition for a task order when it submitted a form as an unfillable, rather than fillable, PDF, and found that elimination was proper because the agency had made the fillable PDF format requirement clear in the solicitation.  

New Generation Solution, LLC (“NGS”) protested its elimination from competition for a task order under a Department of Defense, Defense Information Systems Agency (“DISA” or “the Agency”) ENCORE III small business multiple-award IDIQ contract. The task order sought “contractor support to design, plan, install, configure, and maintain systems and services for DISA’s Compute Center’s enterprise and cloud hosting, storage, backup, and virtualization desktop infrastructure programs.”[2] Although award would be on a best-value tradeoff basis considering technical/management approach and price, the solicitation required the Agency first to ensure that each proposal met the solicitation’s administrative requirements. As part of these requirements, each offeror was required to submit a DD Form 254, or Department of Defense Contract Security Classification Specification form. Specifically, the RFP stated that these forms should be submitted in “the original fillable form and format,” warning offerors that failing to submit such a form would render an offeror ineligible for award.[3]

NGS timely submitted its proposal and DD Form 254 but was notified prior to Agency award that it had been disqualified from consideration due to the submission of the DD Form 254 as an unfillable, rather than fillable, PDF file.

NGS protested, contending first that the solicitation did not in fact require it to submit a fillable DD Form 254 as a condition for consideration and, in the alternative, that the solicitation was latently ambiguous regarding whether the DD Form 254 was required to be fillable. The GAO denied the protest on both grounds.

First, the GAO found that the Agency did indeed require submission of a fillable form as a condition of award because it stated that offerors had to submit the “original fillable form and format” with proposals, and in conjunction warned offerors of the possibility of disqualification for failure to comply.

Despite siding with the Agency on this first ground, the GAO continued analyzing whether a latent ambiguity existed in the solicitation instructions regarding the format of the DD Form 254. The protester pointed to the fact that the still-fillable form requirement was phrased in the passive voice and could have been interpreted as requiring the offeror to fill out the fillable form, but not necessarily submit it as a fillable PDF file.  The GAO sided with the Agency, however, in closely reading the language of the solicitation instructions and finding that the only reasonable interpretation was that offerors were required to submit still-fillable PDF versions of the DD Form 254 alongside their proposals.

This decision is perhaps most notable for the fact that the protester’s elimination from competition hinged on a seemingly minor, and potentially inadvertent, administrative error in the protester’s submission. That error was nonetheless a reasonable ground for rejection of the protester’s proposal because the corresponding requirement was set forth in the solicitation alongside a warning that failure to comply could be grounds for elimination. Even nuanced protest arguments are unlikely to save an offeror from a failure to read instructions carefully.

West Electronics, Inc.

In West Electronics, Inc.,[4] the GAO analyzed the Department of the Army, U.S. Army Materiel Command’s (“Army”) award of a task order issued as part of a two-phase IDIQ procurement. The GAO ultimately dismissed the protest, disagreeing with the protester’s assertion that the Army had unreasonably made a material modification to the solicitation without giving offerors adequate time to respond and that, absent that modification, the protester would have been the only offeror eligible for award.

The solicitation sought proposals for a water storage distribution system, which included requirements for field support and water pumps rated at both 125 and 350 gallons per minute (“GPM”). The solicitation anticipated two phases of procurement: first, award of up to five fixed-price IDIQ contracts each requiring fulfilment of a single delivery order for water pumps and product qualification testing of those pumps; and second, award of a single-award task order to one of the Phase 1 contract holders. Specifications for the water pumps were governed by a purchase description under the Automotive Tank Purchase Description that was in effect at the time of the solicitation’s original release. 

Both the protester, West Electronics, Inc. (“West”), and the awardee, GTA Containers (“GTA”), were awarded Phase 1 contracts and associated delivery orders; all Phase 1 awardees were to deliver water pumps for product quality testing within 90 days of contract award.

Three days before the delivery order water pumps were due to the government, however, the Army notified all Phase 1 contract holders that the Army had issued “permanent deviations” to the water storage distribution system program, which included technical changes to the pump specifications that were to be evaluated. These specifications essentially relaxed the requirements for the 350 GPM pumps to a previous, less stringent performance standard. The notice indicated that the Army would issue a formal contract modification incorporating the changes.

Delivery of the pumps under Phase 1 continued: notably, West was the only Phase 1 awardee that met the Phase 1 pump delivery deadline. The Army then completed the Phase 1 product quality testing and issued a request for proposals (“RFP”) for Phase 2 of the procurement. This RFP permitted the Phase 1 offerors to lower their pricing proposed during Phase 1. West elected not to change its pricing, and later learned that the Phase 2 task order had been awarded to GTA.

When West received its requested debriefing, it learned from the Army the reasons for the relaxation of the water pump standards via the Phase 1 modification: first, the agency had determined that the more stringent specifications were unnecessary for the water storage distribution system and that the change would not negatively impact system performance; and second, the change allowed for greater competition among offerors. Upon learning this information, West timely filed its protest.

West alleged that the Army had acted unreasonably when it issued alleged modifications to the solicitation without providing the protester a fair opportunity to respond. West contended that, had it had more time to respond to the relaxed specifications, it could have proposed a less costly pump model to the government. West also contended that it should have been the only firm in competition for Phase 2 of the procurement because it had been the only firm to meet the Phase 1 delivery deadline.

The Army, on the other hand, maintained that the modifications were an update to the underlying IDIQ rather than a modification to either the Phase 1 delivery order or the Phase 2 task order, as neither order was active at the time the modification was issued. The Army also contended that the protester was essentially untimely challenging the terms of the Phase 2 solicitation. The Army also argued that its determination that offerors that had not met the Phase 1 delivery deadline were eligible for Phase 2 award was a matter of contract administration within the Army’s discretion.

The GAO dismissed West’s protest, finding that both issues raised by the protester were indeed matters of contract administration not subject to review by the GAO. 

First, regarding the contention that the Army had modified the solicitation without providing offerors a fair opportunity to respond, the GAO agreed with the Army that the modification was an administrative change to the underlying IDIQ contract’s requirements. The GAO’s regulations do not permit review of matters of contract administration, and therefore the GAO was required to dismiss this particular argument.

Next, regarding West’s contention that it should have been the only firm eligible for Phase 2 award because it alone had met the Phase 1 pump delivery deadline, the GAO again found this dispute administrative and outside its regulatory purview. The GAO emphasized that the only eligibility requirement stated in the Phase 2 solicitation was that offerors meet the Phase 1 product testing requirements and be notified that they were eligible for Phase 2 award by the Army. Three offerors, including the protester and the awardee, met these requirements. Absent a solicitation provision to the contrary, late delivery under prior task or delivery orders is not in and of itself a basis for an offeror to be eliminated from competition for subsequent task or delivery orders. The GAO explained that questions about the timeliness of contract deliverables is a contract administrative matter, and not a valid ground of protest.

Although it may seem to a lay reader that the agency acted unreasonably in issuing a technical modification just three days before delivery of underlying products was required, an understanding of the difference between an underlying IDIQ and a subsequent task order makes the protester’s error clear. Once an IDIQ and associated task or delivery orders have been awarded, changes to performance specifications are matters of contract administration even where task order performance may tangentially impact award of future task or delivery orders.

System Dynamics International, Inc. v. United States

Finally, in System Dynamics International, Inc. v. United States,[5] the Court of Federal Claims (“COFC” or “the Court”) sustained System Dynamics International, Inc.’s (“SDI”) protest of the Army’s award of an IDIQ contract. SDI raised numerous protest grounds and was ultimately successful when the Court found that the Army had unreasonably awarded technical ratings that were inconsistent with solicitation requirements.

The IDIQ at issue was set aside for small businesses and sought design and development engineering support for Soldier Unmanned Aircraft Systems, where the awardee would be providing engineering services to short-range, medium-range, and long-range reconnaissance aircrafts, as well as a handheld ground-control station. The Army anticipated award of an initial task order related to engineering of the ground-control station alongside the IDIQ award.

The evaluation scheme contemplated evaluation of past performance and technical factors by a Source Selection Evaluation Board (“SSEB”), and evaluation of cost/price factors by a Cost/Price Evaluation Team. To be eligible for award, all offerors were required to have a rating of at least “Acceptable” under the technical factor; ratings of at least “Relevant” and “Satisfactory Confidence” or “Unknown Confidence” under the past performance factor; and a determination that their cost/price was complete, fair, reasonable, balanced, and realistic.

Two awardees were excluded from the competition because they received unacceptable technical ratings, leaving only the protester, SDI, and the awardee, Strata-G Solutions, LLC (“Strata-G”) in competition. With regard to the technical factor, the Army evaluation team determined that SDI’s and Strata-G’s proposals each contained a single Significant Weakness. The Army then determined that all offerors had proposed reasonable, realistic, and balanced prices. 

The Army then conducted a best-value tradeoff analysis and ultimately selected Strata-G for award over SDI because the technical subfactor in which SDI received a Significant Weakness was, per the terms of the solicitation, “significantly more important” than the technical subfactor under which Strata-G received a Significant Weakness.

SDI filed an initial protest of the Army’s award to Strata-G in March 2023, which the Army voluntarily remanded to consider certain cost/price aspects of its evaluation. In its post-remand report, the Army indicated that it had reconsidered its analysis and again concluded that Strata-G was the proper contract awardee. 

SDI then filed a second amended complaint, which forms the basis of this protest decision. SDI contended that the Army had arbitrarily and irrationally evaluated technical proposals; unreasonably evaluated professional compensation; conducted a flaw cost realism analysis; and made an arbitrary and capricious source selection decision.[6] The Army contested all of these protest grounds, as well as SDI’s assertion that it was entitled to permanent injunctive relief.

Despite the large number of protest grounds at issue, the Court ultimately resolved the protest on one primary ground.  The Court found that the Army acted unreasonably in failing to assign a Deficiency to Strata-G for one of the technical subfactors, which, if properly assigned, would have precluded Strata-G from competition, leaving SDI with the only technically acceptable proposal.

The missing Deficiency was tied to the labor mapping technical subfactor.  SDI asserted, and the Court agreed, that Strata-G had improperly changed the minimum education requirements for numerous labor categories in its proposal. The Army argued that this merely increased performance risk, rather than rendering Strata-G’s proposal technically unacceptable. 

The Court, however, analyzed the solicitation language regarding the technical subfactor at issue, which itself set forth the minimum education requirements for specific labor categories. The Technical Evaluation Team had explicitly documented 22 labor categories for which Strata-G had failed to propose qualified personnel for performing solicitation requirements. Although the SSEB subsequently adopted this finding, it merely assigned Strata-G a Significant Weakness. Because the solicitation had defined a Deficiency as “a material failure of a proposal to meet a Government requirement,” the Court determined that this Significant Weakness should properly have been a Deficiency. Both the Army and Strata-G’s arguments that Strata-G had in fact met minimum contract requirements were unavailing, as the COFC focused on the plain language of the solicitation itself.

The COFC then found that this error had prejudiced SDI, and that SDI was therefore entitled to a permanent injunction.

While agencies enjoy significant discretion, they must adhere to the evaluation criteria set forth in their solicitations. Here, the protester’s close look at the Army’s technical ratings as compared to the technical requirements of the solicitation paid off handsomely.

 [1] New Generation Sol., LLC, B-421941 (Oct. 24, 2023).

[2] Id. at 2.

[3] Id.

[4] West Electronics, Inc., B-421816 (Sept. 27, 2023).

[5] Sys. Dynamics Int’l, Inc. v. United States, 2023 WL 6532692 (Fed. Cl. Oct. 6, 2023).

[6] Id. at 12.