United States: January 2017 Protest Roundup

Two common themes run through the cases we have chosen for this month's bid protest roundup.  The first three decisions explore some pitfalls relating to the timeliness of proposals and protest grounds.  The last two highlight the fact that the Government Accountability Office's (GAO) well-known deference to agency discretion does not extend to matters where an agency cannot (or will not) document any reasonable basis for a challenged action.  We have summarized the most interesting points of these protests below.

Sumaria Systems, Inc., B-413508.2, Dec. 29, 2016

Protesters ordinarily have until the date set for proposal submission to file a pre-award protest.  That rule is not ironclad, however.  A few pre-award errors must be raised within ten days of when the protest ground was known or should have been known.  In addition, as the protester learned in Sumaria, when a GAO protest is preceded by an agency-level protest, the GAO protest must be filed within ten days of when the agency takes adverse action on the agency-level protest.  Because the protester got these timing rules confused in this case, the GAO dismissed as untimely one of its protest grounds.

The original request for proposals (RFP) contemplated award to the lowest-price technically acceptable (LPTA) offeror.  While Sumaria (the eventual protester) was lowest-priced, it was found technically unacceptable because it did not provide qualifications for its contract program manager.  In the first round of protests, the protester argued that the RFP did not require it to provide qualifications for its contract program manager.  The agency took voluntary corrective action, announcing its intention to terminate award, amend the solicitation, obtain revised proposals, and make a new award decision.  GAO then dismissed the protest as academic.

The protester then filed an agency-level protest, arguing that the agency should simply award the contract to the protester as the lowest-price, technically acceptable offeror, rather than amend the RFP.  On September 14, the agency denied the protest and, on the same day, amended the RFP along the lines originally announced.  Proposals were due October 3.

On September 30 – before the date set for proposal submission, but more than ten days after the agency denied the agency-level protest – the protester filed a GAO protest challenging both the agency decision to take corrective action (other than simply awarding the protester the contract) and the terms of the new solicitation.

GAO distinguished between the challenge to do anything other than award the contract to the protester and the challenge to the terms of the amended RFP.  The former was the subject of an agency-level protest.  GAO's timeliness regulations require such protests to be filed at GAO within ten days of adverse agency action (such as a denial), regardless of whether different timeliness rules would ordinarily apply.  In other words, the ten-day rule trumped the ordinary pre-award rule in this case.  Because the protester filed at the GAO more than ten days after the agency denied the agency-level protest, GAO dismissed the first protest ground as untimely.  (See our previous blog post for this and other peculiarities of agency-level protests.)

GAO then turned to the second ground: whether the terms of the amended RFP were unduly restrictive of competition or otherwise unreasonable.  Because this ground was not raised in the agency-level protest, which preceded the amendment of the RFP, it fell under the ordinary rule for challenges to alleged solicitation improprieties:  it had to be filed before the date set for proposal submission, which it was.  GAO proceeded to deny this ground on the merits.

Takeaway: Bid protest timeliness rules are complicated.  Most contractors are familiar with the general rule of thumb:  if you become aware of a problem pre-award, you must protest before the next date set for submission of proposals; if you become aware of a problem post-award, you must protest within ten days.  As Sumaria learned, however, there are several exceptions to this rule, and even some exceptions to the exceptions.  If you are not certain of which rule governs your potential protest, contact a procurement attorney as early as possible.

Washingtonian Coach Corp., B-413809, Dec. 28, 2016

Timeliness rules affect not only protests, but also proposals.  This is often referred to as the "Late Is Late" rule, and it generally is applied without mercy.

Washingtonian Coach involved an RFP that required offerors to submit electronic proposals to the email addresses of the contracting officer and contract specialist by 2 p.m. on September 16.  Approximately 40 minutes before the deadline, the protester emailed its proposal to the two addresses listed in the RFP.  To confirm receipt, the protester attempted to call the contract specialist at 1:55, and various times after the 2 p.m. deadline.  Also after the deadline, the protester sent emails to both email addresses asking for confirmation of receipt of the proposal.  The agency officials had not received the proposal.  Instead of responding to the protester, they emailed the agency help desk to determine if any other emails had been received from the protester.  Five days later, the help desk informed the contracting officer and contract specialist that the protester had sent eight emails on September 16, but all were blocked before reaching the system's local exchange level because they exceeded ten megabytes in size.  Four other offerors successfully submitted proposals without any technical problems.  The agency accordingly rejected the protester's proposal because it was not received at the designated email addresses by the time set in the RFP.

The excluded offeror protested, arguing that its proposal was properly and timely submitted.  The offeror also argued that it was not proper to be penalized for sending a large email because the RFP made no mention of the size limit of the agency's email system.

Although recognizing the harshness of the "Late Is Late" rule, the GAO held that it is an offeror's responsibility to submit proposals sufficiently in advance to ensure timely receipt by the agency.  What matters is not the time an offeror presses "send," but the time that the designated agency official or office receives the proposal.  GAO also noted that the solicitation incorporated FAR 52.212-1(f)(2)(i)(A), which deems an electronically submitted proposal timely if it is received at the initial point of entry into the government system before 5 p.m. of the day before proposals are due, regardless of whether the designated agency officials actually receive the proposal by the RFP's deadline.  By waiting until less than an hour before proposals were due, however, the protester could not rely on that exception to the timeliness rule.  Accordingly, GAO denied the protest.

Takeaway: Late is late.  Case law and regulations provide for certain limited exceptions to this rule, but offerors should always leave plenty of time to ensure their proposals are received – and receipt is confirmed – by the RFP's deadline.  For electronic submissions, note any size limitations, try to avoid unnecessarily large files, and do not rest until receipt is confirmed.  Zipping files may help avoid problems with size limits.

Global Dynamics, LLC v. United States, 2016 WL 7974999 (Fed. Cl. 2016)

In Global Dynamics, the Court of Federal Claims denied a challenge to an allegedly improper price analysis as untimely.  In this fixed-price procurement, the solicitation did not clearly put offerors on notice that the agency would consider price realism – i.e., whether prices were too low – which ordinarily means that price realism will not be evaluated.  ( See our earlier post on price realism here.)  During discussions, the agency noted the protester's low price in comparison to the other offerors, which the protester alleged led it to raise its price and thus lose its price advantage over other offerors.

When the offeror lost the contract due in part to having a higher price than its competitors, the protester went to court, arguing that the agency conducted a price realism analysis that was not permitted by the RFP and engaged in misleading discussions by leading the offeror unnecessarily to raise its price.  On the misleading discussions ground, the court disagreed that the offeror was misled:  the agency truthfully had observed that the offeror's price was comparatively low, and did not request a higher price.

As to whether the agency performed a price realism analysis that the RFP did not allow, the court observed that the protester itself alleged that it understood from its discussions that the agency was doing exactly that.  Because the solicitation did not clearly provide for a price realism analysis, but the agency allegedly caused the protester to believe the agency was performing one anyway, the court held that the protester was on notice of an ambiguity regarding the ground rules of the procurement and should have sought clarification or protested before submitting its final proposal revision.  By waiting until after award to protest, the protester waived its right to object to the price realism analysis (if one even occurred).

This case is interesting because it highlights a timing dilemma that sometimes arises.  Apparent solicitation improprieties and ambiguities can be protested only before the date for submitting proposals.  Misevaluations, on the other hand, generally can be protested only after award has been made.  When the agency indicates during discussions that it will evaluate proposals in a manner inconsistent with the solicitation, is that notice of an ambiguity in the solicitation (requiring a pre-award protest), or is it the foreshadowing of a misevaluation (requiring a post-award protest)?  The dividing line is not always clear, and guessing wrong may result in a protest being dismissed as premature, or (as happened in this case) as untimely.

Takeaway:  Seek clarification if it appears the agency is evaluating proposals in a manner inconsistent with the solicitation, or if you do not understand what a particular discussion topic means.  If it appears the agency may be changing the ground rules of a procurement, explore your options with a procurement attorney before the next date set for proposal submission.

Threat Management Group, LLC, B-413729, Dec. 21, 2016

MoFo successfully litigated this interesting case involving an out-of-scope task order award.  The protester previously had performed a contract for contingency training services.  As its contract came to an end, the agency decided not to hold a new competition for those ongoing requirements, but instead simply issued the work as a task order to another firm, which held an Indefinite-Delivery Indefinite-Quantity (IDIQ) contract for explosive ordnance disposal support services.

When the agency's action came to light, the protester challenged the task order as outside the scope of the IDIQ contract under which the task order was issued, and argued that the Competition in Contracting Act required the agency to compete the work on a full and open basis.

The IDIQ contract's performance work statement (PWS) included various support services, including certain training services.  The agency argued before GAO that the new task order fell within the scope of the existing IDIQ contract, and therefore a new competition was not required.  GAO disagreed.  GAO noted that it normally will compare the statement of work of the protested task order with the statement of work of the underlying IDIQ contract to determine if a task order is out of scope.  That was not possible here, however, because the agency did not issue a statement of work or performance work statement for the task order at all, other than requiring 13 FTEs to provide "EOD [explosive ordnance disposal] Support Services."  In the absence of any documentation of the specific services requested, GAO was forced to review monthly progress reports that the contractor provided to the agency under the new task order, and found them apparently to be outside the scope of the IDIQ PWS.  Despite multiple requests for additional information, the agency failed to provide sufficient documentation of the work performed, and GAO noted there were inconsistent statements in the series of declarations agency personnel submitted in an attempt to justify the task order award.  Given the dearth of documentation, contradictory declarations by agency personnel, and evidence suggesting the work was out of scope, GAO sustained the protest.

Takeaway:  An agency may not issue task or delivery orders that exceed the scope of the underlying IDIQ contract, and agencies are at significant risk if they fail to document a reasonable basis for the actions they take.  It is also worth noting that protests of out-of-scope task orders, such as this one, are an exception to the normal rule that task order protests can be brought only at the GAO and only for task orders exceeding statutorily determined dollar values.

Walker Development & Trading Group, Inc., B-413924, Jan. 12, 2017

Agencies enjoy great discretion in deciding to cancel a solicitation, and GAO seldom sustains a protest challenging such a decision.  GAO sustained this protest, however, where the agency canceled a solicitation (and simply gave the work to the incumbent contractor, who the protester alleged "always receives these laundry contracts") but failed to give GAO a consistent explanation or sufficient documentation of the true reason for the cancelation.

The agency issued a Request for Quotations (RFQ) for laundry services, anticipating an IDIQ, fixed-price contract.  The agency received quotations, revised the solicitation, and received revised quotations.  The agency then issued a notice stating that the solicitation had been canceled due to "legal guidance."  The agency then apparently exercised its rights under FAR 52.217-8 to extend its existing laundry contract with the incumbent contractor to continue procuring services from it.  This protest followed.

The protester argued that the agency lacked a reasonable basis to cancel the solicitation, that the agency's stated rationale for canceling the solicitation was a pretext, and that the agency's actual motivation was to make a de facto sole-source award to the incumbent.  On the due date of the agency report, the agency filed an "Agency response and motion to dismiss" with merely three attachments.  The attachments showed only that the agency awarded "emergency laundry services" to the incumbent and extended its contract.  Inexplicably, the contract extension bore the solicitation number of the canceled RFQ.  GAO informed the agency that its response was incomplete and requested that it address the cancelation of the solicitation.  The agency supplemented its record with a two-page narrative by the contract specialist explaining that the agency did not make an award because the lowest-priced offeror's quotation was below the solicitation's minimum order amount.  After another request by the GAO, the agency submitted a brief supplemental legal memorandum that provided no additional insight into the cancelation issue.  After a third request by the GAO, the agency stated that it had produced all relevant documents and had nothing further to add.

An obviously frustrated GAO found that the agency had blown every chance for providing a rational explanation for its decision to cancel the competition and give the work to the incumbent.  Accordingly, the GAO made the adverse inference that no rational explanation existed and sustained the protest.

Takeaway:  GAO affords agencies great deference in canceling a solicitation on a reasonable basis, but that deference is not unlimited.  When an agency cannot explain and document a reasonable and coherent basis for cancelation, GAO may sustain a protest.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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