GAO sustains protest where agency fails to establish a competitive range and engages in unequal discussions only with the awardee

On April 25, 2022, the Government Accountability Office (GAO) sustained a protest filed by Rice Solutions LLC, challenging the award of a Department of Health and Human Services Indian Health Service (IHS) contract to SOPOR LLC. Rice Solutions alleged that IHS improperly engaged in discussions with only SOPOR, and not the other offerors, as required by the Federal Acquisition Regulations (FAR). The GAO agreed with Rice Solutions, finding that IHS had improperly engaged only the awardee in discussions and sustained the protest, recommending that the agency take corrective action. This decision serves a reminder that an agency may not engage in unequal discussions, and if it does so, the procurement may be overturned by the GAO, if it is challenged.

Background

On Dec. 10, 2021, IHS issued a solicitation for certified registered nurse anesthetist services at the Pine Ridge Service Unit health care facility in South Dakota, under FAR Part 12 procedures.  The solicitation contemplated the award of a contract that would consist of a one-year base period and four one-year options. The solicitation provided that award would be made to the responsible offeror whose offer was considered to be most advantageous to the government, with price and other factors being considered.

The technical evaluation factors were listed as: problem and approach; past performance; and key personnel. However, the solicitation contained conflicting descriptions of the weight that IHS would give to the technical factors. As well, the solicitation was silent regarding the importance of price relative to the technical factors. Finally, the solicitation informed offerors that IHS intended to award the contract without conducting discussions, but that the agency reserved the right to conduct discussions.

The significant dates and events leading up to the filing of the protest were as follows:

  • Rice Solutions, SOPOR, and one other company timely submitted proposals in response to the solicitation.  
  • On Jan. 6, 2022, IHS’ technical evaluation team determined that Rice Solutions was the second highest rated proposal and was its second choice for the award. Importantly, IHS evaluators determined that both Rice Solutions and the third offeror had technically unacceptable proposals.
  • IHS evaluators did not eliminate Rice Solutions from the competition, and they did not establish a competitive range.
  • On Jan. 6, 2022, IHS entered into discussions only with SOPOR.
  • On Jan. 11, 2022, IHS requested a final proposal revision only from SOPOR, and SOPOR provided this to the agency on that same day.
  • On Jan. 12, 2022, the IHS contracting officer selected SOPOR for award.

After Rice Solutions received notice that it was an unsuccessful offeror, it filed the instant protest arguing that IHS unfairly conducted discussions with only SOPOR, thereby denying Rice Solutions an opportunity to also submit a revised proposal.   

The GAO’s findings

The GAO first concluded that the agency’s assertion that Rice Solutions’ proposal was technically unacceptable was not supported by the record, which indicated that the evaluators had differing opinions regarding the strength of the offeror’s technical approach. The GAO determined that it was unclear whether Rice Solutions’ proposal should have ultimately been found technically unacceptable in the first place, particularly in light of the conflicting solicitation provisions related to the relative weight of the price and non-price factors.

But the GAO ultimately sustained the protest specifically on the grounds that IHS had failed to properly establish a competitive range of offerors that it wished to enter into discussions with. The GAO opined that even though an agency has broad discretion in establishing a competitive range and is not required to memorialize its competitive range determination expressly in a formal document, it is required to provide sufficient information to adequately support its rationale. The GAO noted in this case that the contemporaneous record did not contain any documentation or support for IHS’ contention that a competitive range had been established before entering into discussions with SOPOR.

In fact, the GAO noted that the record indicated the opposite, because in response to the GAO’s request for additional information during the protest, IHS provided a declaration from the technical evaluation team chair, in which he admitted that prior to the protest, he was unfamiliar with the terms ‘competitive range’ and ‘competitive range determination’ and had only come to understand what those terms meant through this protest process. This admission, via this declaration, for the GAO confirmed that IHS had not established, or even intended to establish, a competitive range before the agency entered into discussions with SOPOR. The GAO concluded that once the agency chose to conduct discussions, it was required to so with all offerors in the competitive range, and that because no competitive range had been established, the agency was required to conduct discussions with all offerors.

Takeaways

  • An agency, if it decides to conduct discussions, must establish a competitive range and conduct discussions with all offerors in the competitive range. If it fails to do this, the GAO will sustain a protest challenge based upon this conduct.
  • Further, an agency may not engage in discussions with any offerors when a competitive range has not been established. The GAO has opined that a de facto competitive range of one is not created when an agency finds all offerors except for one technically unacceptable. 

GAO determines protestor is not an interested party and also filed an untimely protest

On April 14, 2022, the Government Accountability Office (GAO) dismissed a protest in the Matter of U.S. Marine Management, Inc. B-420468, finding the protest untimely because the protester filed it more than 10 days after it knew the basis for its grounds of protest and because the protester failed to demonstrate that was is an interested party to raise such grounds of protest. This decision serves as yet another reminder that when it comes to bid protest litigation before the GAO specifically, timeliness matters.

Background

 On March 23, 2021, the Navy issued a request for proposal (RFP) pursuant to Federal Acquisition Regulation (FAR) Part 12, using the negotiated procurement policies and procedures established under FAR Part 15. The RFP was for a time charter of an ice-class tanker vessel for the transportation of petroleum and other cargo and contemplated the award of a contract for a 12‑month base period, three one‑year option periods, and one 11‑month option period. The RFP informed offerors that the Navy’s award would be based on a lowest-price, technically acceptable basis and that the following evaluation factors would be considered: critical submission data, technical, past performance, and price.

The significant dates and events leading up to the filing of the protest are as follows:

  • On May 1, 2021, Marine Management submitted three proposals in response to the RFP: one proposing the vessel Maersk Peary for a term of 36 months; one proposing the vessel Maersk Peary and an unnamed replacement vessel for a term of 59 months; and one proposing the vessel CB Adriatic for a term of 59 months. Following these submissions, the Navy conducted initial discussions with Marine Management regarding its three proposals.
  • On September 7, 2021, Marine Management submitted a revised proposal for its 59‑month Maersk Peary and replacement vessel offer, reaffirmed its 36‑month Maersk Peary proposal without revisions, and withdrew its CB Adriatic proposal via email to the agency.
  • On November 3, 2021, the Navy informed Marine Management that the initial CB Adriatic proposal had been included in the final competitive range even though Marine Management had withdrawn this proposal. The next day, the Navy informed Marine Management that its other two proposals had been excluded from the competitive range. Marine Management timely requested a pre-award debriefing for the 59‑month Maersk Peary and replacement vessel proposal, but not for the 36‑month Maersk Peary
  • On November 12, 2021, the Navy provided Marine Management with a pre‑award debriefing for its 59-month Maersk Peary and replacement vessel proposal.
  • The Navy set a deadline of November 29, 2021 for the submission of final proposal revisions. Marine Management did not submit any final revised proposals.
  • On December 23, 2021, the Navy notified Marine Management that it had awarded the tanker charter contract to another offeror.
  • On January 3, 2022, the Navy provided Marine Management with a debriefing for its CB Adriatic proposal, and Marine Management timely submitted questions to the Navy regarding its debriefing, to which the Navy responded on January 11, 2022.

On January 18, 2022, Marine Management filed a protest in which it alleged that the Navy unreasonably relaxed solicitation requirements for the awardee and that its technical evaluation and price evaluation of the awardee were unreasonable. The Navy filed a motion to dismiss the protest, alleging that the protest grounds were not appropriate for consideration on the merits.

The GAO’s findings

The GAO first concluded that Marine Management was not an interested party with standing to protest the reasonableness of the Navy’s technical and price evaluation of the awardee’s proposal because two of its proposals were found to be technically unacceptable and excluded from the competitive range, and the third proposal had been withdrawn. The GAO concluded that if it were to sustain the protest, Marine Management would neither be in line for award (because two of its proposal had been excluded) nor capable of submitting a revised proposal (because it had withdrawn its third proposal from consideration). By law, a GAO protest must be filed by an interested party. An interested party is an actual or prospective bidder or offeror whose direct economic interest would be impacted by the award of a contract or by the failure to award a contract.

Notably, the GAO did conclude that Marine Management was an interested party and had standing to protest the Navy’s relaxing of several solicitation requirements. This was because, according to the GAO, a sustainment based on these grounds would most likely result in the GAO making a recommendation that the Navy revise the RFP, accept revised proposals, and make a new award decision. Because Marine Management would potentially have been able to revise the two proposals that it had not withdrawn, it would have been an interested party to challenge the contract award on these bases.

However, even despite this conclusion, the GAO ultimately went on to find that Marine Management’s protest was untimely. The GAO pointed out that by regulation, a protest that is based on other than alleged improprieties in a solicitation must be filed no later than 10 days after the protester knew or should have known of the basis for its protest, whichever is earlier. 4 C.F.R. section 21.2(a)(2). The GAO also pointed out that while an exception to this general rule is a protest that challenges a procurement conducted on the basis of competitive proposals under which a debriefing is requested and, when requested, is required, this exception will not apply in a situation such as the one in this case, where an agency provides a debriefing that is not required. Here, Marine Management had withdrawn its CB Adriatic proposal on September 7, 2021, and therefore it was not an unsuccessful offeror entitled to a post-award debriefing related to its CB Adriatic proposal, even though the Navy provided a post-award debriefing.

As part of its CB Adriatic proposal debriefing, Marine Management asked follow-up questions that related to the Navy’s treatment of certain RFP requirements and received information that led it to ultimately raise a specific protest ground. But because Marine Management had received the information from the Navy concerning this protest ground, which was related to the relaxation of the RFP requirement associated with vessel reflagging requirements, no later than January 5, 2022, according to the record, Marine Management was untimely in filing its protest on January 18, 2022, which was more than 10 days after it had received the information that gave rise to the protest allegation.

Takeaways

  • A protestor must be able to establish that it is an interested party to avoid having its protest dismissed by the GAO. A protestor that cannot receive an award if it prevails on the merits of its protest is not an interested party.
  • In a “best value” negotiated procurement, the GAO will determine whether a protestor is an interested party by examining the probable result if the protest is successful. This means that an actual offeror will be determined to be an interested party if it would regain the opportunity to compete if the protest is sustained.
  • An unsuccessful offeror must pay close attention to the GAO timelines for filing a protest to avoid missing the protest window.

Chinese authorities focus in on the collection of prescription and usage data in anti-corruption drive

As part of an anti-corruption campaign targeting the healthcare sector, the Chinese authorities’ latest measures seek to prohibit the improper collection of prescription and usage data by healthcare professionals (HCPs) and employees of healthcare companies. The regulations cover prescription and usage data in relation to pharmaceutical products, medical devices and medical consumables.

Our Asia-Pacific regulatory and investigations team cover the following issues in their latest alert:

  • an overview of  the regulations targeting HCPs;
  • an outline of the regulations targeting employees of companies in the healthcare sector; and
  • a useful explanation of what the regulations mean for you and how to deal with them.

Read the full alert here.

 

GAO sustains a protest because agency documentation fell short

On March 14, 2022, the Government Accountability Office (GAO) sustained a protest (B-420267.3, B-420267.4) filed by Starlight Corporation (Starlight), a small business based in Carlsbad, California, contesting the Air Force’s award of a contract to a competitor.

In its protest, Starlight complained that the Air Force’s past performance evaluation was not in accordance with the solicitation’s evaluation criteria and was otherwise unreasonable. This decision serves as yet another reminder that the GAO will scrutinize the agency record and sustain a protest where the agency does not properly document its evaluation decision in accordance with the terms of the solicitation.

Continue Reading

GAO denies a protest as untimely, notwithstanding the Agency’s decision to answer additional questions after enhanced debriefing concluded

On March 7, 2022, the Government Accountability Office (GAO) dismissed a protest in the Matter of K&K Industries, Inc. B-420422; B-420422.2, finding the protest untimely because it had been filed more than ten days after enhanced debriefing concluded. This decision serves as another reminder that when it comes to bid protest litigation before the GAO specifically, timeliness matters, and the protest clock starts after an agency definitively concludes a requested and required debriefing. Additionally, this decision reinforces the rule that when an original protest is untimely, the GAO will dismiss both the original protest and all supplemental protest grounds.

Background

The Department of the Army, Army Corps of Engineers (the “Agency”) issued a solicitation for the design and renovation of a historic barracks building in Fort Riley, Kansas. K&K Industries, Inc. (“K&K” or the “Protester”) competed for award under this solicitation, but the Agency ultimately made award to another offeror and notified K&K of its decision on September 28, 2021. K&K then timely requested a debriefing and a redacted version of the Source Selection Decision Document (“SSDD”). The significant dates and events that followed were operative in the GAO’s ultimate decision: Continue Reading

FAR Council mandates more domestic content in Buy American Act revision

75% domestic requirement takes effect in 2029

On March 7, the Federal Acquisition Regulatory (FAR) Council issued a final rule changing the “Buy American” requirements for federal contractors. The final rule is very similar to the proposed rule published in July 2021 and it materially changes the regulations at FAR Part 25, which implements the Buy American Act (BAA). These changes come more than a year after President Joseph Biden issued Executive Order 14005 – Ensuring the Future Is Made in All of America by All of America’s Workers, which provided that U.S. government procurement should “maximize the use of goods, products, and materials produced in, and services offered in, the United States.”

Background
Passed by Congress and signed by President Herbert Hoover in 1933, the BAA requires the federal government to purchase domestic “articles, materials and supplies” when procured for public use. The FAR implements the BAA and outlines how procuring agencies can determine whether solicited materials or products are “domestic.” According to the FAR, goods are considered “domestic” if they are “such unmanufactured articles, materials, and supplies as have been mined or produced in the United States,” or “such manufactured articles, materials, and supplies as have been manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured, as the case may be, in the United States.” Exceptions to the BAA include instances where the cost of the items is determined to be unreasonable, instances where it would not serve public interest to purchase the products domestically, instances where the products are not available domestically, and instances in which an acquisition is subject to a specific trade agreement. Continue Reading

GAO sustains protest because of material key personnel misrepresentations and disparate treatment during proposal evaluation

Late last year, on December 20, 2021, the Government Accountability Office (GAO), sustained a protest in the Matter of Insight Technology Solutions, Inc. B-420133.2, B-420133.3, B-420133.4 when it found that the Department of Homeland Security, U.S. Immigration and Customs Enforcement (Agency) unreasonably and disparately evaluated the Awardee’s proposal to provide information technology (IT) support services for the Agency’s student and exchange visitor program (SEVP). This decision is a stark reminder that exclusion of an offeror from a competition is warranted where an offeror has made a material misrepresentation in its proposal and where an agency’s reliance on that offeror’s misrepresentation had a material effect on the evaluation results.

Background

On April 28, 2021, the Agency issued a fair opportunity proposal request (FOPR) to firms holding contracts under the National Institutes of Health’s chief information officer-solutions and partners 3 (CIO-SP3) small business government-wide acquisition contract (GWAC). The FOPR informed offerors that the Agency intended to issue a task order on a best-value tradeoff basis to provide Student and Exchange Visitor Information System IT services. The FOPR was structured as two-phase procurement: phase I required interested firms to affirmatively respond that they wished to participate in phase II, and phase II required offerors to provide a written response to the FOPR and a video presentation. The FOPR provided that the Agency would evaluate proposals based on the certifications factor and the experience factor. Following the evaluation, the Agency would conduct a down-select to up to four proposals that would be considered for award. After the down-select, the FOPR provided that the Agency would evaluate the remaining proposals in light of three evaluation factors: technical approach, management approach, and price. The FOPR also provided that the Agency did not intend to conduct discussions with any offerors.

Importantly, the Agency set forth the minimum qualifications for key personnel in the FOPR and specifically required the proposed project operations manager (PPOM) to have a minimum of five (5) years of experience in managing projects, with a focus on business process and re-engineering projects. Additionally, even though the FOPR did not require offerors to submit key personnel resumes, it did require offerors to clearly identify qualifications and to identify any unique qualifications or experience proposed that exceed the minimum qualifications.

In response to the FOPR, the Agency received seven proposals. After its initial evaluation, the Agency selected four offerors to proceed to phase II, including the Awardee and the Protestor. The Agency conducted its Phase II evaluation of proposals, and when the Source Selection Authority (SSA) discussed the management approach of the offerors in the tradeoff memorandum, the SSA specifically noted that the offeror determined to be the best value and chosen for award proposed “personnel with significantly more experience than the minimum requirements.” The SSA in the tradeoff memorandum did not discuss the experience of the Protestor’s proposed key personnel in its tradeoff analysis.
On September 2, 2021, the Agency transmitted notice to the Protestor that it was not the successful offeror. The Protestor timely requested a debriefing, which was provided, and then it timely protested the award before the GAO.

Protest Grounds

The Protestor asserted that the award was improper because Awardee misrepresented the relevant experience of its PPOM. Specifically, the Protestor argued that the Awardee’s proposal misrepresented that its PPOM had nine years relevant experience managing projects, with a focus on business process and re engineering projects. Protestor argued that the PPOM did not have the nine years of experience claimed, nor did the PPOM even meet the FOPR’s minimum requirement for five years of experience. The Protestor complained that, because the evaluation both of Awardee’s technical acceptability and the benefits provided by the PPOM’s experience were based in significant part on the misrepresentation that the PPOM had nine years of experience, the Agency’s evaluation was flawed and did not provide a reasonable basis for making award to the Awardee.

The Protestor also complained that the proposals were evaluated disparately under the management approach factor because the Awardee was assessed a “raises-confidence” observation for its approach to “back-fill” vacancies while Protestor was not assessed the same “raises-confidence” observation, despite proposing a similar approach. Specifically, the Protestor argued that, similar to the Awardee, it had proposed to cross-train all of its staff so that they would be ready to cover any vacancies while they were being filled; despite proposing this approach, the Protestor was not credited with a similar observation by the Agency.

GAO’s Findings

The GAO sustained the protest on both grounds. Specifically, the GAO found that the Awardee’s proposal included a material misrepresentation, and that the Agency disparately evaluated the management approach factor despite similar approaches for “back-fill” vacancies.

In its decision, the GAO concluded the Awardee’s assertion that its PPOM had nine years of experience managing projects was a misrepresentation. The GAO relied on information contained in the Agency Record which conclusively indicated that the PPOM had far less experience than the nine years claimed. The GAO found that this misrepresentation was material because the Agency relied upon when it determined that the Awardee’s management approach met and exceeded the requirements. According to the GAO, this reliance had a significant impact on the evaluation and ultimate award to Awardee. The GAO concluded that the Agency’s actions prejudiced the Protestor because the Protestor had the lowest-priced proposal and would have had a substantial chance of receiving the award had the Awardee’s proposal been accurate with respect to the experience level of its PPOM.

With respect to the disparate evaluation allegation, the GAO noted that the Awardee and the Protestor both proposed under the Management Factor similar approaches to “back-fill” vacancies; however, the Awardee alone was assessed a “raises-confidence” observation by the Agency while the Protestor was not. The GAO noted the long standing requirement that Agencies treat all offerors equally and evaluate proposals evenhandedly, and determined that the Agency erred in its evaluation because the offerors’ approaches were substantially indistinguishable and that the differences in the ratings assigned by the Agency did not stem from differences between the proposals and were not supportable based upon the record.

Ultimately, as stated, the GAO sustained both protest grounds and recommended that the Agency terminate Awardee’s task order, exclude the Awardee from the competition, reevaluate the remaining proposals’ management approaches, and make a new source selection decision.

Takeaways

This decision is an important reminder that material misrepresentations in a proposal may be a basis for disqualifying a proposal and canceling a contract award. In instances where source selection teams are required by the solicitation terms to evaluate the qualifications of key personnel, offerors must affirmatively demonstrate that their key personnel meet the qualifications required or their proposal may be deemed deficient. Unsuccessful offerors who have reason to question the qualification representations of other bidders should consult with counsel and avail themselves of the protest process if they believe that a competitor has mad misrepresentations in its proposal upon which the government has relied. By doing so, they will ensure that the source selection teams have not made a fatal error that has tainted the award decision and resulted in an unfair result.

Recent Chinese data security laws could increase roadblocks for litigants seeking discovery in U.S. courts

Two new data security laws are making it increasingly difficult to obtain discovery materials located in China for U.S. litigants. The Data Security Law (“DSL”) and the Personal Information Protection Law (“PIPL”) require parties to seek approval from the Chinese government before sending any data from China to a foreign court or law enforcement authority.  Read more on how these new laws may affect U.S. litigation on Reed Smith’s Technology Law Dispatch Blog

CO AG hosts forum on state privacy laws, announces new privacy advisor

This past Friday, the Attorney General Alliance and the Colorado Department of Law held a symposium, “Colorado Privacy Act: Rights, Obligations, and Next Steps.” The symposium is another signal that state attorneys general (state AGs) around the country intend to take a primary role in influencing, and ultimately enforcing, data privacy policies. The panel discussions revolved around the Colorado Privacy Act (CPA), one of only three comprehensive data privacy laws in the nation—the other two being California’s Consumer Privacy Act of 2018 (CCPA) and Virginia’s Consumer Data Protection Act (VCDPA). Panelists, including the state legislators who sponsored the CPA, discussed the impact of the law since its enactment this past summer and how it could serve a model for other states to look to when considering their own comprehensive privacy laws.

Continue Reading

Federal agencies must update cybersecurity controls to achieve a zero trust architecture

On January 26, 2022, the U.S. Office of Management and Budget (OMB) published Memorandum M-22-09, “Moving the U.S. Government Toward Zero Trust Cybersecurity Principles” (the ZTA Memorandum), which requires federal agencies to take a hard look at their cybersecurity controls, and invest in and implement new measures to better protect the government’s networks, systems, and devices. The ZTA Memorandum expands upon President Biden’s Executive Order 14028, “Improving the Nation’s Cybersecurity,” which stated the president’s general goals to advance the federal government toward zero trust architecture (ZTA). The ZTA Memorandum also follows President Biden’s “Memorandum on Improving the Cybersecurity of National Security, Department of Defense, and Intelligence Community Systems,” issued on January 19, 2022, which established certain cybersecurity requirements for National Security Systems (NSS) and set forth the methods by which federal agencies could secure exceptions to these requirements when appropriate given unique mission needs. To comply with the ZTA Memorandum’s increased cybersecurity requirements, federal agencies will be required to invest in new and/or increased cybersecurity controls, policies, and procedures to move to a ZTA. For government contractors involved in IT modernization efforts for the federal government, this initiative will likely drive unique and evolving agency requirements, which will ultimately present new partnership opportunities.

Continue Reading

LexBlog