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Introduction
General Counsel, P.C.'s Government Contracts Practice Group is pleased to provide you with the Bid Protest Weekly. Researched, written and distributed by the attorneys of General Counsel, P.C., the Bid Protest Weekly allows the Government Contract community to stay on top of the latest developments involving bid protests by providing weekly summaries of recent bid protest decisions, highlighting key areas of law, agencies, and analyses of the protest process in general.
General Counsel, P.C.'s Government Contracts Group has over eighty years of combined government contract law experience (both as in-house and outside legal counsel), helping clients solve their government contract problems relating to the award or performance of a federal government contract, including bid protests, contract claims, small business concerns, and teaming and subcontractor relations.
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1. SHG National, LLC, B-404613.3, July 20, 2011
Link: GAO Opinion
Agency: Department of the Army
Disposition: Protest denied.
Keywords: Technical Evaluation
General Counsel P.C. Highlight: In reviewing protests against allegedly improper evaluations, GAO examines the record to determine whether the agency's judgment was reasonable and in accord with the evaluation factors set forth in the RFP.
SHG National, LLC, (SHG) protests the award of a contract under a request for proposals (RFP), issued by the Department of the Army, for lodging, meals, and transportation services.
The RFP provided for the award of a fixed-price requirements contract. A detailed performance work statement (PWS) was provided, describing the contract requirements. Offerors were informed that the agency estimated that an average of 53, and a maximum of 165, applicants would require daily meals, lodging and transportation services. In this regard, the PWS advised offerors that the actual number of applicants might exceed the agency's estimates and that the contractor was responsible for ensuring that a sufficient number of rooms were available to fulfill the daily requirements of the contract. The RFP provided that award would be made on a best value basis considering the following factors: mission capability, past performance, and price. Offerors were advised that the agency would conduct an on-site evaluation, and that past performance would be separately evaluated and assessed a performance risk rating.
With regard to the mission capability factor, the RFP provided that the agency would assess the following elements: sanitation/cleanliness/condition/quality control; security and safety; meals; and facility location. Proposal preparation instructions were provided for each of these evaluation elements. For example, regarding sanitation- cleanliness-condition-quality control, the RFP advised offerors that the agency would evaluate all aspects of their proposed hotel and instructed offerors to provide the total number of rooms, describe their dining facilities, and make all areas available for inspection.
The awardee received a higher rating under the mission capability factor and reflected the SSEB's assessment that the awardee's proposal presented nine strengths, three of which were significant, and one weakness under that factor.
SHG complains that its proposal should have been rated excellent under the mission capability factor and contends that the agency used unstated evaluation criteria. The protester argues that its proposal met, or exceeded, the RFP's minimum requirements for the number of hotel rooms, kitchens, security, lobby, and check-in areas. SHG also maintains that the agency evaluated proposals unequally by overvaluing features of the awardee's proposed hotel but undervaluing similar features of SHG's proposed hotel.
GAO states that in reviewing protests against allegedly improper evaluations, GAO examines the record to determine whether the agency's judgment was reasonable and in accord with the evaluation factors set forth in the RFP, and whether the agency treated offerors equally in evaluating their respective proposals. While GAO has recognized that such judgments are often subjective by nature, the exercise of these judgments in the evaluation of proposals must be documented in sufficient detail to show that they are not arbitrary. Where a protester challenges the agency's evaluation and source selection, GAO will review the evaluation and award decision to determine if they were reasonable, consistent with the solicitation's evaluation scheme, as well as procurement statutes and regulations, and adequately documented.
GAO finds, based on a review of the record, that the agency's well-documented evaluation of SHG's proposal was reasonable and consistent with the RFP's stated evaluation criteria. The record shows that the agency found, and extensively documented, numerous qualitative differences in this regard between the protester's and the awardee's proposed hotels. The record does not support the protester's assertion that the agency evaluated proposal disparately or used undisclosed evaluation criteria. The protest is denied.
2. D'Andre Insurance Services, LLC, B-405046, July 21, 2011
Link: GAO Opinion
Agency: Department of the Interior
Disposition: Protest denied.
Keywords: Technical Evaluation
General Counsel P.C. Highlight: A vendor has the burden of submitting an adequately written quote, and it runs the risk that its quotation will be evaluated unfavorably when it fails to do so.
D'Andre Insurance Services, LLC (DIS) protests the issuance of a purchase order, under a request for quotations (RFQ), issued by the Department of the Interior, for professional services for the Risk Management Agency (RMA), U.S. Department of Agriculture.
The RFQ, issued as a combined synopsis/solicitation under the streamlined commercial item acquisition procedures of Federal Acquisition Regulation (FAR) Parts 12.6 and 13, provides for the issuance of a fixed-price purchase order for the evaluation of, and recommended improvements for, the Nursery Crop Insurance Program, which is administered by RMA, and recommendations for alternative designs for providing insurance for nursery crops. A detailed statement of work (SOW) was provided. Vendors were informed that the purchase order would be issued on a best value basis considering the following factors: technical approach, project management, past performance, and price.
The protester quote was found to be unacceptable under the technical approach factor. The evaluators determined that DIS failed to demonstrate knowledge of how the nursery crop insurance program currently works and that the protester's quotation contained a deficiency and numerous weaknesses.
DIS broadly challenges its rating under each of the non-price factors, disagreeing with the agency's technical judgments and asserting that the agency's evaluation of its quotation reflected bias and bad faith. GAO states that in reviewing protests challenging an agency's evaluation of quotations, it will not conduct a new evaluation or substitute our judgment for that of the agency; rather it will examine the record to determine whether the agency's judgment was reasonable and consistent with the solicitation's evaluation criteria, and with procurement statutes and regulations. A vendor has the burden of submitting an adequately written quote, and it runs the risk that its quotation will be evaluated unfavorably when it fails to do so. A protester's mere disagreement with the agency's evaluation does not establish that the evaluation was unreasonable.
Here, the protester's arguments reflect nothing more than disagreement with the agency's judgment as to the merits of the firm's quotation. As noted above, the agency found that the protester's quotation was deficient with respect to addressing how it would conduct the evaluation of the current program, because DIS only discussed alternatives to establishing maximum insurable prices for each insurable nursery plant. DIS disagrees with the assigned deficiency, arguing that developing alternatives can only be done after performing the program evaluation, and that, in any event, its quotation provided a preliminary discussion of developing alternatives. There is no merit to this argument. Vendors were instructed to discuss their approach to performing the SOW evaluation and recommendation requirements, which included, among other things, providing alternative methods for establishing liability on fluctuating nursery inventory, indemnifying nursery producers, and establishing the maximum insurable price.
Similarly, DIS disagrees with the agency's assignment of weaknesses in the firm's quotation. For example, with respect to the agency concern that DIS had proposed excessive effort to perform this work and failed to demonstrate knowledge of the current program, DIS argues that the "resources needed is a professional determination" and that it has experienced insurance professionals, and not "academics or economists." With respect to the evaluators' concern that providing three individuals for each listening session seemed excessive, DIS contends only that it sees this as a positive and not negative attribute of its quotation. Similarly, with respect to the agency's concern that the firms' plan to review underwriting after reviewing loss adjustment standards was not a logical sequence, DIS only states that there is an advantage to performing the work in the sequence it offered and that therefore it should not be penalized for its "superior business analysis." As noted above, arguments such as these that only disagree with the agency's judgment do not demonstrate that the agency unreasonably evaluated the firm's quotation. GAO finds that the agency reasonably rejected the protester's quotation, given that the record supports the agency's determination that the quotation was deficient and contained a number of weaknesses. The protest is denied.
3. Intermarkets Global, B-400660.12; B-400660.13, May 6, 2011
Link: GAO Opinion
Agency: Department of Defense
Disposition: Protest denied.
Keywords: Legal Standing; Interested Party Status
General Counsel P.C. Highlight: In order for a protest to be considered, a protester must be an interested party, that is, an actual or prospective offeror whose direct economic interest would be affected by the award or failure to award a contract.
Intermarkets Global (IMG) protests the Department of Defense, Defense Logistics Agency's (DLA) award of a contract to Anham FZCO, LLC, under a request for proposals (RFP), for the supply of a full service food line in Kuwait, Iraq, and Jordan. IMG challenges the conduct of discussions, evaluation of proposals, and award determination.
The RFP provided for award of an indefinite-delivery, indefinite‑quantity (ID/IQ), fixed-price contract, for a base period of 18 months with four option periods, to serve as a full line food distributor responsible for the supply and delivery of semi-perishable and perishable items to the military and other federally funded customers within Kuwait, Iraq, and Jordan. Award was to be made on a "best value" basis, with technical factors significantly more important than price. Prices--including prices for products and distribution--were to be evaluated for completeness, reasonableness, and balance. In addition, the RFP advised that proposals found unrealistically low in price could be viewed as lacking understanding of the RFP's requirements.
After a number of amendments and three protests against the terms of the solicitation, IMG, Anham, and another protester submitted proposals. Based on Anham's higher technical rating and lower price, DLA awarded the contract to Anham. IMG and the other protester protested the award, challenging the evaluation of proposals, conduct of discussions, and price realism analysis. DLA executed an override of the resulting stay of contract performance based on urgent and compelling circumstances significantly affecting the interests of the government. GAO conducted an outcome prediction alternative dispute resolution (ADR) conference in which the GAO attorney indicated that GAO likely would sustain the protests on the basis that the agency's price realism determination was unreasonable. The GAO attorney also raised concerns about several aspects of the solicitation requirements and related technical evaluation--including the force protection requirements and evaluation of warehouse capacity--but indicated that these concerns would not serve as additional bases for sustaining the protests. Based on DLA's determination to take corrective action--reopening limited discussions on specific issues, requesting revised proposals, and making a new source selection decision--the protest was dismissed. Both parties again protested the agency's corrective action and IMG's protest was denied. Eventually, upon learning of the resulting award to Anham, and after a debriefing, IMG filed this protest.
IMG protests the conduct of the procurement and award to Anham on numerous grounds, including challenges to the evaluation of Anham's and IMG's proposals, unequal discussions, and an alleged, improper change in Anham's proposed team.
First, however, the agency requests dismissal of the protest, asserting that IMG withdrew or qualified its price proposal thereby rendering IMG's proposal unacceptable. GAO states that in order for a protest to be considered, a protester must be an interested party, that is, an actual or prospective offeror whose direct economic interest would be affected by the award or failure to award a contract. A protester is an interested party to challenge the agency's evaluation of proposals where there is a reasonable possibility that the protester's proposal would be in line for award if its protest were sustained. The record shows that IMG is ineligible for award for failing to offer the required firm fixed-price proposal, and that there is another proposal besides the awardee's eligible for award. Thus, IMG is not an interested party to challenge the award.
IMG's final proposal revision (FPR) discussed at length how the agency's clarification of pallet sizes would impact its storage capacity. IMG noted that such changes would likely impact its distribution pricing, but conceded that it had "not analyzed thoroughly the impact" of the changes on its previously submitted price and thus, could not predict whether its revised price would be higher or lower. IMG included the following statement in its FPR, "IMG considers that any award made on the cost proposal that IMG submitted in February/March 2010 is invalid as IMG price due to [deleted] changes will have to be revised to take into consideration those changes." GAO agrees with DLA that IMG's FPR statement effectively repudiated its prior price proposal and removed it from consideration. Thus, in the absence of a firm-fixed-price proposal, the agency reasonably determined that IMG's proposal was unacceptable
4. Explo Systems, Inc., B-404952; B-404952.2, July 8, 2011
Link: GAO Opinion
Agency: Department of the Army
Disposition: Protest sustained in part, denied in part.
Keywords: HUBZone Price Preference
General Counsel P.C. Highlight: In a procurement not set aside for HUBZone companies, that procuring agency shall give offers from HUBZone small business concerns a price evaluation preference by adding a factor of 10 percent to all offers.
Explo Systems, Inc., a HUBZone small business contractor protests the award of a contract under a request for proposals (RFP), issued by the Department of the Army, for the demilitarization and disposal of eight families of conventional ammunition.
The RFP, which was issued on an unrestricted basis, contemplated the award of a fixed-price contract to the offeror whose proposal represented the best value to the government, on the basis of the following evaluation factors listed in descending order of importance: technical, past performance, price, and small business utilization.
The technical evaluation factor consisted of the following equally-weighted subfactors: program management plan, technical approach, safety approach, security approach and environmental approach. As is relevant here, with respect to the safety approach subfactor, the RFP stated that the agency would evaluate each offeror's technical expertise to perform demilitarization operations, including the offeror's safety program of demilitarization. With respect to the environmental approach subfactor, the RFP stated that the agency would evaluate each offeror's compliance with all applicable environmental regulations, as well as the offeror's approach for managing hazardous and non-hazardous waste streams during demilitarization operations.
With respect to the past performance factor, the RFP provided that the agency would evaluate each offeror's recent and relevant experience for the offeror's record of quality and on time delivery, based on the results of the past performance surveys.
With respect to the price factor, the RFP incorporated Federal Acquisition Regulation (FAR) clause 52.219-4, Notice of Price Evaluation Preference for HUBZone Small Business Concerns. Pursuant to this clause, the agency was required to "add a factor of 10 percent to the price of all offers," except offers from HUBZone small business concerns that did not waive the evaluation preference, and otherwise successful offers from small business concerns.
Only two firms responded to the RFP, Explo and the eventual awardee. The source selection authority (SSA) conducted a best value tradeoff between proposals. In doing so, the SSA did not apply the HUBZone price evaluation preference, even though the awardee was a large business and Explo was a HUBZone concern, because Explo had submitted the lowest priced offer. The SSA determined that the advantages associated with the awardees' superior technical proposal were worth the price premium, as compared to Explo's lower technically rated and lower priced proposal.
Explo argues that the Army improperly failed to apply the HUBZone price evaluation preference provided for in 15 U.S.C. sect. 657a(b)(3)(A) (2006), as implemented in various regulations and incorporated into the RFP, in making its best value selection decision. To implement this statute, FAR sect. 19.1307 provides that agencies "shall give offers from HUBZone small business concerns a price evaluation preference by adding a factor of 10 percent to all offers," except for offers from HUBZone small business concerns that have not waived the evaluation preference, or otherwise successful offers from small business concerns. Consistent with this FAR provision, and as required by FAR sect. 19.1309(b), the solicitation incorporated FAR clause 52.219-4, titled Notice of Price Evaluation Preference for HUBZone Small Business Concerns.
As noted above, the Army did not apply the price evaluation preference here. GAO states that it is well-settled that an agency must follow the ground rules of the competition set forth in the solicitation, and deviation from those stated ground rules is grounds to sustain the protest. Here, the unambiguous language of the solicitation required that the agency apply "a factor of 10 percent to the price of all offers" other than certain HUBZone or small business offers. The Army failed to do so here, and GAO sustains the protest on this ground.
The Army maintains that it properly did not apply the HUBZone price preference in making its best value selection decision because Explo already submitted the lowest priced offer. The Small Business Administration (SBA) agrees with the Army. Both agencies contend that the language of 15 U.S.C. sect. 657a(b)(3)(A), quoted above, only requires that a price evaluation preference be applied where the HUBZone offer is priced higher than the large business offer; the preference does not apply when a HUBZone offer is priced lower than the large business offer. GAO finds nothing in the plain language of the statute, or the legislative history of the statute, that expressly limits that application of a price preference in the manner argued by the agencies. Rather, the statute only identifies when a HUBZone offer must be considered lower in price--i.e., when the HUBZone offer is "not more than 10 percent higher" than the large business offer. In the context of a best value procurement where a cost/technical tradeoff is required, this statutory language can reasonably be interpreted to include HUBZone offers lower in price, since those offers are "not more than 10 percent higher" than the large business offer.
The Army also argues that the FAR provisions are not enforceable under the facts presented here. GAO notes that both FAR provisions have been in effect for many years, and its review of case law confirms that both FAR provisions have been routinely recognized, by the U.S. Court of Federal Claims and GAO, as implementing 15 U.S.C. sect. 657a(b)(3)(A), including in procurements where the solicitation contemplated the performance of a best value tradeoff. Neither the Army nor the SBA have cited, and GAO has not found, any case law or other authority to support the agencies' position that the HUBZone price evaluation preference need not be applied in a best value procurement when the HUBZone offer is priced lower than the large business offer. In sum, GAO finds that the Army deviated from the solicitation requirement to apply the HUBZone price evaluation preference before performing its best value tradeoff, and GAO sustains the protest on this ground.
GAO sustains the protest because the Army deviated from the solicitation requirement to apply the HUBZone price evaluation preference during its evaluation and recommends that the agency apply the HUBZone price evaluation preference in accordance with the applicable FAR provisions and that it perform a new best value tradeoff decision. The protest is sustained in part and denied in part.
5. SafeGuard Services, LLC, B-404910, June 28, 2011
Link: GAO Opinion
Agency: Department of Health and Human Services
Disposition: Protest sustained.
Keywords: Late Proposal
General Counsel P.C. Highlight: A proposal that does not provide all items required by the solicitation may not be automatically rejected if the proposal information received by the deadline is sufficient to constitute an acceptable proposal.
SafeGuard Services, LLC (SGS) protests the rejection of its proposal as late by the Department of Health & Human Services, Centers for Medicaid and Medicare Services (CMS) under a request for proposals (RFP) for the award of a Zone Program Integrity Contract (ZPIC) to support CMS's audit, oversight, and anti-fraud, waste and abuse efforts in geographic zone 6.
The RFP contemplated the award of a single indefinite-delivery/indefinite-quantity (ID/IQ) contract. Task orders under the contract could be issued on a cost reimbursement or fixed-price basis. Each offeror's proposal was to consist of three volumes: a business proposal, technical proposal, and a conflict of interest and compliance program volume. The solicitation included detailed instructions regarding the preparation and submission of each of these volumes. As part of their business proposal submission, offerors and each of their subcontractors were required to submit a business proposal spreadsheet for two cost reimbursement task orders complete with the following categories of cost information: labor, travel, other direct costs, subcontracts, indirect rates, fee, and a summary rollup of all costs. The RFP provided that all volumes of each proposal had to be delivered in an electronic format on compact discs (CD) by 1 p.m., July 20, 2009, to the CMS Building in Baltimore, Maryland. The RFP also stated that "all proposed subcontractors shall submit a separate and complete business proposal spreadsheet in the same format as the Offeror's business proposal spreadsheet no matter the dollar amount." The solicitation stated that if a proposal was late, it would be deemed unacceptable.
SGS's proposal was included in the competitive range and discussions were conducted. As part of the discussions with SGS, CMS raised some questions about the proposed costs of one of SGS's proposed subcontractors. The agency sent SGS a request for final proposal revisions (FPR). The revised technical proposal, which was to include only the revised sections, was due via e-mail on February 24. Offerors were required to submit a "complete revised business proposal" in electronic format by February 28, and provided that "any subcontractor business proposals shall also be received by the February 28, 2011 deadline." On March 4, offerors were to submit one hard copy and four CDs of their technical, business, and OCI submissions, as well as "subcontractor business proposal sealed packages as necessary." SGS submitted its FPR by the stated deadlines. However, a minor subcontractor of SGS failed to submit its revised business proposal in electronic format by the February 28 deadline. As a result of the late delivery of the subcontractor's revised business proposal, the contracting officer rejected SGS's proposal as late.
SGS asserts that the agency's rejection of its FPR due to the late submission of its subcontractor was improper because, according to SGS, even without the subcontractor's proposal, SGS's proposal was complete. GAO states that offerors are responsible for submitting proposals, and any modifications to them, so as to reach the government office designated in the solicitation by the time specified in the solicitation. Proposals, and modifications to them, that are received in the designated government office after the exact time specified are "late," and will be considered only if received before award, and if the circumstances meet the specific requirements of the provision at FAR sect. 52.215-1. Portions of proposals that are submitted late may not be considered by the agency, and if the proposal is unacceptable as timely submitted, it should be rejected as late. On the other hand, a proposal which does not provide all items required by the solicitation may not be automatically rejected if the proposal information received by the deadline is sufficient to constitute an acceptable proposal.
Here, the record reflects that the agency did not consider whether SGS's FPR was acceptable without the subcontractor's revised business proposal spreadsheets. However, as discussed above, SGS asserts that its FPR was complete and acceptable because it contained all of necessary costs. GAO's review confirms SGS's assertion that the information included in its revised business spreadsheet was reflected in SGS's business proposal. Thus, the subcontractor's submission could appropriately be viewed as backup supporting material for SGS's proposed costs. In circumstances like these, where an agency finds that an offeror's proposed costs on a cost reimbursement contract are not reasonably supported, an agency, as part of the cost realism analysis, can adjust the proposed costs to account for this lack of supporting information. In sum, GAO concludes that the agency improperly rejected SGS's entire FPR as late without considering whether the proposal was acceptable without the subcontractor's revised business proposal, and the protest is sustained on this basis.
GAO recommends, consistent with this decision, that the agency consider whether SGS's FPR was acceptable. If SGS's FPR is determined to be acceptable, GAO recommends that it be reinstated in the competition.
