In a previous article, we analyzed what made protests successful at the Government Accountability Office (“GAO”) in Fiscal Year 2023 (“FY23”). Now, we want to share some insights we gained while conducting the same analysis of bid protest decisions at the Court of Federal Claims (“COFC” or the “Court”).
Notably, half of the successful protests before the COFC in FY23 were pre-award protests. These notable pre-award victories are broken down into three basic categories: (1) unreasonable bidder qualification requirements; (2) unreasonable elimination from competition; and (3) improper solicitation requirements. Most of these protests involved interpretation of procurement law, which may be the reason why the protesters chose to pursue their protest in Court rather than at the GAO. The remaining successful protests were post-award victories that fall into categories similar to those we saw at the GAO: (1) improper technical evaluation; (2) inadequate documentation; (3) flawed price analysis. The Court granted one protest because of inadequate corrective action following a GAO protest.
In one decision, the COFC used a different standard for key personnel requirements than that employed by the GAO. In KPMG, LLC v. United States, the Court found the agency’s decision to follow GAO’s recommendation to evaluate the protester’s proposal as though its key personnel was unavailable was irrational.[1] In this case, KPMG proposed Mr. H, a subcontractor employee, as a key personnel. After proposal submission, Mr. H announced his intent to resign from the subcontractor, but had not officially left the company until after the award was made to KPMG. The record shows KPMG made efforts to convince Mr. H to stay. The unsuccessful bidder protested at GAO, and GAO found the agency knew about the resignation before award and should have deemed Mr. H unavailable upon submission of the resignation notice. The agency followed GAO’s recommendation and found KPMG’s proposal unacceptable. But the Court found employees should not be deemed unavailable until they officially leave the company, which did not occur here until after award. This case demonstrates one of the few differences in procurement law interpretation between GAO and the Court, and serves as a reminder that protesters should choose their forum wisely when it comes to key personnel issues.
Here is a brief summary of the other successful protests before the Court and what made them victorious.
Pre-Award Protests
Unreasonable Bidder Qualification Requirements
In two protests, the Court found the agencies imposed unreasonable qualifications on bidders.
First, in Consolidated Safety Services, Inc. v. United States, the protester challenged the North American Industry Classification System (“NAICS”) code designation chosen by the agency and affirmed by the SBA Office of Hearing and Appeals (“OHA”).[2]The Court agreed with the protester that the NAICS code for environmental consulting services, rather than the NAICS code for research and development (“R&D”), was not the best choice. The Court explained the agency must select the NAICS code that best describes the principal purpose of the product or service being acquired and the record showed that 80% of tasks and labor hours under contract were for R&D rather than advice and consulting, as defined in NAICS guide.
In the second matter, Piedmont Propulsion Systems, LLC v. United States, the Court found the agency’s requirement that the bidder be an original equipment manufacturer (“OEM”) licensee lacked a rational basis.[3] The Coast Guard issued a solicitation restricting competition to companies holding an OEM license and a small business that had previously performed the repair work protested the terms of the solicitation. The Court found the correspondence and data in the record demonstrated the agency did not fully understand what an OEM license entails or whether OEM licensees have any special access to proprietary data to warrant the restriction on competition. Thus, the Court found the agency’s justification for restricting competition to OEM licensees lacked a rational basis.
Unreasonable Elimination from Competition
In two protests, the Court found the agencies unreasonably eliminated a bidder from the competition.
In Aspire Therapy Services & Consultants, Inc. v. United States, the Court found the agency abused its discretion by failing to allow protester to clarify a minor clerical error that could easily be corrected.[4] Specifically, the offerors submitted two spreadsheets with proposals showing labor hours. The protester’s spreadsheets were off by 30 hours, which resulted in a price difference of 0.063%. The agency rejected the protester’s proposal as nonresponsive, but the Court found the agency should have issued a clarification and allowed the protester to correct what was obviously a minor typographical error.
Similarly, in STG International, Inc. v. United States, the Court found the agency’s exclusion of the protester’s proposal from the competitive range was unreasonable.[5] In this case, the procurement had two phases. The agency found the protester ineligible for award because the protester was not registered in SAM when it submitted its Phase I proposal. The Court found that FAR requires offeror to be registered in SAM when it submits an “offer,” and the Court found that a proposal becomes an offer when the government’s acceptance would create a binding contract. Phase I did not include price, and thus, government could not accept Phase I proposal as contract. Thus, protester did not submit an offer until it submitted Phase II proposal containing price, and it was registered in SAM at that time.
Improper Solicitation Requirements
In two cases, the Court found the terms of the solicitations violated applicable law.
In SH Synergy, LLC v. United States, the Court found the terms of the solicitation violated the SBA regulations regarding the evaluation of mentor-protégé offerors.[6] Specifically, the SBA regulations regarding mentor-protégé offerors states, “A procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.” 13 C.F.R. § 125.8(e). The protester challenged the terms of the solicitation because the agency was to evaluate a protégé’s relevant experience using the same criteria and points scale as projects submitted by offerors generally. The Court agreed that the terms of the solicitation violated the SBA regulations. The Court also found the solicitation violated procurement law by excluding price as an evaluation factor at the IDIQ level. 41 U.S.C. § 3306(c)(1)(B) requires agencies to “include cost or price to the Federal Government as an evaluation factor that must be considered in the evaluation of proposals” for every procurement “except as provided in paragraph (3).” In paragraph (3), Congress carved out a narrow exception to the general rule requiring price evaluation for certain IDIQ contracts “for services acquired on an hourly rate basis” that will “feature individually competed task or delivery orders based on hourly rates.” GSA believed this exception applied to the instant procurement because, even though the task orders would be firm fixed price, hourly rates for labor costs would be embedded in the contractor’s bid amount. The Court disagreed and found that the exception applies only to task orders in which the government would be paying on an hourly rate basis, such as time-and-materials and labor-hour task orders.
In SEKRI, Inc. v. United States, the Court found that Defense Logistics Agency’s (“DLA’s”) intent to purchase only 50% of its advanced tactical assault panels (“ATAP”) from the AbilityOne designated mandatory source, SEKRI, Inc., was unlawful.[7] This dispute had a long history, but in the instant case, the issue was whether DLA was required to purchase 100% of its ATAPs from the protester because AbilityOne had listed the protester as a mandatory source on the procurement list. Interestingly, during the litigation, AbilityOne issued a Federal Register notice “correction” stating that SEKRI was only the mandatory source for 50% of the Army’s ATAP requirement, and the government relied heavily on this notice. The Court found, however, that AbilityOne had not followed its regulations in changing the status of the item on the procurement list and had not properly determined that any of the exceptions allowing for less than 100% applied to the ATAPs. Thus, the Court found DLA was required to purchase 100% of its ATAPs from SEKRI and DLA’s solicitation, which sought to purchase only 50%, was unlawful.
Post-Award Protests
Improper Technical Evaluation
As we saw in the sustained protests at GAO, the Court also sustained protests where the agencies conducted flawed technical evaluations.
The Court sustained one protest where the agency assigned the awardee a weakness but instead should have assigned the awardee a deficiency, making the awardee ineligible for award. In System Dynamics International, Inc. v. United States, the agency found the awardee failed to meet the education and experience requirements for the labor categories and assigned the awardee a weakness.[8] The Court found the agency should have assigned a deficiency because these were material failures to meet government’s mandatory requirements. Had the agency properly assigned a deficiency, it would have found the awardee ineligible for award.
In a similar vein, the Court sustained another protest where the agency made an award to a company that did not hold the required license. In Accura Engineering and Consulting Services, Inc. v. United States, NASA sought to procure architecture and engineering (“A&E”) services, which are governed by the Brooks Act.[9] Under the Brooks Act, a contract for A&E services must go to a “firm” with an architecture and engineering license. The awardee did not hold such license, but instead tried to rely on the license of its subcontractor, which it argued was part of its team. The Court rejected this argument finding that the plain language of the statute requires the awarded company to hold the license.
The Court also sustained a protest where the record did not support the agency’s evaluation findings. In Allicent Technology, LLC v. United States, the agency assigned one of the protesters a weakness and significant weakness for failing to provide an approach to certain PWS tasks.[10] The Court found that while the proposal sections may have been brief, they did provide an approach to meeting the PWS tasks. Thus, the Court found the agency’s conclusion that the protester failed to provide any approach was not supported by the record.
Inadequate Documentation
The Court also reminded agencies that they must provide enough documentation to support their evaluations for the Court to provide effective judicial review, even in FAR Part 8.4 procurements. In DigiFlight, Inc. v. United States, the protester argued the agency’s failure to assign strengths or to differentiate the proposals in any meaningful way improperly converted the best value procurement to a lowest price technically acceptable procurement.[11] The government argued it did not need to thoroughly document its evaluation because it was a FAR Part 8.4 procurement. The Court found the government did not provide adequate documentation stating: “Although the government is correct that FAR subpart 8.4 procurements permit more streamlined documentation than, for instance, FAR part 15 procurements, this streamlined documentation requirement does not get the agency off the hook for the almost complete lack of documentation of its rationale regarding its technical expertise evaluation….” Similarly, in Toni and Vin Hoover Property Management, LLC v. United States, the Court found the agency failed to adequately document its evaluation of proposals and its calculations used to make its award decision for an office space lease.[12] The Court found that without adequate documentation, the agency could not show it had rational reasoning for its decision, or that it considered the relevant factors in calculating the lease prices.
Flawed Price Analysis
The Court also granted a protest, in part, because the agency’s price realism analysis was irrational. In DigiFlight Inc. v. United States, the solicitation stated the agency would conduct a price realism analysis, but the Court found no rational support for such an analysis in the record.[13] The Court found the agency made three determinations: (1) the agency found that because two offerors had similarly low prices, there was “no evidence of an attempt to offer unrealistically low prices as a strategy to receive the award;” (2) the government used the GSA Contract Awarded Labor Categories (“CALC”) tool to substantiate a random sample of labor category prices; and (3) the agency stated it concluded the level of effort and labor mix proposed reflected an understanding of the requirements. The Court found that all three conclusions, at least to the extent documented, were unreasonable. First, the Court found no rationale for the assumption that two offerors could not offer unrealistically low prices. Second, the Court found insufficient documentation to review whether the agency’s use of the CALC tool was reasonable. And third, the Court found there was no evidence in the record of the agency’s evaluation of the offerors’ understanding of the requirements.
Inadequate Corrective Action
Finally, following a GAO protest that resulted in the agency taking corrective action, the Court sustained a protest because the agency’s corrective action did not cure the original defect. In SLS Federal Services, LLC v. United States, the protester challenged a multiple-award IDIQ contract for global contingency construction services before GAO arguing the agency erroneously evaluated price reasonableness and should have conducted discussions.[14] The agency took voluntary corrective action stating it would “address the evaluation of proposals, including, but not limited to, price reasonableness.” Nearly a year later, the agency announced the awards would remain the same and stated that the only corrective step it took was to remove an erroneous Contractor Performance Assessment Reporting System evaluation. The protester challenged the agency’s corrective action before the Court. The Court found the agency did not solicit sufficient price data from the offerors to conduct a proper price reasonableness analysis, and thus, did not cure this defect in corrective action. The Court also found that DFARS 215.306 creates a presumption in favor of conducting discussions which an agency can only overcome with an adequate justification. Here, the Court found there was no justification for failing to conduct discussions in the record.
In sum, the Court’s decisions are not surprising and our summary above provides examples of the types of protests that will be granted. The Court will closely examine statutory and regulatory requirements and not defer to agency interpretation where the requirements are plain on their face, an approach that is different than the deferential treatment provided to the agency by the GAO. The Court, like GAO, will heavily examine the record and will not accept agency conclusions without adequate support. Of note, the administrative record before the Court generally provides access to more documents than an agency report at the GAO, which is something to consider when deciding where to file your protest. And, as noted above, the Court takes a different stance on key personnel availability than GAO and will likely continue to follow its precedence in those kinds of cases.
FOOTNOTES
[1] KPMG, LLC v. United States, 166 Fed. Cl. 588 (July 3, 2023).
[2] Consolidated Safety Servs., Inc. v. United States, Case No. 23-521C, 2023 WL 6173385 (Fed. Cl. Sept. 22, 2023).
[3] Piedmont Propulsion Sys., LLC v. United States, 167 Fed. Cl. 72 (Aug. 21, 2023).
[4] Aspire Therapy Services & Consultants, Inc. v. United States, 166 Fed. Cl. 366 (May 30, 2023).
[5] STG International, Inc. v. United States, 165 Fed. Cl. 577 (May 17, 2023).
[6] SH Synergy, LLC v. United States, 165 Fed. Cl. 745 (April 21, 2023).
[7] SEKRI, Inc. v. United States, 165 Fed. Cl. 21 (Mar. 13, 2023).
[8] System Dynamics Int’l, Inc. v. United States, Case No. 23-431, 2023 WL 6532692 (Fed. Cl. Oct. 6, 2023).
[9] Accura Engineering and Consulting Servs, Inc. v. United States, Case No. 22-1592C, 2023 WL 5761365 (Fed. Cl. Sept. 6, 2023).
[10] Allicent Technology, LLC v. United States, 166 Fed. Cl. 77 (May 3, 2023).
[11] DigiFlight, Inc. v. United States, 165 Fed. Cl. 588 (March 31, 2023).
[12] Toni and Vin Hoover Property Management, LLC v. United States, 165 Fed. Cl. 92 (March 14, 2023).
[13] DigiFlight, Inc. v. United States, 165 Fed. Cl. 588 (March 31, 2023).
[14] SLS Federal Services, LLC v. United States, 163 Fed. Cl. 596 (Jan. 3, 2023).