Virginia Business Law Blog

1. East West, Inc., B-400325.7; B-400325.8, August 6, 2010

Link: GAO Opinion

Agency: Department of Health and Human Services

Disposition: Protest denied.

Keywords: Procurement Integrity; Prejudice

General Counsel P.C. Highlight: Proof of actual prejudice is an essential part of any viable protest. Without a showing of actual prejudice, the protest will be dismissed.

East West, Inc. (East West) protests the award of a contract, issued by the National Institutes of Health (NIH), for custodial services at NIH buildings.

The RFP contemplated the award of a five-year indefinite-delivery/indefinite-quantity contract to the offeror whose proposal represented the best value to the government, considering technical, cost/price, and past performance. Following the receipt of the initial proposals, the contracting officer (CO) ultimately established a competitive range of five proposals and invited the firms to submit revised price proposals. East West responded by reducing its proposed price. Another offeror was selected for award.

The day after the decision was signed, the agency project officer met with the awardee’s personnel to discuss various concerns and to offer an unofficial notice of award (contingent on receiving final authority to make an award). The awardee’s project manager asked to meet with staff members of the other two offerors, but this request was denied by the CO. East West contacted the contract specialist to complain that the project manager had visited its offices and interviewed its employees anyway. The contract specialist responded that no official award had occurred even though a decision had been made and was not sure why a staff member from the awardee’s company had visited East West.

East West requested a debriefing and filed a protest following the official award. The protest was dismissed as premature since it was filed before the debriefing was received. East West then filed a second protest after receiving the debriefing. NIH took corrective action by suspending contract performance and conducting an investigation of the alleged procurement integrity violations. East West’s protest was dismissed.

The CO conducted an investigation and found no evidence that the awardee had received source selection or procurement sensitive information, or that it had become privy to information that gave it a competitive advantage. The awardee was again selected to receive the contract.

East West contends that NIH officials committed a procurement integrity violating by sharing “procurement-related” information with the awardee regarding the contract award prior to making an official award. GAO states that the Procurement Integrity Act prohibits any present or former official of the United States from “knowingly” disclosing contractor bid or proposal information or source selection information before the award of a contract. Source selection information includes bid and proposal prices, source selection and technical evaluation plans, technical and cost/price evaluations, competitive range determinations, rankings of bids/proposals, and reports/evaluations of source selection panels, boards, or advisory councils.

GAO’s review of the record fails to demonstrate that a prejudicial procurement integrity violation occurred. There is no evidence that an agency official disclosed East West proposal information to the awardee. The agency admitted to giving notice before it had actual authority to make award, which arguably was a violation, but the GAO found that this disclosure did not prejudice East West. Because proof of prejudice is necessary for pursuit of a protest, the GAO denied the protest.

2. Hardiman Remediation Services, Inc., B-402838, August 16, 2010

Link: GAO Opinion

Agency: Department of the Army

Disposition: Protest denied.

Keywords: Unacceptable technical approach

General Counsel P.C. Highlight: It is the offeror’s responsibility to submit an adequately written proposal for the agency to evaluate.

Hardiman Remediation Services, Inc. (Hardiman) protests the elimination of its proposal as unacceptable under a request for proposals (RFP), issued by the Department of the Army, for commercial demolition services.

The RFP sought proposals for award of at least three and up to five fixed-price, indefinite-delivery/indefinite-quantity (IDIQ) multiple award task order contracts for demolition services. The RFP identified four evaluation factors: (1) technical/management approach, (2) past performance, (3) price, and (4) utilization of small business. Hardiman’s proposal was eliminated from the competitive range because it received an unacceptable rating for specialized experience and task order technical approach subfactors of the technical/management approach factor as well as a marginal rating for the management approach subfactor. It challenges the unacceptable ratings.

GAO states that the evaluation of proposals is a matter within the discretion of the procuring agency, since the agency is responsible for defining its needs and deciding on the best methods of accommodating them. GAO will question the agency’s technical evaluation only where the record shows that the evaluation does not have a reasonable basis or is inconsistent with the RFP. It is the offeror’s responsibility to submit an adequately written proposal for the agency to evaluate. The agency reasonably evaluated Hardiman’s proposal as unacceptable where Hardiman failed to demonstrate the breadth and depth of experience in performing the work described in the RFP and the proposal only reflected a generic discussion of how it would accomplish demolition work required by the RFP. The generic discussion was not what the RFP required and was insufficient to demonstrate that firm’s depth and breadth of experience and technical approach to execute each phase of the task order project. The protest is denied.

3. Eggs & Bacon, Inc., B-402591.2, August 13, 2010

Link: GAO Opinion

Agency: Department of the Army

Disposition: Protest denied.

Keywords: Cost/Technical Trade Off

General Counsel P.C. Highlight: Mere disagreement with the agency’s determinations as to the relative merit of competing proposals and its judgment as to which proposal offer the best value, does not establish that the valuation or source selection was unreasonable.

The Department of the Army (Army) issues a request for proposals (RFP) for event production services. The RFP sought proposals for a contractor to furnish all non-military personnel, equipment, tools, materials, and supervision to perform pre-production, production, and event production services for the Spirit of America 2010 program. The RFP contemplated award of a fixed-price contract to the offeror whose proposal was determined to represent the best value to the government based of technical capability, past performance, relevant experience, personnel skill/experience, and price. The non-price factors, combined, were significantly more important than price. The RFP also advised that award would be made without engaging in discussions.

Eggs & Bacon, Inc. (EBI) submitted its proposal in response to the RFP. Both EBI and the awardee were rated equally on each non-price factor. But EBI did not receive the award because, with non-price factor scores equal to the awardee, EBI was higher priced than the awardee’s. After receiving a debriefing, EBI protested the award to GAO and, in response, the agency took corrective action to re-evaluate the proposals.

The proposals were re-evaluated and the source selection authority lowered the overall evaluation rating for the awardee’s proposal under the technical capability factor, but still determined that the price offered by the awardee was fair and reasonable and that the cost savings associated with View One’s proposal outweighed the technical advantages associated with EBI’s proposal. The awardee’s proposal was again selected for award.

GAO reviews challenges to an agency’s evaluation of proposals only to determine whether the agency acted reasonably and in accord with the solicitation’s evaluation criteria and applicable procurement statutes and regulations. An agency may properly select a lower-rated, lower-priced proposal, even where price is less important, where it reasonably concludes that the price premium involved in selecting the higher-rated proposal is not justified. The Army provided a detailed record of its evaluation of proposals, the selection decision, and the proposal submitted by both offerors.

GAO’s review of the record shows nothing to lead it to conclude that the agency’s findings and conclusions for each proposal were unreasonable. For example, under the personnel skill/experience factor, the record shows that both proposed project managers were judged to have most, but not all, the required experience and therefore, each offeror’s proposal was assigned a rating of marginal under that factor. Mere disagreement with the agency’s determinations as to the relative merit of competing proposals and its judgment as to which proposal offer the best value, does not establish that the valuation or source selection was unreasonable.

As to the best value determination, the record shows that the agency was aware of the relative merits and comparative prices when it performed the tradeoff. The tradeoff was made comparing the relative merits of the EBI proposal with those of the awardee’s proposal, and considering as well, the price difference. It is clear that the agency understood the difference between the two proposals and reasonably decided to award the contract to the other offeror because of what the agency views as the price premium associated with EBI’s higher-rated proposal. GAO states that there is no basis to object to the agency’s source selection decision. The protest is denied.

4. JBlanco Enterprises, Inc., B-402905, August 5, 2010

Link: GAO Opinion

Agency: Department of the Air Force

Disposition: Protest denied.

Keywords: Price Calculation Error

General Counsel P.C. Highlight: An offeror has the responsibility to submit a well-written proposal, with adequately detailed information which clearly demonstrates compliance with the solicitation requirements and allows a meaningful review by the procuring agency. The offeror must affirmatively demonstrate the merits of its proposal, and risks the rejection of its proposal if it fails to do so.

The Department of the Air Force issued a request for proposals (RFP) for the repair and replacement of roofs at the United States Air Force Academy. The RFP was set aside for eligible section 8(a) firms, provided for the award of a fixed-price, indefinite-delivery/indefinite-quantity (ID/IQ) contract for a base and four option years. Offerors were informed that award would be made to a technically acceptable offeror on the basis of a past performance-price tradeoff. The RFP stated that the agency did not intend to conduct discussions or provide offerors with an opportunity for proposal revisions.

JBlanco Enterprises, Inc. (JBlanco) submitted a proposal that was found technically unacceptable since its required technical volume did not demonstrate compliance with the specification’s instructions for preparation of the demonstration project. Specifically, the RFP instructions required the offeror to apply a multiplier at one point in the price calculations, JBlanco applied the multiplier at a different point in the price calculation. JBlanco argues that its noncompliance was only a minor error that the firm should have been permitted to clarify.

GAO states that an offeror has the responsibility to submit a well-written proposal, with adequately detailed information which clearly demonstrates compliance with the solicitation requirements and allows a meaningful review by the procuring agency. The offeror must affirmatively demonstrate the merits of its proposal, and risks the rejection of its proposal if it fails to do so. JBlanco did not submit a technical proposal that clearly demonstrated its ability to satisfactorily calculate prices as instructed. GAO does not agree that the failure to demonstrate its capability to properly prepare task order proposals could be waived as a minor error or corrected through clarifications. The error implicates JBlanco’s ability to properly prepare its task order proposals and GAO finds no basis to question the reasonableness of the agency’s determination. The protest is denied.

5. Sig Sauer, Inc., B-402339.3, July 23, 2010

Link: GAO Opinion

Agency: Bureau of Alcohol, Tobacco, Firearms and Explosives

Disposition: Protest denied.

Keywords: Technical Evaluation

General Counsel P.C. Highlight: An agency is accorded considerable discretion in making such a subjective judgment as to what best meets its needs, particularly where, as here, the judgment involves matters of human life and safety.

Sig Sauer, Inc. protests the rejection of its proposal under request for proposals (RFP), issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for semi-automatic handguns.

Offerors were instructed to submit written proposals and sample handguns, in both standard and compact sizes, to be evaluated in three phases. Under phase I, the handguns were to be evaluated on a pass/fail basis for compliance with the RFP’s specifications. Under phase II, ATF planned to perform a live-fire assessment of the guns, consisting of four parts. Offerors were informed that offers “deemed most suitable for performance” would continue to phase III. The RFP provided for the award of a single or multiple indefinite-delivery, indefinite-quantity (IDIQ) contract to the offeror whose proposal was found to represent the best value after the phase III evaluation.

Sig Sauer, Smith & Wesson Corp., and Glock, Inc. submitted proposals that were evaluated as passing phase I. During phase II, a record was kept of any stoppages or malfunctions that occurred during the live fire testing. The records show that ATF agents recorded 58 stoppages with Sig Sauer’s full-size and compact pistols, 13 of which were considered to be gun-induced and 45 shooter-induced. The source selection board recommended that Sig Sauer’s handgun be excluded from further consideration as unacceptable with respect to reliability. The contracting officer agreed.

Sig Sauer protested, challenging the agency’s phase II live-fire assessment. ATF took corrective action, stating that it would reconsider its phase II evaluations. ATF did not reconvene the source selection board or re-evaluate proposals. The contracting officer reviewed the live-fire assessment record, the phase II incident reports, and the declarations made during the original protest. The contracting officer found that Sig Sauer’s proposal was appropriately excluded due to the significant number of malfunctions.

Sig Sauer challenges the live-fire testing assessment, arguing that the source selection board substituted its own judgment for that of the agents that performed the testing. GAO states that in reviewing protests challenging the evaluation of proposals, it will not conduct a new evaluation or substitute our judgment for that of the agency but examine the record to determine whether the agency’s judgment was reasonable and in accord with the RFP evaluation criteria.GAO affords particular deference to the technical expertise of agency personnel regarding judgments that involve matters of human life and safety. GAO finds that the agency’s assessment of Sig Sauer’s proposal was reasonable and consistent with the RFP’s evaluation criteria. The RFP provided that “[r]atings on the proposed [shooters' tests], any stoppages or parts breakages during testing, and the written evaluations will be recorded and used to evaluate each model.” The record supports ATF’s assertion that it considered these things when it affirmed the source selection board’s earlier determination to exclude Sig Sauer. GAO agrees that the agency reasonably concluded that the stoppages provided a more significant measure of the guns’ reliability than the adjectival ratings for reliability assigned by individual shooters.

Sig Sauer asserts that ATF placed too great an emphasis upon reliability in determining which offers should continue to phase III. GAO disagrees since the RFP provided that only those offers which were “deemed most suitable for performance to the Government” would be included in the phase III evaluation. GAO finds that the agency could reasonably rely upon its concerns about the reliability of Sig Sauer’s handguns to exclude its proposal from the final phase. The protest is denied.

1. ITT Corporation-Electronic Systems, B-402808, August 6, 2010

Link: GAO Opinion

Agency: Department of the Navy

Disposition: Protest denied.

Keywords: OCI; conflict of Interest

General Counsel P.C. Highlight: The FAR requires contracting officials to avoid, neutralize or mitigate potential significant OCIs so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity.

ITT Corporation (ITT) protests the award of a contract under a request for proposals (RFP) issued by the Department of the Navy, Space and Naval Warfare Systems Center Pacific, for joint tactical radio system (JTRS) software.

The RFP contemplated the award of a cost-plus-fixed-fee/cost-plus-incentive-fee contract for a two-year base period, with three option years. Award was to be made to the offeror submitting the proposal deemed to offer the “best value” to the government considering both cost and several non-cost factors. After receiving three proposals, the agency determined that discussions were necessary. Following the award of the contract to another offeror, ITT filed this protest asserting that the awardee had an impermissible “unequal access to information”-type organizational conflict of interest (OCI).

The FAR requires contracting officials to avoid, neutralize or mitigate potential significant OCIs so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. An unequal access to information OCI exists where a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm a competitive advantage in a later competition.

ITT complained that it was required under another contract to share certain information with Boeing that eventually improved its proposal and made it first in line for award. GAO held that Where, as here, the protester has the information in question and the awardee also has the same information, the awardee cannot be said to have “unequal access to information.” ITT cannot be prejudiced since both ITT and the awardee had access to the same information. Additionally, ITT was contractually required to provide the information to the other offerors by virtue of a government purpose rights license. GAO concludes that there was no “unequal access” OCI.

ITT also asserts that the agency misevaluated its technical proposal and takes issue with almost every weakness identified by the agency. GAO states that it will not address ITT’s assertions relating to the evaluation in detail since, even if ITT was correct with respect to its assertions, the errors would not have affected its standing in the competition. The protest is denied.

2. PDL Toll, B-402970, August 11, 2010

Link: GAO Opinion

Agency: Department of the Navy

Disposition: Protest denied.

Keywords: Protesting Terms of a Solicitation

General Counsel P.C. Highlight: An agency has the discretion to determine its needs and the best way to meet them. An agency also has broad discretion in the selection of the evaluation criteria that will be used in an acquisition.

PDL Toll (PDL) protests the terms of a request for proposals (RFP) issued by the Department of the Navy (Navy), for ship husbanding services for Navy vessels. The RFP contemplated the award of a fixed-price indefinite-delivery/indefinite-quantity contract for a base year, with a six-month option period, to “the responsible offeror who submits the lowest price, technically acceptable offer with acceptable or neutral past performance.”

PDL argues that the use of the lowest-price, technically-acceptable source selection process is not appropriate for this acquisition and asks that the Navy use a tradeoff process. PDL also argues that the agency should conduct a comparative assessment of the offerors’ past performance and that the agency has improperly omitted several husbanding services that are provided under an existing contract for husbanding services.

GAO states that an agency has the discretion to determine its needs and the best way to meet them. An agency also has broad discretion in the selection of the evaluation criteria that will be used in an acquisition, and GAO will not object to the absence or presence of a particular evaluation criterion so long as the criteria used reasonably relate to the agency’s needs in choosing a contractor or contractors that will best serve the government’s interest.

The record reflects that the agency reasonably determined that the lowest-price, technically-acceptable approach to evaluate offers was best where the decision was based on the fact that the requirement was relatively noncomplex, and there was little performance risk. There was also a substantial amount of information provided to the offerors in solicitation. Additionally, the agency explains that the requirements included in the solicitation were intentionally limited to those the agency would actually require during the contract’s short performance period and for which estimated quantities could be provided. The agency states that if additional requirements for supplies and services arise under the contract to be awarded, it will then determine the acquisition method for obtaining those requirements. GAO cannot find this determination to be unreasonable. The protest is denied.

3. Infrastructure Defense Technologies, B-401860.2; B-401860.3, July 27, 2010

Link: GAO Opinion

Agency: Defense Logistics Agency

Disposition: Protest denied.

Keywords: Corrective Action

General Counsel P.C. Highlight: In negotiated procurements the agency has broad discretion to take corrective action where the agency determines that such action is necessary to ensure fair and impartial competition.

The Defense Logistics Agency (DLA) issued a request for proposals (RFP) for expeditionary earth-filled protective barriers. The RFP anticipated award of an indefinite delivery/indefinite quantity, fixed-price with economic price adjustment delivery order contract, with a two-year base period and two one-year options. The RFP required offerors to submit product demonstration models (PDMs), which were to be evaluated based on a combination of testing and contractor performance certifications. Six offerors, including the protester, Infrastructure Defense Technologies (IDT), and the awardee, Hesco Bastion, Ltd. (Hesco), submitted proposals.

The offerors’ PDMs were tested and each offeror’s lab certifications were reviewed for acceptability. Following discussions, DLA made award to Hesco, concluding that its slightly lower rated technical proposal, but lower-priced proposal, provided the best value to the government. IDT filed a protest challenging several aspects of the evaluation process, including the way the agency evaluated its surge and sustainment plan and the agency agreed to take corrective action by amending the solicitation, conducting discussions with IDT and Hesco, soliciting and evaluating revised proposals, and making a new award decision.

DLA amended its RFP and advised offerors that their surge and sustainment plans should not assume or incorporate any material inventories that utilize funding under the DLA Warstopper program. The source selection authority (SSA) found that IDT’s and Hesco’s technical proposals were “largely equivalent, with IDT providing only a slight technical advantage.” However, the SSA concluded that the slight benefits provided did not warrant a payment of a higher price premium for the PDMs. The contract was awarded to Hesco. IDT challenges the reasonableness of DLA’s evaluation of the technical proposals and past performance.

GAO states that the evaluation of an offeror’s technical proposal, and its past performance, is a matter within the agency’s discretion. GAO will not reevaluate proposals but instead will examine the record to determine whether the agency’s judgment was reasonable and consistent with the stated evaluation criteria and applicable procurement statues and regulations.

IDT argues that DLA’s corrective action was improper because it was designed with the specific intent to allow Hesco to correct a noncompliant offer. GAO states that in negotiated procurements the agency has broad discretion to take corrective action where the agency determines that such action is necessary to ensure fair and impartial competition. An agency can amend a solicitation, and request and evaluate revised proposals where the record shows that the agency made the decision to take this action in good faith, without specific intent of changing a particular offeror’s technical ranking, or avoiding award to a particular offeror. GAO will not object to an agency’s proposed corrective action where the agency concluded that the award, because of perceived flaws in the procurement process was not made on a basis most advantageous to the government. DLA explains that the agency reviewed the contract file based on the allegations raised in IDT’s first protest, which led the agency to address the areas of concern involving surge, subcontracting plan, and field service life. DLA also states that certain elements of the surge plan requirements in the RFP were ambiguous and needed to be clarified, it may have improperly neglected an element of responsibility or may have failed to conduct meaningful discussions. GAO finds that the agency’s decision to address these concerns through corrective action was reasonable.

As to the assertion that Hesco did not propose a warranty that complied with the solicitation requirements, GAO finds that the agency reasonably concluded that Hesco’s warranty met the requirements of the RFP. While the awardees’ warranty included a number of qualifying conditions, it expressly stated that it was warranted for the purposes described in the RFP.

IDT also argues that DLA did not reasonably evaluate Hesco’s surge and sustainment plan, but GAO’s review of the record shows that DLA’s amended RFP prohibited offerors from using Warstopper funds and Hesco stated that it would meet the surge and sustainment requirements without use of any materials funded through the Warstopper program. GAO states that IDT’s arguments consist of mere speculation that the awardee misrepresented its surge and sustainment plan and such speculation is not a valid basis of protest.

IDT argues that DLA treated the offerors unequally in evaluating the technical proposals and past performance. GAO finds that IDT’s arguments have no merit. Finally, where IDT asserts that DLA’s award of a single contract under the solicitation did not comply with the statutory and regulatory requirements concerning multiple awards of ID/IQ contracts valued in excess of $100 million, GAO finds the protest untimely since IDT knew, at the time of award, that the agency had made a single award of an ID/IQ contract valued at more than $100 million and did not bring it up in its initial protest. GAO denies the protest.

4. A P Logistics, LLC, B-401600, August 11, 2010

Link: GAO Opinion

Agency: Department of the Army

Disposition: Protest denied.

Keywords: Discussions

General Counsel P.C. Highlight: An agency is not required to repeat discussions where the offeror is informed of a problem and fails to correct the problem in a final proposal revision.

A.P. Logistics, LLC (APL) protests the award of a contract under a request for proposals (RFP), issued by the Department of the Army (Army), for storage services for privately-owned vehicles.

The RFP provided for award of an indefinite-delivery/indefinite-quantity contract on a “best value” basis and identified the following evaluation factors: mission capability, past performance, small business participation, and price. Offerors were informed that the agency would not conduct discussions before making and award and offerors should put their best terms from a price and technical standpoint in their initial proposal. Large business offerors, like APL, were instructed to submit small business subcontracting plans with their initial proposals.

APL’s proposal was assigned several weaknesses, including under the small business participation factor. Specifically, the Army identified concerns with APL’s submitted small business subcontracting plan and informed APL that its subcontracting plan did not indicate the total amount of the contract that would be subcontracted, did not address the types of services/supplies to be subcontracted or include a breakdown of which supplies/services would be planned for subcontracting in the different small business categories, and did not describe the methods used to develop goals and to identify potential sources. APL submitted a revised proposal, but it was found ineligible for award since it small business subcontracting plan was unacceptable.

APL asserts that the requirement that “the apparently successful offeror” submit an acceptable subcontracting plan indicates that the agency would negotiate a subcontracting plan only after the agency identified the apparently successful offeror. GAO states that it was within the contracting officer’s discretion to negotiate the details of APL’s subcontracting plan. However, the Army had already asked APL during both written and oral discussions to provide answers to specific questions concerning the subcontracting plan and APL failed to adequately response. Therefore, the Army was not required, in these circumstances, to revisit its nonresponsibility determination by providing APL another opportunity to address the same questions that it had failed to answer during discussions. The protest is denied.

5. Information Ventures, Inc., B-401448.5; B-401448.6, August 11, 2010

Link: GAO Opinion

Agency: Department of Health and Human Services

Disposition: Protest denied.

Keywords: Corrective Action

General Counsel P.C. Highlight: The selection of individuals to serve as proposal evaluators is a matter of discretion of the agency and GAO will not review allegations concerning the composition of evaluation panels absent a showing of fraud, conflict of interest, or actual bias on the part of evaluation officials.

Information Ventures, Inc. (IVI) protests the award of a contract under a request for proposals (RFP), issued by the Department of Health and Human Services, for technical report preparation services.

The RFP was issued as a small business set-aside, contemplated the award of a cost-plus-fixed-fee contract for a five-year base period with five one-year options for technical report preparation services. Award was to be made on a best-value basis considering the following evaluation factors: technical, cost, and past performance. Eight proposals were received and a special emphasis panel evaluated each proposal. The panel then conducted discussions with the offerors. Various concerns were raised during discussions regarding IVI’s proposal, including the concern that IVI’s proposed team had not worked together before, the team would be new hires, IVI’s offices and staff were located in different areas, and its cost proposal was high compared to the government estimate. Another panel raised the same concerns with IVI’s proposal. Following award of the contract to another offeror, IVI filed a protest.

The agency decided to take corrective action, including convening a “new technical evaluation panel,” and reevaluating the “competitive range proposals, as revised.” However, the reviewers unanimously rated the proposal as unacceptable. IVI’s proposal was downgraded and received a lower point score.

IVI argues that the use of members from the prior evaluation panels was inconsistent with its promised corrective action. GAO states that the selection of individuals to serve as proposal evaluators is a matter of discretion of the agency and GAO will not review allegations concerning the composition of evaluation panels absent a showing of fraud, conflict of interest, or actual bias on the part of evaluation officials.

As for IVI’s assertion that its proposal was improperly evaluated, GAO reviewed the record and found the agency’s judgment to be reasonable and in accord with the stated evaluation criteria. For example, IVI complains about the agency’s conclusion that certain of its staff had limited experience. However, GAO finds that the panel was reasonable in concluding that this was a major defect. The protest is denied.

Earlier this year the Department of Labor Wage and Hour Division released Fact Sheet #71, outlining what requirements an unpaid internship position must meet in order to comply with the Fair Labor Standards Act (FLSA). The FLSA, which applies only to for-profit entities, restricts the ability of companies to hire interns for uncompensated positions:

The Fair Labor Standards Act (FLSA) defines the term “employ” very broadly as including to “suffer or permit to work.” Covered and non-exempt individuals who are “suffered or permitted” to work must be compensated under the law for the services they perform for an employer. Internships in the “for-profit” private sector will most often be viewed as employment, unless the test described below relating to trainees is met. Interns in the “for-profit” private sector who qualify as employees rather than trainees typically must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.

The six-part test is as follows:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern;
and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

This six-point test was developed by the Department of Labor in response to the 1947 Supreme Court decision of Walling v. Portland Terminal Co., 330 U. S. 148 (1947). Although the DOL states that all six points must be met in order for an internship to be exempt from FLSA requirement, these guidelines do not have the force of law of statute or court precedent. Currently, there is a Circuit split as to whether all these requirements must be met, or if the proper test is a totality-of-the-circumstances approach, under which an internship may not strictly meet every requirement, but nevertheless still qualify for the exemption.

Not everyone is happy with the DOL’s clarification of the internship requirements. Thirteen college presidents have signed a letter to the Department of Labor [PDF] urging them to reconsider any increased regulation of student internships, but for now, the guidelines issued in Face Sheet #71 stand.

But until the DOL changes course on the issue, employers should craft their internship programs to stay in compliance with the six point test listed above. To do so, the following suggestions should be kept in mind:

- Before beginning an internship program, have clearly defined time limits on how long the internship is intended to last for, e.g., for a time-span equivalent to a school semester, over the summer break, or for a six month period.
- Provide interns with a higher level of supervision than the firm’s employees receive. Having interns shadow regular employees is a good way of meeting this requirement.
- Keep in mind that just because a student earns course credit for the position does not automatically make it an internship.
- Make it clear that the internship is not merely a “trial period” used to evaluate a candidate for a potential full-time position. The internship should have a clear starting and ending date, and there is no job offer riding on the intern’s performance.
- Consider having interns sign an agreement acknowledging that their internship is an uncompensated position, designed to provide an educational opportunity for students who want to learn more about their intended field.
- Make sure that the interns do in fact have an education experience — don’t just relegate them to making coffee and running the copy machine.
- And, if all else fails, consider offering minimum wage to your interns, and converting it into a paid internship position.

1. John P. Santry-Designated Employee Agent, B-402827, August 2, 2010

Link: GAO Opinion

Agency: Department of the Air Force

Disposition: Protest denied.

Keywords: A-76 Protest

General Counsel P.C. Highlight: No function of the Department of Defense performed by Department of Defense civilian employees may be converted, in whole or in part, to performance by a contractor unless the conversion is based on the results of a public-private competition.

John P. Santry-Designated Employee Agent and representative of federal workers who could be displaced by the award of a proposed contracting action, protests the Department of the Air Force’s (Air Force) issuance of request for quotations (RFQ), which sought submission of quotations from private-sector food service contractors to provide various food service activities at specified Air Force bases.

The RFQ required vendors to submit quotations for “core” requirements, defined as “operation of the mission essential [appropriated fund] dining facilit[ies] at each installation” along with providing non-appropriated fund “catering operations.” Santry asserts that, by seeking proposals from private-sector contractors, the agency has failed to comply with the statutory requirements in 10 USC §2461 and OMB Circular A-76 regarding “civilian employees.” Specifically, Santry asserts that the agency is not conducting a public-private competition for performance of the food service functions to determine whether the function should be performed by federal government employees or should be contracted out to private contractors. A “civilian employee” is defined as “An individual who works for a federal agency on an appointment without time limitation who is paid from appropriated funds, which includes working capital funds. A foreign national employee, temporary employee, term employee, non-appropriated fund employee, or uniformed personnel is not included in this definition.”

GAO states that non-appropriated fund employees are expressly excluded from the definition of “civilian employee.” GAO states that Santry’s argument that the agency’s alleged conversion of government functions to contractor performance is unfounded where the record establishes that the jobs of the employees performing services are not at risk and there is no conversion of work to the private sector since the federal employees’ jobs are not at stake. GAO concluded that the provisions of 10 USC §2461 do not apply to functions performed by non-appropriated fund employees and where the agency amended the solicitation to provide that no appropriated fund employee will be “displaced, reassigned, subjected to reduction in force, or otherwise adversely affected,” the ongoing procurement actions do not constitute conversion of functions performed by those employees to private sector performance. The protest is denied.

2. Greystones Consulting Group, Inc., B-402835, June 28, 2010

Link: GAO Opinion

Agency: Department of Homeland Security

Disposition: Protest denied.

Keywords: Size Protetst; corrective action

General Counsel P.C. Highlight: It is inconsistent with the integrity of the procurement system and the intent of the SBA for an agency to allow a firm to continue performing a contract where the firm was determined by the SBA after the award to be other than small, unless there are countervailing reasons for allowing the award to remain in place.

Greystones Consulting Group, LLC (Greystones) protests the award of a contract under a request for proposals (RFP), issued by the Department of Homeland Security (DHS) for roleplayer services.

The RFP was issued as a competitive set-aside for small businesses under the Small Business Administration’s (SBA) section 8(a) program. The agency received four proposals that were eligible for evaluation. Among the four were Greystones and the awardee, CWU. Following a size protest, the SBA determined that CWU is other than small with respect to the procurement and was not eligible for the award of the contract. But the agency decided not to terminate the contract award to CWU immediately. Instead, the agency decided to keep the contract in place but not not exercise any option for performance beyond the base year period and to “resolicit with due diligence” to make a new contract award.

GAO states that it is inconsistent with the integrity of the procurement system and the intent of the SBA for an agency to allow a firm to continue performing a contract where the firm was determined by the SBA after the award to be other than small, unless there are countervailing reasons for allowing the award to remain in place. The key consideration is whether there is another offeror in line for award who can step in and perform the contract if it is terminated.

Greystones proposal was found unacceptable, as were the remaining two offerors. Therefore, there is no offeror to which award could be made based on existing proposals if CWU’s contract was terminated. GAO sees no basis to challenge the reasonableness of the agency’s decision to honor CWU’s contract, given the need for continuing roleplayer services and its plan to award a new contract after holding a reasonably prompt recompetition. The protest is denied.

3. Eisenhower Real Estate Holdings, LLC, B-402807, July 27, 2010

Link: GAO Opinion

Agency: General Services Administration

Disposition: Protest denied.

Keywords: Challenge to the terms of a solicitation

General Counsel P.C. Highlight: In preparing a solicitation, a contracting agency is required to specify its needs in a manner designed to achieve full and open competition and may include restrictive requirements only to the extent they are necessary to satisfy the agency’s legitimate needs.

General Services Administration (GSA) issued a solicitation for offers (SFO) for the lease of office space to house portions of the Department of Homeland Security (DHS). The SFO requires that the housing be located in Washington, DC, or if in Virginia or Maryland, within a certain proximity of the main DHS campus under development.

Eisenhower protests the geographic restriction. GAO states that the contracting agency has the discretion to determine its needs and the best method to accommodate them. In preparing a solicitation, a contracting agency is required to specify its needs in a manner designed to achieve full and open competition and may include restrictive requirements only to the extent they are necessary to satisfy the agency’s legitimate needs. An agency may include geographic restrictions if they are reasonably necessary for the agency to meet its needs.

The record shows that, early in the procurement planning process, DHS documented its rationale for the chosen geographic area. DHS concluded that the location is critical to DHS headquarters operations. The location will facilitate the extensive daily interactions between DHS components, enabling DHS to share services among components, improve organizational efficiently, and enhance component working relationships. GAO states that this is sufficient to explain the nexus between the agency’s mission needs and proximity of DHS components. GAO states that the agency has reasonably explained the geographic restriction. The protest is denied.

4. TrailBlazer Health Enterprises, LLC, B-402751; B-402751.2, July 20, 2010

Link: GAO Opinion

Agency: Centers for Medicare and Medicaid Services

Disposition: Protest denied.

Keywords: Final Evaluation

General Counsel P.C. Highlight: Where a protest challenges an agency’s evaluation, it will review the evaluation record to determine whether the agency’s judgments were reasonably and consistent with the stated evaluation criteria and applicable procurement statutes and regulations.

TrailBlazer Health Enterprises, LLC (TrailBlazer) protests the award of a contract under a request for proposals (RFP) issued by the Department of Health and Human Service (HHS), Centers for Medicare and Medicaid Services (CMS), for administration services under Section 1011 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which requires CMS to pay hospitals and other healthcare providers for costs associated with furnishing emergency healthcare services to undocumented or other specified aliens.

The RFP was for the award of a cost-plus-fixed-fee contract, with a one-year base period, and four one-year options, for services as the administrative contractor for the Section 1011 program. The contractor was required to enroll healthcare provider applicants and process subsequent claim submissions. Award was to be made to the offeror whose proposal represented the best value based on experience, past performance, technical approach, and cost. The RFP also provided “estimated workload assumptions” and specified that offerors “shall use the workload assumptions provided” in preparing their proposals.

CMS received four proposals, held discussions, obtained revised proposals, conducted final evaluations, and made an award decision. During discussions, CMS questioned the awardee’s low staffing for claims processing, to which the awardee responded that the number was sufficient to perform the workload at the assumed 25% suspense rate set forth in the RFP. After reviewing the awardee’s responses, CMS concluded that the staffing levels were sufficient to support the agency’s requirements. The awardee’s proposal was significantly lower in cost than TrailBlazer’s and although TrailBlazer maintained a slight advantage with respect to the non-cost factors, CMS found that this advantage did not justify selection of TrailBlazer. TrailBlazer asserts that the evaluation of the awardee’s proposal was inconsistent with the terms of the RFP and therefore improper.

GAO states that where a protest challenges an agency’s evaluation, it will review the evaluation record to determine whether the agency’s judgments were reasonably and consistent with the stated evaluation criteria and applicable procurement statutes and regulations. Also, when an agency evaluates a proposal for the award of a cost-reimbursement contract, the agency must perform a cost realism analysis to determine the extent to which an offeror’s proposed costs are realistic for the work to be performed. An agency’s evaluation in this area is reviewed only to see that the agency’s cost realism evaluation was reasonably based and not arbitrary.

The RFP provided that CMS would evaluate the extent to which offerors proposed “innovations” and “efficiencies” with respect to the various requirements to include claims processing. Additionally, FAR §15.404-1(d)(1), a cost realism analysis, which CMS was required to perform, provides for independently reviewing whether specific cost elements proposed by an offeror are realistic for the work to be performed considering the unique methods of performance described in the offeror’s proposal. Having identified the awardee’s explanation as to why it would reduce staffing as an innovative and viable technical approach, it was appropriate for CMS to consider the impact of this approach on the awardee’s staffing levels and thereby its overall cost to the government. Also, since the Section 1011 program is essentially a replicate of the Medicare Part A and B processing system, CMS reasonably had little doubt that similar staffing reductions could be achieved. GAO concludes that the agency’s consideration of the awardee’s staffing was reasonable and proper. The protest is denied.

5. JLT Group, Inc., B-402603.2, June 30, 2010

Link: GAO Opinion

Agency: General Services Administration

Disposition: Protest denied.

Keywords: Protest of terms of the solicitation

General Counsel P.C. Highlight: In preparing a solicitation, a contracting agency is required to specify its needs in a manner designed to achieve full and open competition, and may include restrictive requirements only to the extent they are necessary to satisfy its legitimate needs.

JLT Group, Inc. (JLT) protests the terms of solicitation for offers (SFO), issued by the General Services Administration (GSA), for leased office space in Minnesota. JLT asserts that the SFO improperly restricts competition.

GSA originally published an advertisement on FedBizOpps regarding the need for 233,000 square feet of office space and a request for expressions of interest. After receiving 16 expressions of interest, GSA issued the SFO to three potential offerors, not including JLT, whose buildings were identified as being within the delineated area and as meeting or having the capability of meeting the minimum requirements of the SFO. After filing its protest, JLT received a copy of the SFO from the GSA and the protest was dismissed. JLT then filed this protest, challenging certain SFO requirements as unduly restrictive of competition, specifically, the requirements for indoor parking and a nine foot minimum ceiling height.

GAO states that a contracting agency has the discretion to determine its needs and the best method to accommodate them. In preparing a solicitation, a contracting agency is required to specify its needs in a manner designed to achieve full and open competition, and may include restrictive requirements only to the extent they are necessary to satisfy its legitimate needs. GAO will review a challenge to restrictive requirements to determine whether the restrictions are reasonably necessary to meet the agency’s needs.

In its review of the record, GAO finds no basis for objecting to either requirement. While indoor parking may not be available in all federal buildings, it is a common feature and given the climate in Minnesota, indoor parking is manifest. As for the minimum ceiling height, GAO finds that the agency justified the height, based on the fact that it is a standard requirement contained in the Facilities Standards for the Public Buildings Service, which are intended to establish “design standards and criteria for new buildings, major and minor alterations, and work in historic structures.” The protest is denied.

Mr. Brainard’s principal practice area is government contract law, corporate compliance, and government audit guidance.  Using his vast experience as inside counsel to major government contractors, Mr. Brainard counsels clients on all aspects of government contracting from compliance to proposal preparation to equitable adjustments to contract close-out.  Mr. Brainard also represents clients in government audit matters including indirect rate development and internal control reviews.  Mr. Brainard develops complete government compliance programs strategically designed to focus on critical management controls.  Mr. Brainard also has extensive experience working with and developing small businesses, including SBA Section 8(a), HUBZone, and veteran-owned business registries.  He is active in the Department of Defense Mentor-Protégé Program and has won five Nunn-Perry Awards.

Prior to joining General Counsel, P.C., Mr. Brainard founded The Brainard Group, LLC in 2007 and served large and small businesses in a wide variety of government compliance and legal initiatives.  His clients were able to enjoy significant successes in government compliance matters by strategically implementing key compliance program elements.

Over the course of his career, Mr. Brainard has designed risk management and compliance programs for major contractors that have resulted in extreme reductions in legal costs and claims.  He designed and implemented a government compliance assessment program that helped a debarred contractor reduce the debarment period.

Mr. Brainard is a member of the State Bar of California and has been admitted to practice by the United States Supreme Court.  He participates in fundraising for the Community Foundation of Northern Virginia, and is a frequent public speaker on a wide variety of contracts and compliance topics.

Mr. Brainard is a member of the State Bar of California and has been admitted to practice by the United States Supreme Court.  He participates in fundraising for the Community Foundation of Northern Virginia, and is a frequent public speaker on a wide variety of contracts and compliance topics.

On September 28th, as part of the General Counsel, P.C. Seminar Series, Michael is presenting, “Compliance and Ethics for Government Contractors:  The Pathway for Good Corporate Governance.” The presentation will be from 7:30 to 9:00 a.m. at the Tower Club.  To Register, click here:  http://complianceandethics.eventbrite.com/

The Fairfax County Economic Development Authority has published an updated version of its excellent book Doing Business in Fairfax County.  The book compiles information useful for a business of any size doing business in Fairfax.

It is particularly useful for identifying state and local regulations that may require attention from your business, and for identifying incentive programs that may put cash into your business.

1. JRS Management, B-402650.2, June 25, 2010

Link: GAO Opinion

Agency: Department of the Navy

Disposition: Protest denied.

Keywords: Terms of the Solicitation

General Counsel P.C. Highlight: GAO will review the record to determine whether the restrictions imposed by the solicitation are reasonably related to the agency’s needs.

JRS Management (JRS) protests the terms of a request for quotations (RFQ), issued by the Department of the Navy (Navy), for a sail loft instructor at the Navy Consolidated Brig.

The RFQ contained one contract line item number (CLIN), for which vendors were required to provide a unit hour price for a total quantity of 1,992 hours (249 days, 8 hours per day) for the sail loft instructor. An amendment to the RFQ contained a schedule of supplies and services that the instructor may be required to work.

The RFQ stated that the primary duties of the instructor should include managing the sail loft, training and supervising approximately eight prisoners, and assisting security personnel in maintaining security. The instructor was also required to have at least two years correctional experience and have supervised at least eight prisoners. The Navy amended the RFQ to additionally require the instructor to have at least two years experience in the control and use of keys, tools, and toxic, caustic, and flammable materials in a correctional setting and have at least a year of experience in supervising, moving, and teaching at least eight prisoners in a correctional setting.

JRS asserts that there should be a second CLIN for the amendment containing possible additional hours. GAO states that the risk that additional hours may be required does not make the solicitation inappropriate or improper. It is within the agency’s discretion to offer a proposed contract that imposes maximum risks upon the contractor.

JRS also asserts that the experience requirements are unduly restrictive. GAO states that the determination of a contracting agency’s needs and the best method of accommodating them are matters primarily within an agency’s discretion. GAO will review the record to determine whether the restrictions imposed are reasonably related to the agency’s needs. GAO’s review of the record finds that the Navy has established a reasonable need for the experience requirements. The Brig houses violent offenders in contact with materials that could be used for harm and therefore, it is reasonable for the Navy to increase safety by requiring the contractor to provide personnel with experience with the challenges that can arise within the facility. The protest is denied.

2. C2C Solutions, Inc.; TrustSolutions, LLC, B-401106.6; B-401106.7, June 21, 2010

Link: GAO Opinion

Agency: Department of Health and Human Services

Disposition: Protests denied.

Keywords: Corrective Action; OCI

General Counsel P.C. Highlight: Where an agency conducts exchanges with an offeror regarding the offeror’s plan to mitigate identified conflicts of interest, such exchanges do not constitute discussions.

C2C Solutions, Inc. (C2C) protests the corrective action being taken by the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS), in response to GAO recommendation for corrective action in sustaining a previous protest.

GAO originally sustained C2C’s protest against an award of a contract, under a request for proposals (RFP), issued by CMS for contracts in support of its audit, oversight, and anti-fraud, waste, and abuse efforts in two geographic zones. GAO found that CMS failed to reasonably consider the plan submitted on behalf of the awardee, by its parent company, to mitigate the awardee’s organizational conflicts of interest (OCI). GAO recommended that “the agency reconsider its determination that the awardee is eligible for award based on the amended OCI mitigation plan.” CMS advised GAO that it planned to implement the recommendation by “re-engaging” the awardee regarding its proposed OCI mitigation strategy.

C2C and TrustSolutions argue that CMS’s decision to reengage the awardee regarding the proposed mitigation plan is improper where it is inconsistent the GAO recommendation and is contrary to FAR § 9.504(e). GAO states that the details of implementing their recommendations for corrective action are within the discretion and judgment of the contracting agency. The issue in this protest is whether the corrective action proposed by CMS is contrary to FAR § 9.504(e) or whether their “re-engagement” constitutes improper discussions.

Under FAR § 9.504(e), when an agency concludes that an apparently successful offeror is ineligible for award based on a conflict of interest, the agency is required to notify the firm and allow it “a reasonable opportunity to respond.” GAO states that CMS is not precluded from reengaging the awardee regarding its OCI mitigation plan. FAR § 9.504(e) merely establishes an agency’s minimum duty to provide an offeror with an opportunity to respond to an agency’s OCI concerns where, but for the OCI concerns. the offeror would receive an award. There is also nothing in FAR § 9.504(e) to suggest that the offeror’s status has any bearing on how the agency should engage the offeror regarding its OCI mitigation strategy. Where an agency conducts exchanges with an offeror regarding the offeror’s plan to mitigate identified conflicts of interest, such exchanges do not constitute discussions. The protests are denied.

3. Bilfinger Berger AG Sede Secondaria Italiana, B-402496, May 13, 2010

Link: GAO Opinion

Agency: U.S. Army Corps of Engineers

Disposition: Protest denied.

Keywords: Responsibility

General Counsel P.C. Highlight: GAO will not question a negative responsibility determination unless the protester can demonstrate bad faith on the part of the agency or a lack of any reasonable basis for the determination.

Bilfinger Berger AG Sede Secondaria Italiana (BBSSI) protests the award of a contract under a request for proposals (RFP), issued by the U.S. Army Corps of Engineers (Army), for construction, repair, and facilities maintenance services in Italy.

The RFP was for award on a “best value” basis. The offerors were required to submit a Societa Organismi D’Attestazione (SOA), which is a certification evidencing compliance with Italian law regarding the qualifications of companies competing for public works contracts. BBSSI’s proposal included an SOA in the name of a related company, Bilfinger Hochbau GmbH (BBH), a debarred contractor.

In considering BBSSI’s responsibility, the contracting officer (CO) found that BBSSI and BBH had an extremely close business relationship. The Army also received an opinion from an Italian legal expert to determine the effect of BBSSI’s use of BBH’s SOA. Based on the information gathered by the CO, the CO determined that BBSSI would have “full disposal of BBH’s assets and resources” and would likely avail itself of those assets. Based on the close relationship between BBSSI and BBH, the CO determined that BBH was indirectly offering on the solicitation through BBSSI and, therefore, BBSSI was not a responsible offeror.

BBSSI challenges the agency’s negative responsibility determination. In making a negative responsibility determination, a CO is vested with a wide degree of discretion and must rely on his or her business judgment in exercising that discretion. The determination must be factually supported, but GAO will not question the negative determination unless the protester can demonstrate bad faith on the part of the agency or a lack of any reasonable basis for the determination. In this case, the GAO found that CO’s determination was based on extensive information on which the CO relied fully supported the view that BBSSI and BBH were closely related, and the resultant appearance that BBH, a debarred contractor, would be involved in performing the contract. The FAR prohibits debarred firms from submitting offers for government contracts either directly or indirectly. GAO finds that the CO reasonably relied on the evidence in concluding that BBH essentially was proposing through BBSSI, and that BBSSI was nonresponsible. The protest is denied.

4. Alalamiah Technology Group, B-402707.2, June 29, 2010

Link: GAO Opinion

Agency: Defense Logistics Agency

Disposition: Protest denied.

Keywords: Late proposal

General Counsel P.C. Highlight: It is the offeror’s responsibility to deliver its proposal to the proper place at the proper time.

The Defense Logistics Agency (DLA) issued a request for proposals (RFP), for excess property management and office support services to be performed in Kuwait. The RFP established a closing date and time of April 20 at “10 AM Sharp” local time. DLS issued two amendments to the RFP; the first included a revised closing date of April 23 and second amendment included a revised closing date of April 28. However, the time remained unchanged at 10 AM.

Alalamiah Technology Group (ATG) submitted its proposal electronically to the contracting official on April 28 in three volumes. The first volume was sent at 9:52 a.m., the second volume at 9:57 a.m., and the third volume was sent at 10:00 a.m. However, the contracting official did not receive the volumes until 10:03, 10:08, and 10:11. ATG was notified that its proposal was received late and would not be considered for award.

GAO states that it is the offeror’s responsibility to deliver its proposal to the proper place at the proper time. When a proposal is submitted electronically, it is the offeror’s responsibility to ensure timely delivery by transmitting the proposal sufficiently in advance of the time set for receipt of proposals to allow for timely receipt. The RFP, in this case, established that offerors’ proposals were to be received by April 28 at 10:00 a.m. The record shows that the primary cause of ATG’s late delivery was that the offeror delayed attempting to transmit its proposal until shortly before the time set for receipt. ATG did not act reasonably in waiting to transmit its electronic proposal until minutes before the time set for receipt of proposals, especially when ATG was aware of potentially long email delivery times common to its location. The protest is denied.

5. K & S Associates, Inc., B-402604, June 14, 2010

Link: GAO Opinion

Agency: Department of the Army

Disposition: Protest denied.

Keywords: Proposal Evaluation

General Counsel P.C. Highlight: In reviewing a protest objecting to an agency’s evaluation, it will not evaluate the proposals anew or substitute its judgment for that of the agency; rather, it will examine the record to determine whether the agency’s judgment was reasonable and in accord with the RFP.

K & S Associates, Inc. (K & S), protests the rejection of its proposal, under a request for proposals (RFP), issued by the Department of the Army (Army), for construction of a digital training facility.

The RFP provided for award to the offeror whose proposal represented the best value to the government based on technical factors and price. K & S was not awarded the contract and received an overall rating of acceptable although its price was lower than the awardee’s. K & S argues that the agency’s evaluation of its proposal was unreasonable and that the agency has not justified its selection of a higher-priced proposal.

GAO states that in reviewing a protest objecting to an agency’s evaluation, it will not evaluate the proposals anew or substitute its judgment for that of the agency; rather, it will examine the record to determine whether the agency’s judgment was reasonable and in accord with the RFP. GAO’s examination of the record supports the agency’s conclusion that the awardee’s previous projects had a greater degree of relevance to the project called for under the RFP. K & S failed to demonstrate that it had experience on projects that were similar overall, it failed to demonstrate that all four of the proposed key individuals had previously worked together on a project as a team, and it failed to demonstrate a capability to plan and schedule the complete project to meet the proposed contract completion period. Therefore, the protest is denied.

1. Emergent BioSolutions Inc., B-402576, June 8, 2010

Link: GAO Opinion

Agency: Department of Health and Human Services

Disposition: Protest denied.

Keywords: Contract Modifications; Contract Administration

General Counsel P.C. Highlight: GAO generally will not consider protests against modifications to an awarded contract, because such matters are related to contract administration and are beyond the scope of our bid protest function. An exception to the general rule is where a protester alleges that a modification is beyond the scope of the original contract, because, absent a valid sole-source determination, the work covered by the modification would be subject to the statutory requirements for competition.

Emergent BioSolutions Inc. (Emergent) protests the issuance of a modification to a contract by the Department of Health and Human Services (HHS) with PharmAthene, Inc. (Pharm) regarding the development and manufacture of a recombinant protective antigen (rPA) anthrax vaccine.

Pharm was awarded an original Phase 1 contract in September 2002, related to the development of an rPA anthrax vaccine. In 2003, HHS issued a request for proposals (RFP), for the award of one or more cost-plus-fixed-fee contracts for the continued development, testing, and production of the vaccine. The RFP contained a FAR clause, Changes-Cost Reimbursement, applicable to research and development contracts. HHS awarded this Phase 2 contract to Pharm as well. Between 2003 and 2009, HHS modified Pharm’s Phase 2 contract on 17 occasions.

Again in 2009, HHS posted a notice announcing intent to again modify the Phase 2 contract and Emergent submitted a statement of interest in response. Emergent also stated its concern that the modification was beyond the scope of the original contract. HHS stated that all aspects of the modification were already required by the objectives of Pharm’s Phase 2 contract.

GAO generally will not consider protests against modifications to an awarded contract, because such matters are related to contract administration and are beyond the scope of our bid protest function. An exception to the general rule is where a protester alleges that a modification is beyond the scope of the original contract, because, absent a valid sole-source determination, the work covered by the modification would be subject to the statutory requirements for competition. GAO will look to whether there is a material difference between the modified contract and the contract that was originally awarded.

GAO examined the record in this case and determined that no material difference exists between the original contract and the modification. GAO stated that the scope of most R&D contracts is often flexible because of unanticipated changes due to the lack of definitiveness of the government’s requirements. Also, the scope of work contained in the RFP was broadly defined and therefore, the RFP and original contract reasonably contemplated that there would be changes and setbacks in performance.

GAO stated that the original objectives of Pharm’s Phase 2 contract have not changed and the modification in question merely continues rather than alters the original contract objectives. GAO also thinks that the solicitation for the original contract adequately advised offerors of the potential for the type of changes that occurred during the course of contract performance. The protest is denied since GAO concluded that no material difference exists between the original contract and the modification.

2. Brican Inc., B-402602, June 17, 2010

Link: GAO Opinion

Agency: Department of Veterans Affairs

Disposition: Protest sustained.

Keywords: Technical Evaluation

General Counsel P.C. Highlight: A contracting agency must treat all offerors equally and evaluate their proposals evenhandedly. GAO will examine the record to determine whether the agency’s judgment was reasonable, in accord with the evaluation factors set forth in the RFP, and whether the agency treated offerors equally in its evaluation of their respective proposals and did not disparately evaluate proposals with respect to the same requirements.

The Department of Veterans Affairs (VA) issued a request for proposals (RFP), for the construction of a radiology imaging center. The RFP, issued as a service-disabled veteran-owned small business set-aside, sought proposals for construction services to expand and replace the radiology imaging center at the VA Medical Center.

Brican, Inc. was denied award after the SSEB rated its proposal under the past performance factor as unacceptable with moderate overall risk, because Brican did not have at least three projects of similar size, scope, and complexity involving image center construction. Also, although the awardee did not identify or propose to use a shielding subcontractor in its proposal, the descriptions of the two imaging center construction projects provided for the past performance evaluation reveals that the awardee used the same shielding subcontractor that Brican proposed.

A contracting agency must treat all offerors equally and evaluate their proposals evenhandedly. GAO will examine the record to determine whether the agency’s judgment was reasonable, in accord with the evaluation factors set forth in the RFP, and whether the agency treated offerors equally in its evaluation of their respective proposals and did not disparately evaluate proposals with respect to the same requirements.

GAO finds that the VA did not reasonably evaluate Brian’s proposal in accordance with the RFP’s requirements and evaluation factors. Brican proposed an experienced subcontractor, who was the same subcontractor identified in the awardee’s proposal. Although the RFP specifically provided for consideration of past performance/experience of major subcontractor’s, there is no evidence that the agency considered the past performance/experience of Brican’s shielding contractor. Additionally, the record establishes that the VA did not reasonably evaluate the awardee’s proposal under the past performance factor where the record shows that the awardee did not satisfy the RFP requirement for three completed imaging center construction projects. GAO sustains the protest.

3. Contrack International, Inc., B-401871.5; B-401871.6; B-401871.7, May 24, 2010

Link: GAO Opinion

Agency: Department of the Army

Disposition: Protest sustained.

Keywords: Past Performance

General Counsel P.C. Highlight: The evaluation of an offeror’s past performance is within the discretion of the contracting agency, and GAO will not substitute its judgment for reasonably based past performance ratings.

Contrack International, Inc. protests the award of a contract to Zafer Contracting Construction and Trade Company, Inc. (Zafer), under a request for proposals (RFP), issued by the Department of the Army, for the design and construction of an ammunition supply point. The RFP provided for the evaluation of proposals on a “best value” basis looking at experience, past performance, project management plan, and price.

Zafer’s original proposal was higher-rated and lower-priced and therefore, the best value to the government. Contrack challenged the evaluation of its and Zafer’s past performance, asserting that the Army failed to consider adverse performance information regarding Zafer’s past construction projects. The Army decided to take corrective action by amending the RFP to allow revised proposals. Contrack’s revised proposal, evaluated by a newly appointed SSEB, was rated satisfactory under the past performance factor and Zafer’s revised proposal received the same excellent evaluation rating under past performance as its initial proposal.

GAO stated that the evaluation of an offeror’s past performance is within the discretion of the contracting agency, and GAO will not substitute its judgment for reasonably based past performance ratings. The critical question is whether the evaluation was conducted fairly, reasonably, and in accordance with the solicitation’s evaluation scheme, and whether it was based on relevant information sufficient to make a reasonable determination of the offeror’s past performance, including relevant information close at hand or known by the contracting personnel.

Where, as here, the record showed that Zafer’s excellent past performance rating was primarily based upon two performance ratings for projects, but three reports provided overall ratings of satisfactory or marginal, and indicated that Zafer had a number of performance problems, GAO found that the Army’s past performance evaluation did not meet the standard discussed above. The Army made no effort to investigate the merits of the negative reports. GAO stated that it has no basis to find reasonable the Army’s assessment of an excellent rating for Zafer under the past performance factor and sustained Contrack’s protest on that basis.

4. Dorado Services, Inc., B-401930.3, June 7, 2010

Link: GAO Opinion

Agency: Department of the Air Force

Disposition: Protest denied.

Keywords: Past Performance

General Counsel P.C. Highlight: The evaluation of an offeror’s past performance is within the discretion of the contracting agency, and GAO will not substitute its judgment for reasonably based past performance ratings.

The Department of the Air Force (Air Force) issued a request for proposals (RFP) for refuse and recycling services for an Air Force base. Dorado Services, Inc. was not awarded the contract and protests the Air Force’s evaluation of the past performance factor.

The RFP was issued as a commercial services acquisition under FAR Part 12. The contract was to be fixed-price for a one-year base period with four one-year option periods. Award was to be based on an integrated assessment of the past performance and price of technically acceptable proposals. The Air Force was to look at relevant and recent contracts of bidders to assess the past performance of each bidder. Dorado’s proposal was found to be technically acceptable and received a rating of substantial confidence for past performance. However, another bidder’s proposal was lower in price and that bidder was awarded the contract.

The evaluation of an offeror’s past performance is within the discretion of the contracting agency, and GAO will not substitute its judgment for reasonably based past performance ratings. GAO will review the evaluation and award decision to determine if they were reasonable and consistent with the evaluation criteria and procurement statutes and regulations.

GAO found that the agency’s assessment of a substantial confidence rating to the awardee’s proposal under the past performance factor was reasonable and consistent with the terms of the solicitation since the awardee received satisfactory to exceptional ratings on all of its relevant contracts and positive comments from references. There were no meaningful differences in what both proposals had to offer, but the awardee’s proposal was lower in price. GAO found that the assessment made by the Air Force was not unreasonable. The protest is denied.

5. CapRock Government Solutions, Inc.; ARTEL, Inc.; Segovia, Inc., B-402490; B-402490.2; B-402490.3; B-402490.4; B-402490.5, May 11, 2010

Link: GAO Opinion

Agency: Department of Defense

Disposition: Protests denied.

Keywords: OCI; Organizational Conflicts of Interest

General Counsel P.C. Highlight: Contracting officials must avoid, neutralize or mitigate potential significant OCIs so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity and an unequal access to information OCI exists where a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm a competitive advantage in a later competition for a government contract.

CapRock Government Solutions, Inc. (CapRock), ARTEL, Inc. (ARTEL), and Segovia, Inc. (Segovia) protest the award of a contract to Intelsat General Corporation, under request for proposals (RFP), issued by the Department of Defense (DoD), for performance of the Navy’s Commercial Broadband Satellite Program (CBSP).

The RFP sought proposals to support the Navy’s CBSP and anticipated award of a single indefinite-delivery/indefinite-quantity (ID/IQ) contract for a base year and four option years. Proposals would be evaluated on the basis of price, technical approach, and past performance. Five proposals were received and were evaluated by the agency’s source selection evaluation board (SSEB). The source selection authority (SSA) also reviewed the assessments and concluded that Intelsat’s advantages under two of the subfactors, and its higher-rated past performance, merited award over CapRock’s higher ratings for a different subfactor and its lower price.

CapRock, ARTEL, and Segovia assert that the agency improperly evaluated Intelsat’s past performance, and CapRock and ARTEL each argue that their own past performance should have been rated higher. The evaluation of an offeror’s technical proposal, and its past performance, is a matter within the agency’s discretion. GAO will not reevaluate proposals but instead will examine the record to determine whether the agency’s judgment was reasonable and consistent with the stated evaluation criteria and applicable procurement statutes and regulations.

The record shows that the agency credited both Intelsat and its partners for performance under the highly relevant contracts and that these references were the basis for a green overall rating, as well as the agency’s judgment that Intelsat had the best overall past performance. GAO thinks these judgments were reasonable and consistent with the terms of the solicitation. The record showed no evidence that CapRock or ARTEL’s past performance should be rated higher.

GAO states that the SSA is required to exercise independent judgment in making a reasonable and adequately-documented source selection decision and the SSA has broad discretion in determining the manner and extent to which technical and cost evaluation results are used, is permitted to make an independent evaluation of offerors’ proposals, and may disagree with or expand upon the findings of lower-level evaluators provided the basis for the evaluation is reasonable and documented in the record. Therefore, CapRock’s assertion that the agency’s evaluation of its technical proposal was unreasonable under several subfactors is without merit where the record shows that the SSA viewed Intelsat’s proposal as superior to CapRock’s proposal with regard to technical approach and although CapRock disagrees with the judgment of the SSA, it has not shown it to be irrational or inconsistent with the solicitation criteria.

ARTEL argues that the award to Intelsat was tainted by an organization conflict of interest (OCI) arising from the awardee’s knowledge of the other offeror’s costs for certain satellite resources. GAO finds that the allegations, even if true, would not constitute an OCI. Contracting officials must avoid, neutralize or mitigate potential significant OCIs so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity and an unequal access to information OCI exists where a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm a competitive advantage in a later competition for a government contract. ARTEL complains that the awardee had access to certain cost information arising from ARTEL’s negotiations with Intelsat for the use of satellite resources that were under Intelsat’s exclusive control. GAO states that these types of negotiations between competitors do not give rise to an OCI. GAO denies the protests.

The U.S. Small Business Administration’s Office of Advocacy has released a study that examines how small businesses use credit.

Of particular interest to businesses considering the best way to access credit, the study identifies the importance of trade credit–vendor-provided financing–as a complement to traditional bank credit.  Each type of financing has characteristics that lead certain types of companies to them.  For example, businesses using trade credit have relatively lower credit scores than those using bank credit, likely because banks are more hesitant to lend to businesses with bad credit scores.  Similarly, businesses that avoid using any type of credit tend to be small, likely because they have not used credit to finance rapid expansion of their businesses.

1. Baldt Inc., B-402596.3, June 10, 2010

Link: GAO Opinion

Agency: Department of Navy

Disposition: Protest dismissed.

Keywords: Timely Filing; Protest of Terms of the Solicitation

General Counsel P.C. Highlight: Any protest challenging the terms of a solicitation must be filed prior to the time for receipt of proposals.

Baldt, Inc. (Baldt) protests the award of a contract, under a request for quotations (RFQ), issued by the Department of the Navy (Navy), for a non-magnetic stud link chain. The Navy issued the RFQ using simplified acquisition procedures (available for purchases of $100,000 or less. Baldt’s proposed price was $864,000 and the awardee’s price was $720,000.

GAO finds that the protest is untimely and not for consideration by the GAO where protests based upon alleged improprieties in a solicitation that are apparent prior to the time set for receipt of initial proposals must be filed prior to that time. Baldt knew, or should have known, prior to the time set for receipt of quotes, that its own quote would be priced more than eight times higher than the simplified acquisition threshold, and that any resulting contract would likely exceed the threshold. GAO finds that Baldt was required to protest the Navy’s use of simplified acquisition procedures prior the closing time, rather than waiting after award.

The “good cause” or “significant issue” exceptions to GAO’s timeliness rules do not apply since Baldt has not demonstrated a compelling reason beyond their control that prevented Baldt from filing a timely protest and the record does not show that the issues raised are of widespread interest to the procurement community that would warrant resolution in the context of an otherwise untimely protest. The protest is dismissed.

2. Baine Clark Company, Inc.–Costs, B-401172.4, June 7, 2010

Link: GAO Opinion

Agency: Department of Army

Disposition: Reimbursement amount recommended.

Keywords: Bid protest costs

General Counsel P.C. Highlight: In support of a request for payment of bid protest costs, the protester’s counsel must submit sufficient evidence to support its monetary claim, which must be adequately documented and reasonable in its nature and amount

Baine Clark Company, Inc. (Baine) has asked GAO to determine the amount that it should recover from the Department of the Army (Army) for costs of filing and pursuing a protest of the adequacy of price evaluation of quotations under a request for quotations issued for the lease of three pick-up trucks.

GAO conducted “outcome prediction” alternative dispute resolution, reporting the anticipated decision sustaining the firm’s protests and recommending reimbursement of reasonable protest costs. Baine submitted its claim to the agency for reimbursement of attorneys’ fees, itemized by the firm’s initial attorney and his retained co-counsel.

The Army offered to settle for a lesser amount, claiming that some of the attorney time entries appeared duplicative or excessive, or were associated with a different protest previously dismissed by GAO. Baine objects to the reduction of costs.

GAO states that a protester seeking to recover the costs of pursuing a protest must submit sufficient evidence to support its monetary claim and the amount claimed may be recovered to the extent that the claim is shown to be sufficiently related to the filing and pursuit of successful protest grounds, is adequately documented, and is reasonable in its nature and amount. GAO finds that three of the attorney’s itemized work entries are disallowed where the entries aggregate allowable and unallowable costs in a way that GAO cannot tell from the record what portion is unallowable. Therefore, GAO finds that the questionable entries must be disallowed in their entirety.

As for six work entries for the co-counsel, GAO finds that two of the work entries are not allowable since they concern efforts toward possible settlement of the action. The other four challenged by the Army are allowable costs, and will be included in the recommendation. GAO recommends reimbursement to Baine in the amount of $24,908.34.

3. Stephen Lucas Construction, LLC, B-402654, June 9, 2010

Link: GAO Opinion

Agency: Department of Veteran Affairs

Disposition: Protest denied.

Keywords: Invitation for Bid

General Counsel P.C. Highlight: Bidders are responsible for delivering their bids to the proper place at the proper time. Where a bid is delivered by a commercial carrier, the bid is regarded as hand-carried.

Stephen Lucas Construction, LLC (Stephen) protests the award of a contract to Construction Management Engineering & Consulting, Inc. (CMEC) under invitation for bids (IFB), issued by the Department of Veterans Affairs (VA) for columbarium and drainage improvements at an Oregon cemetery.

The IFB, a total service-disable veteran-owned small business set-aside, recommended that bids be submitted by overnight courier service. Bid opening was scheduled for 2 p.m. on March 3. The record showed that on March 3 at 10:51 a.m., CMEC’s bid was delivered to the address listed in the IFB prior to bid opening, and it was sent by Federal Express. Once CMEC received confirmation that its bid package had been received, it contacted the contracting officer and advised him that its bid package had arrived. Also, on March 3, prior to bid opening, CMEC had a courier deliver a bid modification. The contracting officer picked up CMEC’s bid modification, but failed to pick up CMEC’s original bid.

The contracting officer announced during bid opening that “if any bids are received by the VA before 2:00 p.m. deadline and are not present at the bid opening, those bids are considered to be within VA custody and will be considered timely.” CMEC’s bid modification was lowest in price and Stephen’s was second lowest. After bid opening, the contracting officer received CMEC’s original bid. After reviewing CMEC’s bid and verifying that it was received prior to the deadline, VA made award to CMEC.

Stephen argues that there is no proof that the VA had in its possession the CMEC bid prior to bid opening. GAO states that bidders are responsible for delivering their bids to the proper place at the proper time and where a bid is delivered by a commercial carrier; the bid is regarded as hand-carried. A late hand-carried bid may be considered for award where improper government action was the paramount cause of its late delivery and consideration of the late bid would not compromise the integrity of the competitive bid system.

GAO finds that CMEC’s original bid was timely received where the evidence shows that an agency employee signed for the original bid package at 10:51 a.m. on March 3 and CMEC acted reasonably to ensure the delivery of the bid to the contracting officer before bid opening. The VA’s actions were the paramount cause for the contracting officer not having the original bid at bid opening. The protest is denied.

4. JER 370 Third Street, LLC, B-402025.2; B-402541, June 1, 2010

Link: GAO Opinion

Agency: General Services Administration

Disposition: Protest sustained.

Keywords: Cancellation

General Counsel P.C. Highlight: An agency may cancel an existing solicitation where it has a reasonable basis for doing so. The potential for cost savings provides a reasonable basis for cancellation.

The General Services Administration (GSA) issued a solicitation for offers (SFO), for the lease of office space to be used by the Environmental Protection Agency (EPA) in San Francisco. JER 370 Third Street, LLC (JER) was one of four offerors that submitted proposals.

The SFO sought proposals for the lease of office and related space for a term of 15 years and included sections defining both “location requirements” and “unique requirements,” and the SFO advised offerors that a failure to meet the latter requirements would render an offer unacceptable. Award was to be made on a best value basis, with technical factors and price considered. Technical factors were considered significantly more important.

The GSA determined that JER had not proposed a building of the “highest quality,” which, in turn, did not comply with the solicitation requirement pertaining to the ceiling cavity, posing a significant risk to the government. Award was made to Lincoln Property Company (Lincoln) based on technical superiority even though its proposal contained a higher price. GSA sent Lincoln a lease, which it refused to sign. Rather than make award to the next in line offeror, GSA decided to cancel the solicitation. It reasoned that the solicitation had not been adequate since comparable quality space was available at significantly lower rates and modification of the SFO’s requirements might increase competition.

JER asserts that although an agency may cancel an existing solicitation where it has a reasonable basis for doing so, GSA did not have a reasonable basis. GSA maintains that JER’s offer was ineligible for award since it failed meet critical solicitation requirements. GAO finds that GSA failed to produce a technical evaluation report endorsed by the evaluation panel members in its response to the protest and thus, the record lacks documentation as to the technical evaluation panel’s conclusions regarding JER’s offer.

GAO additionally finds that GSA’s justification for canceling and resoliciting does not support a finding that offers of space comparable in quality to the Lincoln building at similar rates may be anticipated. GSA did not establish that it will receive prices more favorable than the protester’s if it resolicits. GAO recommends that the GSA reinstate the cancelled solicitation and proceed with the source selection process and reimburse JER reasonable costs of filing and pursuing the protest. The protest is sustained.

5. Sabre Systems, Inc., B-402040.2; B-402040.3, June 1, 2010

Link: GAO Opinion

Agency: Department of Justice, Drug Enforcement Administration

Disposition: Protest denied.

Keywords: Technical Evaluation; Discussions

General Counsel P.C. Highlight: An agency is not obligated to reopen negotiations to give an offeror the opportunity to remedy a defect that first appears in a revised proposal

A solicitation issued by the Department of Justice, Drug Enforcement Administration (DEA), for information technology support services, contemplated issuance of a time-and-materials task order for a two-year base period, with two-year and one-year options. Performance requirements, including human resources, security, and deliverables, were identified in a detailed statement of work (SOW). Proposals were to be evaluated on a “best value” basis under three factors: technical; past performance; and price.

Three vendors, including Sabre Systems, Inc. (Sabre), submitted proposals, which were evaluated by a technical evaluation panel (TEP). The TEP rated Sabre’s proposal very good overall under the technical factor and low risk under the past performance factor. However, the contracting officer awarded the contract to another company at a higher price based on a price/technical tradeoff. Sabre filed a protest and in response, DEA notified GAO that it would take corrective action. Sabre’s protest was dismissed as academic.

In the re-evaluation, the TEP rated Sabre’s proposal good overall, with low past performance risk, but rated the other company’s proposal very good overall, with low past performance risk. Sabre filed another protest asserting that the re-evaluation was inadequate and resulted in the identification of unreasonable new weaknesses, specifically, a weakness regarding its proposing a deputy project manager (DPM) as part of its communication initiative.

GAO finds the evaluation unobjectionable where the solicitation required vendors to demonstrate their understanding and management of important events or tasks and the TEP found that Sabre’s communication initiatives failed to clearly define the different roles and responsibilities needed to properly implement the new responsibilities. The TEP acknowledged that Sabre had provided additional details, but found that Sabre failed to clearly identify or define the DPB’s role.

Sabre also asserts that the agency failed to provide it with meaningful discussions regarding previously unidentified weaknesses under the demonstrated understanding and management/technical approach subfactors. GAO states that when an agency engages in discussions with an offeror, the discussions must be meaningful, that is, they must lead the offeror into the areas of its proposal that require correction of amplification. However, an agency is not required to reopen negotiations to give an offeror the opportunity to remedy a defect that first appears in a revised proposal.

The discussions were unobjectionable where the agency’s initial discussions noted that Sabre’s proposal did not provide sufficient detail to depict all SOW requirements, which was sufficient to lead Sabre to provide a response that included a more detailed proposal. GAO also finds that the fact that Sabre’s initial proposal contained little information on the DPM is irrelevant where Sabre’s failure to provide complete information led to a new evaluated weakness, which, because it was introduced for the first time in its revised proposal, did not obligate the agency to reopen discussions. The protest is denied.

1. Transportation Security Administration–Costs, B-400340.8, May 20, 2010

Link: GAO Opinion

Agency: Transportation Security Administration

Disposition: Request granted.

Keywords: Attorney Fee Cap

General Counsel P.C. Highlight: In reimbursing attorney’s fees following a successful protest, an agency may pay more than the fee cap of $150 per hour where the increase is consistent with the Government’s Consumer Price Index.

General Dynamics protested the award of a contract by the Transportation Security Administration (TSA) under a request for proposals (RFP) for computer support services. GAO sustained the protests, issued corrective action, and recommended that the agency reimburse costs.

General Dynamics filed a claim for protest costs with the agency, which included a request for reimbursement of attorneys’ fees at a higher rate than the statutory max of $150/hour. TSA makes no objection to the higher rate. GAO states that the successful protester may receive a higher hourly rate in reimbursing attorney’s fees where the protester is a small business concern or where the agency determines, on a case by case basis, that a special factor, such as cost of living or special expertise, justifies a higher fee. In this case, the protester is not a small business, but GAO states that the higher rate is justified to adjust for the cost of living increase where the rate is increased in accordance with the Department of Labor’s (DOL) Consumer Price Index (CPI).

GAO finds that General Dynamics provided TSA a detailed explanation of the enhanced attorney fee rate using DOL’s CPI-All Urban Consumers, which is consistent with GAO’s prior decisions, and since TSA does not object, GAO recommends reimbursement at the higher rate.

2. Gonzales-McCaulley Investment Group, Inc., B-402544, May 28, 2010

Link: GAO Opinion

Agency: Department of Veteran Affairs

Disposition: Protest denied.

Keywords: Prejudice

General Counsel P.C. Highlight: GAO will not sustain a protest unless the protester demonstrates a reasonable possibility that it was prejudiced by the agency’s actions

Gonzales-McCaulley Investment Group, Inc. (GMIG) protests the issuance of an order to NPI, Inc. (NPI) under a request for quotations (RFQ), issued by the Department of Veterans Affairs (VA), to provide contracting training for the VA Acquisition Academy (VAAA).

The RFQ provided that quotations would be evaluated for “best value” based on three factors: technical approach; past performance; and price. The RFQ stated that “previous performance conducted within the VAAA will be considered more heavily than other previous performance outside of VAAA.” GMIG’s technical approach resulted in a rating of unacceptable and was assigned one deficiency and one weakness under the past performance factor, resulting in a rating of acceptable. NPI was rated excellent for technical approach and acceptable for past performance.

GMIG asserts that it was unreasonable for the VA to assign its quotation a deficiency based on its having only one past performance reference for teaching at the VAAA. GAO states that evaluation of a protester’s past performance is a matter within the discretion of the agency and as long as the performance rating is reasonable, GAO will not substitute its views. Upon examination of the record, GAO finds no reason to object to the past performance rating since GMIG was on notice that less past performance with VAAA would result in a lower rating, and only one of GMIG’s required references was for the VAAA.

GMIG also asserts that its quotation was misevaluated under the technical approach factor, objecting to each specific criticism. However, the GAO will not sustain a protest unless the protester demonstrates a reasonable possibility that it was prejudiced by the agency’s actions. Here, even if GMIG received the highest technical approach rating, it still would not receive the order, since NPI’s price was still lower. The protest is denied.

3. IntegriGuard LLC, B-401626; B-401626.2, October 20, 2009

Link: GAO Opinion

Agency: Office of TRICARE Management Activity

Disposition: Protest denied.

Keywords: Discussions; technical evaluation

General Counsel P.C. Highlight: The FAR requires agencies conducting discussions to inform offerors of deficiencies and significant weaknesses, but the content of discussions is largely a matter of the contracting officer’s judgment.

TRICARE Management Activity (TMA), a Department of Defense Field Activity, procures and administers contracts for TRICARE healthcare support services. TMA issued a request for proposals (RFP) for a contractor to provide independent audits of TMA healthcare support contractors’ reimbursement determinations and healthcare claims processing services. The RFP also stated that award would be made to the offeror with the lowest-priced, technically acceptable proposal based on technical and price factors.

A set of subfactors were set forth under the technical factors. Specifically at issue in the protest, was the “staffing plan” subfactor. IntegriGuard LLC (IntegriGuard) submitted a proposal that was deemed inadequate because of its proposed staffing. IntegriGuard’s price was also considered too low. Following two rounds of discussions, IntegriGuard submitted final proposal revisions (FPRs) in which it reduced the staffing for four of five option periods. The agency still deemed the proposal technically unacceptable and considered the price too low.

IntegriGuard claims that the agency unreasonably found its proposal technically unacceptable under the staffing plan subfactor on the basis of an unsupported productivity estimate. IntegriGuard’s estimate for the number of claims processed per day was found to be unreasonable by the agency since it was “such an aggressive productivity level” and it “demonstrates a misunderstanding of the audit process.” GAO states that the evaluation of technical proposals is a matter largely within the agency’s discretion and it finds no basis to question the productivity estimate on which the agency based its conclusion.

The record demonstrates that all three of the evaluators have extensive knowledge of the TRICARE program and relevant experience in auditing TRICARE claims. The three evaluators had determined a reasonable daily workload for claims analysis and IntegriGuard’s proposed rate was inadequate to meet the RFP requirements. GAO cannot conclude that the estimate in the RFP was unreasonable.

IntegriGuard next claims that the agency ignored aspects of its proposed “team approach” to claims auditing. GAO states that offerors bear the burden of submitting a sufficiently detailed proposal and IntegriGuard failed to identify the staffing position responsible for conducting initial claims review audits and failed to specify any other labor category as sharing this responsibility. Therefore, the evaluators reasonably concluded that only certain staffers were devoted to initial claims review.

As to IntegriGuard’s assertion that the agency failed to conduct meaningful discussions, GAO states that the Federal Acquisition Regulation (FAR) requires agencies conducting discussions to inform offerors of deficiencies and significant weaknesses, but the content of discussions is largely a matter of the contracting officer’s judgment. GAO finds that the record clearly demonstrates that IntegriGuard was informed that its staffing was inadequate and therefore, the agency conducted meaningful discussions. The protest is denied.

4. Magnum Opus Technologies, Inc. and The Healing Staff, Inc. v. U.S. and Luke & Associates, Inc. and Terrahealth, Inc.

Link: Court of Federal Claims Opinion, Nos. 10-106C, 10-127C

Agency: U.S. Air Force

Disposition: Protest Granted.

Keywords: Exercise of Options; ID/IQ Contracts

General Counsel P.C. Highlight: In exercising the option on an ID/IQ contract, the Government must be able to consider the price element and if all contractual price commitments have been removed from the master ID/IQ contract, the Government may not exercise the option. It is not enough that the ID/IQ contract required consideration of price at the task order level, there must be limits in the ID/IQ contract itself prior to the exercise of an option.

In a request for proposals (RFP) issued in 2005 for a minimum of five indefinite delivery /indefinite quantity (ID/IQ) contracts for a four-year period, with two three-year options by the Air Force, offerors were required to submit pricing info including not-to-exceed (NTE) ceiling rates for sixty-eight health care service staffing positions.

The RFP also included an economic price adjustment to provide adjustments to contract price as a result of economic changes as the contracts aged. Contracts were eventually awarded to five companies, not including Magnum Opus Technologies, Inc. (Magnum) or The Healing Staff, Inc. (Healing). Magnum initiated two separate protests. One with the Small Business Administration (SBA), which found in favor of Magnum and the other with GAO, which recommended award to Magnum, after which an ID/IQ contract was awarded.

The Air Force found later that contractors were exceeding NTE rates even though the contracts stated that prices could not be more than the NTE price. The Air Force ultimately agreed to remove requirement to comply with NTE rates and issued contract modifications. The Air Force chose to exercise four contractors’ options and gave notice to Magnum and Healing that their options would not be exercised. Both filed protests with GAO, which were dismissed because the protests concerned matters outside scope of GAO bid protest function.

Magnum and Healing filed motions for reconsideration with GAO, which were not acted upon. The companies, therefore, filed a bid protest in the Court of Federal Claims asserting that because NTE pricing was eliminated from the contracts, the Air Force had exercised unpriced options violating Federal Acquisition Regulation (FAR) §17.207. Healing also alleged violation of §17.207 and further alleged that the Air Force wrongfully failed to disclose that it would use performance evaluations in determining whether to exercise options.

After establishing subject matter jurisdiction and standing, the Court of Federal Claims held that the Air Force failed to comply with FAR §17.207, specifically subsection (f), which states that for the Government to validly exercise an option, “the option must have been evaluated as part of the initial competition and be exercisable at an amount specified in or reasonably determinable from the terms of the basic contract.”

The Court of Federal Claims stated that following the modifications rendering the NTE rates non-binding, the price evaluation conducted at the time of the initial award was no longer useful. When the options were exercised, the NTE rates were only advisory, and contractors could increase their labor rates at will. Therefore, the relative costs to the Government of various contractors’ options, was entirely unknown. The pricing of the options, as exercised, was not “evaluated as part of the initial competition.”

The Air Force also failed to satisfy the second clause of FAR §17.207(f), that the option was “exercisable at an amount specified in or reasonably determinable from the terms of the basic contract.” The Court of Federal Claims held that it is impermissible to evaluate relative cost based only upon non-binding proposals, because such a comparison is not meaningful. Once the Air Force removed the NTE rates, it removed its only basis of meaningfully comparing the cost to the Government of the contractors’ options. The price of the options was not “reasonably determinable” from the ID/IQ contracts.

The Court of Federal Claims also stated that, “the statutory requirement that cost to the government be considered in the evaluation and selection of proposals for award is not satisfied by promise that cost or price will be considered later, during award of individual task orders.” The Air Force cannot substitute competition at the task order level for compliance with the applicable laws and regulations.

Finally, the Court of Federal Claims held that the maximum contract value for the ID/IQ contract did not establish price either. The contracting officer looked at the total contract value and made a guess as to how to divide it between the base period and two option periods, which is not “evaluated” price within the meaning of CICA and FAR.

As for remedy, the Court of Federal Claims ordered injunctive relief since the plaintiffs succeeded on the merits of the case, proved that they will suffer irreparable harm in the absence of injunctive relief, identified a number of mechanisms other than the contract options that the Air Force could use during pendency of an injunction, and public interest weighed in favor of granting the injunction.

1. NAE-TECH Remediation Services, B-402158, January 25, 2010

Link: GAO Opinion

Agency: Department of the Army, Corps of Engineers

Disposition: Protest denied.

Keywords: Technical Evaluation; Discussions

General Counsel P.C. Highlight: Directly challenging the merits of an agency’s technical evaluation is one of the most difficult protest grounds to win. When GAO reviews a protest related to an evaluation of proposals, it does not independently reevaluate the proposals, but rather determines whether the evaluation was reasonable.

The Department of the Army’s Corps of Engineers issued a request for proposals (RFP) for the award of an indefinite-delivery/indefinite-quantity contract to a minimum of five small business contractors. Award was to be made on a “best value” basis and was to be determined based on price and four non-price related factors: technical capability; technical approach to sample task orders; organization/management; and past performance. The solicitation also provided that the Army would not conduct discussions during the procurement and that award would not be made to an offeror whose proposal contained a deficiency.

The Corps received fifteen proposals, including one from NAE-TECH Remediation Services. As part of its evaluation of NAE-TECH’s proposal, the agency identified one deficiency in NAE-TECH’s response to the sample task order for work to be performed in the U.S. and five deficiencies under the organization/management evaluation factor. Based on these ratings, the agency excluded NAE-TECH’s proposal from the competitive range, a decision that NAE-TECH decided to protest.

In its protest, NAE-TECH principally contended that it did some of the tasks that the agency had listed as deficient. This included the argument that its failure to discuss certain matters was actually evidence of its “comprehensive understanding of remediation efforts.” Additionally, it was claimed that the agency’s assignment of a deficiency was unreasonable in light of the fact that the agency viewed as a strength NAE-TECH’s discussion of other, more complex procedures associated with the sample task order.

When GAO reviews a protest related to an evaluation of proposals, it does not independently reevaluate the proposals, but rather determines whether the evaluation was reasonable. In this instance, GAO determined that it was reasonable for the Corps to assign a deficiency to NAE-TECH’s decision to list the critical tasks in its proposal, instead of providing an explanation as to how the tasks would be performed. GAO was also unpersuaded by NAE-TECH’s argument that it intended to provide further detail during discussions, due to the fact that the solicitation stated its intent to make the award without conducting discussions. Therefore, GAO determined that the Corps’s decision to exclude NAE-TECH’s proposal from further consideration was reasonable and denied NAE-TECH’s protest.

2. Irving Burton Associates, Inc., B-401983.3, March 29, 2010

Link: GAO Opinion

Agency: Department of the Army

Disposition: Protest sustained.

Keywords: Page Limitations

General Counsel P.C. Highlight: If a Request for Proposals contains a page limitation and an offeror exceeds that page limitation, the appropriate remedy is to eliminate the extra pages and evaluate the remainder in light of the RFP requirements. If the pared-down proposal does not meet the RFP requirements, it is not eligible for award.

The Army Medical Research Acquisition Activity issued a task order proposal request (TOPR) for defense health information management system support services. The TOPR contemplated the issuance of a fixed-price task order to be awarded on a “best value” basis as determined by an evaluation of price, and five non-price factors: experience, technical approach, management approach, quality control approach, and past performance. Competition under the TOPR was limited to prior awardees of a multiple-award indefinite-delivery/indefinite-quantity (ID/IQ) contract for similar services. Three contractors submitted proposals, and after conducting an evaluation, the contracting officer determined that the proposal submitted by Technology, Automation & Management, Inc. (TeAM) represented the best value to the government. Irving Burton Associations, Inc. (IBA), one of the competitors, protested the award, alleging that TeAM’s proposal violated the TOPR page limitation on responsive proposals. Consequently, the agency took corrective action by reevaluating TeAM’s proposal in accordance with the stated evaluation criteria, eliminating the portion of TeAM’s proposal that violated the page limitation. Despite this elimination, TeAM’s proposal was still determined to represent the best value to the government. IBA again protested, alleging that eliminating a portion of TeAM’s proposal eliminated TeAM’s transition plan and required milestones. GAO agreed, noting that the remaining portions, which did make some reference to the transition plan and milestones, was not sufficient to satisfy the TORP after enforcement of the proposal page limitation.

IBA also protested the agency’s evaluation of its own proposal, contending that it received lower ratings for experience, technical approach, and management approach than it should have. GAO’s response to this argument, while redacted of most of its specifics, largely agreed with IBA, asserting that the record did not reflect a reasonable basis for the evaluators’ rating of IBA’s proposal.

In light of its determination that the agency’s evaluation of TeAM’s proposal was unreasonable and its conclusion that IBA’s proposal was not reasonably evaluated, GAO sustained IBA’s protest. GAO then recommended that the agency conduct discussions with the offerors, request revised proposals as necessary, re-evaluate the proposals, and make a new source selection determination.

3. DTV Transition Group, Inc. — Costs, B-401466.2, April 7, 2010

Link: GAO Opinion

Agency: Federal Communications Commission

Disposition: Claim for costs denied.

Keywords: Bid and Proposal Costs

General Counsel P.C. Highlight: Recovery of bid and proposal costs is dependent upon the protester providing adequate documentation that identifies and supports the amounts claimed for each individual expense (including cost data to support the calculation of claimed hourly rates for employees), the purpose for which each expense was incurred, and how the expense relates to the claim.

The Federal Communications Commission issued a solicitation for walk-in centers to provide consumer assistance related to the transition to digital television. DTV Transition Group, Inc. (DTG) protested the award under this solicitation, claiming that the FCC failed to comply with the small business set-aside provisions in the solicitation and made awards that would not meet the agency’s needs. Although FAR required the agency to suspend performance of the contract pending resolution of the protest, the agency was allowed to, by regulation, and did in this case issue a determination and finding allowing performance to continue during the protest. Contract performance was largely completed during the pendency of the protest. Eventually, the FCC took corrective action by offering to pay the protester’s bid and proposal costs, which was the only remedy available to the protester because the contract was largely completed. GAO then dismissed the protest, but cautioned

DTG that bid and proposal costs claimed by a protestor may be recovered only to the extent that they are adequately documented and shown to be reasonable, and that claims for reimbursement must identify and support the amounts claimed, the purpose for which the expense was incurred, and how the expense relates to the claim.

Subsequently, DTG submitted a claim for costs to the FCC in the amount of $118,500, supported by a short affidavit from its managing director that explained the costs were related to services provided by SinoPowell Capital and Yelverton Law Firm. The affidavit explained that the firms were engaged for flat fees related to the amount of the award by the FCC, with a minimum fee due to the two firms of $118, 500. The FCC responded to DTG’s request, claiming that the amount requested was not adequately documented to allow the FCC to determine what costs were actually incurred, the correlation between those costs and the preparation of the proposal, and the reasonableness of the costs. As such, the FCC requested that DTG submit additional information supporting its claim for costs. DTG responded, but did not provide any of the requested documentation, instead it explained that it believed that in good faith that it would receive at least some part of the overall awards and thus negotiated with the professionals needed to assemble a proposal and agreed to pay them a percentage of the fees awarded.

The FCC denied DTG’s claim in full, concluding that DTG’s response indicated that DTG had not actually incurred proposal preparation costs for any services provided by the identified firms and that, in any event, DTG had not provided adequate documentation of any proposal preparation costs. DTG then filed a claim for costs with GAO.

GAO’s review of the record supported the conclusion reached by the FCC – DTG failed to provide sufficient support for its claim for costs, even after the FCC specifically requested the necessary documents from DTG. Additionally, GAO pointed to the fact that DTG’s statements raised doubts as to whether any amounts due to SinoPowell and Yelverton were incurred for the preparation of the proposal. Based on this determination, GAO denied DTG’s claim for costs.

4. Carthage Area Hospital Inc., B-402345, March 16, 2010

Link: GAO Opinion

Agency: Department of Veterans Affairs

Disposition: Protest denied.

Keywords: Cost Technical Trade-off; Past Performance

General Counsel P.C. Highlight: Selection of higher-rated, higher-priced proposal is unobjectionable where the selection official reasonably determined that awardee’s higher technical rating outweighed the protester’s lower price

The Department of Veterans Affairs (VA) issued a request for proposals for the operation of a community-based outpatient clinic in Jefferson County, New York. The solicitation provided for the award of a fixed-price contract that was to be awarded on a “best value” basis considering the following three evaluation factors: technical capabilities, past performance, and price. The VA received three proposals, two of which were included in the competitive range: Valor Healthcare, Inc. and Carthage Area Hospital, Inc. (the incumbent contractor). The two proposals were evaluated and the source selection authority, who compared the strengths and weaknesses assessed in the proposals. Valor’s proposal was determined to be technically superior, but Carthage’s proposal was acceptable and lower in price. In a cost-technical trade-off, which is an essential part of a best value determination, the source selection authority determined that Valor’s technical superiority outweighed Carthage’s price advantage. Carthage protested the award on several grounds.

Carthage first objected to the VA’s rating of Valor under the management, experience and staffing subfactor, alleging that Valor failed to adequately describe how it would provide qualified personnel. However, GAO concluded that the record did not provide a basis upon which to object to the VA’s assessment. That particular subfactor was evaluated on more than just the staff proposed by the offeror, instead looking at offeror’s scheduling methods, experience, planned organization, capability and plan to commence performance within required timeframes. Due to Valor’s responsiveness to the subfactor as a whole, GAO determined that the VA’s evaluation related to this charge was reasonable.

Next, Carthage claimed that it should have received a higher rating for the same subfactor due to the fact that it was the incumbent and already had staff in place. The VA countered that its evaluation examined more than just the proposed staff, and that weaknesses in other portions of Carthage’s proposal related to this subfactor caused it to receive its rating. GAO agreed.

Carthage also protested the determination that the location of Valor’s proposed clinic was more favorable than Carthage’s. Again, GAO concluded that the record supported the VA’s finding that Valor’s location offered numerous strengths, causing it to receive a higher rating than Carthage.

Carthage then argued that the agency’s evaluation of Valor’s past performance failed to consider negative past performance information, specifically a report from the VA’s Office of Inspector General that critiqued Valor’s operation of another community-based outpatient clinic. In certain circumstances an agency evaluating an offeror’s proposal has an obligation to consider “outside information” bearing on the offeror’s proposal when it can be shown that the information in question was “simply too close at hand to require offerors to shoulder the inequities that spring from an agency’s failure to obtain, and consider this information.” GAO concluded that the information in question here was not “too close at hand” for the agency to ignore, and thus, the agency was not required to consider the information in its evaluation of Valor’s past performance.

Based on its review of the record, and the determinations described above, GAO concluded that the VA’s evaluation of the proposals in question was not unreasonable, and denied the protest.