Contractors who have filed or have considered filing a Bid Protest based on a mistake by an agency know that they have very little time to recognize an issue and take action before the Government Accountability Office (GAO).

  • Typically, a protest challenging the award of a contract must be filed within 10 days (calendar, not business) of when a protester knows or should know of the basis of the protest.
  • GAO routinely dismisses untimely protests without even considering the substance of the appeal.
  • Government Agencies will always target timeliness in their brief when it might be an issue.

These facts result in many otherwise worthy Bid Protests being dismissed. While this feels harsh to contractors with legitimate complaints about tight turnaround, it is an integral part of keeping meritorious and timely protests before GAO process quick, inexpensive, and effective overall.

However, there are two important favorable rules GAO has developed over the years that may rescue contractors who might otherwise think they are out of luck due to timeliness concerns.

  • Diligent pursuit of information that gives rise to a basis for protest may lead to a favorable decision on timeliness for contractors.
  • Doubts over timeliness are resolved in favor of protestors.

These two considerations help somewhat ease the harshness of the strict timeliness rules GAO has.

A recent 2019 GAO case reminds us that “diligent pursuit” of a basis for protest may save a contractor whose Bid Protest otherwise appears untimely.

In Miltrope, the Army argued that the Bid Protest should be dismissed because the contractor knew the basis of its protest after its pre-award debriefing when it was initially excluded from the competitive range. The Army had determined the sample device Miltrope provided did not exceed the minimum specification required.

The contractor argued that its protest was timely because it only realized that it had a basis for protest once the sample device was returned to it and forensic analysis indicated that the settings had been changed. In other words, it only became aware of its basis for protest once it received the device back from the agency. Recall the “knows or should know” aspect of timeliness discussed above.

Those changed settings, which directly affected the test the Army had performed, effectively eliminating Miltrope from the competitive range through no fault of their own.

GAO decided that because the contractor had “sought diligently” to determine the cause of its device’s test failure, and had made this determination within eight days that it would hear the substance of the protest.

I mentioned earlier that GAO resolved doubts over issues of timeliness in favor of protesters. This rule essentially means that if a case is a close-call, tie goes to the protester. Pairing the “diligent pursuit” concept with GAO’s long-standing rule resolving doubts in favor of protesters, can create a circumstance that rescues protests that appear to be untimely.

Before even getting to this stage, contractors should be very aware of all of the potential pitfalls surrounding timeliness even before they begin submitting proposals for government contracts. Being prepared to deal with an unfortunate scenario can make all the difference in whether you have the option of protesting before GAO.

At the end of 2018, the President signed the Small Business Runway Extension Act.  Without much fanfare, the Act delivers a major shakeup to the Federal small business community.

Before the Act, a business would determine its size by calculating its average annual receipts over the three most recently completed fiscal years.  With the stroke of a pen, those average annual receipts are now measured over a five year period.

Perhaps predictably, lots of ink was promptly spilled on the internet both hailing and deriding the change.  For a fast-growing business, the Act provides a longer runway (hence the name) to remain small and continue to compete for set-aside work.  On the other hand, a decelerating business now must include receipts from busier times that could bump it over the size threshold and eliminate future opportunities.

In the midst of all of this angst, Small Business Administration (SBA) decreed in an Information Notice that the Act is not effective immediately.  Instead, SBA will roll out implementing regulations on a date to be determined.  As things stand right now, that date does not seem to be coming anytime too soon.

So, which standard should contractors use?  Three years?  Or Five?

The only certainty lies with contractors that are small under either/both metrics.  A contractor that is only small under the three-year measurement could face a size protest because it is not small under the Runway Act.  On the other hand, a business that is only small under the new five-year standard could be face with the argument that there are no implementing regulation for the new law (and therefore the old three-year period still controls — which is what the SBA itself says).

Candidly, there is no right or wrong answer at this time.  Contractors must make calculated decisions based on a number of factors, including where they fall on the size spectrum, the likelihood of a size protest, and what they consider an acceptable amount of risk.

Given the adverse consequences associated with a negative size determine (to say nothing of the cost of defending against a protest), these are decisions that should be approached strategically before deciding to submit a proposal or otherwise hold your business out as small.

One of the primary benefits offered by the Small Business Administration’s (SBA) mentor-protégé programs is the ability to operate outside the normal rules governing affiliation.  Generally speaking, SBA allows mentors to provide assistance (including technical, management, and financial assistance) to their protégé firms without fear of creating affiliation.  That is, so long as the assistance provided is consistent with the mentor-protégé agreement, it cannot be used as the basis for a finding of affiliation.

However, some time ago, we wrote on this blog that participation in an SBA-approved joint venture does not necessarily guarantee an automatic exemption from affiliation.  Contractors still must abide by particular SBA rules and regulations — or risk an adverse size determination.

We previously examined SBA’s decision in Kisan-Pike, A Joint Venture, SBA No. SIZ-5618 (2014).  In that case, SBA’s Office of Hearings and Appeals (OHA) found affiliation between SBA-approved 8(a) joint venture partners based on the conclusion that the joint venture agreement failed to adequately:

  • Itemize all major equipment, facilities, and other resources to be furnished by each party to the joint venture, with a detailed schedule of cost or value of each, and/or
  • Specify the responsibilities of parties with regard to negotiation of the contract, source of labor, and contract performance, including ways that the parties to a joint venture will ensure that the joint venture and the 8(a) partner(s) to the joint venture will meet the performance of work requirements.

Because the joint venture agreement did not rise to the level required by the regulations, the 8(a) member was not shielded from a finding of affiliation.

Now, in a recent decision, SBA reiterates and seemingly expands on this proposition.  In reviewing a joint venture between an SBA-approved mentor and protégé under the All Small program, SBA determined that the joint venture was not small for purposes of the procurement.

As in Kisan-Pike, the decision turns on the inadequacy of the written joint venture agreement.  Specifically, SBA determined that the joint venture agreement:

  • Did not specifically address the applicable procurement.
  • Did not sufficiently describe the work to be performed by each member of the joint venture, and
  • Did not sufficiently indicate that the joint venture partners would adhere to the requirements concerning the division or work and performance of work requirements.

Absent this information, SBA (once again) refused apply the exception to affiliation arising out of the previously approved mentor-protégé relationship.

These decisions offer two major takeaways for contractors when it comes to mentor-protégé joint venture agreements:

First, tailor your joint venture agreement specifically for each procurement.  A key element missing from the agreement in this SBA OHA decision was any mention of the specific procurement at issue.  By revising the agreement or adding an addendum to address the work being sought, it is harder to overlook the details required by the regulations.

Second, add as much detail as possible – and then add some more.  A common thread in both of the protests detailed in this post is the idea that it is often difficult to provide details concerning the equipment, facilities, and other work that will go into the project so far in advance.  The SBA hears you – but it does not seem to care.  The bottom line is that contractors cannot ignore these requirements or rely on generic statements indicating that the joint venture partners will do the work and comply with the law. Details are expected and required.

It may be difficult, but contractors must take care to drill down into the details as much as possible.  Based on what is now a pattern of case law, anything less runs the risk of an adverse size determination.

Traditionally, disputes that rise to the level of an appeal before the Armed Services Board of Contract Appeals (ASBCA) (or other board of contract appeals) follow a similar path:

·       The contractor and the Government enter into a written contract

·       The contractor performs the contract, but believes that it is entitled to recover additional costs or damages in connection with its performance and files a claim

·       The Government denies the claim in a formal Contracting Officer’s Final Decision (COFD).

The appeal before the Board is the contractor’s appeal of the COFD.

However, in a recent decision, the ASBCA held that contractors have the right to bring an appeal — even if the government claims a contract does not exist: no COFD is required.

The case at issue concerns training services.  The contractor alleged the existence of an “implied-in-fact” contract between the contractor and the Navy. An implied-in-fact contract is one where there has been a meeting of the minds between the parties, but there is no written agreement and the contract must be inferred from the conduct of the parties.  Here, the contractor alleged that the Navy made payments for certain training services performed by the contractor, but denied others based on the purported absence of a written agreement.

The Navy moved to dismiss the appeal for lack of jurisdiction based on the absence of a traditional written contractor and COFD.  In its decision denying the Navy’s motion, the Board held that it has the authority to hear disputes regarding the existence of a contract.  Further, the Board reviewed the facts and found that even though the Government was apparently “unable to locate” documentation for alleged unpaid training services, the claim, at minimum, was not frivolous.

Previous cases before the Board have found that an implied-in-fact contract will trigger its jurisdiction.

The absence of a COFD is a particularly noteworthy procedural quirk.  As noted above (and argued by the Navy in this case) a contractor typically must rely on a COFD as the basis for an appeal to the Board. However, where the fundamental question at the heart of the appeal is whether a contract exists, the Board can exercise jurisdiction to resolve the dispute without a final decision. Thus, even though the Navy purposefully fashioned its response to the contractor to avoid any indication that it was a “COFD,” the contractor still had a right to an appeal.

While a contractor in this situation bears the burden of establishing jurisdiction, the Board emphasized that the contractor only must make a “non-frivolous allegation that a contract existed.” This is good news for contractors, as it presents a relatively low hurdle.  Basic allegations regarding the parties’ course of conduct should suffice.

This case should serve as a reminder to contractors that – even without an express contract — they may still have the option to bring an appeal before the ASBCA. The absence of a written contract (or even a COFD) does not necessarily leave you without the right to appeal before the applicable Board.

Recently on the blog, I covered one of the major risks encountered by construction contractors – subsurface or unexpected physical conditions discovered after the work begins (commonly known as  Differing Site Conditions under Federal Acquisition Regulation (FAR) 52.236-2).

In that post, I explained that a government contractor that uncovers a Differing Site Condition on a federal project must take three basic steps:

(1) Properly document the condition

(2) Notify the government, and

(3) Preserve the right to bring a Request for Equitable Adjustment or Certified Claim.

Today, I’d like to drill down on the second requirement – providing proper notice to the government – by examining a recent decision from U.S. Court of Federal Claims (COFC).

The case concerned a contractor seeking additional compensation in connection with its performance of a construction contract with the International Boundary and Water Commission (for the widening and rehabilitation of the top surface of the Urban Presidio Level in Presidio, Texas).  The contractor was required to test the embankment soil to ensure compliance with certain performance specifications, including moisture content and compaction.

The contractor struggled to achieve the required soil conditions and, accordingly, experienced project delays.  The contractor sought to shift responsibility for the delays to the government, arguing that it was required to place the embankment material over an “unacceptable, non-constructible subgrade.” Specifically, the contractor alleged that the contract documents misrepresented the site’s subgrade conditions, resulting in a differing site condition under FAR 52.236-2.

The government sought summary judgment on the contractor’s claim based on an allegedly unreasonable contract interpretation.  That is, the government argued that no reasonable contractor would have interpreted the contract documents as indicating that the project’s subgrade would meet the embankment specifications.  Additionally, the government claimed that – even if there was a differing site condition – the contractor failed to provide adequate notice.

On the latter point, the contractor did not dispute that it failed to provide formal notice, but nevertheless argued that the government was “constructively” on notice of the subgrade condition.  The COFC disagreed, finding that “constructive notice” may only take the place of actual notice where there is no prejudice to the government.  Simply stated, the contractor must communicate with the contracting officer when or if it discovers a condition that does not meet its expectations.

In this case, the contractor did not provide such notice and, moreover, waited for more than a year to raise the issue through a request for equitable adjustment.

The takeaway for contractors is an easy one – communicate, communicate, communicate.  Regular updates to the government are probably part of your contract anyway, but regardless, should be part of your firm’s best practices.  If a differing site condition is encountered, providing notice to the government pivots from a best practice to an absolute necessity.

 

Bid protests at the Government Accountability Office (GAO) have spawned a distinct area of the law.  With multiple evaluation schemes to consider, there are an ever-growing number of strategies for disappointed offerors to challenge alleged agency procurement errors.

Just like there are best practices for bid protests, there are also strategies to avoid at all costs.  Chief among the arguments a protester should steer clear of is “mere disagreement” with the agency.

In a nut shell, “mere disagreements” arise where the protester challenges the agency’s decision based only on the notion that it deserved a better score, more strengths, better adjectival rating (and so on).  These arguments do not identify mistakes by the agency – they just wish the agency reached a different result during the evaluation.

GAO is not shy about denying “mere disagreement” protests out of hand.  For example, in a recent bid protest decision concerning an Army IT support services contract, GAO found that the protester’s arguments concerning the number of strengths/weaknesses and adjectival ratings assigned by GAO did not offer any grounds to sustain the protest.

The underlying rationale for the decision is GAO’s unwillingness to substitute its own judgment for that of the agency.  In other words, GAO finds that the agency is in the best position to assess its own needs and evaluate proposals.

GAO is also unwilling to split hairs when it comes to evaluation ratings.  For example, in this case, the protester unsuccessfully argued that the agency’s determination that a portion of its technical proposal included only strengths and no weaknesses should have automatically resulted in the assignment of a “significant strength.”  GAO disagreed, finding that the RFP defined a significant strength as an aspect of a proposal that would be “appreciably advantageous to the government during contract performance.” While the protester’s proposal may have exceeded certain requirements, GAO would not step in to overrule the agency’s determination that the proposal did not significantly exceed those requirements.

So, if “mere disagreement” is out, does that mean it is impossible to challenge an agency’s evaluation of your proposal?  Not at all.

The key is to focus on the essential element of all bid protests – a procurement error by the agency resulting in competitive prejudice (i.e., a diminished opportunity for contract award).  Rather than focus on ratings or strengths, the protest should address specific errors made during the evaluation process.  Did the agency misinterpret part of your proposal?  Or overlook something altogether?  Did the agency offer the awardee an advantage that your firm did not receive?

While these kinds of errors may be difficult to pinpoint at first, a skilled debriefing strategy can help draw them out.

The bottom line is that bid protests require a significant investment of time and resources.  If your firm’s only arguments amount to mere disagreement with the agency, those resources are likely better spent elsewhere.

For federal contractors, affirmative action plan (AAP) audits may be just around the corner.

The U.S. Department of Labor Office of Federal Contract Compliance Programs sent 750 courtesy scheduling announcement letters (CSAL’s) last week to federal contractors, notifying them that their affirmative action plans (AAP) may be audited.

This latest round of notifications, which supplements the 1,000 CSAL’s sent out earlier this year, alerts federal contractors that the Office of Management and Budget (OMB) will be sending scheduling letters in 45 days. The OMB-approved letters will then provide recipients the standard 30 days to submit their AAP.

Preparation is key. In our latest alert, Fox Rothschild’s Kenneth Rosenberg offers takeaways on how federal contractors can ready themselves for complying with this regulatory procedure and the potential audits that may follow.

 

As I’ve covered here before, low-priced, technically acceptable procurements (LPTA) shine a light on a contractor’s ability to provide the required services at the lowest possible cost to the government.  Leave your style points at home.  It is all about getting lean to win the award.

But when the evaluation is that simple, is there any room to challenge an LPTA award decision?  The answer is Yes — and a recent GAO protest offers some important insights into best practices.

The protest concerned an Air Force contract to provide tactical recovery kits.  Covering both LPTA bases, the protester argued that the agency (1) unreasonably found the awardee technically acceptable and (2) conducted inadequate discussions concerning price.

On the first question, GAO disagreed that the agency erred in evaluating the awardee’s proposal.  Stated differently, the agency determined that the awardee’s proposal was technically acceptable and GAO found no basis for overturning that conclusion.

With the technical acceptability side settled, only the question of the lowest price remained.

The protester argued that the agency held inadequate discussions, but GAO would not consider the issue because it lacked a key allegation.  Specifically, the protester never alleged that it would have lowered its price if the discussions had been adequate.  Without that allegation, GAO found there could be no prejudice.  The awardee remained technically acceptable and offered the lowest price.

Although it was unsuccessful, this protest nevertheless offers a great roadmap for firms considering an LPTA protest.  If possible, the protest should identify that the awardee was not, in fact, technically acceptable.  In that case, the award should skip over that offeror and proceed to the next in line.

In the alternative, the protest should identify a procurement error resulting in a misevaluation of your firm’s price (i.e., the missing element of the protest examined in this post).  It only makes sense that a LPTA protest should take a stance on your firm’s ability to offer the government the lowest price.

 

 

Federal procurements often include a competitive range of offerors seeking the contract award.  The Federal Acquisition Regulation (FAR) competitive range procedure offers the agency an incremental stage in the competition where it can pare down a large pool of offerors into a narrow group consisting of only those proposals with a reasonable chance of receiving the award.

But what qualifications are used to determine the offerors included in the competitive range?  And can you protest your firm’s improper exclusion from a competitive range?

Let’s start with that second question.  Yes.  Your firm is absolutely entitled to protest an agency’s competitive range decision if it was made unfairly or not in accordance with the solicitation requirements.  In fact, competitive range proposals sometimes have a greater window for success.  There is much less heartburn involved for the agency in adding one more qualified offeror to the pool (as opposed to traditional protests that challenge the agency’s final decision and seek to wrestle a contract award away from someone else).

Now, circling back to the first question, FAR 15.306 (Exchanges with offerors after receipt of proposals) defines a competitive range as consisting of “all of the most highly rated proposals.”  The agency evaluates proposals against the criteria included in the solicitation to narrow the field.

In a recent protest, an offeror challenged its exclusion from the competitive range for a contract for base operations and spaceport services to be performed at the John F. Kennedy Space Center and NASA facilities on Cape Canaveral Air Force Station.  In part, the protester challenged the agency’s decision on the basis that its proposal included an acceptable technical approach (i.e., the proposal was not defective and conceivably could have received the contract award).

GAO took the opportunity to emphasize that mere technical compliance does not guarantee inclusion in a competitive range.  Specifically, GAO accepted the agency’s conclusion that the lack of strengths in the protester’s proposal, combined with its high price (as compared to other similar offers), rendered it unlikely to be considered for award, even if some of the proposal’s weaknesses could be addressed in future discussions with the agency.

In other words, the proposal was excluded from the competitive range because there was no reasonable chance it would receive the contract award.

Interestingly, GAO’s decision also addresses the protester’s argument that the agency was required to conduct a best-value tradeoff analysis among all of the evaluation factors when establishing the competitive range.  Again, GAO disagreed with protester.  The focus of a competitive range is on culling down the group of offers to only the most highly rated – not following the procedures included in the solicitation for the ultimate contract award decision.

GAO’s decision should not discourage contractors from pursuing a debriefing after exclusion from the competitive range – or even filing a protest.  The protester’s procedural basis was solid – the agency is accountable for making its competitive range decision in a fair, reasonable, and well-documented manner.  With better facts, a competitive range protest offers a low-risk, high-reward opportunity to get back into the competition for the award.

Here we go again.  Back in March, I discussed the impact of the brief government shutdowns in January and February and risks associated with what could have been (had the stand-off gone on much longer).

Today, news from the White House and Capitol Hill raises concerns over another possible shutdown in September (when the government will run out of money without action by Congress and the President).

In light of this uncertainty, I thought it made sense to again share practical steps that contractors can take to get prepared.  That includes creating a plan for how to address existing contractual obligations without assuming unnecessary risks in the event that the government does, in fact, shut down (again).  It is far better to think about and address these issues in advance, rather than face the real time pressure of a last minute budget deal (or failed deal).

Let’s start with the bad news:  Your government contract (like almost every other procurement contract) will very likely be impacted by a shutdown.  The Anti-Deficiency Act prohibits Federal agencies from exceeding appropriation limits unless the contract falls into a narrow exception.  For contractors, that means a Stop Work Order.  Remember that the risk of continuing performance in the event that funding is not available may fall on your company.

Now, some good news:  By thinking ahead and planning in advance, you can mitigate risks and place your business in better position to weather the storm.  Here are a few practical pointers aimed at doing just that:

  • Review Your Contract.  Understanding how the government funds your contract will shed light on how it likely will be treated by the agency in the event of a shutdown.  According to the Office of Management and Budget, most “routine ongoing activities” will not be authorized to continue during a lapse in appropriation.
  • Communicate with the Contracting Officer.  Just like your business, the agency is also likely working on a plan on how to administer on-going contracts during a shutdown.  A mutual understating with the CO will go a long way towards avoiding disputes when the work inevitably ramps back up.
  • Develop Contingency Plans.  Work internally to create a contract specific contingency plan to mitigate risk in the event of a funding issue.  These will vary greatly depending upon the specifics of each procurement, so bringing in outside consulting and expertise to set up an individualized plan may reap benefits, particularly for more complex work.

Of note:  these tips – and the last one in particular – are not limited to government shutdown concerns alone.  Any government contract can experience unanticipated delays or even a long-term suspension of work.  Thinking ahead and creating a plan is the best way for contractors to avoid assuming unnecessary performance risks.