Government Accountability Office

 

We often discuss the need for government contractors to Read and React when responding to a solicitation:  (1) Read the RFP and understand all of the requirements and limitations and (2) React to the RFP’s evaluation scheme by playing the appropriate strengths and minimizing weaknesses.  And sometimes, the best reaction is knowing the value of beefing up your proposal in the right areas — even when it will increase your overall price.

The best example when it comes to shifting proposal strategies is Lowest Price Technically Acceptable (LPTA) vs. Best Value.

The goal on an LPTA procurement is to achieve technically acceptability while keeping price as lean as possible.  On the other hand, when responding to a Best Value procurement, the game changes dramatically.  The Agency is looking at the intersection of technical competency and price in order to maximize the benefit to the government.  The award can go to even the highest priced offeror – provided that the higher price can be justified through additional benefits to the agency.

A recent GAO decision highlights the tightrope that government contractors must walk when responding to RFPs.

The protest concerns the National Institutes of Health’s award of a contract for event management and video production services.  The RFP called for award on a Best Value basis, considering the following three factors:  (1) technical, (2) price, and (3) past performance.

The protest challenged the agency’s decision that the unsuccessful offeror’s proposal created a “potential risk” based on its option year pricing.  Specifically, the agency concluded that the offeror’s decision to decline any increases in option year pricing jeopardized the company’s ability to retain qualified personnel on the job (because, presumably, those employees would not be in line for compensation increases year over year).

The protester disagreed and presented some compelling facts to support its position.  The protester argued that it maintains a robust employee retention program and cited statistics regarding its favorable retention record.  Moreover, the protester noted that its competitive compensation plan undercuts the agency’s concerns.

The agency chalked all of this information up as “mere disagreement” with the agency’s reasonable concerns and dismissed the protest.

There was nothing “wrong” or non-responsive about the offeror’s proposal.  But with Best Value evaluations, the agency has the ability to dig into the numbers and uncover what it believes is the most advantageous offer.  In this case, the agency determined it was worth the extra bump in option year pricing to ensure employee retention.  That kind of value judgment (when properly documented by the agency) is difficult to overcome as part of a bid protest.

The key for contractors responding to a Best Value RFP is to anticipate what is important to the agency and reinforce your business’s unique ability to satisfy those needs — even if it means a higher overall price.

Government contractors know the odds on GAO bid protests – are they are not all that good.  Even with a noticeable uptick, the statistics reveal that less than 1/4 (about 23%) of all bid protests were sustained in FY 16.  Even factoring in voluntary agency corrective action, the odds of a positive outcome are still worse than a coin flip (about 46%).

So, the question is how can you make those odds work for your business?

First, pick the right battle.  As I discuss in The Practical Guide to Filing (and Winning) GAO Bid Protests, certain kinds of cases tend to fare better at the GAO.  These cases include pre-bid solicitation errors and obvious evaluation missteps by the government.  More nuanced issues – or cases requiring in depth legal analysis – are better suited to the Court of Federal Claims (COFC).

The difference largely lies in the mission of each venue.  The GAO’s trademark is speed and efficiency.  A contractor can obtain a mandatory stay of contract award or performance just based on filing a timely protest – so the GAO’s stated goal is to resolve all protests within 100 days of filing.  Protest administration at the COFC, on the other hand, is more akin to traditional litigation.

Each venue offers pros and cons that can vary on a case-by-case basis.  So, contractors should certainly think before mechanically filing a protest (because “that’s what we always do”).

The other way to beat the odds at GAO is to avoid common contractor pitfalls.  Even though some areas of procurement administration seem (and probably are) inequitable – that does not necessarily mean they will support a protest.

For example, in a recent decision, GAO rejected a contractor’s protest related to its adjectival ratings.  The contractor argued that the agency conducted an improper best-value tradeoff analysis where two offerors received identical adjectival ratings – but the agency still elected to award to the higher-priced offeror.

GAO disagreed, finding that the contractor’s arguments focused too narrowly on the assigned ratings.  The record showed that, within those ratings, the agency conducted a proper tradeoff analysis, including documenting the technical merits of the proposals against their respective offered prices.  In the end, the agency determined that the technical benefits of the awardee’s proposal warranted the government paying the premium price.

The lesson for contractors is not to rely too heavily on adjectival ratings.  Particularly when it comes to best value procurements, the government has significant discretion to put a finer point on proposals with the same overall rating.

When this situation arises, contractors are well-served to thoroughly explore the agency’s best value decision during the required post-award debriefing.  If the debriefing reveals holes in the analysis, then a protest could be worth the time and effort.  On the other hand, if the best value decision is properly documented, a protest based only on adjectival ratings is likely not worth the investment.

This is not a unique story – but there is still a lesson for Federal contractors to learn.

A recent GAO decision considered an electronic proposal submitted by email just prior to the 4:00 p.m. deadline.  Although the contractor beat the clock, the proposal did not arrive in the contracting officer’s electronic mailbox until about two hours later – after the deadline.

The Federal Acquisition Regulation (FAR) takes a hardline (but easy to follow) position on untimely proposal submissions.  Late is Late.  With some very limited exceptions, proposals received in the designated government office after the exact time specified are late and will not be considered.

The contractor’s argument to GAO is a familiar one – surely, a contractor that hits “send” on an electronic proposal can rely on that transmission.  After all, the proposal is out of its hands and there was no indication of an error or electronic bounce-back.  Not so, says GAO.

After a lengthy back and forth between the contractor and the government over whose system was responsible for the delivery delay, the GAO ruled that it does not matter.  The FAR places the burden on the contractor to ensure that the electronic proposal has sufficient time to make its way through any filters or email traffic.  Specifically, FAR 15.208(a)(1) provides that a late proposal can still be timely if it is “transmitted through an electronic commerce method authorized by the solicitation,” and “received at the initial point of entry to the Government infrastructure” not later than 5:00 p.m. one working day prior to the deadline for the receipt of proposals.

In other words, if you electronically submit your proposal one day early, you can get off the hook if a government transmission problem delays its arrival in the contracting officer’s mailbox.

While it may seem one-sided to shift the burden for a successful transmission away from the government, that is nothing new for experienced government contractors.  In fact, in this case, it may even provide a benefit.

I am a longtime advocate of contractors submitting proposals a day early.  It solves lots of last minute logistical problems.  While we see many “late is late” problems for contractors that submit proposals at the 11th hour, I have yet to see a case where a contractor was unable to resolve a transmission problem over the course of 24 hours.

It is not always realistic, but getting your proposal teed up a day early is worth the effort.

Winning bid protests all share one common theme – the government erred somewhere in the procurement process and the contractor was unfairly prejudiced as a result.  It is then up to the contractor to expend the time, effort, and resources necessary just to return to the status quo of basic fairness.

Fortunately for contractors, the burden of pursuing a meritorious protest can (sometimes) be lifted.

By law, the GAO has authority to recommend the reimbursement of protest costs (including attorneys’ fees) when it determines that the agency’s actions violated a procurement statute or regulation.  This type of recommendation is most commonly seen when the agency (unsuccessfully) contests a contractor’s protest all the way to a GAO final decision.

The GAO can also make a recommendation for the agency to reimburse protest costs even when the agency elects to take corrective action prior to a final decision.  However, in order to do so, the GAO must find that the agency “unduly delayed” taking action in response to a “clearly meritorious” protest (thus causing the contractor to expend unnecessary time and resources).

Two recent GAO decisions – one granting costs and the other denying costs – help to shed more light on vague standards like undue delay and clearly meritorious.

In the first decision, the GAO recommended the reimbursement of protests costs by the Air Force in connection with a protest over multiple award construction contracts.  The protest challenged the contract awards, arguing that the agency waived solicitation requirements for certain contractors, but not others (a classic “unequal treatment” argument).

The agency did not take corrective action in response to the protest – instead electing to submit an agency report.  After it became apparently that the agency’s own materials actually bolstered the protester’s claim of disparate treatment among offerors, the agency finally decided to take corrective action by canceling the solicitation and terminating the awards.

Following corrective action, the contractor requested reimbursement of its protest costs and GAO agreed.  Specifically, GAO found the protest allegations concerning unequal treatment “clearly meritorious” – noting that the plain language of the RFP and the protest allegations should have alerted the agency to the problem.  In short, GAO determined that the Agency’s position, from the outset, was “not legally defensible.”

On the flipside, the second GAO decision denied a claim for costs where it determined that the agency offered a reasonable rebuttal to the protest allegations.

The decision arises out of a protest over a DLA health support services contract.  The protester argued that the agency should have found the LPTA awardee technically unacceptable due to alleged proposal defects.  The protester also later filed a supplemental protest arguing that the agency engaged in misleading discussions during the evaluation period, relied on information from outside offerors’ proposals, and changed RFP requirements after proposals were submitted.

Following receipt of the protester’s supplement, the agency elected to take corrective action.  The protester promptly requested reimbursement of its fees – but this time, GAO denied the request.

If both of the cases under review ended with corrective action, why did the GAO recommend reimbursement in only one?

The key lies in the timing of the second case.  The GAO concluded that the agency had a reasonable rebuttal to the grounds raised in the initial protest.  However, when the protester filed its supplement, the agency dropped the challenge and promptly took corrective action.  The GAO therefore concluded that there was no undue delay in response to the clearly meritorious (supplemental) protest.

The Takeaway

Bid protests are all about the cost-benefit analysis.  The opportunity to claim what rightfully should have been a lucrative contract award is usually enough to justify the expenditure of time and resources.  However, when the government ignores its own procurement errors and forces a contractor through unnecessary paces, it is good to know that there is a way to claw back those costs.

Government agencies have ample discretion when it comes to corrective action in response to a bid protest.  A recent GAO bid protest shows that contractors must tread lightly when it comes to challenging that discretion.

Unlike negotiations in the private sector, power plays against the government can end in lost contracting opportunities.

The procurement that spawned the protest in question started as a sealed IFB by the U.S. Army Corps of Engineers (USACE) for dredging services.  In response, to the IFB, the Agency received three timely bids – and determined that all three were unreasonably high-priced (in comparison to a government estimate).  USACE therefore determined that it could not award the contract.

The lowest of those bidders submitted an agency-level protest, arguing that its bid was not unreasonably high – rather, the government’s estimate lacked a reasonable basis and was unrealistic.  In response to the agency protest, USACE attempted to engage the contractor in a dialogue concerning how its bid was formulated (in accordance with a USACE Acquisition Instruction, which authorizes the agency to share the details of the government estimate with the apparent low bidder), but the contractor declined to share details regarding its pricing.  Unsurprisingly, USACE then promptly denied the agency-level protest.

The contractor next took its argument to the GAO, where it again protested the government’s cost estimate as unreasonable.  This time, USACE elected to take corrective action and convert the acquisition from a sealed bid to a negotiated procurement.

The contractor again protested – this time arguing that the decision to convert the procurement was unreasonable and that the agency should have awarded the contract under the terms of the IFB at the originally-bid price.  This time, it was the GAO that dismissed the protest and allowed the agency to proceed with its corrective action.

Most interestingly, GAO dismissed the contractor’s challenges concerning the realism of the government’s price estimate as untimely.  According to GAO, the contractor failed to diligently pursue the basis for its protest when it declined to engage in an exchange of pricing information at the agency level.  But for this decision (according to GAO’s reasoning), the contractor would have been armed with a copy of the government’s estimate and equipped with the basis to pursue a protest (before both the agency and at the GAO).  The GAO also dismissed the protest arguments concerning the conversion to a negotiated procurement (again relying on the lack of any basis in the record to scrutinize the government estimate).

The series of protests is not a total loss for the contractor, as it is still eligible to engage in the continued competition and to negotiate its proposed price with the agency.  That said, the contractor finds itself right back where it started — leaving open the question of whether it would have been better served to engage with the agency over price as the lowest-priced bidder in response to the IFB.

Government contractors responding to RFPs understand the need to read the fine print.

Mostly commonly, we discuss this topic in terms of pure proposal acceptability.  Protest decisions from the GAO and Court of Federal Claims make it abundantly clear that the burden falls on the contractor to follow directions and include all of the required information in all of the right places.  It is for that reason (among others) that we always recommend having an outsider (be it a consultant, a lawyer, or even just another person from your company not involved in preparing the proposal) do a quality check before a proposal is submitted.

A more nuanced issue – but just as important – is understanding the RFP’s evaluation scheme.  That is, not only what information must be submitted, but how that information will be weighed and measured by the Agency.

For example, in the past, we’ve looked at low-price technically acceptable (LPTA) RFPs.  The basic idea on an LPTA procurement is that a contractor need only achieve a minimum passing score on its technical proposal – the Agency will not give bonus points for added bells and whistles.  The much more important part of an LPTA proposal is price. Among those offerors found to be technically acceptable, the award goes to the offeror with the lowest submitted price.  So, the focus on an LPTA proposal should be on getting lean (while maintaining technical acceptability) so that you can get as low as possible (or practical) on price.

But what about Best Value RFPs?  There, the game changes dramatically.  The Agency is not looking just at technical ability or price – but how the two interact in order to maximize the benefit to the government. The award may be made to a higher-priced offeror, but only if that higher price is justified by a proper tradeoff analysis.  Stated differently, is the contractor’s higher price justified by greater technical skill?

Here is a nice, short summary from a recent GAO decision outlining government’s rights and responsibilities under a Best Value RFP:

[Agencies] have discretion to make award to a concern that has submitted a higher-priced, technically superior offer.  An agency’s decision is governed only by the test of rationality and consistency with the solicitation’s stated evaluation criteria.  Source selection decisions must be documented, and must include the rationale for any business judgments and tradeoffs made or relied upon by the source selection authority, but there is no need for extensive documentation of every consideration factored into a tradeoff decision.  Rather, the documentation need only be sufficient to establish that the agency was aware of the relative merits and costs of the competing proposals and that the source selection was reasonably based.

So, what is the BEST approach for Best Value competitions?

Maximize Technical Skill.  Unlike LPTA (where the proverbial C- or D+ proposal could get the award), the key is to go for the A+.  Play to your strengths and show the Agency that your firm is not only capable – but highly skilled and able to deliver the best service.

In maximizing technical skill, you’ll look to add those bells and whistles that show off your firm’s capabilities.  But remember, this isn’t just a talent show.

Keep Price in Mind.  This is where things start to get tricky.  While you’ll want to maximize technical skill and performance, price must always be a touchstone.  In order to accept a higher price, the Agency must be able to document (as part of its Best Value Tradeoff Analysis) that the higher price is justified by demonstrated technical superiority.

The Best Value combination of technical aptitude and price is particularly important for contracts involving complex, multi-disciplinary services because it gives the government the option of accepting a higher price in exchange for better odds of successful future performance.  But what if the Agency gets the formula wrong?  Fortunately, the GAO and Court of Federal Claims have recognized a number of avenues for challenging the Agency’s Best Value Trade Off.

Protesting Best Value Awards.  Bid protests of Best Value award decisions generally fall into one of two buckets: (1) The Agency overvalued the technical aspects of the awardee’s proposal (when a lower-priced offeror that believes that it is on par with the technical skill of the offeror) or (2) The Agency failed to recognize the technical superiority of a proposal (when a higher-priced offeror loses out to a lower-priced and allegedly less skilled awardee).

When properly supported, these allegations will put the Agency’s Best Value Tradeoff Decision under the microscope and open the door for the more skilled and/or lower-priced protester to make its case.

Bid protests concerning proposal interpretation present an uphill battle for federal contractors.  Both the Government Accountability Office and the Court of Federal Claims take the expansive view that the contractor is responsible for the content of its proposal — and that it is not the agency’s role to play detective or dig through a proposal to piece together responsive information.

For example, a few months ago, we looked a case where the protester’s proposal was rejected for failing to include certain required technical details.  The protester, however, argued that the details were included – just not in the section of the proposal specified by the RFP.  The GAO rejected the argument, finding that it is unreasonable to expect the agency to hunt for important details.

Today, we’re looking at a similar case, but with an important twist.  An RFP from the Department of Homeland Security directed offerors to submit sample past performance projects detailing their technical capabilities in a number of areas.   In response, one offeror mistakenly submitted a duplicate project, resulting in a failure to submit a relevant project in each area required by the RFP.  The agency assigned a material deficiency to the proposal and it was not selected for the award.

As part of its protest, the contractor argued that at least some of the blame for the duplicate submission lies with the agency’s website.  However, absent proof of a technical glitch on the part of the agency, the GAO rejected the argument.

In denying the protest, the GAO included some telling commentary that should serve as a warning for contractors submitting proposals electronically.  For example, GAO noted that the agency specifically warned contractors that heavy website traffic close to the due date for proposals could cause server lag time – so contractors should not wait until the last minute the submit.   GAO also anecdotally noted that the protestor was the only contractor – out of over 150 offerors – to encounter an alleged website problem that materially affected a proposal.

Contractors should take not only the decision – but also GAO’s additional commentary – seriously:

  1.  Follow the RFP.  Whether it’s your first proposal, or your one hundred and first, it always pays to refer back to the RFP.  Contractors should not make assumptions about what content to include in the proposal – or where to include it.
  2. When Submitting a Proposal, there are No Second Chances.  Take the time to get it right the first time.  This should include having a fresh set of eyes – or even an outside attorney or consultant – review a proposal prior to submission.  This double-check is the best method to catch overlooked errors or omissions.
  3. Set the Alarm a Day Early.  Whatever the deadline for submitting proposals, make it a practice to be ready to go a day early (or even earlier, if you can).  It’s not always easy, but having your proposal in the can before the deadline will eliminate the kind of uploading or website errors discussed in this post.

By following these rules, you’ll maximize your odds of winning the contract each time you submit a proposal.

Every government contractor that files a bid protest has the same goal in mind – corrective action.  The agency made a procurement error and changes need to be made.

But just because the agency takes corrective action does not mean it will be the corrective action your firm wants.  Contractors should take the time to consider the possible outcomes of a successful bid protest before filing.

Take, for example, the recent U.S. Court of Federal Appeals decision denying a protest over corrective action.  In that case, an unsuccessful offeror successfully protested a United States Transportation Command non-temporary storage contract.  In response to the protest, the agency took corrective action and started the process of re-evaluating all offerors in order to make a new award decision.

But this was not the corrective action the protestor expected.  Because the protest argued that the original awardee’s proposal was technically deficient, the protestor wanted the government to cancel the first award and make a new award decision (in its favor) without further evaluation.

The Court rejected the idea that a protester can limit the agency’s authority to correct evaluation errors.  To the contrary, the decision holds that it is within the agency’s discretion to review its prior conclusions and conduct a re-evaluation (provided that the new evaluation conforms to the solicitation and is fair to all offerors).

So is the takeaway that your firm shouldn’t file a protest unless it knows it will receive the award?  Not at all.  As this decision makes clear, you cannot control or limit the agency’s authority when it comes to corrective action.  The correct takeaway is that you should make sure that your firm is prepared for all contingencies before moving forward with filing a bid protest – including the possibility of a complete re-evaluation.

Again, on this point, the COFC decision is extremely illuminating.  Even though the protestor was successful in obtaining corrective action, it also found out that its own proposal was not considered technically acceptable by the agency (due to an alleged failure to meet the solicitation criteria).  If not for that proposal drafting error, it is possible the protest would have a different outcome (including a new award decision rather than a re-evaluation).

Taking the time to work through these scenarios in advance is the key to time and cost effective bid protests.  Even bid protests that result in corrective action are disappointing when they do not result in a new contract for your business.

 

The Government Accountability Office (GAO) is establishing a new system for filing bid protests – the Electronic Protest Docketing System (EPDS).  GAO promises that the new system will be both “secure” and “easy-to-use.”

This week, GAO rolled out a new set of instructions that offers greater insight into the new e-filing process.

45431909_s

The instructions include definitions of key terms, details on eligibility for bid protest filers, and some logistical information on how protests will be filed and processed under the new EDPS system.

GAO still has not provided a firm date from when EPDS will go live.  When a start date is set, will the change to EPDS be earth-shattering? No.  GAO bid protests will still be subject to the same rules concerning content, standing, and timeliness (among other things).

One new EPDS feature sure to garner more attention as the roll out continues is the new $350.00 filing fee.  Currently, filing bid protests is free.  GAO says that the new fee is included in order to offset the cost of the EPDS system.

The filing fee is new, but should not affect a contractor’s strategy for pursuing a protest at the GAO.  As we’ve covered in detail before, the GAO is the ideal forum for protesting straight-forward agency errors that can – at least in theory – be resolved quickly in the GAO’s streamlined environment.  Protests involving more complicated legal questions are better suited for resolution at the Court of Federal Claims.

For more on the pros and cons of protests at the GAO, check out my Government Contracts 101 guide.

 

Our Blog often covers issues associated with government contracts protests (like, for example, protests at the GAO, Court of Federal Claims, and size protests at the SBA).  The point of those posts is to highlight ways that disappointed offerors can “get back in the game” by challenging an improper award made to another business.

But, occasionally, we’re reminded that the best practice (whenever possible) is to avoid the need for a protest altogether.  By focusing on the details and learning how to serve up timely proposals that check all of the government’s boxes, you’ll put yourself in a position to win more contract awards and avoid the need to file protests on the back end.

21052889 - tape measure with measure twice cut once text isolated on white with copy space.

Take the recent opinion from the GAO denying a protest over the post-deadline submission of pricing data.  In that case, the protester was eliminated from the procurement when it used a draft agency document to submit its pricing information, rather than the final revised version of the form later circulated by the agency.

The protester offered a number of equitable arguments against its elimination.  It used a form that was provided by the government, just not the most recent version.  And, in any event, it included all of the key pricing information.  At a minimum, shouldn’t the agency allow an interested offeror to correct this deficiency by simply substituting the correct form?

The GAO rejected all of these arguments out of hand.  It held that the agency acted reasonably in deciding to reject the offer — it would be unfair (GAO surmised) for the agency either to accept an offer based on different pricing assumptions (the draft form) or allow one offeror the special privilege of revising its offer after the deadline for proposals (on the corrected form).  As the GAO pointed out, the agency specifically cautioned all offerors that only the revised pricing form would be accepted.

Putting together a proposal in response to an agency solicitation can be a time-consuming and expensive proposition.  Protect that investment by developing a system for checking (and double-checking) your work.  Sometimes, a new or fresh set of eyes will be able to pick up on mistakes or omissions, or perhaps better see the requirements from the agency’s perspective.

Taking the time to get it right can help minimize the frustrating experience of missing out on a contracting opportunity due to easily avoidable mistakes.