GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive Of Competition

Morrison & Foerster LLP - Government Contracts Insights

The Chief Information Officer-Solutions and Partners 4 (CIO-SP4) procurement of the National Institutes of Health’s Information Technology Acquisition and Assessment Center (NITAAC) has garnered a great deal of attention. With confusion over evaluation criteria, a string of last-minute solicitation amendments and reversals, short extensions of the rushed due dates for proposals, and a series of major changes in how offerors were permitted to form teams, some expected NITAAC to suspend the procurement altogether and send the solicitation back to the drawing board. Instead, after a final set of amendments and a last-minute extension of the proposal due date, NITAAC received proposals on August 27, 2021.
 

Thanks to a new U.S. Government Accountability Office (GAO) decision finding the solicitation is unduly restrictive, the solicitation (at least with respect to offerors competing for small business awards) may be going back to the drawing board after all. The decision is Computer World Services Corporation; CWS FMTI JV LLC, B-419956.18 et al., Nov. 23, 2021.

Background

CIO-SP4 will be a large multiple-award contract, against which agencies across the Government may place task orders. The solicitation provides for both unrestricted and small business set-aside awards. Similar to the General Services Administration’s (GSA) OASIS procurement, an important part of the CIO-SP4 evaluation involves numerical scores offerors give themselves for various capabilities, credentials, and experience their team members possess. This feature of the evaluation drives offerors to assemble teams that can rack up the maximum number of points, thus improving their chances of award.

Between the initial draft solicitation released in 2020 and the final amended solicitation, NITAAC significantly changed the rules a number of times for scoring the contributions of various types of teammates. Late in the process, NITAAC prohibited small business offerors from relying on the capabilities, credentials, and experience of large business subcontractors. Although the solicitation permitted mentor-protégé joint ventures to rely on the experience of mentors approved by the Small Business Administration (SBA), the solicitation eventually limited the number of experience references a mentor-protégé joint venture offeror might submit for a large business mentor to two per task area. Because large businesses generally have more capability, credentials, and experience than small businesses, these restrictions limited the number of points a small business might accumulate for evaluation purposes.

The Protest

Prior to the date set for receipt of proposals, various offerors filed protests with the GAO, challenging the terms of the solicitation. We’ll focus on the protest of CWS FMTI JV LLC (CWS FMTI), a mentor-protégé joint venture competing for one of the small business awards, whose protest the GAO sustained in part.

The protester complained that the solicitation’s self-scoring criteria improperly limited the number of experience references that may be submitted for a large business mentor in a mentor-protégé joint venture. According to CWS FMTI, these limitations unduly restricted competition, violated SBA regulations, and improperly treated mentor-protégé joint ventures with large business mentors differently from mentor-protégé joint ventures with a small business mentor—a distinction the SBA regulations do not make.

As relevant to the protest, the solicitation provided self-scoring criteria for various kinds of experience. The solicitation permitted offerors to submit experience examples from members of their teams, including from mentor-protégé joint venture members. For a mentor-protégé joint venture, however, a large business mentor was limited to two examples for each task area in corporate experience, and two of the three possible experience examples for leading edge technology experience and federal multiple award experience.  If an offeror wanted to submit additional experience examples, it had to come from other (small) team members. The solicitation did not similarly limit the experience contributions from a small business mentor.

First, the protester argued the limitation on mentor experience violated 13 C.F.R. § 125.8(e). That regulation prohibits an agency from requiring “the protégé firm [in a mentor-protégé joint venture] to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.” The protest continued that, because this regulation requires agencies to permit mentor-protégé joint ventures to demonstrate experience “in the aggregate,” a restriction on a mentor’s experience contribution violates the regulation.

The GAO invited the SBA to provide its view of this argument. The SBA cited its prefatory comments accompanying the promulgation of the most recent version of 13 C.F.R. § 125.8(e). There, the SBA stated that the regulation does not prohibit agencies from requiring a protégé to demonstrate some experience of its own; it simply requires agencies to consider the mentor’s experience, and prohibits agencies from holding a protégé joint venture member by itself to the same standard as other offerors. The GAO noted that the CIO-SP4 solicitation did not require protégé members to demonstrate any experience of their own and affirmatively permitted the consideration of large business mentor experience as part of a joint venture offeror’s aggregate experience. Thus, the GAO determined that the solicitation did not violate 13 C.F.R. § 125.8(e).

The protester, however, argued this restriction was unduly restrictive of competition, even if it did not violate regulation. A challenge based upon undue restriction of competition is generally not a very difficult hurdle for an agency to clear, as an agency need only document some rational basis for the restriction. NITAAC, however, was unable to do that.

NITAAC first argued that its restrictions were reasonable because they were the same as restrictions the GAO approved in Ekagra Partners, LLC, B-408685.18, Feb. 15, 2019, 2019 CPD ¶ 83. (See our prior discussion of the sustained protest ground in Ekagra here.) There, in the context of the OASIS on-ramp solicitation, the GAO held that the GSA “reasonably explain[ed] that limiting the amount of experience that may be credited to a large business mentor ensures that the agency will be able to meaningfully consider the experience of the protégé member of the joint venture.” The GAO found it was unreasonable for NITAAC to rely upon this portion of the Ekagra decision because, unlike OASIS, CIO-SP4 did not require protégés to submit any experience examples at all. Thus, restricting the number of experience examples from a mentor was irrelevant to the consideration of the protégé’s experience and not a rational basis for the restriction.

NITAAC next argued that the limitations on the experience that a large business mentor might submit were reasonable to avoid competitive disadvantage to small business firms that did not partner with large business mentors.  The GAO rejected this argument, pointing out that the mentor-protégé program is designed to allow small business protégés to benefit from the capabilities and experience of their mentor firms, be they large or small businesses. See 13 C.F.R. § 125.9(a), (b); 15 U.S.C. § 644(q)(1)(C). The GAO found no basis in 13 C.F.R.

§ 125.8(e), or any other SBA statute or regulation, to support NITAAC’s conclusion that a procuring agency had discretion to limit the submission of experience from a large business mentor for the purpose of favoring joint ventures with small business mentors over those with large business mentors.

Thus, neither of NITAAC’s asserted bases for restricting competition was rational.

Third, the GAO held that the limitation on mentor experience submissions was not only unduly restrictive of competition but also improperly treated similarly situated offerors unequally. Specifically, the solicitation’s challenged restrictions applied only to mentor-protégé joint ventures with large business mentors, but not to those with small business mentors. In light of the purpose of the mentor-protégé joint venture program, the GAO found that NITAAC failed to explain why it had the discretion to competitively disfavor a mentor-protégé joint venture with a large business mentor as compared to all other small business offerors, or to favor mentor-protégé joint ventures with small business mentors over mentor-protégé joint ventures with large business mentors. NITAAC, in effect, appointed itself to make a distinction that the governing small business statutes and regulations do not make, and ended up treating offerors unequally.

The GAO denied the remainder of the protest grounds. At this point, it appears the GAO has resolved all of the multiple pre-award protests filed so far against this solicitation, and only CWS FMTI has raised an argument that GAO sustained.

Where Does NITAAC Go from Here?

In one sense, the GAO’s decision is fairly limited. It involves restrictions that applied only to offerors competing for one of the small business awards, and it applies only to mentor-protégé joint ventures with large mentors. The GAO leaves open the possibility that NITAAC might come up with a better rationale for the existing restrictions than it was able to think of during litigation:

We recommend that the agency reconsider its requirements and the limitations the RFP imposes on the experience that may be submitted by large business mentors, and whether the agency believes there are justifications for the limitations that are consistent with our discussion herein. If the agency elects to retain the current version of the RFP, it should advise the protester of the new justification for the limitations.

Assuming the failed rationales NITAAC articulated during the protest are the best NITAAC can do, it will have to follow the GAO’s alternative recommendation:

In the alternative, we recommend that NIH amend the solicitation to either remove the limitations, or to revise the evaluation criteria in a manner that treats offerors in an equal manner and is consistent with the provisions of 13 C.F.R. § 125.8(e), as discussed above. If the agency amends the solicitation, it should provide offerors an opportunity to submit revised proposals.

Although the GAO did not specify this, NITAAC also will have to consider the requirements of FAR 15.206(e):

If, in the judgment of the contracting officer, based on market research or otherwise, an amendment proposed for issuance after offers have been received is so substantial as to exceed what prospective offerors reasonably could have anticipated, so that additional sources likely would have submitted offers had the substance of the amendment been known to them, the contracting officer shall cancel the original solicitation and issue a new one, regardless of the stage of the acquisition.

Here, small business offerors scrambled to rearrange their teams and sometimes changed the prime offeror itself as a result of NITAAC’s various restrictions on teaming arrangements. Are there mentor-protégé joint ventures that did not submit proposals as a result of the solicitation’s restrictions on mentor experience? Would they have submitted proposals if they had known that NITAAC would remove those restrictions after proposal submission? Or, if NITAAC tries to justify the restriction by adding a new requirement for protégé firms to submit some experience of their own, would some joint venture offerors have proposed instead as prime-subcontractor teams if they had known NITAAC would amend the solicitation in this way? Depending on how one answers these questions, NITAAC may end up having to cancel and resolicit at least the small business portion of CIO-SP4, or face another slate of protests if it does not.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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