In Split Decision, Federal Circuit Affirms Agency Exclusion of Proposals

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In U.S. Government procurements, most solicitations specify that noncompliance with its terms and conditions may cause a proposal to be determined unacceptable or be deemed non-responsive and excluded from consideration.  However, in some cases, the agency may alter the terms and conditions through pre-award discussions.  In Safeguard Base Operations v. United States, the Federal Circuit considered the latitude an agency has to make such alterations when it sided with a government agency, by harmonizing the agency’s answer to a bidder’s question that conflicted with a direct instruction in the solicitation.  In doing so, the court affirmed the Claims Court’s determination that four of seven offerors failed to comply with the solicitation’s requirements.  The court made this ruling despite the protester’s allegations of the agency’s bias against the protester.

Specifically, for sixteen Contract Line Item Numbers (“CLINs”), the solicitation instructed offerors “DO NOT SUBMIT PRICING FOR THESE CLINS” because the government would provide the relevant entries, but the solicitation failed to include those amounts.   In response to a bidder’s question, the agency addressed the CLINs at issue by instructing offerors to “include the following ‘not-to-exceed’ amounts in the applicable CLIN”, a sum of over $6M which the agency provided.  However, the agency never amended the solicitation or the pricing schedule itself.  Safeguard failed to include the price entries directed by the Q&A instruction and was excluded from consideration for award by the agency, despite the fact that all offerors were instructed to enter the same amount and despite the conflicting instructions.  Safeguard filed a protest with the GAO, which resulted in the agency agreeing to take corrective action.  Unhappy with the agency’s corrective action, Safeguard again protested the post-corrective action award.  On the third iteration, the agency simply disqualified all offerors who failed to include the relevant pricing, in other words, the offerors who followed the solicitation instruction rather than the Q&A instruction. Safeguard protested again. On appeal, the Federal Circuit harmonized the conflicting statements, holding that the agency’s action was proper.  Specifically, the Federal Circuit found that the proper interpretation of “pricing” in the solicitation’s direction not to provide pricing meant offeror-provided pricing.  In other words, the court said that it was proper for the agency to disqualify four of the seven bids as improper since they left blank pricing for the relevant CLINs, rather than fill in the government provided sums on those CLINs.

With such an unexpected result, it is not surprising that one of the three judges on the panel dissented.  The dissent summarized the majority opinion quite simply, noting the Q&A response was just one of 272 responses that came four months after the third amendment of the solicitation was issued.  The dissent focused on the solicitation’s conflict with the later Q&A response, explaining that since the Q&A response was not incorporated into an amended solicitation the protester should have been relieved from the compliance with the Q&A response required by the majority. The dissent found the majority opinion to be strained as it went beyond even the agency’s argument on appeal, noting that four of the seven bidders made the same “error.”  The agency conceded the inconsistency but argued that the Q&A response superseded the solicitation, while the Federal Circuit’s majority found that the Q&A direction to include the specified government-provided pricing was not inconsistent with the solicitations express instruction to not include pricing.  The dissent also disagreed with the majority on the issue of agency bias against the protester.

The decision should serve as a warning to offerors on government contract solicitations.  Not only must the offeror understand the solicitation itself, but the ruling demonstrates the importance of being aware of all bid requirements, including all answers to bidders’ questions.  

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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