May 2021 Bid Protest Roundup (Law360 Spotlight)

Morrison & Foerster LLP - Government Contracts Insights

Law360 - June 8 2021

This month’s Bid Protest Roundup (featured on Law360) examines three recent decisions by the U.S. Government Accountability Office (GAO) and the Court of Federal Claims (COFC). The first, Tridentis, LLC[1], highlights the importance of submitting a sufficiently clear proposal; the second, M R Pittman Group, LLC[2], reminds contractors to timely protest patent ambiguities in solicitations before the proposal submission deadline; and the third, Appsential, LLC v. United States[3], addresses whether an organizational conflict of interest (OCI) exists where an agency official is married to an individual associated with the awardee’s proposal efforts.

Tridentis, LLC

In Tridentis, LLC, the Department of the Navy (the “Navy” or the “agency”) issued a solicitation, as a small business set-aside under the SeaPort-Next Generation multiple award contract for ship integration services. The solicitation contemplated issuance of a task order with a one-year base period and four one-year options. Originally, the Navy awarded the task order to Marine Systems Corporation and Tridentis, LLC protested. The Navy agreed to take corrective action and during the course of its reevaluation, notified Tridentis that its proposal was disqualified from the competition for its failure to possess the requisite facility security clearance. Tridentis filed a second protest.

The solicitation included a requirement that the contractor’s primary facility must be cleared to the “Secret” level of security and be authorized for Secret storage. Offerors were required to address the facility security clearance requirements in their oral presentations and in their written technical proposals. Offerors that could not meet the clearance requirements at the time of proposal submission would be considered ineligible for award.

In its oral presentation, Tridentis included a slide identifying a Virginia Beach facility with a clearance. Tridentis’ written technical proposal included reference to a facility with a clearance, and Tridentis’ Teaming Agreement with a proposed subcontractor also included the address of the same Virginia Beach facility identified in Tridentis’ oral presentation.

During its corrective action, the agency conducted a facility security clearance and storage check using the National Industrial Security System (NISS) for each offeror. The agency searched for both the company name and the Commercial and Government Entity (CAGE) code to determine whether the offerors possessed the necessary clearance and storage requirements. Upon review, the agency determined that, although Tridentis possessed a Secret facility clearance, it did not have clearance for the safeguarding of Secret information. The agency searched additional Tridentis locations, but none was authorized for such storage.

The agency informed Tridentis of the discrepancy and requested clarification. Tridentis responded to the agency and provided an alternative CAGE code for NISS verification. A search of the new CAGE code revealed that sometime between the original NISS verification and the second verification, Tridentis received an interim clearance for one of its locations. Accordingly, the agency determined that Tridentis’ proposal was technically unacceptable at the time of proposal submission because it did not meet the solicitation requirement that the offeror’s primary facility be cleared at the time of proposal submission. In response, Tridentis explained that it planned to use its subcontractor’s cleared facility as its primary facility until Tridentis’ facility was cleared and requested that the agency engage in additional clarifications. The agency repeated that Tridentis’ proposal failed to meet solicitation requirements and denied Tridentis’ request for clarifications.

In its protest, Tridentis argued that the solicitation did not require offerors to submit documentation or evidence of compliance with the security clearance requirement and that this requirement was a matter of contractor responsibility that it could satisfy at any time prior to award (instead of proposal submission). And, to the extent that the GAO did not buy that argument, Tridentis offered an alternative explanation – it did comply with the security requirements because it identified the cleared facility of its subcontractor. The GAO disagreed.

The plain language of the solicitation required offerors to satisfy the clearance requirement at the time of proposal submission and instructed offerors to address the requirement in their oral presentation and written proposals. As a result, and despite Tridentis’ argument to the contrary, the GAO concluded that this requirement was a material term of the solicitation and could not be considered a matter of responsibility.

With respect to Tridentis’ alternative argument that it did, in fact, comply with the security requirements, the GAO reiterated the importance of submitting a well-written proposal that adequately and clearly demonstrates compliance with the solicitation. Although Tridentis included the address of its teaming partner’s cleared Virginia Beach facility, Tridentis failed to explain that it belonged to another firm or that it would be relying on that facility until it received the proper facility clearance. Accordingly, the GAO agreed that the agency’s determination that Tridentis could not meet the solicitation requirements was reasonable.

Takeaway: This decision reinforces the importance of submitting an adequately detailed written proposal, particularly with respect to material solicitation requirements. Where the solicitation requires offerors to meet specific requirements or risk disqualification, it is in the contractor’s best interest to be as clear and concise as possible and not expect the agency to make inferences.

M R Pittman Group, LLC

The Department of the Army, Army Corps of Engineers (the “Army”), issued a pre-solicitation notice on beta.SAM.gov for repair and maintenance services at the Wilkinson Canal Pump Station in Plaquemines Parish, Louisiana. The pre-solicitation notice identified the procurement as a total small business set-aside under North American Industry Classification System (NAICS) code 811310. Shortly thereafter, the Army issued an Invitation for Sealed Bids (IFB), which incorporated by reference Federal Acquisition Regulation (FAR) 52.219-6, Notice of Total Small Business Set-Aside. This FAR provision provides that “offers are solicited only from small business concerns,” and any offers received from concerns that are not small business concerns will be considered nonresponsive and will be rejected. The IFB also included the full text of FAR clause 52.219-14, Limitations on Subcontracting, which must be included in solicitations involving small business set-asides.

However, despite the inclusion of both small business set-aside FAR clauses, the IFB did not identify the applicable NAICS code or corresponding size standard. Following submission of the bid of M R Pittman Group, LLC (“Pittman”), the contracting officer notified Pittman that it was ineligible for award because it did not qualify as small under NAICS code 811310. Pittman protested.

Pittman argued that because the IFB did not include the NAICS code or corresponding size standard, the procurement could not be considered a small business set-aside, and any reliance on the information contained in the pre-solicitation notice was improper. Specifically, Pittman claimed the pre-solicitation notice was “extrinsic to the final solicitation” and the final solicitation did not incorporate the pre-solicitation notice.

In its review, the GAO considered whether the IFB contained a patent ambiguity. A patent ambiguity exists where the solicitation contains an error or discrepancy so glaringly obvious, the bidder has an affirmative obligation to seek clarification from the agency. If the offeror fails to challenge the patent ambiguity before the deadline for proposal submissions, it has essentially waived its ability to assert its own interpretation.

The GAO has previously found that where an agency indicates somewhere in a solicitation that it is a set-aside procurement, the agency’s failure to “check a box” elsewhere in the solicitation does not allow offerors to automatically assume that the procurement is not set aside for small businesses. Here, the IFB’s inclusion of FAR 52.219-6 and 52.219-14 indicates that the procurement is set aside for small businesses, and the Army’s omission of the applicable NAICS Code and corresponding size status required Pittman to raise the inconsistent provisions with the Army before proposal submission. Accordingly, the GAO found that Pittman failed to timely challenge the patent ambiguity in the IFB and dismissed the protest.

Takeaway: It is incumbent upon offerors to review solicitations thoroughly to identify ambiguities and raise any concerns with the agency before the deadline for proposal submission. Otherwise, if the agency subsequently disagrees with the offeror’s preferred interpretation, it may be too late for the offeror to object.

Appsential, LLC v. United States

We have written extensively about an agency’s responsibility to identify and mitigate OCIs before contract award. Here, the court considered whether the agency failed to adequately mitigate an unequal access to information OCI when it discovered an agency official was married to an individual on the awardee’s proposal team.

The Department of Energy (DOE) awarded a Blanket Purchase Agreement to General Dynamics Information Technology, Inc. (GDIT) for business information technology services. The incumbent, Appsential, LLC, filed two protests at the GAO. The first resulted in corrective action and the second was denied. Looking for a second bite at the apple, Appsential filed a protest with the COFC, arguing in part that the DOE failed to identify and mitigate a potential unequal access to information OCI.

The record revealed that a division director in the DOE’s Office of the Chief Financial Officer was married to a principal solutions architect at GDIT and, during the early stages of the proposal effort (between March and May 2018), the architect was involved in drafting and reviewing documents related to the subject solicitation. In July 2018, the DOE division director discovered that GDIT responded to the agency’s Request for Information and recused herself from any future involvement in the procurement. Over a year later, GDIT informed the agency of the potential OCI. GDIT included in its proposal that the architect had recused himself from any involvement with the company’s proposal. Additionally, the architect was firewalled from the proposal team and no longer had access to any of the proposal-related information.

The contracting officer investigated the potential OCI and determined that, because the solicitation documents had undergone multiple reviews following the architect’s involvement and contained similar requirements to prior DOE information technology contracts, there was no substantial risk to the integrity of the competition or unfair competitive advantage.

In its protest, Appsential argued that GDIT had access to nonpublic, competitively useful information as a result of the architect’s marriage. Appsential went even further, suggesting that the DOE official who recused herself from the procurement shared information with the architect. The court explained that, although a marriage between an agency employee and an employee of an offeror could certainly create the appearance of a conflict of interest, the protester must identify hard facts – more than mere speculation, inference, or suspicion – to establish the existence of an OCI. The court held that Appsential did not meet its burden and concluded that the agency’s investigation of the potential OCI and subsequent determination that GDIT sufficiently mitigated the potential OCI was not unreasonable.

Takeaway: This case highlights the benefits of promptly and thoroughly addressing potential OCIs. Contractors must be vigilant in identifying conflicts of interest and, upon discovery of an actual or potential OCI, immediately notify the contracting officer and take steps to mitigate the conflict. Once an agency considers the relevant facts and comes to a decision on an OCI, the GAO and the court will generally defer to the agency’s judgment unless hard facts show the decision was unreasonable.

[1] Tridentis, LLC, B-418690.4 (Jan. 5, 2021). This case was publicly released on May 11, 2021.

[2] M R Pittman Group, LLC, B-419569 (May 5, 2021).

[3] Appsential, LLC v. United States, No. 21-804 (Fed. Cl., Apr. 29, 2021; reissued May 6, 2021).

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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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