Recent GAO Decision Demonstrates The Utility Of Pre-Award Protests

McCarter & English Blog: Government Contracts & Export Controls

In a time of uncertain federal budgets and an increasingly crowded marketplace, contractors of all sizes are on the lookout for ways to enhance their chances of winning federal business opportunities. Step one in this process is, of course, the identification of the government’s needs—which are typically codified in requests for proposals or quotations. Step two (i.e., the “pursuit” phase) involves the preparation of an offer designed to fulfill the government’s requirements. As most government contractors know all too well, this is an often laborious and expensive process that requires painstaking attention to detail. But what happens when there is, in fact, a real devil lurking in those details? What if the RFP or RFQ simply doesn’t make sense? What if the terms are in conflict with one another? What if the government includes requirements that run afoul of a law or regulation? Enter the pre-award protest exorcism.

There are essentially two options that contractors face when confronting an apparently defective solicitation: (1) roll the dice and submit a bid notwithstanding the purported defect(s), or (2) timely challenge the terms of the solicitation if the government fails to remedy the issues before the deadline for receipt of proposals. For the Vegas-weary among us, Option 2 can be a very useful and productive course of action. This truth is underscored by the U.S. Government Accountability Office’s (“GAO”) recent decision in Innovate Now, LLC, B-419546 (April 26, 2021).

In the case, Innovate Now, LLC (“Innovate”)—a small-business joint venture between mentor Quantech Services Inc. and protégé Macalogic—protested the terms of an Air Force RFP issued for the procurement of engineering, professional, and administrative support services in support of Air Force Material Command headquarters at Wright-Patterson Air Force Base in Ohio. Innovate’s pre-award protest lodged challenges to the RFP’s requirements that (1) the protégé entity of a mentor-protégé joint venture have the same level of experience as other offerors, and (2) offerors demonstrate the staffing used on a prior contract at “a single point in time.” The protester alleged that the former requirement violated a Small Business Administration (“SBA”) Mentor-Protégé Program regulation, while the latter requirement was undefined and therefore ambiguous. The GAO sustained both grounds of protest.

The RFP Violated Mentor-Protégé Requirements

As a matter of background, the SBA’s Mentor-Protégé Program permits a small-business “protégé” to partner with a more experienced contractor “mentor” by establishing a joint venture to combine resources and experience to perform contracts under which the protégé can gain business guidance, financial assistance, and experience performing federal contracts while maintaining its eligibility for small-business set-aside contracts. A unique benefit of a mentor-protégé joint venture is the ability to utilize the mentor’s past experience so that the joint venture will meet solicitation requirements.

In the procurement at issue, the RFP required a joint venture to submit at least one example of each joint venture member meeting specific experience requirements (i.e., at least one work sample from a federal contract performed by the entity as a prime contractor on a non-fixed price basis for at least six months within the past five years). The protester argued that this RFP requirement violated the SBA regulation codified at 13 C.F.R. § 125.8(e) concerning evaluation criteria for small-business joint ventures, which provides, in pertinent part, that “[a] procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.” The GAO agreed with Innovate’s reading of the regulation, stating:

The plain language of [13 C.F.R. § 125.8(e)] is clear; a procuring agency may not require a protégé firm to individually meet the same evaluation requirements as those imposed on other offerors. Here, the RFP violates this express prohibition.

In addition, the GAO noted that the SBA, whose comments the GAO solicited in deciding protest, agreed with the protester that the RFP was contrary to controlling regulatory requirements:

SBA regulations at 13 C.F.R. § 125.8(e) prohibit an agency from applying the same experience requirements to protégés as other offerors generally. This requirement does not mandate a particular level or type of experience and provides agencies with the flexibility to determine the appropriate criteria, with the understanding that protégés must be held to a different experience standard from mentors and other offerors.

The SBA’s statements in opposition to the Air Force’s RFP constitute a somewhat rare example of the government fighting with itself during the pendency of a protest. This is reassuring news for contractors and further confirms that the SBA is, in fact, an independent voice within the government.

The RFP Was Ambiguous

Innovate’s second ground of protest challenged the RFP requirement that offerors must have been able to staff a prior contract or task order adequately by demonstrating that the “position count” on the prior contract or task order reflects the number of personnel working on the submitted sample at “a single point in time.” Innovate argued that the RFP was ambiguous because it did not define what the agency meant by “a single point in time,” and that because the phrase is susceptible to many interpretations, offerors would be unable to compete intelligently and on a relatively equal and common basis. In sustaining this ground of protest, the GAO noted that the agency’s continued failure to provide a common definition for the phrase rendered it ambiguous:

The agency has not explained why providing a common definition

would somehow detract from its ability to conduct a competitive acquisition, or otherwise deprive it of some particular insight into an offeror’s ability to perform the solicited requirement. Nor has the agency explained why providing a common definition of the phrase would not actually promote full and open competition by ensuring that all offerors compete intelligently and on an equal basis, with a common understanding of the agency’s intended basis for evaluating proposals.

In addition to the agency’s failure to define the term, the GAO noted that the agency offered various rationales for the requirement – all of which simply “failed to withstand logical scrutiny.”

Conclusion

The Innovate Now decision serves as a useful reminder for contractors confronted with a solicitation that appears to contain terms and/or conditions that are contrary to law, regulation, and/or common sense. Acquisitions are not games of chance, and all contractors are entitled to prepare their offers on an equal basis in response to clear and fair criteria. So, if you happen to find yourself feeling like you are sitting at a slot machine while preparing to submit a bid to the government, consider leaving the casino and calling your counsel. Gambling is an activity that can grow very old very fast – particularly if you lose.

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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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