Chance to Change Pricing Generally Required After Corrective Action
This week, GAO released a decision in Power Connector, Inc., B-404916.2, Aug. 15, 2011, 2011 WL 5029615 that appears to introduce a significant change to the circumstances in which a procuring agency may limit the scope of proposal revisions during corrective action.
Prior GAO precedent indicated that there are certain instances where an agency could limit proposal revisions during corrective action and certain instances where such limitations were improper. On the one hand, in Honeywell Technology Solutions, Inc. (“Honeywell”), B-400771.6, Nov. 23, 2009, 2009 CPD ¶ 240, the procuring agency decided to accept updated past performance references as part of corrective action, but did not amend the RFP. When a protester challenged the agency’s decision to forbid pricing revisions, GAO denied the protest because agencies “have broad discretion” in the area of corrective action and “[GAO] will not question an agency’s decision to restrict proposal revisions when taking corrective action so long as it is reasonable in nature and remedies the established or suspected procurement impropriety.”
On the other hand, in Lockheed Martin Systems Integration-Owego et al. (“Lockheed”), B-299145.5 et al., Aug. 30, 2007, 2007 CPD ¶ 155, GAO sustained a protest where the procuring agency amended the way in which certain life cycle costs would be calculated during the cost reevaluation, yet forbade offerors from amending their technical proposals. GAO recognized that changes to the way costs will be tabulated can have a direct effect on the technical solution offered, and thus concluded that, when an agency amends its solicitation, it should allow offerors to amend proposals without restriction “unless [1] the agency offers evidence that the amendment could not reasonably have any effect on other aspects of proposals, or [2] that allowing such revisions would have a detrimental impact on the competitive process.” Id. at 5. Since the agency’s amendment had a clear connection to another aspect of Lockheed’s proposal, the limitation was deemed improper.
The intersection of these two legal principles is found in cases such as the recent decision in Intermarkets Global, B-400660.10, Feb. 2, 2011, 2011 CPD ¶ 30, where an agency revised two technical requirement in the RFP as part of corrective action and restricted proposal revisions to addressing the updated technical requirements. Specifically, the agency instructed: “Price revisions are prohibited unless you can provide documented evidence, including a narrative explanation, showing a direct link, with supporting cost-type information, between changes in your proposal resulting from these two clarifications and the proposed pricing.” Id. at 3. When this limitation to pricing revisions was challenged, GAO denied the protest and upheld the agency’s corrective action approach. Citing to both of the above decisions in Honeywell and Lockheed, GAO found that there was no abuse of discretion in the agency’s decision to limit proposal revisions because offerors could make any pricing revisions that reasonably related to the revised technical requirements. Id. GAO was unmoved by the protester’s desire to make wholesale pricing changes that had nothing to do with the revised solicitation.
However, just six months after the Intermarkets Global decision, GAO seems to have issued a conflicting opinion in the Power Connector that has called into question the viability of not only Intermarkets Global, but many of the cases upon which it relied.
Continue Reading...
