With 2017 firmly in the rear-view, it’s time to take stock of recent and anticipated bid protest developments. Today, we’ll look back and highlight five of the most significant trends in 2017 bid protests. In the near future, we’ll turn our gaze forward and predict the five most important protest developments to keep an eye on in 2018.
- The Outsized Importance of Key Personnel Departures
GAO has long held that an offeror has an affirmative duty to notify an agency if its proposed key personnel become unavailable after proposal submission but before award. See Greenleaf Constr. Co., B‑293105.18, B-293105.19, Jan. 17, 2006, 2006 CPD ¶ 19. In 2017, however, GAO repeatedly emphasized the difficult choice that an agency faces when it receives such a notification. The agency must either (1) evaluate the proposal as submitted, where the proposal would be rejected as technically unacceptable for failing to meet a material requirement, or (2) open discussions (with all offerors) to permit the offeror to amend its proposal.
In 2017 alone, this draconian rule led to numerous sustained protests where agencies improperly allowed offerors to substitute replacement key personnel without conducting discussions with all offerors. E.g., YWCA of Greater Los Angeles, B-414596 et al., July 24, 2017, 2017 CPD ¶ 245; General Revenue Corp. et al., B-414220.2 et al., Mar. 27, 2017, 2017 CPD ¶ 106. It also led to at least one published decision denying a protest where GAO held that the agency reasonably chose not to open discussions—even though the key personnel departure was seemingly beyond the offeror’s control. A-T Solutions, Inc., B‑413652.2 et al., July 5, 2017, 2017 CPD ¶ 214.
This leaves offerors stuck between a rock and a hard place. An offeror can either notify an agency of a key personnel departure and risk elimination on that basis (should the agency choose not to open discussions) or remain silent and risk being excluded for essentially a misrepresentation by omission. As offerors and agencies continue to grapple with this difficult issue, it will be interesting to see whether GAO provides any guidance on how often offerors must check to ensure their key personnel are available. It will also be interesting to see whether the COFC, if presented with this issue, adopts GAO’s approach. Short of statutory or regulatory reform, the COFC may be the only available avenue for contractors to achieve relief from this new status quo.
- The DFARS Preference for Discussions in High-Value Procurements
Ordinarily, agencies have significant discretion in determining whether or not to conduct discussions. However, in high-dollar procurements, should that be the case? One regulation, and a series of recent decisions applying it, suggests maybe not.
DFARS 215.306(c) provides that, “[f]or acquisitions with an estimated value of $100 million or more, contracting officers should conduct discussions.” In a late 2016 decision, GAO explained that, where this regulation applies and an agency foregoes discussions, GAO will review “whether the record shows, given the particular circumstances of th[e] procurement, that there was a reasonable basis for the agency’s decision not to conduct discussions.” Science Applications Int’l Corp. (SAIC), B‑413501, B‑413501.2, Nov. 9, 2016, 2016 CPD ¶ 328. SAIC was GAO’s first foray into applying DFARS 215.306(c), and, on the facts of that case, GAO upheld the agency’s decision not to conduct discussions. However, in more recent decisions, both GAO and the COFC have perhaps expressed a greater willingness to scrutinize agency decisions not to conduct discussions.
First, in Dell Federal Systems, L.P. v. United States, 133 Fed. Cl. 92 (2017), which involved a challenge to corrective action in response to multiple GAO protests of a $5 billion procurement, the agency had taken corrective action in part due to litigation risk surrounding its decision not to conduct discussions. The agency’s corrective action analysis focused on GAO’s SAIC decision and the preference for discussions in DFARS 215.306(c). Relevant here, the COFC held that the agency’s SAIC analysis and threshold decision to take corrective action were not arbitrary and capricious.
Second, in McCann-Erickson USA, Inc., B‑414787, Sept. 18, 2017, 2017 CPD ¶ 300, a $4 billion procurement for advertising services, GAO went out of its way (after sustaining the protest on other grounds) to highlight DFARS 215.306(c) and the requirement that “any exercise of discretion on the part of the agency in connection with [a decision not to conduct discussions] must be reasonable.”
These decisions call into question the once well-settled notion—at least for DoD procurements of $100 million or more—that an agency’s decision not to conduct discussions would always be upheld.
- A New Timeliness Trap for OCI Protests?
At GAO, there’s generally no need to protest an agency’s organizational conflict of interest (OCI) determination until after contract award; in fact, a protest before award is almost always premature. See, e.g., REEP, Inc., B‑290688, Sept. 20, 2002, 2002 CPD ¶ 158. The lone exception to this rule is where a protester is on notice of the issue prior to award and the agency specifically states that the offeror with the alleged OCI is nonetheless eligible. In that limited scenario, a protest has to be filed prior to the deadline for proposal submission. See Honeywell Tech. Solutions, Inc., B-400771, B‑400771.2, Jan. 27, 2009, 2009 CPD ¶ 49. However, a recent COFC decision reached a somewhat different conclusion.
In The Concourse Group, LLC v. United States, 131 Fed. Cl. 26 (2017), the COFC held that the protester waived its OCI challenge where it should have been on notice of the alleged OCI—based on a 2012 Army publication and a posting on the awardee’s website—prior to award but filed its challenge only after award. The COFC reasoned that the protester “knew or should have known of [the awardee’s] role in the . . . program well before contract award,” and held that the Federal Circuit’s Blue & Gold Fleet waiver rule applies broadly “to all situations where the protesting party had the opportunity to raise its claim before the award of the contract.” Id. at 29 (citing Commc’n Constr. Servs., Inc. v. United States, 116 Fed. Cl. 233, 264 (2014), and CRAssociates, Inc. v. United States, 102 Fed. Cl. 698, 712 (2011), aff’d, 475 Fed. Appx. 341 (Fed. Cir. 2012)).
Given that timeliness considerations frequently drive critical decisions such as where and when to file a bid protest—and whether a pre-award protest is necessary at all—it will be important to monitor whether future GAO and/or COFC decisions follow Concourse and require offerors to file future OCI protests prior to proposal submission.
- Clarifications, Discussions, or Communications
There’s a bright-line distinction in the law between discussions and clarifications: the former enable offerors to substantively revise their proposals, while the latter do not. But what about FAR 15.306(b) “communications”? That was the nuanced question the COFC tackled in Rivada Mercury, LLC v. United States, 131 Fed. Cl. 663 (2017).
The case involved a unique procurement to establish a nationwide public safety broadband network pursuant to recommendations made by the 9/11 Commission. The RFP contemplated a multi-phased evaluation process, and the agency engaged in extensive rounds of exchanges with the two offerors that it deemed the only viable competitors. After the agency completed its initial evaluations, it excluded the protestor from the competitive range—finding that the protestor’s proposal carried substantial risk—and entered into a competitive range of one with the eventual awardee in order to conduct discussions.
The protestor alleged that the pre-competitive range exchanges between the agency and the offerors were discussions and had improperly allowed the eventual awardee to substantively revise aspects of its proposal. However, the COFC disagreed. The COFC held that the exchanges, though extensive because of the complexity of the procurement, were used to carry out a baseline assessment of proposals, against which future proposal revisions might occur. Because the exchanges themselves were not intended to allow for proposal revisions, they were communications, not impermissible discussions.
Contractors should pay close attention to the result of this case and its potential applicability to future procurements where extensive pre-award communications are contemplated in order to assess proposal risk. Exchanges could easily devolve into impermissible discussions if both the agency and the offerors are not careful. However, if properly tailored to the regulation and solicitation, such in-depth communications can be a valuable tool for agencies to assess offeror’s proposals.
- Unfair Competitive Advantage Can’t Be Waived
FAR 9.503 allows an agency to waive an OCI when, notwithstanding a conflict, waiver is in the Government’s interest. See, e.g., Concurrent Techs. Corp., B-412795.2, B-412795.3, Jan. 17, 2017, 2017 CPD ¶ 25 (upholding OCI waiver). However, a recent GAO decision clarified that this waiver authority does not extend to the closely related doctrine of unfair competitive advantage (UCA).
In Northrop Grumman Systems Corp., B-412278.7, B-412278.8, Oct. 4, 2017, 2017 CPD ¶ 312, the protester alleged that the awardee benefited from a UCA where it hired two former agency employees that could have provided non-public information for use in its proposal. The agency responded by denying the existence of any UCA (a point on which GAO ultimately agreed), and further purported to waive any UCA, if one existed. GAO rejected the waiver, holding that even though GAO’s UCA analysis is “virtually indistinguishable” from the standard for evaluating the potential harm from unequal access to information OCIs, UCAs are not governed by FAR subpart 9.5 and thus may not be waived. See id. (“because FAR 3.1 does not permit the agency to waiver concerns arising under that subpart, a waiver executed pursuant to FAR § 9.503 does not warrant dismissal”).
Northrop Grumman recognizes an important limitation on the Government’s ability to summarily waive conflicts. In recent years, the Government has increasingly utilized its waiver authority to circumvent otherwise meritorious protests. E.g., AT&T Gov’t Solutions, Inc., B-407720, B‑407720.2, Jan. 30, 2013, 2013 CPD ¶ 45 (waiving OCI 3 days before GAO decision deadline, after GAO had predicted a sustained protest in an outcome prediction ADR session). At least for UCAs, however, that strategy will no longer work.
This limitation on waivers also underscores the importance of contractors avoiding UCAs in the first instance. It is incumbent on contractors to set up vetting processes and procedures both for proposal drafting teams and at the employment onboarding phase. Given that a significant portion of capture efforts can occur before pen is ever put to paper, it is a best practice to implement such redundant controls to avoid even the appearance of an unfair competitive advantage.