The following is an installment in Crowell & Moring’s Bid Protest Sustain of the Month Series. In this series, Crowell’s Government Contracts Practice keeps you up to date with a summary of one of the most notable bid protest sustain decisions each month. Below, Crowell Consultant (and former GAO Bid Protest Hearing Officer) Cherie Owen discusses GAO’s decision in Morrish-Wallace Construction d/b/a Ryba Marine Construction Co., where a company’s failure to acknowledge a solicitation amendment proved fatal to its bid.
In Morrish-Wallace, the Army Corps of Engineers issued an invitation for bids (IFB) a contractor to provide construction of a new steel pile offloading platform that would provide access to the West Dickinson Island Confined Disposal Facility in St. Clair County, Michigan. Under the terms of the IFB, award would be made to the contractor submitting the lowest priced acceptable bid. Consistent with standard procurement practice, the IFB informed bidders that they were required to acknowledge receipt of any solicitation amendments that occurred during the procurement. The agency issued three amendments: the first gave updated wage determinations and a site visit attendee list, the second added another wage update along with revised plan sheets and sections, and the third included an additional wage update and more plan sheet revisions.
E.C. Korneffel Co. (Korneffel) was the lowest bidder; however, the firm failed to acknowledge the third IFB amendment. The Corps concluded that Korneffel’s failure to acknowledge Amendment 3 rendered it nonresponsive and selected second-low bidder Morrish-Wallace for award. Korneffel protested its elimination to GAO; in response, the Corps took voluntary corrective action.
In its corrective action, the Corps concluded that Korneffel’s failure to acknowledge Amendment 3 was not material because: (1) the updated wage determination impacted only landscape laborers, a labor category not applicable to the procurement; and (2) the revision to the steel pile cap size would result in only a $21,000 increase in price, which was a negligible portion (1%) of the total contract value. The Corps awarded the contract to Korneffel and Morrish-Wallace protested, arguing that Korneffel’s failure to acknowledge Amendment 3 was material and should have been fatal to its bid. GAO agreed.
GAO first noted that the relevant question was whether Amendment 3 was “material.” Materiality was key because a bidder’s failure to acknowledge a material amendment renders the bid nonresponsive because, without it, the government’s acceptance of the bid would not legally obligate the bidder to meet the government’s needs as identified in the amendment. On the other hand, where the amendment is not material, the impact on performance is negligible. Therefore, GAO has held that the agency should either give the bidder an opportunity to cure the failure to acknowledge or waive it.
Turning to the key issue of materiality, GAO noted that an amendment is not material if it would only have a negligible effect on price, quantity, quality, or delivery of item bid upon. With respect to David-Bacon wage determinations, an amendment is material if there is a reasonable possibility that the trade’s services will be required in the performance of the contract. With respect to other solicitation changes, an amendment is material if it adds requirements to contract performance that were not contained in the original IFB.
Applying these principles, GAO concluded that Amendment 3’s wage rate amendment was not material because the amendment related to the wage rate for landscapers – a category of laborer not relevant to this contract. However, the plan sheet revisions were material because they added requirements to contract performance. Specifically, Amendment 3 changed the contract’s performance requirements by requiring a larger steel pile channel cap, which was necessary because the smaller channel cap has flanges that do not provide enough area to accommodate the dimensional irregularities of the sheet pile walls that would be used for this requirement. As GAO noted, the larger channel cap has a wider flange which allows the cap to accommodate such irregularities. Even the Corps’ own Contracting Officer had acknowledged that this was a “substantive change.” As a result, notwithstanding the minimal impact on contract price, this change was considered to be material. Korneffel’s failure to acknowledge this material amendment was therefore fatal to its bid.
The Morrish-Wallace decision highlights the importance of carefully reviewing and acknowledging all solicitation amendments, as failing to do so—even if the changes seem minor—can render a bid nonresponsive and cost a contractor the award. The decision also underscores the value of participating in the protest process; by intervening in the initial protest, Morrish was able to stay informed about the agency’s actions and position itself to successfully challenge the award to Korneffel when the opportunity arose.