United States: September 2017 Bid Protest Roundup

Last Updated: October 12 2017
Article by Locke Bell

This roundup of notable bid protest decisions issued in September 2017 highlights three decisions, two at the Government Accountability Office (GAO) and one at the Court of Federal Claims (COFC).  The first reminds us of the broadness of the discretion afforded a source selection official making a best-value tradeoff decision.  The second explores the line between products and services reasonably included in an offeror's General Services Administration (GSA) Federal Supply Schedule (FSS) contract, and those that must be separately provided.  And the last examines standing to continue a protest at COFC when intervening circumstances leave a disappointed offeror otherwise ineligible for award.

SSI Tech., Inc., B-414204.3, Sept. 12, 2017, 2017 WL 4021818

The bounds of a source selection official's discretion, although universally broad, may be set differently based on the reviewing GAO attorney and the facts of the case at hand.  In SSI Technology, GAO found it was within the source selection official's rational discretion to award a contract for liquid fuel water separators to a dealer at a unit price of $104 more and a delivery date 170 days later than a manufacturer of effectively equivalent liquid fuel water separators, based on concerns about the manufacturer's past performance.  The source selection official concluded reasonably, in GAO's opinion, that the dealer offered the best value to the government.

The protester pointed out that the solicitation at issue did not mention "best value" or provide for a "best-value tradeoff" by the agency.  In this regard, the solicitation provided, "If the requirement is evaluated manually" — which it was, according to the contracting officer — "price, delivery, and past performance will be considered in accordance with the terms in the solicitation.  Since delivery is an evaluation factor, there may be an evaluation preference for quotes/offers of fewer delivery days than the number of delivery days requested by the Government."  GAO held that this language "effectively required a best-value analysis by providing that award would be based on 'price, delivery, and past performance.'"

The protest further challenged the agency's best-value tradeoff decision as unreasonable and without a rational basis in light of the fact the awardee offered a price 34 percent higher than the protester for what the protester considered to be the exact same product, at a substantially later delivery date.  GAO found this appeal to price and delivery unpersuasive in the face of the agency's determination that the protester's "very poor past performance history, which included a [Past Performance Information Retrieval System] score of 0 and indicated in part that, in the past year, it had delivered only 23.8% of its DLA-awarded [Contract Line Item Numbers] by their due dates" resulted in concern that the protester's proposal did not "represent a time frame in which [the protester] can actually perform."  The agency was reasonable, then, to determine it was worth paying a $104 premium per unit for a "high degree of timely performance."

GAO's decision in SSI Technology serves as a reminder of the formidable climb facing a disappointed offeror as it sets out to overturn an agency's best-value determination as unreasonable.

Bluewater Mgmt. Grp., LLC, B-414785, Sept. 18, 2017, 2017 WL 4174397

GSA FSS contracts provide major administrative ease to procuring agencies, but they present some pitfalls that should be kept in mind.  One is in Bluewater Management, where GAO sustained a protest challenging an award for mixed services, some of which were not included in the awardee's schedule contract.

Specifically at issue were lodging and transportation services for civil service mariners assigned to the Military Sealift Command at Norfolk Naval Base.  The Navy required up to 250 extended-stay hotel rooms within 25 miles of the base, along with daily round trip transportation at prescribed times.  In its request for quotations (RFQ), the Navy listed the lodging and transportation requirements as separate contract line item numbers (CLINs) to be provided and invoiced under the resulting contract.

The Navy invited vendors holding GSA Schedule 48 contracts including Special Item Number 653-9, Long Term Lodging, to submit quotations, although the RFQ made no reference to the schedule or special item number (SIN).  Schedule 48 covers services relating to transportation, delivery, and relocation services.  It includes many SINs, such as SIN 653-9 for corporate housing facilities and SIN 411-1 for passenger ground transportation services.  These individual SINs may cover complementary services as well; SIN 653-9 anticipates that vendors may offer a wide range of amenities to complement the long-term lodging provided, including transportation services.

The awardee in Bluewater Management held a single FSS schedule 48 contract, with SIN 653-9 as its only SIN, listing prices for three types of lodging and identifying only housekeeping services as an additional service, with applicable pricing.  The protester argued that the transportation services required by the RFQ were outside the scope of the awardee's Schedule 48 contract, and therefore the agency was precluded from purchasing those services through it.  The Navy rebutted that because the standing statement of work for SIN 653-9 contemplated transportation services, the agency could purchase the services as "other direct costs" (ODCs).

The GSA Ordering Guidelines state that "[t]o the extent possible, all anticipated ODCs associated with performance and within the scope of the GSA Schedule contract should be offered as separately listed items, and have an established contract price."  GAO, conspicuously disregarding the qualifier "to the extent possible," held that the transportation services awardee proposed were required to be listed on the awardee's schedule with an established contract price.  GAO held that the RFQ required ground transportation as a distinct service to perform the task order, not merely to support the provision of lodging services, and therefore these services were not properly classified as ODCs — defined as "charges in direct support of a service," according to the GSA Ordering Guidelines.

Because the awardee's Schedule 48 contract did not include a SIN for transportation services or otherwise list pricing for transportation services, GAO concluded the Navy's acceptance of the awardee's quotation was improper.  GAO's decision in Bluewater Management reminds agencies and offerors alike to ensure proposals based on GSA Schedule contracts cover all items and services called for in a solicitation.

Geiler/Schrudde & Zimmerman v. United States, No. 16-186C, slip op. (Fed. Cl. Aug. 30, 2017)

We round out this month's bid protest roundup with a case that presents an interesting (albeit sad) fact pattern.  Both COFC and GAO will review a protester's status as an "interested party" as a jurisdictional threshold for hearing a protest — GAO in accordance with its authorizing statutes at 31 U.S.C. §§ 3551, 3553 and its bid protest regulations at 4 C.F.R. §§ 21.0 and 21.1, and COFC in accordance with the Tucker Act, 28 U.S.C. § 1491(b).  At both, with some variations, a party generally is an interested party for the purposes of a post-award protest if it was an actual bidder or offeror and had a direct economic interest in the procurement, meaning it had a substantial chance of receiving award.  But does a protester retain its standing as an interested party if it had a substantial chance of receiving award when it submitted its protest, but due to intervening circumstances is precluded from award on remand to the agency?

In Geiler/Schrudde & Zimmerman, the court confirmed yes, the protester maintains its standing to protest.  There, challenged procurement was set aside for award only to a service-disabled veteran-owned small business (SDVOSB).  When the protester submitted its initial complaint in February 2016 challenging alleged errors in the Department of Veterans Affairs' evaluation of proposals to build a chiller plant at a VA facility in Lexington, Kentucky, the protester qualified as an SDVOSB.  But just over a month after the complaint was filed, plaintiff's service-disabled veteran owner died.

The VA subsequently revoked the protester's certification as an SDVOSB, and the Government moved to dismiss the protest, arguing that the protester was no longer an interested party because it no longer had a substantial chance at award or an economic interest in the procurement.  The court denied the motion, holding, "Standing is determined at the time of the award."  Slip op. at 6 (emphasis added).  Because the protester was an SDVOSB when the initial award decision was made — on September 23, 2015 — the fact that the owner died after the complaint was filed on February 8, 2016 (following an initial protest at GAO) was irrelevant in the court's analysis.  Accordingly, COFC retained its jurisdiction over the protest.

This did little good for the protester — the court then held in favor of the Government on the merits.  Nevertheless, this readily analogized fact pattern and clean holding by COFC provide an easy citation for protester counsel in the future.  One can foresee, without too much imagination, a scenario where a small-business protester challenges evaluation or procedural errors in a small business set-aside award (requiring certification of size as of the date of award), before being acquired or otherwise outgrowing the applicable size standard while the protest pends in court.  Under the holding in Geiler/Schrudde & Zimmerman, that protest could go forward regardless.

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.

© Morrison & Foerster LLP. All rights reserved

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