United States: Proposal Expirations Can Be Costly In The Procurement Context

On March 26, 2021 the Government Accountability Office (GAO) issued a decision in the matter of Cydecor, Inc. B-418165.5, denying a protest that challenged the Department of the Navy's (DoN) decision to exclude the protester's expired proposal from the competition. The GAO based its decision on the fact that the agency record showed that the protester neglected to extend the validity of its proposal, despite having been requested to do so by the DoN and, importantly, that the DoN's reevaluation of proposals pursuant to corrective action did not toll the expiration of the proposal's validity.

Background

On August 22, 2018, the DoN issued a solicitation to multiple award contract holders of its SeaPort-e indefinite-delivery, indefinite-quantity contract for engineering, program management, and integrated logistics support services. The DoN received proposals from Cydecor, Morgan Business Consulting LLC, and two other offerors. The DoN ultimately selected Morgan Business Consulting, LLC for award, and Cydecor filed a protest with the GAO. In response to the protest, the DoN took corrective action and the GAO dismissed the protest as academic. As a part of that corrective action, the DoN indicated that it would be reevaluating proposals, making a new source selection decision and that it would stay performance of the award during corrective action.

During the course of the corrective action, the DoN had to ask the offerors to extend the validity of their proposals numerous times while it was taking corrective action. Cydecor extended the validity of its proposal each time the DoN made the request, except for the last time. Ultimately, the DoN completed its corrective action and selected one of the other offerors for award. When the DoN informed Cydecor that it had not been selected for award, it also noted that Cydecor's proposal had been removed from consideration because it had expired during the course of the corrective action after Cydecor had failed to extend the validity of its proposal in response to the DoN's final request.

Cydecor timely filed a protest with the GAO, arguing that the proposal acceptance period was tolled while the DoN was taking corrective action, and that the DoN's final request that Cydecor extend the validity of its proposal was not properly directed to the authorized representatives identified in its proposal.

The decision

The GAO denied both of Cydecor's protest grounds, and in doing so, issued a stark reminder to offerors about the importance of maintaining the validity of their proposals during the course of a source selection—even a source selection that is operating pursuant to a corrective action. With respect to Cydecor's first protest ground, the GAO found the DoN reasonably excluded Cydecor's proposal from the competition, and rejected its argument that its proposal acceptance period had been tolled during the corrective action period. The GAO pointed out that Cydecor's protest of the DoN's initial award under the solicitation was resolved when the GAO dismissed its protest based on the corrective action. While the GAO recognized that there may be unique situations where an agency assumes that an offeror intends to extend the validity of its proposal (e.g., when an offeror is actively participating in a bid protest), in the case at hand, Cydecor was no longer actively engaged in bid protest litigation.

Likewise, the GAO rejected Cydecor's argument that the DoN had sent the final request to extend the validity of the proposal to an employee who was not the authorized point of contact for this particular source selection, and therefore was at fault for failing to properly make the request. Because this error, according to Cydecor, was on the part of the DoN, its decision to exclude Cydecor's offer when it failed to respond to the improperly made request was unreasonable. The GAO noted that, according to the record, each time the DoN had requested a proposal extension, Cydecor employees, other than those named as authorized points of contact, had responded to the request and extended the validity of the proposal. The GAO also pointed out that Cydecor's president (and authorized representative) had to be aware of the extension request from the DoN because he had been copied on the email request, and yet did not respond by agreeing to the extension or letting the DoN know that the contacted employee was not authorized to represent the company on this matter.

Takeaways

Proposals usually have a shelf life, or stated more plainly, an expiration date after which they are no longer considered valid proposals to meet an agency's needs. Therefore, when an agency requests that an offeror extend their acceptance period for a deal, as the DoN did in this case, an offeror needs to extend the validity of its proposal affirmatively if it wants to remain under consideration. The GAO has made it clear that a procuring agency may assume that an offeror engaged in the protest process intends to keep its proposal alive during the pendency of the protest, but once the protest has been dismissed, the burden shifts back to the offeror to affirmatively agree to any proposal validity extension requests. Companies that are actively engaged in source selections should closely monitor the validity of their proposals and any communications from the procuring agency regarding proposal validity to ensure sure that employees are responding to extension requests. The failure to do so can be costly if it results in a strong proposal being removed from consideration because it has expired.

This article is presented for informational purposes only and is not intended to constitute legal advice.