Federal Construction Contracting Blog : Federal Construction Contracting Law Firm : Cohen Seglias Pallas Greenhall & Furman PC : Construction Law, Dredging and Claims

As the government has expanded its uses of Contracting by Negotiation through the issuance of RFPs ("Requests for Proposals"), as opposed to Sealed Bidding and the issuance of IFBs ("Invitations for Bid"), contractors have had to adapt to this new way of doing business.  All too often, a perfectly capable contractor is not selected for award, even though its price was the lower than its competitors, because it failed to adequately address the evaluation factors listed in the solicitation.  A recent decision by the GAO in the Matter of Capitol Drywall Supply, Inc. ("CDS"), decided on January 12, 2009, highlights the difficulty that a contractor faces when the agency and the GAO conclude that a proposal misses the mark.

The proposal by CDS was one of six submitted to the Corps of Engineers, and was the second lowest in price.  The problem, however, was that CDS was rated as the lowest on the technical merit evaluation factor due, primarily, to a lack of detailed information describing the firm's proposed procedures to perform the statement of work requirements, as well as a failure to demonstrate experience performing contracts similar in size, scope, and complexity, and which were valued at $1 million or more.  Finding that the lowest-priced and third lowest-priced proposals, which received significantly higher technical ratings than the CDS' proposal, represented the best value to the agency, awards were made to those firms; with respect to the latter award, the agency concluded in a price/technical tradeoff determination that the higher technical merit of the higher-priced proposal warranted the payment of the price premium associated with it.

Specifically, the agency evaluators found that while the firm's proposal provided a brief response to the detailed technical approach requirements, in which CDS mentioned the firm's intention to maintain inventory and warehouse operations, specific statement of work requirements were not referenced, as was required (e.g., regarding subcontractor relationships, safety and health plans, quality control, and planned communication and information management), and no planned procedures or detailed methodologies were provided to explain how the firm intended to perform the statement of work requirements. Similarly, under the delivery evaluation factor, while the CDS proposal mentioned the use of certain vehicles and noted that certain reports could be produced, the evaluators found that insufficient detail was provided to ensure an adequate number and type of vehicles would be readily available for simultaneous deliveries, as required, and no detailed methodology was presented to either explain what procedures would be followed to ensure that materials would be expeditiously obtained and delivered, including delivery to remote locations, or to explain in any meaningful detail the firm's planned procedures to meet stated reporting requirements.

In reiterating its position when a protester has failed to adequately respond to the requirements of a solicitation, the GAO stated that "In reviewing protests of alleged improper evaluations and source selections, our Office examines the record to determine whether the agency's judgment was reasonable and in accord with the solicitation's stated evaluation criteria and applicable procurement laws. See Abt Assocs. Inc., B-237060.2, Feb. 26, 1990, 90-1 CPD para. 223 at 4. It is an offeror's responsibility to submit an adequately written proposal that establishes its capability and the merits of its proposed technical approach in accordance with the evaluation terms of the solicitation. See Verizon Fed., Inc., B-293527, Mar. 26, 2004, 2004 CPD para. 186 at 4. A protester's mere disagreement with the evaluation provides no basis to question the reasonableness of the evaluators' judgments. See Citywide Managing Servs. of Port Washington, Inc., B-281287.12, B-281287.13, Nov. 15, 2000, 2001 CPD para. 6 at 10-11. Further, where, as here, technical factors are to be given greater importance than price in the determination of which proposal offers the agency the best overall value, price/technical tradeoffs may be made, and we will not disturb awards to offerors whose proposals have higher technical ratings and higher prices so long as the result is consistent with the evaluation factors and the agency has reasonably determined that the technical superiority outweighs the price difference. See Structural Preservation Sys., Inc., B-285085, July 14, 2000, 2000 CPD para. 131 at 7."

Author's Note:  The lesson to be learned from this case, and others like it, is that a contractor cannot take anything for granted when responding to an RFP.  It is a mistake to assume that the agency knows about your capabilities as a result of previous contracts, and it is similarly a mistake to assume that the government evaluators will learn about your capabilities even though you do not provide detailed information.  Every proposal stands on its own and it is important to prepare your proposal in a manner that provides information that is responsive to the evaluation factors.  Contractors need to make certain that every evaluation factor is addressed clearly and thoroughly.  It is no longer enough to be the best contractor, you now need to be the "best" at putting proposals together, as well.  Most assuredly, you should do everything possible to avoid a conclusion like the one the GAO reached in the CDS case that "[g]iven the lack of detail in CDS's proposal under each technical evaluation factor, we have no basis to question the evaluation."

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The Department of Homeland Security has postponed the start date of the E-verify requirement (please see our earlier article).  The new rule will go into effect no earlier than Friday February 20, 2008.  Proponents of the new rule insist that the rule remains intact with as much legal force as before and that it is only being postponed.  Opponents of the new rule hope that the delay will allow the Obama administration ample time to evaluate the impact it could have on the world of government contracting. 

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For over twenty years, the federal government and private industry, including contractors, mining companies, developers and builders, have debated the extent to which land clearing and dredging activities should be regulated. Since the 1970's, the U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency have regulated the discharge of pollutants into the waters of the United States under 33 U.S.C. §1251 et seq., [the Clean Water Act]. Section 404 of the Act includes the discharge of dredged or fill materials as a regulated activity, and the Corps, by issuance of Section 404 permits, has regulated excavation activities in navigable waters and wetlands. 

In the 1980's, "discharge of dredged material" was not considered by the agencies to include the “de minimis incidental soil movement that occurs during normal dredging.” In the early 1990's, the Corps and EPA redefined the term to include the redeposit of dredged material. This regulatory definition was challenged in court, and in 1998 the U.S. Court of Appeals for the District of Columbia Circuit ruled that the agencies could not regulate "incidental fallback."   National Mining Association v. U. S. Army Corps of Engineers, 145 F.3d 1399. In August 2000, the Corps and EPA included a definition of the term "incidental fallback" in the regulations. The agencies also added that the use of mechanized earth-moving equipment in waters of the United States was presumed to result in the discharge of dredged material, except where the equipment usage could be shown to only result in incidental fallback. The adoption of these definitions was apparently the agencies' "reasoned attempt to more clearly delineate the Clean Water Act jurisdiction" rather than develop a "bright line" rule for determining which activities would require a Section 404 permit.

In response to an adverse decision issued by the United States District Court for the District of Columbia in January 2007, National Ass'n of Home Builders v. U.S. Army Corps of Engineers, Civil Action No. 01-0274, January 30, 2007, the U.S. Army Corps of Engineers and the Environmental Protection Agency recently adopted a Final Rule on December 31, 2008, 73 FR 79641, that deleted the definition of "incidental fallback" from 33 CFR 323.2(d)(2)(ii) and 40 CFR 232.2(2)(ii), as well as the language indicating that the Corps and EPA "regard" the use of mechanized earthmoving equipment as resulting in a discharge subject to regulation.

With the re-issuance of the Section 404 regulations, the situation now will be as it was in 1999 where the decision as to when a particular redeposit of dredged material is subject to Clean Water Act jurisdiction will entail a case-by-case evaluation. This regulatory roll back may create additional burdens to parties that engage in activities that involve incidental fallback and the use of mechanized earthmoving equipment. Corps and EPA guidance in the 1990's identified these activities as including:

· Mining activities, including sand and gravel mining, aggregate mining, precious metals and gem mining, recreational mining, and small instream hydraulic dredges

· Ditching and draining activities, including ditching to lower the water table, ditching to drain

wetlands, and removal of beaver dams

· Maintenance dredging activities and excavation for currently used flood control projects or for

previously abandoned flood control, and irrigation or drainage projects

· Channelization and the reconfiguring or straightening of streams

(See 1997 Corps/EPA Memorandum)

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