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

Contractors continue to be concerned about the impact that the filing of protests or claims will have on their past performance evaluations in negotiated procurements.  While it is never a good idea to file a frivolous protest or claim, it is improper for procurement officials to downgrade past performance evaluations simply because a contractor has exercised a right afforded by law and regulation.  In fact, the Office of Management and Budget issued a Memorandum for Senior Procurement Executives on April 1, 2002, and stated that “. . . the filing of protests, the filing of claims, or the use of ADR, must not be considered by an agency in either past performance evaluations or source selection decisions.”  The Memorandum went on to provide that contractors may not be given “downgraded past performance evaluations for availing themselves of their rights by filing protests and claims or for deciding not to use ADR; and Contractors may not be given more positive past performance evaluations for refraining from filing protests and claims or for agreeing to use ADR.”

The Under Secretary of Defense endorsed the Memorandum and circulated it on December 16, 2002.  The cover letter stated that “We should continue to work with our contractors to avoid or minimize unnecessary protests and claims and encourage the use of ADR, where appropriate, while not discouraging contractors from availing themselves of the rights provided to them by law. The policy embodied in the Memorandum has not changed and contractors should challenge any past performance evaluation that is downgraded because of previous protests or claims.  It must be recognized, moreover, that the reason for a lower than expected evaluation may not always be revealed during a debriefing.  If a contractor suspects that an inappropriate downgrading has occurred, the only way to prove it may be to file a protest so that the agency’s Administrative Record may be reviewed by the protester’s attorney. (Note: In a negotiated procurement, the Administrative Record is almost always subject to a Protective Order that prohibits disclosure of the information to anyone other than the protester’s attorney).

Michael Payne is a Partner and is the Chairman of the firm's Federal Practice Group.
 

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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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This article describes a GAO decision that highlights how difficult it is to prevail on a protest that challenges an agency’s rating of a proposal where the protest is not supported by anything more than a difference of opinion as to how much weight, or what score, should be assigned to a particular evaluation factor. Absent a showing that there was no rational basis for an agency’s evaluation, contractors should not expect the GAO to overturn an evaluation.

The GAO published a decision today that was originally issued on July 19, 2006, but delayed in being made public because of the need for redactions.  The case involved a protest by East-West Industries, Inc. against the award of a contract to Regent Manufacturing, Inc.   The solicitation was issued under request for proposals (RFP) No. FA8518-04-R-70801, advertised by the Department of the Air Force for multi-aircraft canopy cranes (MACC). East-West challenged the past performance and risk evaluations of its and Regent’s proposals. The protest was denied.

In its decision, East-West Industries, Inc. , B-297391.2; B-297391.3, the GAO stated that in reviewing a protest of an agency’s proposal evaluation, “our review is confined to determining whether the evaluation was reasonable and consistent with the terms of the solicitation and applicable statutes and regulations.” The GAO found that the evaluation of protester’s proposal under the past performance evaluation factor was unobjectionable where the agency reasonably concluded that only one of four prior contracts was of a magnitude and complexity essentially the same as the solicitation’s, and thus met the solicitation’s definition of very relevant. Since only one contract was rated very relevant and the protester received exceptional performance ratings under only two of its three relevant contracts, the GAO determined that the agency reasonably concluded that East-West’s performance record warranted assigning the firm a very good/significant confidence rating based on there being little doubt--rather than no doubt--as to its successful performance.

The protester also argued that the agency’s risk evaluation for Regent’s proposal was flawed.  Specifically, East-West asserted that Regent’s [deleted] design, and prior delivery and safety/quality problems, indicated a moderate to high risk of increased costs, degradation of performance, and schedule disruption. The GAO disagreed and found that the evaluation of the awardee’s past performance and risk was reasonable, notwithstanding protester’s identification of alleged quality, safety, and delivery issues, where contracting officials did not have personal knowledge of majority of the issues, and fully considered those of which they were aware in finding no negative impact on awardee’s past performance rating.

In an interesting side comment that GAO stated it has recognized that in certain limited circumstances an agency evaluating an offeror’s proposal has an obligation (as opposed to the discretion) to consider “outside information” bearing on the offeror’s proposal, where the information in question was “simply too close at hand to require offerors to shoulder the inequities that spring from an agency’s failure to obtain, and consider this information.”  International Bus. Sys., Inc., B-275554, Mar. 3, 1997, 97-1 CPD para. 114 at 5.  In those narrow instances where the GAO has applied the “too close at hand” principle, it has “required the protester to demonstrate that the outside information bearing on the offeror’s proposal was not just known by the agency generally but, rather, was known to the agency employees involved in the source selection process.” The GAO found that no such “outside information” was available to the agency in this case, however.

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The Navy recently awarded three cost-plus-award-fee, indefinite-delivery/indefinite-quantity (ID/IQ) contracts to Fluor International, Inc., URS-IAP, LLC (a joint venture of URS Corporation and IAP Worldwide Services, Inc.) and Atlantic Contingency Constructors, LLC (a limited liability company managed by The Shaw Group) for global contingency construction. Each contract was for a base year with four one year options, and the value of each contract was approximately one billion dollars. The contractors were to provide construction and related engineering services in response to war fighting needs, global natural disasters, and humanitarian assistance.

The awards were made following a "best value" evaluation based on experience, past performance, contingency planning, management, small business utilization, and cost. Non-cost factors were considered more important than cost. A disappointed offeror, Kellogg Brown & Root Services, Inc. (“KBR”), filed a GAO protest asserting that the Navy misevaluated the proposals under technical and cost factors. The GAO agreed and issued a decision sustaining the protest.

In a rather complicated and detailed analysis, the GAO determined that the cost comparison performed by the Navy was flawed because the agency did not perform a reasonable cost realism evaluation. Specifically, the Navy’s evaluators deleted a certain element of cost from ACC’s proposed indirect costs because other offerors had accounted for the same element as a direct cost. KBR argued that if this adjustment had not been made, KBR’s evaluated cost would have been lower than ACC’s. The protester went on to argue that it was unreasonable for the agency to make an adjustment to ACC’s costs when it was apparent that there were other instances where the offerors had treated costs differently for accounting purposes that were not accounted for in the cost evaluation.  Given the multiple accounting variances among the offerors, the agency’s “singling out” of certain ACC costs to adjust from indirect costs to direct costs was unreasonable, according to KBR, and represented unequal treatment.  Significantly, the GAO commented that “The agency has offered no substantive response to this KBR contention, which, based on this record, appears to have merit.” The GAO concluded that the agency’s adjustment to ACC’s proposal was unreasonable and prejudicial to KBR because it resulted in ACC’s proposal being evaluated as having a lower cost than KBR’s.

In another aspect of this protest, KBR contended that the agency misevaluated its proposal and the proposals of URS and ACC under many of the technical factors.  In particular, KBR asserted that the agency overlooked a number of strengths, and assessed a number of weaknesses that were unreasonable with regard to the contingency plan factor.  The Navy responded in cursory fashion that KBR’s proposal was “more general” and provided “limited details,” and contended that the protester’s arguments reflect only “mere disagreement” with the agency.  The GAO disagreed and concluded that “Our review of the record shows more than “mere disagreement.”  The protest was therefore sustained because “the record does not, on its face, support the agency’s ratings, and the agency has otherwise failed to explain the difference in ratings.”

The GAO recommended that the Navy reevaluate the proposals, conduct discussions if necessary, and make a new source selection decision. If based on this new evaluation, the agency determines that one or more of the awardees are no longer in line for award, the GAO recommended that the agency should terminate the awardees’ contracts and make awards consistent with the new selection decision.

This decision is important because it represents a departure from the GAO’s frequent reluctance to look behind the discretion of source selection officials, as long as some justification is provided for their decisions. Given the very large and important defense contractors involved, and the subject matter of the procurement, it will be interesting to see if the Navy complies with the GAO's recommendations, and whether there is ultimately a new list of awardees. One thing is certain; with this much money involved additional challenges to the procurement are likely to arise. See Kellogg Brown & Root Services, Inc., B-298694; B-298694.2; B-298694.3, November 16, 2006.

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