Protester Wins Because the Government's Best-Value Analysis was Irrational

By: Michael H. Payne

A protest that challenges the source selection decision on a negotiated, best value, procurement is not easy to win. Numerous decisions of the GAO and the United States Court of Federal Claims have held that procurement officials are entitled to substantial deference. In a recent decision by the Court of Federal Claims, however, the Court stated that “such deference is not unlimited.” See Firstline Transportation Security, Inc. v. United States dated September 27, 2011. While the protest did not involve a construction project, and dealt with a Department of Homeland Security contract for airport screening services, the Court’s decision is certainly applicable to procurements for construction.

The Plaintiff argued that the Source Selection Evaluation Board (“SSEB”) failed to conduct a proper best-value analysis and actually awarded the contract on a lowest-price, technically acceptable basis. That, of course, was improper because the government advertised that there would be a best-value tradeoff that would weigh all of the evaluation factors and price. While a number of protesters have alleged that the Government ignored the advertised evaluation factors and simply found a way to award to the lowest price, it is refreshing to know that, in this case, the Court agreed that the facts supported the protester’s contention.

The Court’s decision is quite lengthy (79 pages) and we will not discuss it in detail, but a copy is linked to this article and we recommend that you give it a quick review. In essence, the Court found that that the best-value analysis performed by the SSEB was both irrational and inconsistent with the evaluation scheme set forth in the RFP. In criticizing the agency, the Court stated that the SSEB failed to account for the significant differences between the competing proposals with respect to technical quality; and, that in selecting a higher-priced, technically superior proposal for award, an agency must explain and document why the technical merits of that proposal warrant its higher price. The Court stated:

[T]he agency is compelled by the FAR to document its
reasons for choosing the higher-priced offer. Conclusory
statements, devoid of any substantive content, have been
held to fall short of this requirement, threatening to turn
the tradeoff process into an empty exercise. Indeed, apart
from the regulations, generalized statements that fail to
reveal the agency’s tradeoff calculus deprive this court of
any basis upon which to review the award decisions.

The finding regarding lack of documentations is particularly welcome because we see so many cases where the GAO and the Court accept very sparse documentation without putting the agency to the test of fully explaining, and supporting, its source selection rationale.

The decision in this case is noteworthy because it holds out the hope that where the facts support a protester’s allegations, the Court will not simply defer to the discretion of the agency. The Source Selection Authority (“SSA”) in this case did not perform an independent evaluation and assessment of competing proposals which, of course, explains why there was no documentation of any such assessment. The Court found this to be particularly egregious and emphasized that the “SSA’s documentation is limited to her adoption of the SSEB report and her otherwise unsupported statement that the intervenor’s proposal represents the best value to the government.” The more that federal agencies are required to document and fully explain the basis for their procurement decisions, the more likely it will be that procurement decisions will be made fairly and impartially.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including teaming arrangements, negotiated procurements, bid protests, claims, and appeals.

Terminology Differences Between a "Bidder" and an "Offeror"

By: Michael H. Payne

Government contractors frequently use incorrect terminology to describe a solicitation. For example, clients often call me and ask why they were not awarded a contract even though they had submitted the lowest bid. The first thing that I ask is whether the solicitation was a Request for Proposals ("RFP"), or an Invitation for Bid ("IFB"). If it was an RFP, the award was probably based on best value and the lowest-priced proposal would not necessarily receive the award. If the solicitation was an IFB, there would be more of a question about why an award was not made to the lowest-priced bidder. Of course, even in sealed bidding the lowest bidder must also be responsive and responsible in order to receive an award, so there can be a valid reason as to why the lowest bidder did not receive the award.

The best way to show that you understand the basics of the federal procurement process is to remember that responses to an IFB (sealed bid solicitation) are referred to as "bids," and responses to an RFP (negotiated procurement) are referred to as "proposals" or "offers." In other words, the proper terms under an IFB are "bid," "bidder," and "sealed bid," and the proper terms under an RFP are "proposal," "offer," and "offeror." Your lawyer will become very confused if you mix these terms by saying, for example, "I just submitted a bid on an RFP." Sometimes, the only way that I can figure out what my client is talking about is to ask for the solicitation number (the "R" or the "B" in the middle will be a dead giveaway), or I may simply ask my client to send me a copy of the solicitation.

Of course, government procurement personnel frequently add to the confusion. RPPs are often referred to as "negotiated procurements" even though there usually are no negotiations (or "discussions"), and contracting officers often refer to both bids and proposals as "bids," To make matters worse, the GAO and the courts refer to protests of either an IFB or an RFP as "bid protests." No wonder there is so much confusion.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including teaming arrangements, negotiated procurements, bid protests, claims, and appeals.

Recent GAO Decisions Highlight the Importance of Meaningful Discussions with Offerors During the Negotiated Procurement Process

By: Michael H. Payne & Elise M. Carlin

Each year, a significant number of bid protests filed at the GAO are the result of inadequate discussions. Recently, the GAO released two decisions which reiterated the importance of holding meaningful discussions that do not mislead offerors during negotiated procurements.

The purpose of holding discussions in negotiated procurements is to maximize the best value to the government. Discussions are held to give offerors in the competitive range an opportunity to revise their bids to make them more competitive. The Federal Acquisition Regulation (the "FAR") defines discussions and in what context they occur with an offeror:

Negotiations are exchanges, in either a competitive or sole source environment, between the Government and offerors, that are undertaken with the intent of allowing the offeror to revise its proposal. These negotiations may include bargaining. Bargaining includes persuasion, alteration of assumptions and positions, give-and-take, and may apply to price, schedule, technical requirements, type of contract, or other terms of a proposed contract. When negotiations are conducted in a competitive acquisition, they take place after establishment of the competitive range and are called discussions.

Requirements of Discussions

It is well established in federal procurement law that discussions between the contracting officer of an agency and an offeror must be meaningful. Once discussions have been opened, the FAR dictates that an agency "shall...indicate to, or discuss with, each offeror still being considered for award, significant weakness, deficiencies, and other aspects of its proposal...that could, in the opinion of the contracting officer, be altered or explained to enhance materially the proposal's potential for award." In order to be meaningful, a discussion must generally lead an offeror into specific areas of their proposal which require modification. Additionally, discussions should be as specific as practical considerations permit, and give offerors a reasonable opportunity to address any potential weaknesses or deficiencies in its proposal which could impact the offeror's competitiveness.

Limitations on Discussions

While discussions must be meaningful, they must also not be misleading. Additionally, they must not favor one offeror over another. During discussions, the contracting officer cannot divulge one offeror's technical solution to another, including any unique technology or innovative and unique uses of commercial items, or any other information that would compromise an offeror's intellectual property. Additionally, any pricing information cannot be revealed without that offeror's permission. In terms of pricing information however, the government may inform an offeror that its price is considered too high or too low and explain how that conclusion was reached. It is also within the government's discretion to inform all offerors if there is a particular price that it has determined to be reasonable based on price analysis, market research or other methods. The government may not disclose the names of any individuals who have provided reference information about an offerors past performance. Lastly, during discussions, the government may not knowingly provide source selection information in violation of the provisions of the FAR that govern procurement integrity, or the savings provisions of the U.S. Code pertaining to Restrictions on disclosing and obtaining contractor bid or proposal information or source selection information. Once discussions have concluded, each offeror must have an opportunity to submit a final proposal revision by a common deadline.
 

Ewing Construction Co., Inc. Decision

On April 26, 2010, the GAO released the decision Ewing Construction Co., Inc., B-401887.3, B-401887.4. Ewing Construction Co., Inc. ("Ewing") protested the award of a contract to Overland Corp. by the Navy for the design and construction of a rotor blade facility at the Corpus Christi Army Depot, Naval Air Station, located in Corpus Christi, Texas. Ewing argued that the Navy failed to conduct meaningful discussions and reasonably evaluate proposals. The GAO sustained the protest because of the Navy's failure to conduct meaningful discussions, but did not discuss whether or not proposals were reasonably evaluated since it recommended that discussions be reopened, meaningful discussions be conducted and that a new source selection be made, if appropriate.

In this case, the Navy held discussions as a corrective action to an initial protest raised by Ewing. After the corrective discussions, the Navy reevaluated the proposals. During the reevaluation, the agency determined that its concerns over Ewing's proposal were more serious than before-a deficiency, rather than a significant weakness. However, the Navy elected not to reopen discussions with the offerors, as it should have, and Ewing was never notified of its deficiency, or given an opportunity to amend its proposal to address the problem. A significant weakness would have resulted in the downgrading of its proposal, but a deficiency made it ineligible for award. Because this concern, if it remained unaddressed, would render Ewing ineligible for award, the GAO recommended that the Navy reopen discussions. Additionally, if after the next round of corrected discussions, the Navy chooses a contractor other than Overland, they are to terminate the contract for convenience and award the contract to the appropriate offeror. Ewing was awarded the costs of filing and pursuing the protest, including attorneys' fees.

AMEC Earth & Environmental, Inc. Decision

On December 22, 2009, the GAO released the decision AMEC Earth & Environmental, Inc., B-401961, B-401961.2. In its protest, AMEC Earth & Environmental, Inc. ("AMEC") challenged the meaningfulness of discussions conducted by the U.S. Coast Guard regarding one of up to five projects that were part of a request for proposals for design-build and construction services for the Department of Homeland Security. Particularly at issue were the discussions regarding AMEC's selection of a particular software program, and AMEC's reasonable, yet inaccurate and uncorrected, assumption that the project site was a wetlands area.

During discussions, AMEC was only asked to address specific questions regarding its use of a particular software program. Due to the nature of the questions, AMEC could not have reasonably understood the true nature of the agency's concern with their use of the software. Because of this, the GAO determined that the discussions were misleading. "An agency may not mislead an offeror - through the framing of a discussion question or a response to a question - into responding in a manner that does not address the agency's concerns, or misinform the offeror concerning a problem with its proposal or about the government's requirements." The agency responded by saying that the use of the software was not considered unacceptable, nor was the weakness considered "significant," and that a determination by them that the use of the software was a weakness would have been tantamount to imposing an undisclosed requirement.

The GAO ruled that while it is true that the FAR only requires agencies to address "significant" weaknesses and deficiencies during discussions, the record revealed that the agency went well beyond the minimal requirements in its discussions with the other eight firms in the competition. In fact, in its discussions with the other offerors, the agency addressed nearly every weakness, almost verbatim, regardless of whether or not they were "significant." Given the requirement of the FAR that the agency shall not engage in exchanges that "favor one offeror or another," it was incumbent upon the agency to hold broad discussions with all offerors equally. The GAO also found the agency's concerns about directing AMEC toward a particular technical approach regarding its use of software to be misplaced. Had the agency simply identified its particular concerns with the use of the software to it, AMEC would have been allowed to make a decision based on a clear understanding of the agency's concerns regarding its technical proposal.

In its proposal, AMEC indicated to the government that it reasonably understood that the project would take place in a wetlands area. AMEC's decision was based on research of publicly available information and it was the only offeror who identified the project site as such. The agency did not consider this designation regarding the project site in its evaluation of AMEC's proposal. Since AMEC was the only offeror to make this conclusion based on publicly available information, the agency was obligated to clarify the agency's understanding of the project site to AMEC. In response, the agency relied on a report that was not publicly available which indicated that the state of New Jersey did not consider the project site to be a wetlands area. The GAO was unsatisfied with this response and held that the agency's failure to clarify its position on the issue violated the fundamental principle of negotiated procurements that a solicitation must provide for the submission of proposals based on a common understanding of the agency's requirements.

The GAO recommended that the agency reopen the competition and hold meaningful discussions with AMEC, and other offerors, as necessary. Further, the GAO indicated that the discussions with AMEC, at a minimum, should address the agency's concerns regarding AMEC's choice of software and clarify its position regarding the wetlands issue. The GAO also ruled that agency was required to reimburse AMEC's costs for filing and pursuing the protest, including attorneys' fees.

After losing a negotiated procurement, it would be wise to request a debriefing from the agency. While at the debriefing, it is important to uncover not only the reasons behind the rejection, but also to determine the nature of the discussions with the competing offerors. If you believe the government conducted inappropriate discussions during a negotiated procurement which you lost, it may be appropriate to file a bid protest. The Cohen Seglias Pallas Greenhall & Furman Federal Construction Practice Group can help you determine if you have a valid bid protest and help you through the process.

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

The Tradeoff Process in Best Value Procurement

By: Michael H. Payne

It is not uncommon, in best value negotiated procurements, for a solicitation to announce that the technical evaluation factors, collectively, are more important than price.  Construction contractors, of course, still remember the days of sealed bidding where the lowest bidder received the award and they are not very receptive to hearing about a subjective technical evaluation that results in an award to a higher priced proposal.  Nevertheless, the Federal Acquisition Regulation allows an award to a higher priced proposal, provided that an appropriate price/technical tradeoff has been made by the agency.

According to FAR 15.101-1(a), “A tradeoff process is appropriate when it may be in the best interest of the Government to consider award to other than the lowest priced offeror or other than the highest technically rated offeror.”  The regulations go on to provide, in FAR 15.101-1(b), that when using a tradeoff process, the following apply:
(1) All evaluation factors and significant subfactors that will affect contract award and their relative importance shall be clearly stated in the solicitation; and
(2) The solicitation shall state whether all evaluation factors other than cost or price, when combined, are significantly more important than, approximately equal to, or significantly less important than cost or price.

The key provision, found in FAR 15.101-1(c), however, provides that “The perceived benefits of the higher priced proposal shall merit the additional cost, and the rationale for tradeoffs must be documented in the file in accordance with 15.406.  This is where, in my opinion, the government frequently falls short.  It should not be enough for federal agencies to simply state that they have greater “confidence” or that they feel “more comfortable” with the higher priced proposal, they should be required to explain why the higher priced proposal is worth the price premium.  Unfortunately, many of the so-called price\technical tradeoff analyses that I have seen fall short of amounting to a rational explanation.

The U.S. Court of Federal Claims has held that price cannot be ignored simply because it is to be given less weight than the technical factors, and the Court has also stated an evaluation that fails to give price its due consideration is inconsistent with the Competition in Contracting Act and cannot serve as a reasonable basis for an award.   In this regard, it is important to note that FAR 15.308 provides that “the source selection decision shall be documented, and the documentation shall include the rationale for any business judgments and tradeoffs made or relied on by the SSA, including benefits associated with additional costs.”  Indeed, the Court has stated that “Conclusory statements, devoid of any substantive content, have been held to fall short of this requirement, threatening to turn the tradeoff process into an empty exercise.  Indeed, apart from the regulations, generalized statements that fail to reveal the agency's tradeoff calculus deprive this court of any basis upon which to review the award decisions.”  Serco Inc. v. United States, 81 Fed.Cl. 463 (2008).

Unfortunately, a contractor who believes that he may have been victimized by an arbitrary price\technical tradeoff does not have direct access to the government’s documentation needed to determine whether his suspicions are correct.  It is necessary to first file a protest in order to gain access to the government’s internal documentation and, even then, only the protester’s attorney is permitted to review the documents.  Source selection documents, including a price\technical tradeoff analysis, are only made available after the entry of a Protective Order that swears the attorney to secrecy.  Nevertheless, once an experienced federal government contracts attorney reviews the agency’s documents, it will be possible for that attorney to advise the contractor as to whether a valid basis for protest exists.  If the agency’s documentation seems to be in order and makes rational sense, the protest can always be withdrawn.  It is a sad commentary, however, that contractors often need to file a protest in order to determine whether there is a valid basis to protest.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and frequently advises contractors about whether the government has conducted a proper source selection, and whether a price\technical tradeoff was conducted in accordance with the law. 

A Postaward Debriefing is Important

By: Michael H. Payne

In a negotiated procurement, where a contractor submits a proposal in response to an RFP (Request for Proposals), FAR 15.506(a)(1) states that “An offeror, upon its written request received by the agency within 3 days after the date on which that offeror has received notification of contract award in accordance with 15.503(b), shall be debriefed and furnished the basis for the selection decision and contract award.” It is a good idea to request a debriefing if you did not receive the award because you may learn something that will help you to improve your next proposal, or you may learn that you were treated unfairly and that you may have a basis to file a protest. The offeror who was awarded the contract should also request a debriefing because there may be information about how the proposal can be made even better the next time. In addition, if a disappointed offeror files a protest, an awardee may be in a better position to defend a protest after receiving a debriefing.

The Contracting Officer is not permitted to discuss the details of other proposals, but the regulations, at FAR 15,506(d) do require that:
At a minimum, the debriefing information shall include --
(1) The Government’s evaluation of the significant weaknesses or deficiencies in the offeror’s proposal, if applicable;
(2) The overall evaluated cost or price (including unit prices), and technical rating, if applicable, of the successful offeror and the debriefed offeror, and past performance information on the debriefed offeror;
(3) The overall ranking of all offerors, when any ranking was developed by the agency during the source selection;
(4) A summary of the rationale for award;
(5) For acquisitions of commercial items, the make and model of the item to be delivered by the successful offeror; and
(6) Reasonable responses to relevant questions about whether source selection procedures contained in the solicitation, applicable regulations, and other applicable authorities were followed.

See FAR 15.506 for the rules relating to postaward debriefings.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and frequently represents contractors during debriefing and provides advice as to whether the contractor’s rights have been violated.

Seminar on "How to Succeed in the New World of Federal Construction Contracting"

MATOC – IDIQ – “Best Value” – BRAC

These are the terms that contractors are hearing more and more and they are part of the rapidly changing world of construction contracting with the federal government.  It is no longer enough to simply be the low bidder; now, in many federal procurements, it is the “best value” that gets the job.  To make matters even more complicated, projects that were once bid individually, on a project-by-project basis, are now being awarded under Indefinite Delivery Indefinite Quantity (IDIQ) or Multiple Award Task Order Contracts (MATOC) and the number of contracting opportunities is shrinking.  Nevertheless, for those who understand the system and know how to put an effective proposal together, there continue to be many opportunities for construction contractors and subcontractors to participate in the federal government’s vast construction program, including the upcoming Base Realignment & Closure (BRAC) program.

Philadelphia

Dallas

Charlotte

Orlando

New Orleans

Feb. 1

Feb. 8

Feb. 13

Feb. 15

Feb. 27

If you are interested in learning more about construction contracting with the Army Corps of Engineers, NAVFAC, and other federal agencies, we invite you to attend one of the upcoming seminars sponsored by Payne Hackenbracht & Sullivan on How to Succeed in the New World of Federal Construction Contracting.  The seminars are to be held in Charlotte, Dallas, New Orleans, Orlando, or Philadelphia on one of the dates in February 2007 listed above and on the attached agenda.  The speakers include former Corps of Engineers attorneys and engineers, the former Deputy District Engineer of the New Orleans District, and the former Chief of the Construction Division of the Philadelphia District. The program will be presented from 8:30 a.m. until 1:00 p.m.

The program will focus upon Identifying Contracting Opportunities, Understanding the Latest Contracting Methods, Successfully Competing for Negotiated Procurements (including effective proposal preparation), and How to Deal Effectively with Federal Agencies, and will include information about how to protect your rights in both the bidding and contract performance stages of a project.  While contracting with the government provides many potentially profitable opportunities for a contractor, the federal contracting process is fraught with peril for those who do not understand federal procedures.  We will help you understand both what you should do, and what you should not do, when dealing with the federal government.

Please review the enclosed agenda and registration form, and feel free to contact us if you have any questions.  The attendance fee is $195, and additional attendees from the same company will only be charged $95.  Please register early because space is limited.

Our Seminar Coordinator, Rachel McNally, is available to answer your questions and she may be contacted at 215-542-2777, rem@phslegal.com.