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Government Contracts Legal Round-Up | 2023 Issue 19

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

Bid Protest Cases

System Dynamics Int’l, Inc. v. United States, No. 23-431 (September 21, 2023).

  • Court of Federal Claims Judge Davis issued an important reminder to offerors of the importance of proposing—and clearly mapping to—key personnel who meet the solicitation’s minimum requirements.
  • SDI protested that the agency misevaluated awardee Strata-G’s proposal by assigning it a significant weakness, as opposed to a disqualifying deficiency, where it mapped 22 labor categories to key personnel with clearly deficient—or at least insufficiently ambiguous—educational backgrounds. For example, Strata-G proposed several employees with a “bachelor’s degree” instead of a “bachelor's of science,” and additionally proposed individuals with associate degrees instead of bachelor degrees.
  • In response, the agency and Strata-G contended that Strata-G’s proposal was appropriately assigned a significant weakness but not disqualified because it proposed several key personnel who exceeded the solicitation’s requirements, and—to the extent Strata-G failed to sufficiently address certain minimum educational requirements—it was within the agency’s discretion to assign it a significant weakness as opposed to a deficiency.
  • Judge Davis rejected the agency’s and Strata-G’s arguments, finding that Strata-G’s proposal, in 22 out of 28 labor categories, flaunted the solicitation’s requirements, a fact recognized by the agency’s evaluators who concluded that Strata-G’s labor mapping spreadsheet “did not fully meet the solicitation’s requirements.”
  • Applying the solicitation’s definition of a deficiency, consistent with FAR. 15.001, Judge Davis found Strata-G’s labor mapping constituted “a material failure of a proposal to meet a Government requirement or a combination of significant weaknesses in a proposal that increases the risk of unsuccessful contract performance to an unacceptable level.” Accordingly, the court granted SDI’s request for a permanent injunction, setting aside the award to Strata-G and ordering the agency to conduct a proper evaluation.

Generally, agencies have discretion to assess the adequacy of an offeror’s proposal with respect to a solicitation’s requirements; however, an agency cannot permit offerors to disregard minimum requirements set forth in a solicitation. System Dynamics International provides an important reminder to contractors to carefully map proposed key personnel and to not play fast and loose with minimum education and experience requirements.

Insight Technology Solutions, LLC, B-421764.2 (October 11, 2023)

  • GAO sustained a protest where the evaluation record contained a factual error overstating the relevancy of one of the awardee’s corporate experience references, an inaccurate finding that carried through to the selection decision.
  • GAO also agreed that the agency disparately evaluated corporate experience references by finding that the awardee’s proposed subcontractors demonstrated certain relevant experience, but not also reaching the same finding for the protester’s proposed subcontractors.
  • In finding prejudice, GAO found that it was unclear but for these errors whether the selection authority would have reached the same conclusion.

This protest illustrates some of the most common procurement errors that lead to GAO sustaining a protest. Although GAO will not reevaluate proposals, it will examine the record to determine whether the evaluation and source selection decision are reasonable, consistent with the solicitation, and not contrary to law. Here, the agency admitted that the evaluation record contained a “misstatement” and further demonstrated disparate treatment.

Guidehouse, Inc., B-421740, B-421740.2 (September 18, 2023)

  • GAO sustained a protest challenging the Department of Defense’s (DoD) award of a contract to Deloitte Touche, LLP for audit remediation and sustainment services where the agency failed to adequately consider a potential conflict of interest.
  • Specifically, the chair of the agency’s technical evaluation board (TEB) was a senior consultant at Deloitte through May 2020, and she was aware that Deloitte might submit a quotation under the solicitation. The agency therefore “initiated a limited investigation of the matter,” which GAO described as confined to whether she had a “disqualifying financial interest in Deloitte.” Based on DoD ethics attorneys’ conclusion that her financial holdings did not create a conflict, she was permitted to lead the TEB.
  • GAO took issue with this assessment. Primarily, GAO criticized the agency for declining to provide “any of the underlying contemporaneous documentation relating to its limited investigation.”
  • As GAO explained: “The problem with the lack of any underlying record is particularly acute where there is no evidence of any independent investigation of any conflict, or the appearance of a potential conflict, by either of the involved contracting officers.”
  • GAO sustained the protest because due to the sparse record produced, it was unable to determine whether, in fact, the TEB chair had a financial interest in Deloitte or whether any such interest would affect her ability to serve as the chair of the TEB. On the contrary, the limited record contained “potentially contradictory evidence on the question of the TEB chair’s financial interest in Deloitte.”

The FAR emphasizes that “Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none.” FAR 3.101-1. Consistent with this warning, GAO has found that the existence of an actual or apparent conflict of interest is sufficient to taint the procurement, particularly where, as was the case here, an agency fails to adequately investigate and resolve a question concerning whether an agency employee who actively and extensively engaged in procurement-related activities should have been recused from those activities.

Moreover, whenever a particular agency action is under protest, GAO needs a sufficient record to assess the reasonableness of the action. An agency’s efforts to limit document production can frustrate GAO’s mandate to fairly resolve bid protests and could preclude GAO’s ability to determine that an agency’s actions were reasonable, as was the case here.

Zolon PCS II, LLC, B-420745.2 et al. (September 20, 2023)

  • GAO denied a protest alleging that the awardee’s technical proposal was noncompliant with the solicitation.
  • The two awardees were credited with strengths for their approach to retention because they offered premium pay to employees holding security clearances, including by specifying within the technical proposal volume the percentage of premium pay offered to cleared employees. 
  • The protesters contended that this ran afoul of the solicitation’s prohibition on including “specific labor rates” or “other pricing information” within the technical proposal volume.
  • GAO disagreed, finding that the terms of the solicitation did not prohibit offerors from including in their technical proposals information on a specified percentage of premium pay to be added to the labor rate where the technical proposal did not include the actual labor rate. In other words, the percentage of premium pay was not “pricing information” but rather an “element of [the] recruiting and retention approach.”
  • GAO likewise rejected the notion that the solicitation was latently ambiguous, reasoning that nothing in the plain language of the solicitation barred offerors from including information in their technical proposals information about percentages for clearance premium pay.

While it may be generally true that solicitations restrict offerors from including pricing information in non-price proposal volumes, GAO will look to the terms of the solicitation itself in determining what information may be included in a technical proposal volume.