December 2019 Bid Protest Roundup
In this post, we briefly summarize three of the key bid protest decisions published in November 2019.
- The first two cases relate to the legality of two unusual award methodologies—one examines whether a price/past performance tradeoff methodology violates recent restrictions on the LPTA methodology and the second strikes down a novel approach of selecting the most complementary pair of two proposals.
- Our third case is a rare sustained protest of a modification to an existing contract that was beyond the scope of the contract and therefore should have been issued as a new procurement.
Inserso Corp., B-417791, B-417791.3, Nov. 4, 2019
Solicitation for information technology services which provides for award to a technically acceptable offer considered to be the best value based on a tradeoff between price and past performance does not violate restrictions on the use of lowest-priced, technically acceptable award process or criteria.
GAO denied a protest that a solicitation for information technology services improperly used lowest-price, technically acceptable (LPTA) award criteria where award was based on a tradeoff between price and past performance.
Inserso protested that the solicitation violated the National Defense Authorization Act (NDAA) for Fiscal Year 2017 by using LPTA source selection criteria to make its award determination. Inserso argued that the agency used LPTA criteria in the solicitation because the RFQ failed to provide for a tradeoff between price and technical factors.
Section 813(c) of the 2017 NDAA restricts the use of LPTA and provides that its use shall be avoided to the maximum extent practicable in acquisitions for certain types of services, such as information technology and cybersecurity services.
Quotations were to be evaluated using technical acceptability, past performance and price factors. Quotations would be ranked according to price, with the five lowest-priced quotations, or more if deemed in the government’s best interest, evaluated for technical acceptability. The agency would evaluate only technically acceptable quotations under the past performance factor, and then select the awardee based on a price/past performance tradeoff.
Inserso argued that the solicitation used LPTA criteria by ranking offerors according to price and then evaluating for technical acceptability. Inserso argued that by evaluating technical factors on an acceptable/unacceptable basis, an agency is using LPTA criteria.
The agency argued that its solicitation did not violate the 2017 NDAA because it did not utilize lowest-priced, technically acceptable source selection criteria as the basis for award where award was based on a best-value tradeoff between price and past performance.
GAO agreed with the agency that under the 2017 NDAA, of a price and past performance tradeoff did not constitute use of LPTA and thus the solicitation did not violate the 2017 NDAA.
GAO noted that the NDAA did not specifically preclude the use of past performance as a technical tradeoff factor with price. The statute did not specifically define either the term LPTA process or the term LPTA criteria, and the parties did not provide any controlling definition of the terms. GAO thus concluded that nothing in section 813 of the 2017 NDAA specifically precluded the RFQ’s selection criteria, which used a price/past performance tradeoff as the basis of source selection, and therefore the RFQ’s evaluation scheme did not violate procurement law.
While the 2017 NDAA and associated regulations restrict the use of the LPTA process in making an award decision, the scope of this restriction does not preclude the use of an award methodology that, like LPTA, does not reward technical merit beyond minimum acceptability, but does contemplate a best-value tradeoff between past performance and price.
Blue Origin Florida, LLC, B-417839, Nov. 18, 2019
Solicitation using an award methodology based on the agency’s determination of which combination of two independently developed proposals offers the best value to the government is not permissible because it does not provide an intelligible, common basis on which offerors will be expected to compete and have their proposals evaluated.
The Department of the Air Force issued a solicitation for the National Security Space Launch (NSSL) Phase 2 Launch Service Procurement, which seeks to procure commercial item launch services for NSSL missions. The NSSL Phase 2 Launch Service Procurement is part of a broader government policy to sustain: (1) the availability of at least two space launch vehicles capable of delivering national security payloads into space; (2) a robust space launch infrastructure and industrial base; and (3) the availability of rapid, responsive, and reliable space launches for national security space programs.
The unrestricted RFP included four evaluation criteria: (1) technical; (2) past performance; (3) small business participation; and (4) price. However, rather than following the typical source selection process by ranking the proposals and then conducting individual trade off determinations, the RFP contemplated that award would be made to the two proposals that, "when combined, represent the overall best value to the Government." Thus, the agency would not conduct tradeoffs between the individual proposals, for example, between proposal A and proposal B, and then between proposal A and proposal C, etc. Instead, the Air Force intended to conduct a tradeoff between paired proposals, for example, the AB proposal pairing and the AC proposal pairing, and then between the AB proposal pairing and the AD proposal pairing. The Air Force explained that award would not necessarily be made to the two highest rated proposals, but may be made to a pairing that offered complimentary attributes while not possessing common weaknesses.
Protester Blue Origin argued that the Air Force’s "when combined" best-value methodology was ambiguous, because each proposal would not be evaluated based on its merits against the RFP’s specified evaluation criteria, but rather, would be evaluated based on how well an individual proposal complements another unknown proposal with unknown qualities.
Blue Origin argued that the agency’s approach would result in the use of undisclosed and subjective evaluation considerations such as the relative strengths and weaknesses of paired proposals that were independently developed and submitted by different offerors. Such an approach, the protester added, would have the effect of divorcing the stated evaluation criteria from the tradeoff analysis. Without knowing the relative factors on how the combined proposals would be evaluated or how to align complementary attributes with another independently developed and submitted proposal, Blue Origin argued that offerors lacked an intelligible and common basis to compete.
GAO agreed with the protester’s arguments and sustained the protest. GAO noted that a solicitation must contain sufficient information to allow offerors to compete intelligently and on equal terms. In this case, the RFP’s basis for award methodology failed to reasonably (1) represent the key areas of importance and emphasis to be considered in the source selection decision, and (2) support meaningful comparison and discrimination between and among competing proposals, as required by FAR § 15.304(b).
GAO found that the RFP failed to provide an intelligible and common basis for award where the agency expressly anticipated not making the source selection decision based on the evaluation of individual proposals as evaluated against the RFP’s specified evaluation criteria, but rather intended to evaluate pairings of proposals using the undefined criterion of whether two individually developed and submitted proposals are the most complementary of one another. GAO suggested that, other than colluding with other potential offerors to coordinate their respective proposals, it was not apparent how an offeror could intelligently compete under the agency’s methodology. Thus, in sustaining the protest, GAO held that because award was not predicated on the merits of an offeror’s own proposal, and was instead dependent on its general compatibility with a proposal independently developed and submitted by another offeror, the RFP’s basis for award failed to provide an intelligible and common basis for competition.
GAO’s decision reinforces a fundamental principle of a negotiated procurement, that offerors must be able to compete intelligently and on a common basis. This fundamental principle applies equally to innovative procurement methodologies an agency chooses to pursue. An award methodology that results in offerors being assessed against the particular strengths and weaknesses of competing offerors, not against the stated evaluation criteria, is impermissible.
Leupold Stevens, Inc., B-417796, Oct. 30, 2019
A contract modification was beyond the scope of a contract where it included changes prohibited by the contract and caused a material increase in the contract’s value, and therefore constituted an illegal noncompetitive award.
GAO sustained a protest of a modification to a contract for squad variable powered scopes (S-VPS), for small arms. In November 2017, the Navy issued a solicitation for the variable-powered scopes and received seven offers in response. In that competition, Leupold Stevens, Inc. had offered a more expensive approach—a glass-etched reticle (a reticle is the crosshair or aiming point in the scope’s field of view). Sig Sauer proposed a wire reticle at a significantly lower price and was awarded the contract at a price of $12,077,565. The contract expressly contemplated future changes to the reticle design but stated, in section 3.17.2 of the contract, that the scope design was not to be changed when changing to a new reticle (other than the reticle itself).
In June 2019, the Navy issued a modification requiring Sig Sauer to use a Horus T-8 reticle, which was glass-etched and illuminated. The modification increased the contract value by $9,338,800—or approximately 77 percent—to $21,416,365.65. As part of the modification, Sig Sauer was required to modify the illumination method of its scope to accommodate a glass-etched reticle.
Leupold argued that the modification for Horus T-8 glass-etched reticle was outside of the scope of the contract, noting that changing from a wire reticle to a glass-etched reticle required a change to the illumination mechanism in the S-VPS, which it contended was prohibited by section 3.17.2 of the contract. Leupold also argued that the size of the change was beyond the scope of the contract.
GAO noted that in determining whether a contract modification is beyond the scope of the underlying contract, it looks to whether there is a material difference between the modified contract and the contract that was originally awarded and whether the modification would have changed the field of competition. In GAO’s view, the plain meaning of section 3.17.2 established that the illumination modifications to the design of the scope were outside the scope of the contract. GAO added that “[t]he only reasonable interpretation of the solicitation language is that it means what it says, i.e., that any changes to the scope design are not permitted.”
GAO also held that the standard FAR Changes clause, FAR 52.243-1, did not permit the modification because it only permits changes “within the general scope of this contract” and, in any event, its general language is trumped by contract section 3.17.2’s more specific limitation on changes.
GAO also found that the contract modification was material in terms of contract value. In particular, GAO noted that the changes related to the illumination of the scope were more than the associated items—the reticle, lens and licensing fee—put together. Accordingly, the significant cost increase along with the restrictive solicitation language resulted in a material change that was outside the scope of the contract.
GAO found that Leupold was prejudiced by the modification, noting that, had it known that despite the restrictions under 3.17.2, the Navy would allow for a later change in the reticle illumination, it too could have proposed a lower-priced wire reticle and substantially improved its competitive position. Thus, according to GAO, the Navy’s approach changed the field of competition.
GAO’s decision is a reminder that there are indeed limitations on the ability of agencies to issue contract modifications. Modifications are limited by specific contract provisions that define the outer bounds of the contract’s scope like, here, section 3.17.2’s prohibition on changes to scope design when the reticle is changed. The decision also highlights the importance, for protesters alleging an out-of-scope modification, of establishing that the modification would have impacted the original competition and thus prejudiced the protester.