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Government Contracts Monitor

If You Think Some Corrective Action Is Overly Restrictive, You're Right

February 15, 2018

By: Hopewell Darneille

In general, when a procuring agency responds to a protest by taking corrective action, the Government Accountability Office (GAO) does not object to the specific corrective action, so long as it is appropriate to remedy the concern that caused the agency to opt for corrective action. The recent GAO decision in Castro & Company, LLC, B-415508.4 (February 13, 2018) reminds us, however, that agencies’ chosen approaches sometimes miss the mark.

The protest involved arose in the context of a request for quotations (RFQ) issued by the Transportation Security Administration (TSA) for financial statement audit and internal control support services. The RFQ specified two required tasks: internal control support services (task 1) and financial statement audit support (task 2); and two optional tasks: new guidance surge support (optional task 3) and financial services replacement surge support (optional task 4). Each of the tasks was to be priced as separate contract line item numbers (CLINs) on a fixed-price basis. As relevant here, Optional Task 3 called for surge support “NTE [not to exceed] 3 FTEs [full-time equivalents].”

The RFQ provided that quotations would be evaluated on a best-value tradeoff basis considering, in descending order of importance: corporate experience, technical approach, management and staffing approach, past performance, and price, with the non-price factors, combined, significantly more important than price. The price factor evaluation was to be based on “the level of effort and the mix of labor proposed to perform the Tasks” and total price was to be evaluated for balance and to ensure that it is “reasonable based on competition.”

Seven quotations were received, including one from the protester, Castro & Company, LLC (Castro). TSA then amended the RFQ to remove optional Task 4 and all vendors were allowed to submit revised quotations. After evaluation of them, TSA awarded the task order to TFC Consulting, Castro and another vendor protested the award to GAO. In response, the agency explained that it had “evaluated the merits of the post-award protests and determined that corrective action was necessary to clarify the agency’s intended requirements for Optional Task 3.” Specifically, TSA decided to “revise the language to clarify that it required quoters to provide the agency three full-time individuals to perform the scope of Optional Task 3.” As a result, GAO dismissed the protest as academic.

Subsequently, the agency issued RFQ Amendment 7, which deleted the “NTE 3 FTEs” language from the optional task 3 CLIN, and modified the CLIN language to require 3 Full Time Individuals for Optional Task 3. In addition to requesting that quotations be updated to reflect this change, the Amendment stated, “Changes are restricted to Task 3 ONLY (Technical and Business Volumes). Do not revise any other areas of your quotation. Any revisions outside of Task 3 (Technical and Business Volumes) will not be evaluated.

In response, Castro filed this protest challenging the restriction on the scope of quotation revisions included in Amendment 7. More particularly, Castro argued that the restriction inherently prejudiced the procurement against any vendor that, like Castro, employed a staffing strategy designed to take advantage of perceived efficiencies in Tasks 1 and 2 to address the potential needs of Task 3. It further argued that, by requiring 3 FTEs without giving vendors an option to make corresponding adjustments to the rest of its staffing strategy, TSA was essentially making decisions on behalf of some (but not all) quoters regarding the hours and staffing mix” of any personnel originally proposed across all three tasks.

The agency essentially pooh-poohed Castro’s assertions, first claiming that Amendment 7 merely clarified an ambiguity and so could not have any impact on other aspects of the quotation. TSA also argued that because Task 3 was optional, it was inherently severable from the rest of the scope of work, so that quoters could not assume that it would be exercised or presume to propose efficiencies based on the assumption it would be. In other words, according to the agency, Castro had no right to complain that it was prohibited from fixing what it shouldn’t have done in the first place.

GAO first noted (i) the broad discretion of contracting officers in negotiated procurements to take corrective action where the agency determines that such action is necessary to ensure a fair and impartial competition; and (ii) the general rule that it does not object to the specific corrective action. It then explained, however, that even when an agency is justified in restricting revisions in corrective action, the agency may not prohibit offerors from revising related areas of their quotation which are materially impacted.

Applying this standard to the case at hand, GAO noted that the inherent severability on which TSA relied does not, by itself, prevent any amendment to the optional Task 3 scope of work from impacting a vendor’s quotation strategy as Castro alleges. Indeed, GAO’s review of Castro’s quotation confirmed the firm’s description of its staffing strategy: Castro’s revised quotation revealed that the firm quoted at least two personnel to perform across all three tasks. In addition, Castro’s revision to its quotation after the agency deleted optional Task 4 from the scope of work not only deleted the personnel it proposed to directly perform on optional Task 4, but also revised the labor hours for personnel who were proposed to work across all tasks specified in the scope of work. Based on this, GAO concluded that Amendment 7 materially impacted aspects of Castro’s quotation outside of the areas permitted by the agency for revision. And, therefore, the agency’s decision to limit quotation revisions to the extent that it did here was unreasonable. Needless to say, GAO sustained the protest.

The lesson? Make sure to carefully review the terms of agency corrective action to determine whether any limitations prohibit you from revising all aspects of your approach that are materially impacted by the corrective action. If they do, you have grounds to protest the corrective action. And such a protest may make all the difference.

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