Government Contracts Monitor
Recent Case Affirms that Offeror Proposal Changes May Exceed RFP Amendment Scope Unless Explicitly Prohibited
May 28, 2013
An issue frequently confronted by offerors in proposal preparation is the extent to which the offeror may modify or change its initial proposal in response to a narrow RFP amendment after the submission and evaluation of initial proposals. This issue is particularly prevalent in cases involving RFP amendments after the agency agrees to implement corrective action to address a specific issue raised in a bid protest by an offeror, either pre- or post- award. The answer, as recently affirmed by the U.S. Court of Federal Claims in Quest Diagnostics, Inc. v. United States, No. 12-907C (Fed. Cl. Apr. 9, 2013) (released publicly May 1, 2013) (Bruggink, J.), is that offerors may revise their proposals in any regard, including as to issues that were not the subject of the Amendment, unless the agency explicitly restricts or limits the scope of revisions that offerors may make to their proposals in the Amendment.
Quest involved a best value RFP issued by the Army Medical Command, Center for Health Care Contracting (“MEDCOM”) on August 20, 2010 (almost three years ago). The procurement was for a multi-year IDIQ contract for clinical reference laboratory services, having an estimated total contract performance price of $250 million. Quest was the incumbent contractor. MEDCOM initially received three proposals, from which it established a competitive range of Quest and Laboratory Corporation of America (“LabCorp”). After multiple rounds of discussions, MEDCOM initially awarded to Quest. LabCorp timely protested this award to the Government Accountability Office (“GAO”). After the GAO advised that it likely would sustain LabCorp’s protest, MEDCOM informed the GAO that MEDCOM would take corrective action, amend the RFP and request “resubmission of price proposals from Quest and LabCorp, and reevalute the price factor.”
MEDCOM subsequently revised the price estimate and issued several RFP amendments. It added estimated usage for certain contract items, and informed offerors of its new methodology for evaluating price. Amendment 12 further instructed offerors that “[i]f any changes identified by this amendment cause a revision to other than the pricing of your proposal, please submit same in number of copies and format as your original submission.” This was followed by another round of discussions. LabCorp and Quest updated their technical proposals and submitted final revised proposals with their new price volumes. MEDCOM re-evaluated both proposals in their entirety. Non-price factors stayed the same, except that LabCorp’s rating for one technical subfactor was upgraded based upon updates to LabCorp’s proposal that were outside the specific scope of the RFP amendments. LabCorp offered the low price, and was selected for award based upon the determination that Quest’s higher rating for “Past and Present Performance” was not worth the higher cost, particularly given that LabCorp’s rating for that same factor was deemed to represent a “low risk” to the agency.
Quest timely protested to the GAO. MEDCOM again voluntarily agreed to take corrective action by re-evaluating the proposals. The Source Selection Evaluation Board (“SSEB”) was tasked to “review [its]previous evaluation and to conduct a closer look at their application of the Technical Adjectival Ratings and particularly the definitions set out in the solicitation, against each offeror’s proposal to ensure that the adjectival ratings were correctly applied.” Note that this corrective action was limited to proposal re-evaluation, and did not involve any new RFP amendments, discussions with offerors or revised proposals. On re-evaluation, the SSEB made some adjustments to both offeror’s technical proposal ratings. Thereafter, the Source Selection Authority (“SSA”) again awarded to LabCorp, finding that Quest did not demonstrate strengths sufficient to justify Quest’s higher price. In language reflecting today’s new budget realities, the SSA stated that this was especially the case “in light of budgetary cuts/limitations imposed through Congressional mandates.”
Quest was notified of the new award to LabCorp on September 12, 2012. After a debriefing, Quest again protested to the GAO. This third time around the agency finally defended the protest, which was denied by GAO on the merits. Quest Diagnostics, Inc., B-405081.5 (Comp. Gen. Dec. 19, 2012). Quest then elevated its protest to the Court of Federal Claims (“COFC”) on December 26, 2012.
Among other things, Quest argued that LabCorp’s technical proposal revisions in response to the agency’s first corrective action were nonconforming, and should not have been permitted and evaluated, since they included technical proposal revisions that were outside the scope of the agency’s corrective action, which was directed at the pricing evaluation methodology. Quest also argued that MEDCOM engaged in unequal discussions by telling LabCorp that it could update its technical proposal while failing to tell Quest the same thing. See Slip Op. at 8.
The Court agreed with Quest’s factual premise, acknowledging that the disputed revisions to LabCorp’s technical proposal dealt mainly with technical issues unrelated to the Amendment 12 pricing issues. Id. at 9. Moreover, the Court stated that the updated technical information enabled LabCorp to obtain an enhanced evaluation rating that “may have influenced the agency’s decision to award to LabCorp.” Id.
However, the Court rejected Quest’s challenge, concluding that Amendment 12 did not explicitly prohibit proposal amendments unrelated to Amendment 12. The Court noted that the GAO correctly stated the controlling legal principle, and that the Court previously had accepted that rule in ManTech Telecommunications & Information Systems Corp. v. United States, 49 Fed. Cl. 57, 75 n.29 (2001) (recognizing the general rule that offerors may “revise any aspect of their proposals they see fit, including portions that were not the subject of the amendment and discussions”), aff’d, 30 F. App’x 995 (Fed. Cir. 2002).
The Court explained:
The rationale is that, in negotiated procurements, an offeror should be able to update its proposal through the various grounds of negotiations and revisions which typically take long periods of time. Therefore, when an agency asks, as here, for new or newly formatted information with respect to a discrete part of a proposal, there is no reason to assume a limitation on revisions to other parts of the proposal unless one is explicitly stated.
Slip Op. at 9. The Court concluded that “[i]t is no great leap of logic to extend this rule to the context of agency corrective action prompted by a recommendation of GAO.” Id. at 10. Indeed, the Court noted, in a footnote, that the GAO has extended this rule to mean that an agency cannot limit the scope of proposal revisions after corrective action unless the agency can show that “the amendment could not reasonably have any effect on other aspects of proposals or that allowing such revisions would have a detrimental impact on the competitive process.” Slip Op. at 10 n.5 (citing Cooperative Muratori Riuniti, B-294980.5, 2005 CPD ¶ 144, at 5 (Comp. Gen. July 27, 2005)).
The Court rejected Quest’s argument that the language in Amendment 12 relating to possible changes to the technical substance “cause[d]” by changes in “this Amendment” was sufficient to overcome the above-stated “default rule” to preclude other changes not triggered by Amendment 12. The Court stated that, “[a]t best,” this language might have been perceived to create an ambiguity that would have triggered a duty of inquiry by Quest. Id. at 11.
The Court also rejected Quest’s unequal discussions challenge, finding that the questions raised by Quest and LabCorp during their respective oral discussions were not the same, and that the agency’s responses to the different questions were appropriate. “The agency was under no duty to answer a question not asked of it, nor was it under a duty to restate the general rule that proposal revisions of any kind could be made up until the deadline for final offers.” Id. at 12.
The Court also rejected Quest’s other protest challenges. The Court therefore entered judgment in favor of the Government, finally bringing this long-running procurement to a conclusion (assuming no
appeal).
Hopewell Darneille is the attorney responsible for the content of this article.