Government Contracts Monitor

Release of Proprietary Information - Tainted Procurement?

December 11, 2018

What happens when a competitor receives proprietary information during a procurement? Will an offeror whose information has been improperly disclosed succeed in a protest? The answer is . . . it depends. Most recently, in DynCorp International, LLC, the Court of Appeals for the Federal Circuit held that an agency had a reasonable basis for not disqualifying a competitor that had received proprietary information concerning the protester.

DynCorp was the incumbent contractor providing worldwide aviation support services (“WASS”) to the U.S. Department of State, Bureau for International Narcotics and Law Enforcement Affairs, Office of Aviation (“Agency”). WASS activities include “aviation support for the eradication and interdiction of illicit drugs.” Dyncorp competed for the follow-on contract, but lost. On September 1, 2016, the Source Selection Authority awarded the follow-on WASS contract to AAR Airlift Group Inc. (“AAR”), having determined that “AAR submitted a [s]uperior technical proposal that met or exceeded all of the technical requirements” of the solicitation.

DynCorp disagreed. It filed a protest with the Government Accountability Office (“GAO”). GAO denied DynCorp’s protest, concluding that the Agency’s evaluation of the proposals submitted by DynCorp and AAR was “reasonable, consistent with the solicitation, and did not reflect unequal treatment.” DynCorp was not satisfied with this outcome and appealed to the Court of Federal Claims, arguing that the Agency should have disqualified AAR as an offeror for soliciting and using DynCorp’s proprietary information in its proposal.

The Court of Federal Claims rejected this argument, concluding that “[g]iven the judicial standards to be applied in reviewing decisions of a contracting officer, the agency award decision was entirely reasonable and rational.” In the Court’s view, the “decision not to disqualify AAR ha[d] a rational basis in the entire record.” But DynCorp was tenacious. It appealed to the Federal Circuit contending, as one of its three bases for appeal, that the Agency had acted arbitrarily and capriciously in refusing to disqualify AAR from the procurement for obtaining and using DynCorp’s proprietary information.

Dyncorp struck out again. The Federal Circuit found that, “after undertaking an exceptionally thorough review of the record, the Contracting Officer [CO] reasonably decided not to disqualify AAR based upon its receipt of allegedly proprietary DynCorp information”. In this regard, the Federal Circuit pointed to the document-by-document review conducted by the CO of all thirty documents in AAR’s possession that contained DynCorp information. Based upon this review, the CO had concluded that: (i) twenty of the documents were publicly available; (ii) the remaining ten documents did not contain DynCorp bid or proposal information; and (iii) AAR did not use any information from the ten non-public documents “to gain a competitive advantage” in the procurement. Under such circumstances, according to the Federal Circuit, the CO had a rational basis for his decision not to disqualify AAR based upon AAR’s receipt of stale DynCorp information that AAR did not solicit or use to gain any competitive advantage.

In upholding the decision by the Court of Federal Claims (which had upheld the decision of the GAO), the Federal Circuit also addressed DynCorp’s argument that, because the CO was unduly concerned about a possible violation of the Procurement Integrity Act with respect to the release of Dyncorp’s proprietary information, the CO had failed to determine whether there was an “appearance of impropriety” requiring disqualification of AAR. Here again, the Federal Circuit again disagreed with Dyncorp, finding that the CO had specifically considered whether any “appearance of impropriety” tainted the procurement and had reasonably found that none existed.

The lesson learned from Dyncorp is that, like most protests, the devil is in the details. Here the admittedly proprietary information did make its way into the hands of Dyncorp’s competitor, AAR. But most of the information was stale and had already been released – was public – and AAR did not solicit this information, nor did it use Dyncorp’s information in its proposal to gain any competitive advantage in the evaluation and award process. The tribunals reviewing this protest all focused (to varying degrees) on the diligent inquiry undertaken by the CO. In the end, it was the CO’s probing inquiry that saved the government’s award and caused the protest to be denied.

Lindsay Simmons is responsible for the contents of this article.

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Lindsay Simmons