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Government Contracts Monitor

Sometimes the Facts Revealed During a Protest Demonstrate a Lack of Government “Monkey Business”

June 21, 2016

By: Hopewell Darneille

Disappointed bidders always have to decide whether or not to protest based on a limited set of facts – those known at the time to decision is made. Of course, this means that even protest grounds that appear objectively sound at the time of protest can later be undercut by facts revealed during the protest process. This appears to be precisely what happened in the recent Government Accountability Office (GAO) decision in Priority One Services, Inc., B-410695.3, B-410695.4, April 6, 2016.

The procurement in question involved a Department of Health and Human Services (HHS) contract for operation and maintenance of the Alamogordo Primate Facility, which houses 160 chimpanzees previously used for medical research. Offerors for the project were to be evaluated based on: 1) technical factors, including competence and experience in the operation and maintenance of a similar facility; 2) cost, including cost reasonableness and cost realism; 3) past performance; and 4) small disadvantaged business (SDB) participation. Non-price factors, when combined, were significantly more important than cost.

After the initial contract award to Charles Rivers Laboratories (CRL) and a debriefing, Priority One Services protested, challenging the agency’s evaluation of proposals and its award to CRL. In response, the agency decided to take corrective action by reevaluating technical and cost proposals, conducting discussions, and making a new source selection decision. GAO dismissed that protest as academic.

During its discussions with offerors as part of the corrective action, the agency informed Priority One that its cost proposal exceeded the budget for the project invited the company to submit a new proposal with a lower cost. Priority One did just that. To its surprise, however, the agency ultimately re-awarded the contract to CRL and claimed that CRL’s technical superiority and minimal risk justified the cost premium over Priority One’s proposal. Adding insult to injury, the awarded cost was also higher than Priority One’s initially proposed cost that HHS said was over budget.

Faced with this apparent contradiction, Priority One protested again. This time it argued, among other things, that the agency failed to engage in meaningful discussions because it misrepresented the protester’s initial cost as being above the agency’s budget and then made award to CRL at a higher cost. HHS responded by explaining that it asked both Priority One and CRL to lower their costs because their final proposed and probable costs did, in fact, exceeded the IGE and available budget. But that when the offerors’ final proposed costs still exceeded the budget, the agency was forced to identify additional funds for the procurement.

GAO made quick work of this issue, noting first that discussions must be meaningful, equitable, and not misleading, but also they are not required to be “all-encompassing or extremely specific describing the agency’s concerns.” Indeed, “agencies need only lead offerors into areas of their proposals that require amplification.” As GAO points out, discussions will not be found improper “where the agency in good faith provides accurate information to an offeror, even where the offeror uses that information to its ultimate competitive detriment.”

Here, Priority One’s problem was that the facts on the record (which were not available at the time the protest was filed) simply did not support its assertions. The record showed that both Priority One’s and CRL’s initial costs exceeded the independent government estimate, and that the agency invited both – using identical language -- to submit new proposals with lower proposed costs. According to GAO, the fact that the agency ultimately found additional funds and awarded the contract to CRL at a higher cost does not mean that the agency’s discussions were not meaningful. The record did not show, for example, that the agency failed to advise Priority One that its cost was unreasonably high or made a misrepresentation regarding Priority One’s cost.

In other words, the record demonstrated the accuracy of the agency’s comments and that accuracy caused the discussions with Priority One to be found meaningful. In the absence of all the relevant facts, however, even objectively truthful statements can appear to be inaccurate and misleading – and good grounds for a protest. This dynamic is an important one to remember when considering -- and weighing the costs and likely benefits of -- a protest. The revelation of additional facts during a protest can transform seemingly solid protest grounds into completely meritless arguments. That doesn’t mean you shouldn’t pursue what appear to be valid protest grounds. But it does suggest that it is better to assess the strength of your arguments with an attitude of cautious optimism instead of irrational exuberance.

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