This month saw some high-profile bid protest decisions. This month’s bid protest roundup, however, will focus on three bid protest decisions that received less attention, but offer lessons no less important.
The first decision is a reminder always to write a proposal with the reader in mind. It is an offeror’s responsibility to draft a well-written proposal, not a procuring agency’s responsibility to decipher jargon, intuit connections, or fill gaps. And, as this decision confirms, the Government Accountability Office (“GAO”) is very forgiving to an agency when it does not understand information in a proposal.
The second decision depicts the high bar courts set for plaintiffs seeking to demonstrate the government has acted in bad faith. Even where, as was the case in this decision, the court acknowledges its concern that the government’s actions appear intentionally to favor one offeror over others, the court will not intervene absent clear and convincing evidence that the government has not acted in good faith.
The third decision is a good example of the GAO’s role in deciding data rights disputes, or in this case, its unwillingness to weigh in on disputes between private parties. The GAO often will review procurement decisions based on an agency’s perceived rights in data, but the Office’s focus will be on the reasonableness of the agency’s conclusion, not the merit of third-party litigation.
VBC Commercial Services, LLC, B-417528, July 15, 2019: The GAO denied this protest objecting to the Army’s rejection of VBC’s proposal as technically unacceptable.
The U.S. Army issued a request for proposals (“RFP”) to provide six months of grounds maintenance at Fort Hood in Texas—for the most part, mowing, trimming, and spraying chemicals over approximately 3,000 acres.
Award was set aside for small businesses. The RFP stated that the agency would evaluate proposals on three factors—technical, past performance, and price—and make an award to the offeror with the lowest-priced, technically acceptable proposal. To be technically acceptable, a proposal needed to contain, among other things, “a written narrative detailing [the offeror’s] ability to effectively communicate and manage the Grounds Maintenance Service,” and that narrative needed to include an “organizational chart or diagram showing the Offeror’s organization structure and how it facilitates communication and management of the contract effort.”
VBC submitted a proposal with a narrative containing an organizational chart. But the agency found its proposal technically unacceptable, in part because the proposal “did not provide or demonstrate lines of communication and lines of authority for key personnel.” As a result, the agency awarded the contract to Aquarius Contractors, Inc. for $2.4 million—about $700,000 more than VBC’s offer.
Following a written debriefing, VBC protested to the GAO.
VBC challenged a number of the agency’s findings, but because the GAO sided with the agency regarding VBC’s lines of communication, it declined to address the others.
On the agency’s conclusion that VBC’s proposal lacked lines of communication and lines of authority for key personnel, VBC pointed out that it provided an organizational chart, as instructed, and that organizational chart depicted a “hierarchy and clear lines of authority,” along with a job description for several key personnel. VBC argued that this chart, combined with the job descriptions, made very clear how the organization would facilitate communication and manage the contract.
The Army countered that the RFP directed offerors not only to provide an organizational chart but also to address their organizational structures and how they would facilitate communication and management of the contract effort. Recall the RFP specifically required “[a]n organizational chart or diagram showing the Offeror’s organization structure and how it facilitates communication and management of the contract effort”—the organizational chart itself was to “show . . . how [the offeror] facilitates communication and management.” But, according to the Army, VBC simply provided an organizational chart, without explaining “what, if anything, the lines in the organizational chart indicated.”
The GAO agreed with the agency. Repeating its maxim that “[a]n offeror is responsible for submitting a well-written proposal,” the GAO found VBC failed to respond meaningfully to the RFP’s requirement. The GAO disagreed with VBC’s contention that the agency evaluators should have read the organizational chart in tandem with the personnel descriptions to demonstrate lines of authority and effective communication. Because it found the agency’s evaluation of VBC’s proposal reasonable in this regard, the GAO denied the protest.
Whether offering to cut grass or develop an aircraft carrier, offerors must ensure their proposals clearly address every aspect of an RFP. An offeror cannot rely on an agency evaluator making common assumptions, or knowing which dots to connect, when reading a proposal, no matter how obvious they may seem. It’s a writing contest—one that is often strained by page limits and tight deadlines, but one that is critical to winning business.
Offerors also must read and re-read (and re-read) solicitations carefully to identify every requirement. If any seem vague or ambiguous, they must be clarified before submitting a proposal, whether through informal communications with the agency (if appropriate), an RFP’s formal Q&A process, or filing a protest at the agency, the GAO, or the U.S. Court of Federal Claims.
Peraton, Inc. v. United States, Slip Op. 19-932C (Fed. Cl. July 22, 2019): The U.S. Court of Federal Claims granted a partial preliminary injunction allowing the agency to continue with corrective action following a successful bid protest at the GAO, but enjoining the agency from making an award until the protester’s concerns could be fully litigated.
This case reached the court after Peraton successfully protested, at the GAO, the U.S. Air Force’s award of a contract to Engility Corporation for satellite technical support services. In those earlier proceedings, the GAO agreed with Peraton that the Engility had failed to meet the solicitation’s small business participation requirement, and thus found the award improper. The GAO recommended the Air Force reevaluate proposals, engage in further discussions with offerors, or amend its solicitation and receive new proposals.
The Air Force chose to engage in further discussions with its offers, allowing Engility an opportunity to revise its proposal to meet the agency’s small business participation needs. In the meantime, it issued a sole-source bridge contract to Engility to perform the same satellite technical support services for up to four three-month periods, to cover the gap until the agency could make a new award.
Concerned by what it deemed to be “pretextual actions” to ensure Engility received the award, Peraton filed a bid protest at the court to challenge (1) the sole-source bridge contract, (2) the agency’s corrective action, and (3) the agency’s overall conduct in the procurement, which, in Peraton’s view, was being carried out in bad faith.
This decision addresses Peraton’s request for preliminary injunctive relief during the pendency of its protest at the court. The court examined each of Peraton’s claims in turn, and relied only upon the incomplete record immediately available to it.
First, the court found Peraton failed to establish standing to challenge the sole-source award. To raise such an argument, the court held, Peraton was required to show it itself had a substantial chance of obtaining a bridge contract to perform the services at the time that contract was awarded. Prior to the bridge contract being award, Lockheed Martin was providing the relevant services, and during the prior GAO bid protest, the Agency had begun the transition process from Lockheed Martin to Engility, pursuant to an emergency stay override Peraton did not challenge. So, at the time it was awarded the sole-source bridge contract, Engility had 90 days of transition experience (and an undefined number of former Lockheed Martin employees) that Peraton lacked. Although the court did not dispute that Peraton could have competed for the services in a normal setting, the court found Peraton had not shown it could do so at the time the contract was awarded, in a manner sufficient of meet the agency’s immediate needs.
The court then turned to the agency’s corrective action. The court will decline to interfere with an agency’s chosen corrective action so long as it has any rational basis; the agency merely must produce a “coherent and reasonable explanation of the agency’s exercise of discretion.” The court found the agency failed to do so here.
Peraton argued that the Air Force’s decision to open limited discussions, focused only on offeror’s small business participation, was irrational because it failed to correct a procurement impropriety—namely, making an award to Engility when it failed to meet a clear solicitation requirement. The court disagreed on this generally stated point, finding nothing to indicate such limited discussions strayed from the guidance provided by the GAO or were per se unreasonable.
Nevertheless, it found that, in practice, the Air Force was not carrying out this corrective action in a rational manner: The Air Force had sent three different versions of evaluation notices to the offerors, with the latest round cancelling the prior two. It had, only in the latest round, stated the solicitation was “agnostic” regarding a state tax cost in the prices. It had attached a spreadsheet, but failed to explain the formula for calculating small business participation percentages or the cost elements to be used as inputs. All together, the court noted “if there is a logic in the Air Force’s [discussions with] the offerors, it is not apparent.” This warranted a limited injunction in the court’s view: the Air Force could continue to conduct discussions—and preferably do so in a changed manner that would promote fair and open competition—but it could not make an award until the court was able to examine Peraton’s claims further.
Lastly, the Court addressed Peraton’s allegations of bad faith. The court admitted many of the agency’s actions deserved scrutiny: Why couldn’t Lockheed Martin continue to perform the services instead of Engility, recognizing the bridge contract would necessarily give Engility a leg up in the ongoing competition? Had the agency engaged in adequate planning to justify use of a sole-source contract? To the court, it appeared much of the urgency was of the Air Force’s own making, and in response to that urgency, the Air Force had repeatedly favored one competitor over others, thereby “tilting what was once a level playing field.” The court agreed “it is quite possible to discern a pattern of conduct here that favored Engility over the other offerors.”
Still, the court recognized “the burden of proof for allegations of bad faith requires clear and convincing evidence.” Despite the court’s concerns, “[t]oo many of the facts presented thus far by the parties, which might be indicative of bad faith, could instead be indicative of rational decision-making that engendered unfortunate results.” In short, it smelled funny, but lacked the concrete evidence the court requires to rebut its presumption that government employees carry out their civic duties in good faith.
It is not uncommon for offerors to get the sense a procuring agency has its eyes set on one competitor over the others. Such favoritism feels wrong, and indeed, agencies are duty-bound to treat all offerors fairly and evenly in each procurement. This does not mean every opportunity or advantage available to one offeror must be given to all others. As the Federal Acquisition Regulation (“FAR”) instructs, “All contractors and prospective contractors shall be treated fairly and impartially but need not be treated the same.” FAR 1.102-2(c).
Peraton offers a reminder of the strong presumption that the government has met this standard—a bar that can only be overcome with concrete evidence an agency has intentionally favored one offeror. Simply put, “allegations of bad faith must be based on hard facts.” See Jacobs Tech. Inc. v. United States, 131 Fed. Cl. 430, 451 (2017).
Wamore, Inc., B-417450; B-417450.2, July 9, 2019: The GAO denied this protest challenging an agency’s sole-source award, finding the agency reasonably determined only one firm had the data rights necessary to meet its needs, and declining to examine the merits of an ongoing private dispute over which party actually held those rights.
This bid protest involves sales of joint precision aerial delivery systems (“JPADS”) to the countries of Norway and Jordan under the foreign military sales (“FMS”) program, and more specifically which contractor has the intellectual property rights necessary to build those systems.
The JPADS is a precision airdrop system that delivers payloads by aircraft to soldiers on the ground using steerable parachutes and an autonomous airborne guidance unit comprising a global positioning system (“GPS”) and an onboard computer. In 2007, the U.S. Army competitively awarded Airborne Systems North American a contract to design, develop, manufacture, and test JPADS for loads of approximately 2,000 pounds. Airborne Systems engaged Wamore (the protester) as a subcontractor on that effort.
In 2009, the Army purchased additional rights in this JPADS system from Airborne Systems, who in advance purchased certain of those rights from Wamore. Specifically, the Army purchased for the government the right to use technical data related to the JPADS system for government purposes, but not for FMS or similar foreign sales or transfers. As between Airborne Systems and Wamore, Wamore assigned to Airborne systems “all of Wamore’s worldwide rights, title and interest in and to” the JPADS airborne guidance unit.
Subsequently, in 2011, Airborne Systems submitted, and the Army approved, an engineering change proposal to reconfigure the airborne guidance unit to be “lighter and modular.” Airborne Systems again engaged Wamore on this effort, including the development of technical data related to the modular airborne guidance unit. Before the Army officially approved the engineering change proposal, the Army (with Airborne Systems’ knowledge) requested Wamore go ahead and submit drawings for the modular unit, for the sake of maintaining schedule with classification and materiel release events. Wamore did so, marking those drawings with its standard restrictive legend. When Airborne Systems ultimately provided drawings as a part of its technical data package for the modular airborne guidance unit, it marked those drawings as being subject to its 2009 special license rights agreement with the Army.
After completion of this full development effort, in 2014, the Army awarded contracts to both Airborne Systems and Wamore to produce additional JPADS units, including the modular airborne guidance unit components. Both Airborne Systems and Wamore have received orders to provide these units to the Army for its own use.
But in 2016, when the Army received letters from the Jordanian Armed Forces and Norway for JPADS with modular airborne guidance units, both Airborne Systems and Wamore claimed they each were the only ones who could produce the systems. Airborne Systems claimed it owned “full data rights” to all 2,000-pound JPADS systems, and had only granted the government rights for its own purposes, not FMS. Wamore, on the other hand, claimed that as the original equipment manufacturer of the modular airborne guidance unit, it held all “non-government use data rights” and had granted the government usage rights under its prior subcontract effort. According to Wamore, Airborne Systems had no legal rights or title to intellectual property in the modified airborne guidance unit developed under the engineering change proposal.
The Army, after seeking additional information and clarification from both parties, ultimately sided with Airborne Systems. In June 2018, the Army issued a justification for procuring the FMS JPADS from Airborne Systems as the only responsible source.
A number of things happened after the Army published a synopsis of its intent to award the FMS contracts on a sole-source basis. Wamore first accused the Army of releasing its intellectual property (i.e., the drawings for the modified airborne guidance unit) to Airborne Systems without authorization. Airborne Systems then filed a demand for arbitration against Wamore related to the parties’ dispute over data rights in the JPADS and modified autonomous guidance unit. And finally, when the Army issued its sole-source solicitation, Wamore filed this bid protest.
At the crux of this bid protest was Wamore’s claim that, as the rightful owner of the relevant data rights, it had previously granted the government sufficient rights to support a competitive procurement. In response, the Army argued that it had conducted a reasonable inquiry when concluding (1) it did not have such rights, and (2) only Airborne Systems possessed adequate rights to meet the agency’s needs. The GAO agreed with the agency.
The GAO noted its review in such situations “focuses on the adequacy of the rationale and conclusions set forth in the J&A,” and where that document “sets forth reasonable justifications for the agency’s actions,” the GAO will not object to the award. An agency’s conclusion that it does not possess sufficient data, or sufficient rights in data, to conduct a competitive procurement is a common basis for issuing a sole-source award, and the GAO collected a number of cases where it upheld such decisions as proper.
The GAO reminded the parties that it is “not in a position to adjudicate the rights of private parties, each of whom apparently claims rights in contested data.” Thus, it would not consider the merits of the ongoing arbitration between Airborne Systems and Wamore. The GAO added that Wamore’s allegation that the government improperly disclosed its proprietary information was “a matter for the courts, and not [the] Office, to remedy.” And although Wamore insisted it was not “asking the GAO to adjudicate the parties’ intellectual property rights,” the GAO was hesitant to “disturb an ongoing procurement or an award because of an allegation that data rights are being violated incident to a procurement.”
Looking only to the record before the agency and the GAO, the GAO found the agency’s conclusions “unobjectionable,” and thus “Wamore’s protest essentially relate[d] to a dispute between two private parties as to which court action, rather than a protest to [the] Office, is the appropriate remedy.” According to the GAO, the agency reasonably considered that it had acquired only rights for U.S. government purposes under the original development contract; that Airborne Systems had purchased Wamore’s “worldwide rights, title and interest” in the airborne guidance unit, including (the agency concluded) the modular unit; and that the Army maintained privity of contract only with Airborne Systems during development of the modular airborne guidance unit. The GAO found that Wamore, in challenging the agency’s inquiry, was essentially arguing that the Army failed to view available information in a light most favorable to Wamore. This disagreement with the Army’s sole-source justification was not sufficient to sustain a protest.
The GAO plays an important role in examining the government’s rights in technical data and software, but that role is limited to reviewing the reasonableness of an agency’s conclusions about its rights. The GAO will not step into private intellectual property disputes, nor will it adjudicate claims that the government has improperly released proprietary information. There are other fora for such relief: private parties may sue each other in state and federal courts for trade secret misappropriation, copyright infringement, or breach of confidentiality obligations, and a party may seek contractual relief against the government at the U.S. Court of Federal Claims or before a board of contract appeals, or seek an injunction under the Trade Secrets Act (18 U.S.C. § 1905).