Bid protest over Census MAS award centers ‘misrepresentation’ claim

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Acme services contractor submits a bid using Sally, Bill and Jesse as the lead talent. Sally leaves for another company after the bids are in. Does that mean the bid is no longer valid? Well, not necessarily. Federal Drive with Tom Temin talked to Smith, Pachter, McWhorter procurement attorney Joe Petrillo about a recent protest case.

Interview transcript

Tom Temin: Joe, this case shows that even if you do switcheroo on people, it doesn’t necessarily knock you out of the competition, does it?

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Joseph Petrillo: Well, it depends on where the protest is filed, among other things and what you knew and when you knew it. So let’s get into the weeds here. We’ve got some new guidance now coming out of the U.S. Court of Federal Claims. In the case of Golden IT, LLC v. United States. It’s a bid protest that arose from an acquisition by the Census Bureau. And they have something called the Master Address File, and they needed IT services to maintain this large database of information, which it gets from tribal, state and local governments. Census conducted the acquisition under a GSA’s multiple award schedule and didn’t set aside for either women-owned small businesses or service disabled veteran-owned small businesses. After the quotations were evaluated, census awarded the order to Spatial Front and one of the competitors, Golden IT, protested to the Court of Federal Claims. It advanced several issues. And one of them, I think, is of particular importance for other contexts and for other bidders. Golden IT alleged that Spatial Front had made a material misrepresentation in its proposal, that key personnel the person in question went to work for another concern shortly after proposals were submitted. So Golden said, “Look, either Spatial Front knew when it submitted its proposal that it couldn’t produce this person for contract performance, or it found out afterward and should have notified census.” This case went to, as I mentioned, the Court of Federal Claims, and their judge, Solomson looked at these issues, and he acknowledged that at least since the 1992 appellate court decision, a misrepresentation and a proposal obviates the proper award. And if that misrepresentation, a material misrepresentation, I’m talking about something that makes some difference in the award decision, if that’s made knowingly or recklessly, it would even disqualify the offer board from receiving an award or participating further in the procurement.

Tom Temin: But there’s a “but” there.

Joseph Petrillo: Well, in this instance, there was no evidence in the record that Spatial Front knew or had reason to know, when it submitted its proposal that the key person would be unavailable for contract performance. Another “but” is that there’s a second part of this argument, and I think this is the one that has more general applicability and raises some interesting issues going forward. Golden had also argued that even if Spatial Front didn’t know about this when it submitted its proposal, after its proposal was submitted and under evaluation, and this person left its employ, it should have notified Census Bureau that the person would be unavailable. And there, Golden IT was basing this argument on a long series of GAO bid protest decisions. Some of which we’ve discussed over the years, which say that when an offeror knows a key personnel becomes unavailable, after submitting its proposal, it has to notify the agency about this.

Tom Temin: We are speaking with Joe Petrillo. He’s a procurement attorney with Smith, Pachter McWhorter. But that’s GAO decisions, and this was taking place in court.

Joseph Petrillo: Right. And the Court of Federal Claims had never really addressed that issue, nor had the appellate court. So this is the case, as we say, of first impression, and what is the judge going to do? Well, the judge looked at the statute, regulation, and the prior appellate decisions, and nothing in those decisions, impose this duty on an offeror, in addition, he noted that there had been some criticisms of the GAO rule. And not only that it wasn’t grounded in legal requirements, but because it was kind of unfair, because presumably an offeror has to notify the agency of something it’s going to, in most cases disqualify its proposal. But the agency isn’t under any obligation to do anything to allow the substitution of a different person. In addition, here we have a situation where this particular fact, which is of interest and importance, has changed after proposals are due, and we’re carving out a rule saying you’ve got to notify the agency and possibly disqualify your bid. But lots of things could happen after proposals are due, which might be of importance to the award decision. And we’re singling out this one for this special treatment.

Tom Temin: So the court found that there’s sort of an art arbitrariness to allowing the protest on that grounds then based on the lack of appellate decisions and prior lower court decisions.

Joseph Petrillo: The judge declined to follow the doctrine the GAO had built around this duty it created. And so now we have at least one judge at the Court of Federal Claims, saying no, that’s not a requirement, GAO saying it is, and we’ll have to see what happens the way the court is structured, other judges of the Court of Federal Claims don’t have to follow this decision. And they won’t be getting a definitive resolution until the court of appeals of the Federal Circuit takes up the case.

Tom Temin: In a case like this, if the soliciting agency in this case, the Census Bureau had said, here are our selection criteria, and number one, which would get I don’t know I’m making this up 60% of the weight of the evaluation, is the talent that is being bid, could that change the calculus in court? Hard to say?

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Joseph Petrillo: Well, the misrepresentation or the change has to be one that’s material and in your instance, clearly would be. The question is, though, what are agencies going to do? Are they going to require in their solicitation that offerors notify them of changes in key personnel? If they do that? Are they going to allow substitutions? If they do that, then they’ve got the prospect of having to redo a portion of the evaluation, and as we know, those processes of evaluating final proposals can go on for some time.

Tom Temin: Yeah, so if the agency goes ahead and makes that award, and then the first day of execution of the contract, well, “Where’s Sally?, “Well, she left.” She went to well, Spacial Front. But in that case, that didn’t happen, didn’t go to the winning bidder, then the agency is kind of stuck with its decision.

Joseph Petrillo: Yeah, that is true. Agencies, if you look at it, they’re in a difficult position. Either they want to carve out a class of information, such as key personnel, where they want to be notified of changes, and then have a way of evaluating them. And if that’s the case, the evaluation process could go on toward almost the end, and then have to be redone to some degree. Or they can say, Look, we’re going to freeze it at this period of time. We have the possibility, of course, that changes will occur after contract award. And we’ve got contract clauses to take care of those things. But we’re going to freeze the evaluation at one point of time, evaluate proposals, make an award decision, and then handle other issues as matters of contract administration. And that’s the choice they have to make.

Tom Temin: Yeah, so they have to make those choices before they get into source selection and make sure that everyone understands the ground rules before they get there.

Joseph Petrillo: Yeah, this probably should best be done as a matter of regulation, at least as a matter of laying down these rules in the solicitation.

Tom Temin: Joe Petrillo is a procurement attorney with Smith, Pachter, McWhorter. Thanks so much.

Joseph Petrillo: Thank you, Tom.

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