Bid Protest Lawyer Blog

DNO's GAO Bid Protest Denial

Posted by Joseph Whitcomb on Nov 22, 2014 7:50:42 PM
Joseph Whitcomb

What can your firm can learn from DNO's bid protest denial?

Government Contract Bid Protest DenialThat’s right: we’re rhyming and talking about a bid protest denial, at the same time. Recently, DNO finally received a decision from the Government Accountability Office (“GAO”) on a bid protest it had submitted nearly three months ago. DNO protested the Defense Logistics Agency’s (a part of the Department of Defense) contract award to Produce One to supply fresh fruit and vegetable products for non-Department of Defense customers in Ohio, Pennsylvania, and West Virginia.

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DNO’s Challenge

DNO challenged the Defense Logistics Agency’s (“DLA”) evaluation of Produce One’s price proposal and contended that the DLA unfairly waived a bid requirement, consequently allowing Produce One to wrongfully win the bid.

The Solicitation

The DLA issued its solicitation as a small-business set-aside. The contract required that the winning contractor provide fresh fruit and vegetables for 18 months, with the option to continue the contract for another 3 years. The GAO estimated the contract value at $18 million.

The DLA stated that it would award the contract to the lowest priced acceptable offer. In order to weed out illegitimate offers, the DLA created a table of items with its estimated price. Furthermore, the DLA stated that where it identified price outliers for certain items, it would request that the offeror substantiate their proposed prices with invoices or quotes. Then, in order to further substantiate those invoices or quotes, the DLA would randomly select three quotes and call the grower or manufacturer to verify its accuracy.

The “Legitimate” Bids

The agency received three legitimate offers, including those from DNO and Produce One. Produce One beat DNO’s offer by approximately $200k, a substantial amount by any calculation. As a result, the DLA awarded Produce One the contract.

DNO challenged the selection and argued that the DLA should have found Produce One’s offer illegitimate because its prices were unrealistically low. Thus, DNO argued that the DLA should have requested that Produce One substantiate its proposed prices. Since DLA did not require that Produce One substantiate its prices, the DLA failed to properly evaluate the bids.  In addition, DNO argued that the DLA failed because it only considered a “fraction” of the items listed in the solicitation and should have substantiated a greater number of items.

The GAO’s Analysis & Decision

According to GAO precedent, the Agency will not overturn a contract award unless the award decision lacks a reasonable basis. The GAO stated that “a protestor’s mere disagreement…does not show it lacked a reasonable basis.”  Here, the GAO determined that the DLA acted reasonably in making its decision: it compared each of the proposals to each other; it used a sample of items to determine whether those items were unusually priced.

Although DNO argued that the DLA should have substantiated more items, DNO could not convince the GAO why the DLA needed to substantiate more.  Thus, DNO’s GAO bid protest denial, finding that the DLA’s decision was reasonable, was tantamount to finding DNO’s protest was nothing more than a disagreement.

Your Bid or Bid Protest

Although DNO ultimately did not get the contract, its situation provides insight into how future protestors can structure arguments, so as to ultimately get that contract. If your business is involved in government contracting and procurement, the experienced attorneys at Whitcomb Law, P.C. can help you protect your rights.

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Topics: Bid Protest

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