In a decision released on April 7, 2020, the Government Accountability Office (GAO) announced it granted Markit! Forestry Management, LLC’s (Markit!) request for fees, and recommended the reimbursement of the reasonable costs of filing and pursuing challenges against the U.S. Department of Agriculture (USDA or agency) Forest Service.
Markit!, a Colorado small business, requested that the GAO recommend that the USDA reimburse it for the reasonable costs of filing and pursuing its protest. In its protest, Markit! challenged the USDA’s price evaluation and best-value award decision under a request for proposals (RFP) that was issued for silviculture treatments. Markit! argued that its protest was clearly meritorious and that the agency unduly delayed taking corrective action.
The RFQ was issued on February 22, 2019, and was set aside for small businesses. The RFQ contemplated the award of multiple indefinite-delivery, indefinite-quantity (IDIQ) fixed-price contracts for vegetation removal and treatment to reduce the risk of wildfires and to meet silvicultural objectives at national forests located in five zones within the Rocky Mountain region.
The USDA based its award on a best-value tradeoff basis considering price and the following non-price factors: (1) past performance; (2) experience/key personnel; (3) performance of work plan and techniques; (4) quality control plan; and (5) utilization of bio-based products.
The USDA received 21 proposals in response to the RFP, including Markit!’s proposal to provide manual and mechanical vegetation treatments in zones 1, 2, and 3. Following an evaluation, the agency notified Markit! that its prices were extremely high and neither fair nor reasonable. In response, Markit! submitted a timely revised proposal. On August 14, 2019, the agency awarded a contract to Markit! for the manual contract line item numbers (CLIN) in zones 1, 2, and 3. The agency determined that Markit!’s prices for the mechanical CLINs were unacceptable, so it awarded the mechanical contract to another bidder.
Markit!’s Initial Protest
On August 27, 2019, Markit! filed a protest with the GAO, citing two issues that both centered on the agency’s evaluation of price.
First, Markit! alleged that the agency failed to award the contracts on a best-value tradeoff basis, which would have required the agency to weigh “the value and benefits associated with a firm’s approach against their associated cost to the government.” The GAO agreed that the agency failed to make a reasonable best-value tradeoff because the decision relied on a mistaken belief about the price evaluation. Notably, the USDA failed to recognize that many of the other vendors' prices substantially exceeded the thresholds established by the agency’s acceptability baseline.
Second, Markit! claimed that the USDA did not evaluate bid prices based on the terms of the RFP, but rather relied on unstated evaluation criteria. Additionally, Marketit! claimed that the agency improperly evaluated prices on an acceptable/unacceptable basis, which was not consistent with the RFP’s terms that required the agency to evaluate the reasonableness of the proposed price. In its award decision, the source selection authority (SSA) stated that an “overall price determination of acceptable or unacceptable was based on the average ratings of each line item for each proposal.” However, the GAO disclosed that the record did not reflect how this average rating was determined when the majority of proposed maximum CLIN prices were outside the agency’s benchmark for reasonable or realistic prices. Moreover, the plain language of the RFP required the agency to determine whether the proposed price of “[e]ach unit item” was “fair and reasonable.”
The USDA responded on September 26, 2019, defending its price evaluations and best-value tradeoff decision. Then, on October 17, the agency notified the GAO of its intent to take corrective action, stating that it had “concerns regarding the procurement” and would take corrective action to “cure any possible errors discussed in the supplemental protest” by reevaluating price proposals and making a new award decision.
GAO Grants Reimbursement of Costs
Markit! requested that the GAO order the USDA to reimburse it for the reasonable costs of filing and pursuing its protest because the agency unduly delayed taking corrective action following Markit!'s protest. The agency argued that Markit!’s initial protest fell short of the GAO standard for recommending reimbursement of protest costs.
In order to grant a reimbursement of costs where a protest has been resolved by corrective action, not only must the protest have been meritorious, but it also must have been clearly meritorious. The GAO explained that a protest is clearly meritorious where a reasonable agency inquiry into the protester’s allegations would reveal facts showing the absence of a defensible legal position.
The GAO concluded that Markit!’s initial challenges to the agency’s price evaluation and resulting award decision to be clearly meritorious. In addition to that conclusion, the GAO found that the agency unduly delayed taking corrective measures to Markit!’s protests. Therefore, the GAO ordered the USDA reimburse Markit! for the reasonable costs of filing and pursuing its initial protest, including reasonable attorneys’ fees, because the agency unduly delayed taking corrective action in response to clearly meritorious protest allegations. The GAO explained that a successful protester should be reimbursed the incurred costs with respect to all issues pursued, and not just those upon which it prevails.