Deloitte Protests Task Order by the Department of the Treasury

Deloitte Consulting, LLP protested a task order to Grant Thornton LLP by the Department of the Treasury, Bureau of the Fiscal Service.  The task order was made under a blanket purchase agreement to support the federal budget formulation requirements for the Department of Housing and Urban Development (HUD).  Deloitte argued the award to Grant Thornton was improper.  It found its quotation “took exception to material solicitation requirements.”  It argued the Bureau of the Fiscal Service unreasonably and unequally evaluated its quotations under the technical evaluation factors, the award decision failed to address the evaluated differences between the quotations and explain why the protester’s higher-rated quotation was not worth a price premium.

Background

HUD is a customer of the Bureau’s Administrative Resource Center (ARC).  It sought “expansion of its utilization” of the OneStream XF2 software solution for its budget formulation requirements.  The Bureau issued the solicitation in July 2019 for quotations to “implement a functional solution to enable HUD to complete business processes in OneStream XF, support the department’s 2022 budget, and generate the HUD Congressional Budget Justification documents. 

The solicitation indicated the quotations would be evaluated based on price; the “demonstrated knowledge and experience/past performance; expertise of proposed consulting team; and method and approach.”  The non-price factors were considered “more important” than price.  Only Deloitte and Grant Thornton submitted quotations for the solicitation.  The award decision indicated Deloitte quotation was valued to have a higher technical evaluation score” than Grant Thornton for meeting the needs and expectations of the government.  Grant Thornton was found to have a higher risk of additional contract support, while Deloitte’s staffing plan was regarded as being “more appropriate for a scope of this magnitude with a deadline of meeting the OMB Submission.”  These findings led the agency to award the contract to Deloitte, despite its higher quoted price.

Grant Thornton filed a protest with the GAO challenging the award to Deloitte.  The Bureau informed the GAO it would take corrective action by reevaluating quotations and making a new award decision.  The agency received additional information from both vendors and opened discussions with both.  The contracting officer noted that although the award was recommended to Grant Thornton, Deloitte had the higher technical evaluation score but “the difference in score was not significant enough to warrant paying more than twice the price proposed by Grant Thornton.”

Analysis

Deloitte raised three challenges to the award received by Grant Thornton.  It argued the following:

1. Grant Thornton’s quotation takes exception to material solicitation requirements and should have been rejected.

2. The agency unreasonably evaluated the vendors’ quotations under the technical evaluation factors, and

3. The award decision did not address the evaluated differences between the quotations and did not explain why the protester’s higher-rated quotation was not worth a price premium.

The exception to Material Requirements

GAO agreed with Deloitte’s argument the Bureau should have rejected Grant Thornton’s quotation as unacceptable because it took exception to material solicitation requirements.  It noted a quotation that takes exception to a solicitation’s material terms and conditions should be considered unacceptable, as shown in IBM U.S. Fed., a division of IBM Corp.; Presidio Networked Solutions, Inc., B-409806 et. al, Aug. 15, 2014, 2014 CPD ¶ 241 at 10.  It stated material terms of a solicitation are those that affect the price, quantity, quality, or delivery of the goods or services provided.  Quotations are also deemed unacceptable when they contain an ambiguity as to whether the offeror or vendor will comply with a material requirement of the solicitation.

The solicitation stated the agency would evaluate vendors’ technical approach and methodology for completing deliverables and tasks outlined in the Performance Work Statement (PWS).  Performance would take place in three phases: requirement, analysis, and design; configuration; and migration.  The period of performance for all three tasks were required to be thirteen months.

Deloitte argued two assumptions in Grant Thornton’s quotation took exception to the requirement to perform the PWS tasks.  It stated that although Grant Thornton would make a “concerted effort” to perform the required tasks, it may elect to move the performance to the warranty period or an undefined “future phase.”  GAO agreed.  It found Grant Thornton’s first assumption took exception to the PWS requirements because it provided for deferring performance of a phase 2 requirement to the warranty period of an undefined “future phase.”  Ambiguity was created because there is no phase after Phase 3.

The Bureau argued Deloitte did not provide a basis to sustain the protest.  The agency stated it addressed the assumptions with Grant Thornton through the discussions that took place during the corrective action following the protest of the initial award.  It also argued the technical evaluation team (TET) was aware of the assumptions in Grant Thornton’s quote and determined they did not present enough risk to overcome its price advantage.  The Bureau asserted Deloitte’s quotation also contained assumptions that took exception to material solicitation terms.

Deloitte argued neither of the assumptions took exception to material solicitation terms.  They addressed the possibility of out-of-scope changes to the PWS requirements.  GAO agreed.  It noted it was assumed the vendor would work with the government to negotiate changes to the task order if the government requires a change in scope.  The second assumption stated the vendor would work with the government to negotiate changes if the schedule is different than the PWS.  The assumptions in Grant Thornton’s quotation stated, “the vendor may elect to perform the PWS tasks on a schedule other than what is set forth in the PWS.”  GAO concluded Grant Thornton was prejudiced by the agency’s error and sustained the protest. 

Evaluation Under Non-Price Evaluation Factors

Deloitte argued the Bureau unreasonably and unequally evaluated the vendors’ quotations under three non-price factors: “demonstrated knowledge and experience/past performance; expertise of proposed consulting team; and method and approach.”  However, the agency stated that weaknesses assigned to Deloitte’s quotation were also assigned to Grant Thornton.  The GAO found no basis to conclude the agency’s evaluation was unreasonable.

Assessment of the Relative Merits of the Quotations

GAO noted agencies are unable to base their decisions solely on numerical ratings.  They are only “guides to intelligent decision-making.”  It stated the assignment of evaluation ratings and consideration of the merit of competing quotations must be based on more than “a simple count of the strengths and weaknesses.” 

Deloitte argued the Bureau unreasonably assigned the vendors’ quotations similar point scores under the expertise of the proposed consulting team factor and the method and approach factor.  It also found that the agency conceded these weaknesses were identified for both vendors’ quotations.  It argued the evaluations should have instead been viewed as finding seven strengths with no weaknesses for its quotation.  GAO disagreed with Deloitte’s argument.  It concluded the agency’s consensus evaluation did not permit a simple tally of strengths and weaknesses.  It also stated if the record did allow for a tally of strengths and weaknesses, it would not demonstrate the agency’s assignment of similar point scores to quotations were unreasonable.  

Conclusion

The GAO sustained the protest.  It found the Bureau improperly awarded Grant Thornton based on a quotation that took exception to the solicitation’s delivery schedule requirements.  It recommended the agency either reopen discussions with vendors or terminate the award.  If you find that you should have received a contract award with the U.S. government, contact the experts in government contracts at Whitcomb Selinksy PC.