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Pre and Post Award Bid Protest

Substantial Material Change in Government Contract Solicitation Requires New Quotations from Offerors

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There are several ways a government agency contracting office can request a quotation or a bid from an offeror. One way is a request for quotation (RFQ). This document details the contracting agency’s requirements for the project and requires offerors to respond with pricing and payment terms. When using an RFQ, the contracting agency is focused on obtaining the lowest price for the project. Once the quotations are received, the contracting agency evaluates and compares each quotation and awards the contract to the appropriate offeror.

Occasionally, a contract award is protested by an offeror who was not awarded the contract. Depending on the outcome of the protest, the contracting agency may need to issue a corrective action and reevaluate the quotations. The contracting agency may request revised quotations from each offeror or require the offeror to revalidate their original price quote. If the contracting agency changes how the quotations are evaluated, they may need to create an addendum to the existing RFQ. A potential issue can arise when the change to the original contract is considered a material change, something that changes the nature of the contract, and the offerors are not permitted to resubmit updated quotations. In the following protest, one offeror argued the change to the original contract was a material change and newly revised quotations were required.

Computer World Services Corporation GAO Protest No. B-418287.3
Decision issued June 29, 2020

The Solicitation

The Department of Homeland Security (DHS), United States Coast Guard (Coast Guard) issued a RFQ for a best-value tradeoff basis of a fixed-price task order for support services. These support services were to be provided on a base period of five months and four 1-year options. The quotations were limited to historically underutilized business zone (HUBZone) small business concerns. The Coast Guard considered price and two non-price evaluation factors, technical capability and corporate experience. The Coast Guard evaluated each quotation’s total prices for reasonableness and unburdened labor rates for realism. The RFQ stated the Coast Guard would make a best-value tradeoff decision based on all evaluation factors. After evaluating the quotations, the Coast Guard awarded Intellect Solutions, LLC (Intellect) with the contract. Computer World Services Corporation (CWS) protested the decision to the Government Accountability Office (GAO).

the original protest

In the original protest, CWS contended the Coast Guard misevaluated the submitted quotations and made an unreasonable source selection decision. In its original evaluation, the Coast Guard found the CWS price was unreasonably high by comparing it to an independent government estimate (IGE) prepared by the Coast Guard. The Coast Guard selected and compared benchmark unburdened hourly rates of compensation to CWS’s proposed hourly rates. The GAO found the evaluation of price “unreasonably high” and “unrealistically low labor rates” and sustained CWS protest on this issue.

Additionally, CWS challenged the non-price evaluation of the quotation submitted by Intellect. The GAO found the Coast Guard did not account for differences between the level of effort and labor mix offered by Intellect and the level of effort and labor mix used to calculate the IGE. The GAO concluded the IGE was “materially flawed” and irrationally selected because it was based on an inappropriate level of effort and labor mix given the requirements provided in the RFQ. The GAO sustained CWS protest on this issue.

The GAO recommended the Coast Guard “devise methodologies for evaluating the realism of the firms’ proposed unburdened labor rates” and reasonableness of the firms’ proposed total prices. It recommended the Coast Guard reevaluate quotations and make a new source selection decision.

The Coast Guard issued a corrective action letter and revised its evaluation criteria by removing limited realism analysis from the evaluation. However, an amendment to the RFQ was not issued reflecting the change in the evaluation. The Coast Guard requested offerors revalidate their price quote otherwise it would not be included in the revised evaluation. On March 27, 2020, the CWS filed a protest with the GAO.

The protest

CWS raised two challenges to the Coast Guard’s corrective actions. It argued the Coast Guard revised the solicitation’s evaluation criteria without providing offerors the opportunity to revise their quotations and argued the agency did not adhere to GAO’s recommendations.

timeliness

According to Intellect, CWS’s protest was untimely as it was submitted after the deadline established by the Coast Guard’s corrective action letter. Intellect argued that because the letter made a change to the terms of the RFQ and required further submission, CWS was required to protest no later than March 19, 2020.

elimination of realism evaluation factor

CWS argued the Coast Guard revised the solicitation’s evaluation criteria without providing offerors the opportunity to revise their quotations. CWS maintained the Coast Guard is required to allow firms to revise their quotations when a material change to a solicitation is made. The Coast Guard disagreed, stating it was not necessary because removal of the realism evaluation factor was not a material change to the solicitation. It asserted its removal would not impact its ability to evaluate quotations on a common basis. CWS argued if given the opportunity to revise its quotation, it would have made changes to its proposed pricing and staffing strategy based on the Coast Guard’s comments.

Development of a revised ige

Additionally, CWS challenged the Coast Guard’s plan for evaluation of the reasonableness of the quotes. CWS argued the Coast Guard should develop a new IGE that reflects the Coast Guard’s requirements while taking into consideration the Coast Guard’s estimate of the level of effort, labor mix, and cost to perform the requirement. However, the Coast Guard reported it would not use IGE in its evaluation. The Coast Guard declared it would use other price reasonableness analysis techniques and compare the quotations received to one another and to historical data.

The outcome

timeliness

The GAO disagreed with Intellect’s assertion CWS’s protest was untimely and concluded CWS was required to file its protest within 10 days of the agency’s correction action letter. Under 4 C.F.R. § 21.2(a)(2), protests must be filed within 10 days of when the protester knows or should have known of its basis for protest.

Elimination of Realism Evaluation Factor

The GAO agreed with CWS’s protest that the Coast Guard needed to allow offerors the opportunity to revise their quotations. The GAO noted the record showed the agency informed CWS and Intellect their unburdened hourly rates were found to be unrealistic. Both vendors changed their pricing considering the Coast Guard’s comments. After receiving revised quotations, the Coast Guard found CWS ineligible for award because “its unburdened hourly rates were unrealistic.” The GAO concluded a change to a solicitation’s evaluation criteria constitutes a material change and would fundamentally affect the offeror’s pricing and staffing strategy, requiring firms to be able to submit revised proposals.

Development of a Revised IGE

GAO found the method of the Coast Guard’s reevaluation is not legally objectionable. The GAO stated reevaluations cannot be reviewed until the Coast Guard performs the evaluation and dismissed CWS’s protest as premature.

The GAO recommended the Coast Guard issue an amendment to the RFQ stating the new evaluation plan and allow offerors to submit revised quotations. Once the Coast Guard received revised quotations, the GAO recommended the Coast Guard reevaluate the revised quotations in a manner consistent with its earlier decision, as well as the above decision, and make a new selection decision. Additionally, the GAO recommended the Coast Guard reimburse CWS for the protest and associated legal fees.

THE TAKEAWAY

When evaluating RFQs, it is important to ensure the evaluation process is sound and reasonable. If it is not, the evaluation process and subsequent award can be protested. If the protest is sustained and the original quotations need to be reevaluated, it is up to the contracting agency to ensure the new evaluation is fair to all offerors. The contracting agency may need to allow offerors to update and resubmit new quotes using the updated evaluation criteria. If the contracting agency does not allow for requoting, the new evaluation process could be protested.

If you believe your quotation was unfairly evaluated and the contracting agency did not allow for resubmission, you may be able to protest the RFQ and/or award. For information on contesting agency award decisions, contact Whitcomb Selinsky PC.

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About the AuthorWhitcomb, Selinsky, PC

Whitcomb, Selinsky, PC is a full service law firm serving clients’ diverse legal needs. Our focus is in helping people in their interactions with federal, state and local governments.

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