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Federal Builders Proves the Lowest-Priced Bid isn't Always Enough

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It’s time for some champagne for the Federal Builders who just pulled off an impressive win in front of the GAO. Recently, the Government Accountability Office (GAO) sustained Federal Builders, LLC-The James R. Belk Trust’s (Federal Builders) bid protest contesting the Bureau of Land Management’s (BLM) contract award to Presidio Bay Capital. The agency’s request sought proposals for the lease of around 12,500 square feet of office and warehouse space in Lake Havasu, Arizona. The request sought a lease term for up to 20 years. The BLM stated it would award the lowest-priced bid, a technically acceptable offer.

In order to verify the offeror’s ownership or imminent ownership of the property, the request required that any offeror that did not yet have a vested interest in the property submit a written agreement stating that they will acquire the property, along with the current owner’s statement that the offeror has performed all required conditions in order to close. In addition, the request required that the offeror pay certain statutorily required wage rates (Davis-Bacon rates) if the offeror has to increase the size of the building through construction.

BLM Received Two Proposals

The BLM received two proposals, one from Presidio Bay and one from Federal Builders. Federal Builders, the incumbent, proposed the building the BLM currently occupied; Presidio Bay proposed a different building. The BLM calculated Federal Builder’s proposed lease rate to be $19.95/square foot; the BLM calculated Presidio’s rate to be $19.82/square foot, including the cost of the move. Accordingly, the BLM awarded Presidio the contract because it offered the lowest-priced, technically acceptable proposal. Federal Builder immediately opposed the award.

Federal Builders Opposed the Award

Federal Builders argued that Presidio Bay’s offer was unacceptable for two reasons. First, Federal Builders complained that Presidio did not state that it would pay Davis-Bacon rates for all of the construction work it had to perform.  Presidio had to construct about 5,000 additional square feet in order to meet the BLM’s 12,500 requirement. Second, Federal Builders asserted that Presidio Bay failed to provide the BLM with the required written agreement to acquire an interest in the property. Presidio did not yet own the property at the time of its bid and, thus, had to provide the BLM with a written agreement indicating its intent to acquire.

The GAO Sided with Federal Builders

The GAO agreed with Federal Builders on both points. According to GAO rules, it will not overturn an agency decision unless that decision was “unreasonable.” However, the GAO will not overturn a decision merely because the agency didn’t make the best, or most efficient, selection. Here, the GAO found that the BLM’s selection was unreasonable.

It found that since Presidio did not state that it would pay Davis-Bacon rates for all of the construction (but only a portion), it was unreasonable for the BLM to assume that Presidio would pay those rates for everything. At the very least, the BLM should have inquired further.  It also found that Presidio failed to provide a written agreement to the BLM; at most, the letter that Presidio provided to the BLM indicated an intent to agree to buy the building (rather than an enforceable agreement).

Due to these errors, the GAO sustained Federal Builders’ protest and ordered that the BLM pay its attorneys’ fees and costs.

As Federal Builders has demonstrated, even seemingly small missteps can be the basis for a successful bid protest.  If your business is involved in government contracting and procurement, the attorneys at Whitcomb Law, P.C. can help you determine whether the bid process was handled fairly and can advise and guide you in protecting your rights.

About the AuthorJoe Whitcomb

Joe Whitcomb is the founder and president of Whitcomb, Selinsky, PC (WSM). In addition, he manages the firm and heads up the Government Procurement and International Business Transactions Law sections. As a result of his military service as a U.S. Army Ranger and as a non-commissioned officer in the Air Force, he learned mission accomplishment. While serving in the Air Force, he earned his Bachelor’s in Social Sciences and a Master’s in International Relations. His Master’s emphasis was on National Security and International Political Economics. After his military career, Joe attended law school at the University of Denver Sturm College of Law.


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