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Bait and Switch Allegations in Government Procurement

Posted by Joseph Whitcomb on Oct 18, 2014 11:09:04 PM
Joseph Whitcomb

The Question of Bait and Switch

The title isn't a bad joke; it’s a listing of the parties involved in a recent bid protest decided by the Government Accountability Office (GAO).  That doesn't include the 16 attorneys that were involved in this case.  That many parties (and attorneys) usually signifies that a large contract is involved.

This case was no exception.  The underlying contract was for audit services to be supplied to the U.S. Army, and tens of millions of dollars were at stake. The contract was awarded to Ernst & Young (E & Y), leaving out IBM Corporation (IBM) and PricewaterhouseCoopers (PwC), which had also submitted bids.  Not surprisingly, both companies protested the bid.  Their protests were ultimately unsuccessful, but the contract value alone warranted the attempt.

Similar Bids…Except for Price

The Army’s request for proposals set forth seven factors that would be weighed by the Army in making its decision.  As usual, price and experience were two of the factors; others factors include approach to sample scenario, past performance, key personnel, transition plan, and small business utilization.

The companies’ scores were the same in all but two respects: (1) E & Y’s approach to the sample scenario was scored as only “Acceptable” in contrast to “Outstanding” scores received by the other bidders; and (2) E & Y’s price was lower. E & Y’s bid was approximately $55 million, with IBM’s coming in around $85 million and PwC’s $106 million. The Army went with E & Y.

Looking for Problems…Finding None

Not willing to go down without a fight, IBM and PwC protested the bid asking the GAO to consider a few different arguments.  One argument involved an alleged conflict of interest by a key E&Y personnel.  The GAO didn’t think that the protesters had submitted sufficient evidence to support this alleged conflict.

Another argument brought by the protesters was that E&Y impermissibly attempted a bait and switch, whereby the key personnel used to complete the project would not be the same as those that E&Y had listed.  IBM alleged that once it received the award, E&Y began poaching IBM employees to come work on the project.

The GAO held that this conduct alone did not constitute an impermissible bait and switch scheme.  Such a scheme requires a firm statement that a company will rely on specific personnel to complete the project, reliance on that statement by the agency, and that the reliance impacted the award of the contract.  In the case at hand, the GAO did not think E&Y had affirmatively asserted that it would rely on certain personnel, and its “poaching” of IBM employees seemed to be nothing more than hiring additional labor that would be needed to complete the new job.

The protesters brought a few other arguments as well, none of which the GAO found persuasive.

The attorneys at Whitcomb Law, P.C. assist clients of all sizes in contesting bid protests.  Whether the contract is worth thousands or millions, we can serve as the trusted advisors and advocates you need.

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Topics: Government Contracting