This month’s Law360 Bid Protest Roundup focuses on two Government Accountability Office (“GAO”) decisions and one Court of Federal Claims (“COFC”) decision. From COFC jurisdiction and standing, to meaningful relationship commitment letters, and responsibility determinations and unwarranted strengths, each decision serves a different helpful reminder for contractors submitting proposals and unsuccessful offerors looking to file a protest, alike.
Acuity-CHS Middle East LLC[1]
Although Acuity-CHS Middle East LLC appears to be a case about organizational conflicts of interest (“OCI”) at first blush, the real meat of the case is about testing COFC’s jurisdiction and standing in the aftermath of the Federal Circuit’s surprising decision earlier this year in Percipient.ai v. United States, 104 F.4th 846 (Fed. Cir. 2024).
A plaintiff has standing to challenge a procurement if it is an interested party, which is defined as an actual or prospective bidder that has a direct economic interest in the award of a contract. This usually means the protester must show that, but for the alleged procurement error, it would have had some likelihood of award itself. As a result, COFC has consistently held that subcontractors do not have standing to bring a bid protest as an interested party. In Percipient.ai, the Federal Circuit, however, found that standing in a protest extends to a prospective subcontractor when it has a substantial chance of being engaged by a prime contractor to meet the needs of the agency had the violations not occurred. Percipient.ai involved a supplier (Percipient.ai) of commercial software challenging a task order that the supplier alleged violated a statutory preference for products available commercially. Percipient.ai was, at most, a potential subcontractor for the task order. The Federal Circuit found Percipient.ai had standing because it had a direct economic interest in the alleged violation of the statute because it was an offeror of commercial or non developmental services or items. Importantly, the Federal Circuit clarified that it found the plaintiff had standing because it (1) invoked only the third prong of the Tucker Act protest authority (i.e., providing jurisdiction over interested parties challenging “any alleged violation of statute or regulation in connection with a procurement or a proposed procurement”); (2) asserted a violation of the statute providing preference for products available commercially and obligating the procuring agency to conduct market research; and (3) did not directly or indirectly challenge a solicitation for an actual or proposed award of a government contract.
Here, Acuity-CHS Middle East LLC (“Acuity”) did not hold the underlying Department of State’s Diplomatic Platform Support Services IDIQ contract for the task order at issue. The task order was for Medical Support Services in Iraq (“MSSI”), which involves conducting drug testing of U.S. diplomatic and contractor personnel in Iraq. Acuity’s affiliate provides protective services in Iraq, and therefore its personnel are subject to the drug testing performed by the MSSI contractor. Therefore, State issued an OCI determination, and the terms of the MSSI task order solicitation stated that contractors holding, directly or through their affiliates, a contract for the protective services were prohibited from competing for the MSSI task order. Acuity filed a protest claiming that this arbitrarily and capriciously prevented it from participating in the task order as a subcontractor in violation of Federal Acquisition Regulation (“FAR”) 9.5. Specifically, Acuity argued the agency failed to reasonably consider and mitigate the OCI to allow it to participate as a potential subcontractor on the task order.
Relying on Percipient.ai, Acuity argued it had standing to bring the protest and COFC had jurisdiction to hear it. Focusing solely on Acuity’s standing argument, COFC disagreed and dismissed the case. [2] Specifically, COFC explained that Acuity could not show that it had a substantial chance of being selected as a subcontractor by the awardee (KBR) as KBR already had a subcontractor for the task order. There was also no record of a prior or current relationship between Acuity and KBR suggesting that Acuity would have a substantial chance of being KBR’s subcontractor for the task order in the future if KBR’s current subcontractor failed.
COFC also explained that Acuity lacked subcontractor standing because it did not exclusively invoke the third prong of the Tucker Act. By alleging the contracting officer violated FAR 9.5 in determining that an immitigable OCI prevented it from participating in the task order, it inherently sought a determination that the task order was invalid and required reissuance, and thus also invoked the first prong of the Tucker Act’s protest authority. Furthermore, the alleged violation at issue here, unlike the violation in Percipient.ai, did not impose an ongoing legal obligation on the agency or the awardee. In other words, once State made its one-time OCI determination and awarded the task order to KBR, it imposed no continuing obligation on the agency or the awardee, according to the Court. Therefore, the regulatory violation here was not similar to the statutory violation in Percipient.ai, which involved a continuing obligation on the agency and its contractor to have a preference for commercial sources.
Takeaways
Acuity-CHS Middle East LLC is the first test of how far the Federal Circuit’s holding in Percipient.ai might be applied. For those worried (or hopeful) that Percipient.ai blew the door open to subcontractor task order protests, Acuity-CHS Middle East LLC shows just how narrow COFC views that holding. Aggrieved prospective subcontractors should study this decision before rushing to the courthouse door.
Mission SOLAIYA JV, LLC[3]
Mission SOLAIYA JV, LLC (“MSJV”), a Mentor Protégé Joint Venture under the Small Business Administration’s (“SBA”) Mentor Protégé Program, protested the General Services Administration’s (“GSA”) exclusion of MSJV’s proposal for award of the One Acquisition Solution for Integrated Services Plus (“OASIS+”) government wide acquisition contract due to noncompliance with a solicitation requirement. Specifically, despite scoring enough points for award, GSA excluded MSJV’s proposal for failure to provide a “qualifying project” from either the protégé member of the joint venture or from the joint venture itself, which was a mandatory requirement in Section L.5.1.3.1 of the Request for Proposals (“RFP”).
MSJV argued, however, that the RFP permitted offerors, including members of a joint venture, to utilize resources from a parent company or affiliate to meet requirements of the RFP so long as a meaningful relationship commitment letter was submitted. Therefore, in lieu of submitting a qualifying project from MSJV or the protégé, MSJV submitted a qualifying project from the protégé’s parent company along with a meaningful relationship commitment letter. This, MSJV argued, should have been sufficient to meet the mandatory requirement for award.
Unfortunately for MSJV, the GAO pointed out that the section of the RFP permitting reliance on an affiliate limited such reliance to scored sections of the RFP. And the mandatory qualifying project requirement for Mentor protégé Joint Ventures was not a scored section. Therefore, the GAO denied MSJV’s protest and found GSA’s determination that MSJV’s proposal was noncompliant was reasonable.
Takeaways
In a time where caselaw and regulations are continually redefining what agencies can and cannot require Mentor protégé Joint Ventures to submit to meet experience, past performance, and capabilities requirements, Mentor protégé Joint Venture offerors should pay close attention to the precise language of RFPs. As this case demonstrates, there are often subtle nuances that can become major pitfalls preventing award of the contract. When in doubt regarding the terms of a solicitation, be sure to submit a question to the agency during the Q&A period. If the response is unsatisfactory, a protest may be necessary prior to proposal submission.
GOVCIO, LLC[4]
In GOVCIO, LLC, the protester, GovCIO, LLC, challenged the Department of Veterans Affairs’ (“VA”) award of a task order to General Dynamics Information Technology, Inc. (“GDIT”) for file conversion services, lodging multiple protest grounds. Of particular interest for this post are two of those grounds: (1) the sole successful ground regarding an unwarranted significant strength; and (2) an unsuccessful ground regarding allegations of nonresponsibility.
First, the VA assigned GDIT’s Technical Evaluation two significant strengths, one of which related to GDIT’s perceived capability to exceed the estimated conversion requirement in the solicitation. Specifically, the VA assigned GDIT a significant strength for demonstrating a capacity to convert a redacted number of files per day, which the VA noted was a redacted percent higher than the solicitation’s estimated 1.2 million daily conversion rate.[5] GovCIO argued this assessment was flawed because the 1.2 million daily rate from the solicitation was calculated based on calendar days, whereas GDIT’s was calculated using workdays. Therefore, the VA utilized an apples-to-oranges comparison when assigning the significant strength. When comparing the conversion rate using workdays as a common basis of comparison, however, GDIT’s estimated capacity did not come close to exceeding the required daily capacity by the percentage the VA noted in its evaluation.
The GAO agreed with GovCIO that the VA’s assignment of a significant strength was unwarranted. Despite GovCIO having a lower Technical rating, no significant strengths, and fewer strengths than GDIT, the GAO further found this assignment of a significant strength prejudiced the protester. This was because the VA specifically mentioned it in the best value tradeoff as one of the benefits of GDIT’s proposal that warranted a price premium. Therefore, the GAO sustained the protest on this ground.
Second, GovCIO unsuccessfully argued that the VA should have found GDIT nonresponsible due to allegations that GDIT allegedly attempted to gain an unfair competitive advantage by improperly pressuring one of GovCIO’s initially proposed subcontractors to rescind its commitment to support GovCIO. The VA argued that it evaluated responsibility at the time of award of the underlying IDIQ contract award, and the task order solicitation did not require an additional responsibility determination. It further argued that the issue raised by the protester was a private dispute rather than a violation of procurement law.
The GAO agreed with the VA, citing to prior GAO case law finding that there is no requirement that an agency conduct an additional responsibility determination when issuing a task order under an IDIQ contract. It also explained that even if a responsibility determination was required, the VA was correct that this was a private dispute rather than relating to responsibility criteria or a violation of statute or regulation.
Takeaways
The two protest grounds discussed above provide different reminders for unsuccessful offerors. First, protesters should not shy away from raising legitimate arguments regarding assignment of strengths to an awardee’s proposal even if the awardee would still have a higher adjectival rating and number of strengths without the evaluation error. If the strength at issue was a differentiator in the best value determination, it could be a successful protest ground, as this case demonstrates. Second, protesters must raise challenges to responsibility at the IDIQ level, rather than the task order level. It is also worth remembering that disputes between private parties rarely rise to the level of a sustainable protest ground.
[1] Acuity-CHS Middle East LLC v. United States, 2024 WL 4716428 (2024).
[2] With regard to jurisdiction, Percipient.ai held that the Federal Acquisition Streamlining Act (“FASA”), which bars COFC from hearing protests “in connection with the issuance or proposed issuance of a task or delivery order,” did not bar Percipient.ai’s case because Percipient.ai neither protested the agency’s decision in issuing the task order nor sought to change anything about the task order itself. Rather, it was directed to the agency’s violation of the statute and related regulations after issuance of the task order. In Acuity-CHS Middle East LLC, COFC never reached the question of whether FASA barred the protest because it found Acuity did not have standing as an interested party.
[3] Mission SOLAIYA JV, LLC, B-421775.11, Nov. 7, 2024, 2024 WL 4788549
[4] GOVCIO, LLC, B-421290.8, Sep. 11, 2024, 2024 WL 4707095
[5] The precise number and percentage were redacted in the GAO’s decision.
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