Government Contracts Monitor

Agency Estimates: Say What You Need and Need What You Say

June 5, 2014

As a general rule, agencies cannot award a contract on a basis fundamentally different from the basis upon which the competition was conducted. GAO recently confirmed this principle, noting that where there is a significant change in the government’s quantity requirements, the agency must inform all offerors of the revised requirements, and give them an opportunity to submit proposals in response to the revised requirements, even where a source selection decision has been made. Systems Studies & Simulation, Inc. (“S3”), B-409375.2 (Comp. Gen. May 12, 2014).

In S3 the Army issued an RFP for instructor pilots to perform flight training on a variety of helicopters. Award of a requirements-type contract was to be made to the firm submitting the lowest-priced, technically acceptable proposal. Offerors were required to complete a pricing matrix indicating their hourly rates for various labor categories. And, offerors were required to price the contract based on the estimated quantities included in the RFP. The RFP included an estimate of the number of students to be instructed on a daily basis, and the various categories of flight instructors required, and advised offerors to assume a student-to-instructor ratio of 2:1.

During the course of the procurement, the contracting officer partially terminated a significant portion (more than 70 percent) of the Army’s then-current contract for the pilot instruction services. This reduction in the agency’s needs was due to the Department of Defense’s shift to the use of in-house personnel to perform the training going forward. At that time, S3, the incumbent, confirmed that the change represented the agency’s actual needs going forward. In fact, the contracting officer sent an e-mail to the individual conducting the new acquisition, copied to the source selection official, advising them of the significant reduction in the agency’s requirements. But according to the Army, the e-mail was too late: the source selection decision was made the same day the e-mail was received, based upon the existing RFP. In any event, the Army argued, the award was simply a requirements contract. GAO disagreed.

According to GAO, neither the fact that this is a requirements-type contract, or the fact that a source selection decision has been made, relieves the agency of its obligation to conduct a competition on the basis of the most accurate or realistic estimates of the total quantity of services likely to be ordered. Here, not only was there more than a 70 percent reduction in the agency’s requirements, the agency also changed the types of instructors required; eliminating half of all categories and adding a new category not contemplated under the original solicitation. In short, the GAO found “the agency’s current requirements bear little relationship to the requirements that it solicited, and for which the offerors competed.” It follows that the agency could have no reasonable assurance, based on the earlier competition, that its award was proper.

GAO sustained S3’s protest on this basis and recommended that the agency (i) either amend its current solicitation to reflect its actual requirements, or cancel the current RFP and issue a new solicitation that reflects its actual requirements; and (ii) “solicit, obtain and evaluate proposals responsive to its actual requirements.” This case serves as a perfect example of how an Agency can and should change an RFP (or even cancel it and start over), if its needs change during the evaluation process. Offerors should be aware of this possibility and should bring any changes to the Agency’s attention as soon as they are discovered. The last thing an offeror wants is to waste time and effort on a proposal that doesn’t match the Agency’s needs.

Lindsay Simmons is the attorney responsible for the content of this article.

Attorneys

Lindsay Simmons