Government Contracts Monitor

Be Careful What You Wish For; Protests Can Have Unintended Consequences

September 8, 2015

By: Eric Whytsell

Disappointed bidders often protest award decisions in an attempt to force the agency to “do the right thing” or “make the right decision.” Sometimes, however, such protests cause the agency to take action that, while “right”, is certainly not what the protester had in mind. Last month’s decision by the Government Accountability Office (GAO) in Retro Environmental, Inc., B-411457.3 (August 19, 2015), is a case in point.

The case involved an invitation for bids for asbestos abatement services at an Air National Guard facility in Maryland. At bid opening, six bids were read, including that of San Dow Construction, Inc. (San Dow) and three other offerors with lower prices. Afterwards, the Army contracting officer realized that Retro’s bid was still in his office, unopened. Upon opening this seventh bid, he found that Retro had proposed the lowest price overall. As a result, the contract was awarded to Retro. In response, San Dow protested, arguing that (i) Retro’s bid was invalid because it had been submitted late and/or because it was not opened publicly; and (ii) that none of the lower-priced bidders possessed the required licenses. That protest was successful, but not in the way San Dow had hoped.

During the protest, the Army reviewed Retro’s bid and concluded that it should have been rejected as nonresponsive because Retro had failed to sufficiently describe “the method on how the job would be accomplished.” At the same time, the agency noticed that the IFB had overstated its minimum needs by providing that “the contractor” was required to be licensed to perform asbestos abatement. The agency had meant to require only that the firm performing the asbestos abatement be licensed. On this basis, the contracting officer concluded that this flaw in the IFB provided a compelling reason to cancel the IFB and announced the Army’s intention to take corrective action by doing so. GAO then dismissed San Dow’s protest as academic.

San Dow chose not to challenge the agency’s corrective action. Retro decided to take another approach and filed a protest arguing that the cancellation of the IFB was improper.

The Army defended its decision in part by explaining that the IFB’s overly restrictive terms may have prevented competition by discouraging additional bidders that might have submitted a lower bid than Retro if not for the apparent requirement that the prime contractor be licensed. According to the agency, since the IFB’s overstatement of requirements may have prevented full and open competition, it had a compelling reason to cancel the IFB. In response, Retro argued that the Army’s misleading requirements argument is invalid because an ambiguous specification is only a basis to cancel an IFB before award, not after.

GAO sided with the Army, stating that “[w]here a solicitation contains inadequate or ambiguous specifications, or otherwise does not contain specifications that reflect the agency’s actual needs, those circumstances provide a sufficient reason to cancel the IFB.” Here, GAO found the contracting officer had reasonably determined that the IFB could be reasonably interpreted as limiting competition in a way that exceeded the Army’s needs.

Thus, San Dow’s initial protest led to the IFB being pulled altogether, so that none of the competitors were awarded a contract. Such outcomes are not as rare as one might think. By forcing the agency to reconsider its procurement decisions, successful protests often have unintended consequences.

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