Government Contracts Monitor

Changes to a Submitted Proposal Can Take You Out of the Running

August 3, 2015

By: Eric Whytsell

Sometimes, circumstances force offerors to consider making changes to their proposal after it’s been submitted. In some cases, offerors decide they need to go so far as to alter their own structure to address a newly discovered problem. As the recent decision in Task Source/Military Personnel Services Corporation FEPP, LLC, B-411173.3 (July 8, 2015) shows, however, material changes to the offeror itself may render it ineligible for award.

In this case, the protester was a joint venture between 8(a) concern, Task Source, Inc. (Task Source), and Military Personnel Services Corporation (MPSC), which had graduated from the 8(a) program and was serving as Task Force’s mentor under the Small Business Administration’s mentor-protégé program. The joint venture, Task Source/Military Personnel Services Corporation FEPP, LLC (the Joint Venture) was awarded a contract for support staff services by the Defense Human Resource Agency (DHRA) on February 18, 2015. That same day, DHRA learned that two individuals associated with MPSC had recently pled guilty to bribery, a fact that the Joint Venture had failed to identify in its initial representations and certifications, and failed to update as required. For these reasons, the agency terminated the Joint Venture’s contract for cause on February 25, 2015. At about the same time, Task Source e-mailed DHRA to explain that MPSC had withdrawn from the Joint Venture and provided a letter from MPSC’s President confirming the withdrawal.

After terminating the contract, DHRA decided to make award to one of the remaining firms that had submitted a proposal in response to the initial request for proposals (RFP). When the agency awarded a contract to Interactive Government Holdings, Inc. on April 1, 2015, the Joint Venture protested. It argued that: (i) the agency improperly excluded the Joint Venture from consideration when it awarded the replacement contract and the exclusion constituted a negative responsibility determination; (ii) the agency acted unreasonably when it considered the two individuals who had pled guilty to bribery charges as “principals” of MPSC; (iii) the agency’s actions were improper because MPSC had withdrawn from the Joint Venture; and (iv) the agency failed to refer its negative responsibility determination to SBA so that it could consider a certificate of competency (COC) as required by law. The Government Accountability Office (GAO) found no merit in any of these protest grounds.

GAO’s denial of the protest did not, however, rest on a close analysis of the substance of all the protester’s various grounds. Instead, GAO identified a single fact that precluded the need to consider any of the Joint Venture’s arguments: since MPSC had withdrawn from the Joint Venture, “the entity that originally had submitted a proposal in response to the solicitation – [the Joint Venture] – is different than the entity that now seeks to be considered for award of the contract.” According to GAO, DHRA’s consideration of the Joint Venture’s proposal after MPSC had withdrawn from it “would be tantamount to the agency allowing the firm to make material changes to its proposal.” Those changes would include both the composition of the offeror and substantive proposal changes. For example, only one of the four past performance questionnaires initially submitted by the Joint Venture related to Task Source. The other three related to contracts performed by MPSC, which was no longer part of the Joint Venture.

GAO noted that an agency’s evaluation of such a materially altered proposal “essentially would amount to the agency engaging in discussions.” Here, however, the RFP provided for award of a contract based on initial proposals, which is exactly what DHRA did. Under these circumstances, GAO held that the agency properly declined to consider the Joint Venture’s proposal in connection with the re-award of the contract: “Simply stated, [the Joint Venture] itself rendered its proposal ineligible for award based on the firm’s decision to make a material change in the composition of the offeror, and the agency’s decision not to evaluate its proposal did not constitute a negative responsibility determination” – so there was no requirement that anything be referred to SBA.

To be sure, the circumstances faced by the Joint Venture in this case are significantly more dire than those faced by most offerors. But the case does provide valuable guidance for firms considering mid-procurement changes to their proposals. First, try to avoid changing the composition of the offeror itself. Second, if you decide that changes to your proposal are necessary, beware of making “material” changes unless the RFP has made clear that discussions will be conducted. Even then, make sure to consider the evaluation criteria and adequately address your changes in those discussions so that they do not adversely impact your evaluation.

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