Government Contracts Monitor

Opposition Research Has Its Limits – Knowing the Facts May Not Be Enough

January 18, 2016

By: Eric Whytsell

In order to make good decisions about whether and how to protest an award decision, disappointed bidders must, among other things, have good information about the awardee. This is particularly true where the protest grounds being considered include the argument that the winner’s proposal violated the applicable limitation on subcontracting requirement, an attack that requires a showing that the lack of compliance is clear from the face of the proposal. Often the choice to pursue such a protest simply reflects the protester’s belief – based on known facts -- that the awardee is simply too small to handle the requisite portion of contract work by itself. As the recent decision in Geiler/Schrudde & Zimmerman, B-412219 et al. (January 7, 2016) shows, however, even if the protester’s “known” facts are supported by the awardee’s proposal, that may not be sufficient.

In this case, Geiler/Schrudde & Zimmerman JV (GSZ), a service-disabled veteran-owned small business (SDVOSB), protested the award of a contract to Innovative Support Solutions, Inc. (ISS) (another SDVOSB) under a Department of Veterans Affairs (VA) request for proposals (RFP) for an upgrade to the chiller plant at a VA Medical Center. After a number of agency requests for dismissal and supplemental protests, GSZ’s protest was whittled down to three allegations, one of which was that ISS’s proposal, on its face, should have led the VA to conclude that the awardee did not intend to comply with the subcontracting limitations set forth in VAAR clause 852.219-10(c)(3). The crux of GSZ’s argument was that it would be “impossible” for ISS to spend 15 percent of the cost of the contract performance on its own employees because ISS’s proposal listed only four ISS employees in the “key personnel” portion of its technical proposal. By GSZ’s calculations, compliance would require ISS to spend at least $1,299,450 on those four employees, resulting in unworkable hourly rates.

The Government Accountability Office (GAO) made short work of this contention. After noting that, while it generally does not review whether a small business offeror’s compliance with the subcontracting limitation clause because it is a matter of responsibility, and the contractor’s actual compliance is a matter of contract administration, GAO reiterated the exception to that rule: “where a proposal, on its face, should lead an agency to conclude that an offeror has not agreed to comply with the subcontracting limitation, the matter is one of proposal’s acceptability.” Here, GSZ alleged the required facial noncompliance.

In response, the VA had relied, strangely, on a size determination issued by the Small Business Administration in an entirely different procurement. While the GAO concluded that the size determination was irrelevant to the subcontracting limitation issue, it nevertheless concluded that nothing on the face of ISS’s proposal should have led the VA to conclude that ISS would not comply with the subcontracting limitation. First, as repeatedly noted by GAO in other decisions, the focus on an offeror’s number of employees, without more, does not establish that the offeror takes exception to the subcontracting limitation. In addition, just because the ISS proposal only mentions four “key personnel” by name, the proposal does not indicate that those four people represent the entirety of ISS’s workforce on the project or that ISS would not hire additional personnel as needed to complete the project or to comply with the subcontracting limitations. Finally, the proposal made clear ISS’ intent to use an SDVOSB subcontractror to perform some of the work, an approach expressly allowed by the RFP ‘s subcontracting limitation clause. Because the clause allowed the prime to count the work of SDVOSB subcontractor’s towards its required share of the contract work, GAO found that ISS’s proposal, on its face, did not furnish any basis for finding that it took exception to the clause.

In other words, even though its information about the awardee’s size and current capabilities was “right”, it was not enough to support a successful protest. That does not mean that disappointed bidders should give up on this type of protest. But it does counsel a need for expectation management on the part of the protest and its legal team. At best, including the subcontract limitation protest ground as part of a larger protest may give a protester’s attorneys the opportunity to review the proposal for supporting information. But even if the proposal contents confirm the protester’s initial suspicions, that may not be sufficient for a win.

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