Government Contracts Monitor

Recent GAO Decision Reveals That \"Name That Offeror\" Is Not Just a Game

December 9, 2011

Every once in awhile there’s a Government Accountability Office (“GAO”) bid-protest decision that causes the reader to ask, “What was the protestor thinking?”.

  Integral Systems, Inc., Comp. Gen. Dec. No. B-405303.1 (Aug. 16, 2011), is just such a case.  In Integral Systems, the GAO dismissed a protest filed by the parent corporation of the offeror because the offeror/subsidiary – not its parent – was the interested party to protest the offeror’s exclusion from the competitive range.  How in the world did this happen?  (Beware, the answer is not pretty.)

The story began in July 2010, when the General Services Administration (“GSA”) issued a major solicitation to obtain multiple contractors to provide worldwide commercial satellite communications (SATCOM) solutions.  In August 2010, CVG, Inc. (“CVG”), which identified itself as a wholly owned subsidiary of Integral Systems, Inc. (“ISI”), submitted a proposal in response to the solicitation.  CVG’s proposal noted that ISI had purchased CVG in early 2010 and that CVG would eventually be renamed the “Integral Systems SATCOM Solutions Division” and do business as “Integral Systems SATCOM Solutions”.  Notwithstanding the references to ISI in the proposal, however, the proposal reflected that CVG was the offeror.

The story got ugly in June 2011 – almost a year later – when the GSA notified CVG that its proposal had been excluded from the competitive range.  ISI filed a timely protest, identifying itself as “Integral Systems, Inc., d.b.a. CVG, Inc.”  Predictably, the GSA moved to dismiss the protest, arguing that ISI was not an interested party to protest CVG’s exclusion from the competitive range.

Just as predictably, the GAO agreed with the GSA, holding that “notwithstanding the degree of ISI’s contemplated involvement in performance of the contract, the record shows that CVG, and not ISI, was the actual offeror, and ISI therefore does not qualify as an interested party for purposes of filing a protest with our Office.”  The GAO rejected ISI’s claim that it was an interested party because CVG’s proposal indicated that a single, post-acquisition entity – the Integral Systems SATCOM division – would perform the contract.  The GAO gave short shrift to this argument, noting that ISI had not shown that it – as opposed to CVG or CVG doing business as the Integral Systems SATCOM Solutions Division – would be the contracting party.  The GAO further explained that ISI had not demonstrated that the Integral Systems SATCOM Solutions Division had become an unincorporated division of ISI such that ISI would be the contracting party.  In sum, ISI had not shown that CVG was anything other than a separate and distinct entity from ISI.  Accordingly, the GAO dismissed ISI’s protest, effectively excluding ISI and CVG from a procurement opportunity valued at some $2.6 billion.

All this begs the question, “How could this have happened?”  Frankly, I wish I knew.  What I do know is this: it’s critical for contractors to respect corporate formalities when identifying themselves in proposals, much less in filing protests.

 

John A. Howell is the attorney responsible for the content of this article.