The government’s disclosure of proprietary information to third parties may form the basis of a pre-award protest when an agency improperly incorporates the information in a solicitation. To be successful in such pre-award protests, the protester must provide clear and convincing evidence that its proprietary rights were violated. The protester must demonstrate that the proprietary information was marked as such or that it was disclosed to the government in confidence. Additionally, the protester must show that the preparation of the information involved significant time and expense and that it contains material or concepts that cannot be independently obtained from publicly available literature or common knowledge. Protest adjudicative forums, such as the Government Accountability Office (GAO), will not sustain a protest based on improper disclosure of proprietary information unless the protester satisfies both elements. That is, such a protest will be denied if the protester fails to appropriately mark proprietary information in its submissions to the government, or if the information consists solely of ideas or concepts that are obvious and not innovative or unique.

In B-416685.6, a bid protest decision issued on May 4, 2020, the GAO denied a protest alleging that the government improperly disclosed proprietary information from an unsolicited proposal in a solicitation because the information was not innovative or unique. The protest involved certain systems on the Navy’s UC–35C aircraft, which were similar to systems on an older UC–12W aircraft. In 2010, after delivery of six UC–12Ws, the Navy had discovered that the aircraft's engines exceeded the maximum allowable Internal Turbine Temperature (ITT). The Navy leased expensive spare engines to keep the aircraft operational before developing an engine aural tone warning system in the 2011-2012 timeframe to resolve the ITT issue. The new warning system provided an audible tone to alert the aircrew when engine temperatures approached the allowable limits. As a direct result of the aural tone system, the Navy no longer needed the expensive spare engines to keep the UC-12W aircraft operational.

The General Services Administration (GSA) Federal Supply Schedule (FSS) program provides federal agencies with a streamlined process for acquiring commercial goods and services. The GSA awards indefinite-delivery contracts after following the contractor responsibility requirements outlined in the Federal Acquisition Regulation (FAR). Under FAR 9.1, contracting officers (COs) must determine a prospective contractor’s responsibility, or capability to perform, before awarding a contract. The requirement for an affirmative responsibility determination applies to the award of the FSS contract, not to orders placed under it. This is because responsibility determinations must be made for prospective contractors rather than existing ones, and the GSA makes an affirmative responsibility determination before the contractor’s overarching indefinite-delivery FSS contract is awarded. This approach is consistent with the regulatory framework governing responsibility determinations, which renders the concept of responsibility inapplicable once a contract has been awarded. However, if the CO nevertheless elects to make a responsibility determination before placing an FSS order, he must do so in a reasonable manner.

The government provides contractors with a variety of information during the solicitation process before a contract is awarded. Such information may be furnished through pre-award conferences, questions and answers, solicitation attachments, specifications, diagrams, drawings, contract provisions, etc. When the government misstates material facts during the contract formation process, it may later be liable under express provisions of the contract or for breaching an implied warranty that it furnishes correct information. In this regard, when the government provides incorrect representations and directs or expects prospective offerors to base their contract pricing on those misrepresentations, the government is responsible for any losses the contractor suffers as a result of its reliance on that information. In other words, when the government instructs offerors to base their pricing on data it furnishes, it assumes responsibility for ensuring that the data accurately reflects the conditions the contractor will encounter during performance. In such cases, as long as the contractor can demonstrate that the government's information was incorrect, it need not prove the government's intent to deceive or bad faith. Furthermore, the contractor may also not need to prove that the incorrect information was inadequately or negligently prepared.

Procuring agencies must make an affirmative determination of contractor responsibility before awarding federal contracts. While a responsibility determination is necessary for all successful offerors, a non-responsibility determination that precludes a small business from receiving an award must be referred to the Small Business Administration (SBA). Specifically, SBA regulations require contracting officers (COs) to refer to the SBA for a Certificate of Competency (COC) determination, all small businesses deemed ineligible for award on a non-comparative basis under a responsibility-related factor, such as past performance or key personnel qualifications. In this regard, non-comparative responsibility factors are evaluated on a pass/fail, go/no-go, acceptable/non-acceptable or another similar basis. Once the referral is made, the SBA informs the small business of the non-responsibility determination and offers it the opportunity to apply for a COC. The SBA then typically reviews COC applications within 15 days. If an agency improperly fails to refer a small business for a COC determination, the small business may file a bid protest at the Government Accountability Office (GAO), alleging violation of the SBA’s COC procedures.