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Post-Award Protests Due to Latent Ambiguities

A basic tenet of the U.S. federal public procurement system is a fair and competitive bid process. This means federal agencies must provide potential contractors with sufficiently detailed solicitations that are clear and concise so they may compete intelligently and on a relatively equal basis. However, sometimes, issues arise when the solicitation itself contains hidden pitfalls. These are known as latent ambiguities. A latent ambiguity in a bid protest arises when a defect in the solicitation is not initially visible but only becomes apparent with the introduction of additional evidence, such as additional technical specifications, past performance evaluations, or discussions. Latent ambiguities may be differentiated from patent ambiguities, which are apparent solicitation defects or errors evident on the face of the solicitation.

A latent ambiguity may arise due to various reasons, including poorly drafted solicitation provisions, inconsistent or conflicting solicitation language, a lack of adequate clarification or guidance from the agency in response to offeror queries, or just a change in circumstances since the issuance of the solicitation. To demonstrate the presence of a latent ambiguity, the protestor should demonstrate that the ambiguity is not readily resolvable by referencing the solicitation or any applicable regulations. Furthermore, the protestor must prove that the latent ambiguity is genuine and material. To prove materiality, contractors can demonstrate that the latent ambiguity ultimately had a bearing on the source selection decision. The protestor must also show reliance on its reasonable interpretation of the latent ambiguity and competitive prejudice stemming from that reasonable reliance. In other words, the protestor must show that the latent ambiguity could have two or more reasonable interpretations and that the protestor relied on its own reasonable interpretation of the latent ambiguity in drafting its proposal. Finally, the protestor’s reliance on its own reasonable interpretation should have resulted in competitive prejudice.

Let us review a sustained post-award protest decision due to a latent ambiguity in the solicitation. In B-415042; B-415042.2, a Government Accountability Office (GAO) protest involving a Navy construction contract from 2017, a latent ambiguity existed in the solicitation due to its past performance reference requirements being susceptible to two reasonable interpretations. The solicitation at issue involved a construction contract competed on a lowest price technically acceptable (LPTA) basis. To demonstrate experience under the past performance evaluation factor, the request for proposal (RFP) in pertinent parts permitted offerors to “utilize the experience of a subcontractor that will perform major or critical aspects of the requirement to demonstrate construction experience.”

The protestor had proposed the lowest evaluated price. However, its proposal was found technically unacceptable due to its past performance section being assigned an unacceptable rating for airfield construction. The prime contractor had submitted its own past performance reference to demonstrate airfield construction experience. However, in the reference projects, the prime contractor had not performed the airfield construction portion of the work, having delegated it to a subcontractor. On the present project, the prime contractor again did not intend to perform the airfield construction portion of the project, instead delegating that work to a subcontractor. The Navy found the protestor’s proposal unacceptable because it relied on a subcontractor to perform the airfield portion of the work but did not include a past performance reference or a letter of intent from the subcontractor for the airfield portion of the work. The Navy explained that the airfield construction portion of the project was of such importance that the government needed to evaluate the experience of the actual contractor who would be performing that work. In response, the protestor argued that it properly relied on its own interpretation of the RFP requirements, which allowed it to claim credit for its own experience as a prime contractor overseeing but not necessarily performing the airfield construction. Therefore, according to the prime contractor, its proposal was technically compliant because it included three prime contractor past performance references in which it oversaw but did not perform airfield construction work.

Conducting a plain language review, the GAO found that the RFP’s past performance reference requirements were latently ambiguous. The GAO determined that both the protestor and the Navy’s interpretation of the RFP requirements were reasonable. The GAO noted that the RFP did not specify that to receive credit for a past performance reference, the corresponding construction work had to be performed by the contractor or subcontractor whose past performance reference was submitted. Therefore, the protestor was reasonable in submitting its own past performance references where it oversaw but did not perform the airfield construction work, as the RFP did not rule out such an interpretation. The GAO determined that the agency’s narrower interpretation and the protestor’s expansive interpretation of the term “perform” were both reasonable in the context of the RFP’s prior experience factor requirements. GAO further determined that these dual interpretations of the term “perform” were not so glaring or evident as to be considered a patent ambiguity – and thus, a latent ambiguity existed in the solicitation’s terms.

In sustaining the protest, GAO recommended that the agency amend the solicitation to clarify the past performance reference requirement for the airfield construction portion of the work, permitting the protestor to resubmit its proposal based on the redefined requirements. Latent ambiguities can be challenging to identify as they are not readily apparent in a solicitation but only become clear with additional information and context. A good indicator of the existence of such ambiguities is if a solicitation requirement is open to more than one reasonable interpretation. The past performance reference requirements here were an example of such a latent ambiguity that only became apparent after the government’s evaluation. By their very nature, latent ambiguities in a solicitation may trip up even the most experienced contractors. Therefore, prospective contractors suspecting latent ambiguities in solicitations should seek clarifications from the government or counsel as early in the process as possible.

This Bid Protests Insight provides a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.

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Contractors often face solicitations containing vague and uncertain terms or errors so evident that a reasonable bidder would request clarification before submitting its proposal. Such solicitations are said to have patent ambiguities and may be protested. While patent ambiguities come in a variety of forms, attentive offerors should be able to spot them when they find themselves unable to interpret the solicitation terms and submit a proposal that is responsive to all its requirements.

Contractors should be aware that the Court of Federal Claims (COFC) has previously held that the silence of a solicitation regarding information necessary to comply with its terms, including information needed to comply with testing or evaluation requirements, constitutes a patent ambiguity and must be protested pre-award. Similarly, the Government’s lack of disclosure of its preferred labor mix is an omission apparent from the face of the solicitation.

Notably, the protesting contractor’s actual knowledge of the ambiguity is not determinative of whether the solicitation contains a patent ambiguity. Thus, protesting a solicitation based on a patent ambiguity can be a valuable tool for the savvy contractor as the basis of this pre-award protest ground is a reasonable bidder’s perception of the solicitation package. In other words, as long as there are two or more reasonable interpretations of a solicitation term, the adjudicating forum is likely to find that a patent ambiguity exists in the solicitation.

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The primary method for managing risks associated with latent physical conditions encountered in construction projects is the differing site conditions clause in Federal Acquisition Regulation (FAR) 52.236-2. Since fully redressable claims under specifically included contract clauses may not be brought under separate breach of contract claims, most claims for hidden site conditions are brought under the differing site conditions clause. However, certain federal contracts for smaller construction projects awarded through simplified procedures, and some custom-negotiated construction contracts may lack a well-defined differing site conditions clause. In such cases, contractors must pursue their claims arising out of unforeseen conditions, such as claims related to subsurface conditions under traditional breach of contract theories. Additionally, when faced with unforeseeable events like extreme and unpredictable weather or unanticipated changes in labor conditions that are not typically covered by the differing site conditions clause, construction contractors may opt to initiate breach of contract claims to recover their increased costs.

The Government’s non-disclosure or misrepresentation of information material to site conditions are two breach of contract actions available to construction contractors in such situations. To be successful in a non-disclosure claim, the construction contractor must demonstrate that the Government possessed information pertinent to a material site condition, which it failed to disclose to the contractor. The contractor must also establish that the presence of the material site condition could not have been readily determined through a site inspection or other reasonable methods. Government misrepresentation is the other breach of contract claim commonly applicable in contracts without a differing site conditions clause. A misrepresentation claim is essentially based on the Government breaching its duty to disclose its superior knowledge of the site condition. To prove that the Government breached its duty to disclose, the Court of Federal Claims (COFC) has previously required that the contractor demonstrate Government culpability. One way of demonstrating Government culpability is by proving that the Government knew that the contractor was unaware of the differing site conditions. However, the Federal Circuit has recently rejected the Government culpability requirement, making contractor claims easier to prove in such situations. Therefore, depending upon the circumstances, the adjudicative forum’s analysis for a breach of contract claim for Government misrepresentation is similar if not identical to a differing site conditions claim.

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The interpretation of federal contracts is generally governed by the plain language of the contract. This means that adjudicative forums assign meaning to federal contracts primarily by giving the contractual words their ordinary sense and without referring to extrinsic evidence. If the plain meaning of contractual words is unambiguous, that meaning generally controls for the purposes of contract interpretation. However, there may be situations where the contract terms are unclear or ambiguous permitting more than one reasonable interpretation. In such situations, adjudicative forums may rely on certain extrinsic evidence to resolve contract interpretation disputes.

  • Extrinsic Evidence in the Solicitation Phase

In resolving the meaning of ambiguous terms in case of interpretive disputes in federal contracts, adjudicative forums often look to the discussions between the government and prospective contractors in the solicitation phase of the procurement. Statements made by government officials during their interactions with prospective contractors at pre-proposal conferences, industry days, or pre-award testing may be used as evidence in contract interpretations as long as such statements do not directly contradict the contract language. As with other extrinsic evidence in the context of contract interpretation, written communications, such as handouts and meeting minutes, generally hold much more weight than oral statements made by government officials.

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Since federal contracts typically contain many documents, clauses, and materials outlining the rights, duties and responsibilities of the contracting parties, it is often difficult to interpret the intent of the parties at the time of drafting or formation. In such situations, an order of precedence clause is used to establish priority of various documents forming the federal contract. The Federal Acquisition Regulation (FAR) contains order of precedence clauses to resolve inconsistencies between contract documents. Depending on the type of procurement at issue, the contract may include the Order of precedence clause at FAR 52.214-29 or FAR 52.215-8. FAR § 14.201-7(d) requires contracting officers to insert the order of precedence clause at FAR 52.214-29 in all solicitations and contracts involving sealed bidding where the uniform contract format is applicable. Similarly, FAR § 15.209(h) instructs contracting officers to insert the order of precedence clause at FAR 52.215-8 for negotiated procurements. Notably, these order of precedence clauses are often supplemented by agency-specific precedence clauses and provide for a structured framework for the resolution of inconsistencies between various contract documents.

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Post-Award Protests Due to Latent Ambiguities

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