Bid protest adjudicative forums such as the Government Accountability Office (GAO) have consistently held that a proposal that fails to meet a material solicitation requirement is considered technically unacceptable and cannot form the basis of an award. When included in the solicitation as mandatory, a prospective contractor’s adherence to the government’s small business participation requirements may be considered a material solicitation requirement. In such solicitations, an adequate response to a mandatory small business participation requirement not only addresses the requirement in the relevant proposal section but is also consistent across all sections of the offeror’s proposal, including its pricing. When an offeror fails to adequately respond to a solicitation’s mandatory small business participation requirement, its proposal contains a material defect. Such a proposal defect is typically only correctable when the government opens discussions, permitting offerors to submit revised proposals. Thus, if the procuring agency fails to open discussions to resolve the material proposal defect, it may not then properly award the contract to an offeror that failed to meet the solicitation’s mandatory requirements.
In B-4226972.2; B-4226972.5; B-4226972.9; B-4226972.12, a decision issued on October 4, 2024, the GAO sustained a protest challenging the award to an offeror that had submitted a proposal that was internally inconsistent with respect to the awardee’s compliance with the material small business participation requirements. Additionally, the procuring agency’s decision to attempt to resolve the inconsistencies in the awardee’s proposal without reopening discussions was also unreasonable. The solicitation in question contemplated the issuance of multiple task orders for Army prepositioned stock to support four locations in the U.S. Indo-Pacific Command under the Logistic Civil Augmentation Program (LOGCAP) V indefinite-delivery, indefinite quantity (IDIQ) contract. Offerors were only required to submit one proposal for all four locations. The proposal evaluation was conducted on a best-value tradeoff basis, with small business participation a separate and distinct factor of higher importance than the cost/price factor. The eventual task orders were slated to include cost-plus-fixed-fee, fixed-price, and non-fee-bearing-cost contract line item numbers (CLINs).
The awardee proposed the lowest cost/price of ~$63.5 M and had identical adjectival ratings in the non-cost/price factors to the offeror that proposed the second lowest cost/price of ~$110.5 M. The offeror that proposed the second lowest cost/price protested the award decision, along with the offeror that proposed the third lowest cost/price of ~$112 M. During the contemporaneous evaluation, the source selection authority (SSA) noted the similarities in the awardee's and the protestor's non-cost/price proposals and stated that cost/price was the controlling factor for the award. Notably, to be considered acceptable under the small business participation factor, offerors were required to submit a small business participation commitment document reflecting that they would meet or exceed the small business subcontracting requirements, including subcontracting at least two percent of the total value of the task order to a small business. Importantly, the solicitation expressly warned offerors that their proposals had to be rated as “acceptable” under the small business participation factor to be eligible for award, making an adequate response to the factor mandatory.
During proposal evaluations, the Army found that the awardee’s proposal contained seemingly contradictory language regarding its proposed small business subcontracting plan. Specifically, while the awardee’s small business participation proposal stated that it would meet or exceed the solicitation’s small business subcontracting goals, the awardee’s technical proposal provided that it would self-perform all task order requirements. Additionally, the awardee’s cost/price proposal did not include any subcontractor cost/price information, and all the awardee’s proposed personnel were its own employees. Owing to these inconsistencies in the awardee’s proposal, the Army recorded a contemporaneous evaluation note that the awardee’s proposed compliance with the small business participation requirements was not reflected in its cost/price proposal elements and, therefore, posed a risk of potential non-compliance. To resolve these inconsistencies, the contracting officer (CO) simply requested confirmation from the awardee that it intended to utilize small businesses on the contract in accordance with its small business participation proposal. Significantly, the CO instructed the awardee to only provide a “yes or no” response to his query and did not allow the awardee to revise its technical or cost/price proposals. Upon receiving a response in the affirmative, the Army upwardly adjusted the awardee’s cost/price by two percent to reflect the risk of non-compliance with the two percent small business subcontracting requirement and made the award.
In the post-award protest that followed, the protestors challenged various aspects of the Army’s evaluation of the proposals. The protest pointed to the internal inconsistencies in the awardee’s proposal and challenged the “acceptable” rating assigned to the awardee’s small business participation plan as unreasonable. The GAO began its analyses by reminding the Army that while it was generally reasonable for a procuring agency to accept as accurate, information provided by an offeror in its proposal – an offeror’s representations could not be accepted at face value when there was significant countervailing evidence sufficient to create doubt in the minds of evaluators as to whether the representations were, in fact, accurate. In this case, the awardee’s proposal was internally inconsistent with respect to its proposed use of small business contractors. Thus, it was unreasonable for the Army to accept the awardee’s representation that it would comply with the solicitation’s mandatory small business requirements.
Furthermore, the contradiction could not be resolved with a mere request for clarification, which was essentially what the Army’s attempt to cure the inconsistencies in the awardee’s proposal amounted to. To properly resolve the inconsistencies in its proposal, the awardee would have needed to revise all relevant sections of its proposal to reflect compliance with the solicitation’s material small business participation requirements. However, that opportunity was not afforded to the awardee because the awardee was only permitted to provide a limited “yes or no” response to the government’s request for clarification. Since such government requests for clarifications may not properly be used to cure proposal deficiencies or material omissions, it was unreasonable for the Army to make an award to the awardee without opening discussions.
Finally, the Army’s attempts to reconcile the inconsistencies in the awardee’s cost/price proposal through an upward adjustment in the awardee’s cost/price by two percent was also an inappropriate solution under the circumstances. Firstly, requests for clarifications may not be utilized to significantly alter technical or cost elements, or otherwise revise an offeror’s proposal. Additionally, the Army’s approach to resolving the inconsistencies in the awardee’s cost/price proposal was flawed because it assumed that the awardee’s potential small business subcontractors would use the same technical approach and pricing as the awardee had provided for its own performance. The GAO noted that the creation of risk-adjusted pricing in this case reflected the Army’s concession that the awardee’s proposal lacked any small business subcontractor cost/price information, which was a material requirement of the solicitation, considering its mandatory small business participation requirements. Thus, the Army’s attempt to cure the awardee’s incomplete and unacceptable proposal by creating an upward risk-adjusted cost/price following the request for clarification was unreasonable. Ultimately, the post-award protest was sustained on the grounds that the awardee’s proposal had failed to satisfy a material solicitation requirement due to the inconsistencies in its proposal with respect to the small business participation factor. Additionally, the Army determination that the inconsistencies in the awardee’s proposal were resolved without the opening of discussions was also unreasonable. Consequently, the GAO recommended that the Army conduct a reevaluation after opening discussions, solicit revised proposals, and make a new source selection decision, if necessary.
It is well established in bid protest jurisprudence that a proposal that fails to conform to a material solicitation requirement is technically unacceptable and cannot form the basis of an award. Contractors should be mindful that a proposal response that is internally inconsistent regarding a material solicitation requirement is subject to be flagged as non-compliant. As with other material requirements, if the solicitation contains mandatory small business participation requirements, contractors should ensure that their proposal adequately responds to those requirements. An adequate response not only describes the contractor’s plan to comply with the mandatory requirements in the small business participation section of the proposal, but also ensures that the plan is consistently reflected in other parts of the proposals, including its technical and the price sections. When responding to relatively high-value solicitations with several distinct and complex factors requiring the participation of a large proposal development team, it is recommended that contractors have the necessary checks and controls in place to ensure all material requirements are addressed satisfactorily and consistently across different proposal sections. Ultimately, such controls and processes may contribute to a higher success rate and reduce potential legal and administrative costs in the long run.
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.
