Companies must meet specific responsibility standards before being awarded U.S. federal contracts. The Federal Acquisition Regulation (FAR) lists prospective contractors’ general and special responsibility standards. FAR 9.103(b) requires contracting officers (CO) to make affirmative determinations of responsibility that are reasonably and factually supported. Disappointed contractors with adequate standing may challenge these determinations through post-award bid protests. Such responsibility determination challenges may be brought to the Court of Federal Claims (COFC) by alleging that the responsibility determination decision lacks a rational basis under the Administrative Procedure Act (APA) or involves a regulatory violation. Alternatively, such challenges may be brought to the Government Accountability Office (GAO) under its bid protest adjudication authority. However, both forums consider responsibility determinations firmly committed to the CO’s discretion, making such protests challenging to sustain. Nevertheless, the GAO will consider bid protests alleging that the CO’s determination of responsibility either unreasonably failed to consider relevant information or that the awardee could not meet the definitive criteria established by the solicitation.
Failure to Consider All Relevant Information
The CO is required to consider all relevant information when determining responsibility before authorizing awards. Furthermore, the CO is specifically required to ensure that the prospective contractor has a satisfactory integrity and business ethics record. While the GAO does not generally review the CO’s affirmative determination of responsibility, it does entertain evidence-backed allegations that the CO may have ignored information that would significantly impact the awardee’s determination of responsibility. In B-408558.4, the GAO sustained such a post-award protest to a best-value procurement conducted by the Department of Homeland Security (DHS) for office support services for U.S. Citizenship and Immigration Services (USCIS) field and asylum offices. In that case, in a separate matter before the award, the Department of Justice (DOJ) had announced its intervention in a qui tam lawsuit against the parent company of the eventual awardee under the False Claims Act (FCA).
The lawsuit alleged that the awardee’s parent company failed to perform quality control reviews in connection with background investigations it conducted for the Office of Personnel Management (OPM). The possible damages resulting from the gross violations alleged in the lawsuit were estimated to be over $1 billion. Despite being aware of the ongoing FCA litigation, the CO made a favorable responsibility determination for the awardee. The protestor was the only other bidder in the procurement and thus had a substantial chance of receiving the award if the awardee was deemed non-responsible. In the post-award protest, the protestor alleged that the CO improperly failed to consider the allegations of fraud against the awardee’s parent company in making the determination of responsibility.
The GAO conducted a hearing in connection with the protest, during which the CO testified that while she was aware of the allegations against the awardee’s parent company, she had not read the DOJ’s civil complaint detailing the allegations. The CO further testified that she did not receive, nor did she request any information regarding the alleged fraud from either the awardee or its parent company before making the responsibility determination. The CO similarly did not contact DOJ or OPM officials to seek additional information about the allegations. The CO’s only source of information regarding the allegations in the lawsuit seemed to be media reports, along with the agency counsel’s generalized description of the allegations. The GAO also found that the CO misunderstood and, thus, failed to consider the close relationship between the awardee and its parent company with respect to performance on the contract.
Additionally, based on the CO’s testimony, the GAO found that there were reasons to question whether she adequately understood the scope of a CO’s authority in determining responsibility. Specifically, the CO gave conflicting responses at different points of the hearing regarding whether she could find a contractor non-responsible in the absence of a suspension or debarment. Finally, the GAO also noted that the CO may have been mistaken regarding the applicable presumptions in a responsibility determination. Generally, since the CO’s responsibility determination is made affirmatively, the contractor must be presumed non-responsible until the CO finds affirmative information clearly indicating responsibility. In contrast, the CO, in this instance, seemed to have mistakenly shifted the presumption to one of responsibility.
Based on these findings, the GAO sustained the protest, stating that the CO failed to obtain and, thus, failed to consider all relevant information regarding the DOJ’s allegations of fraud before making a responsibility determination. Furthermore, since the CO was also mistaken about the awardee’s relationship to its parent company as relevant to performance on the contract and failed to apply the appropriate presumption standards during the responsibility determination, the GAO sustained the protest and recommended that the DHS make a new responsibility determination.
Failure to Meet Definitive Responsibility Criteria Included in the Solicitation
Definitive responsibility criteria refer to objective standards in an RFP that are specifically included to measure a prospective contractor’s ability to perform on the contract. If a prospective contractor fails to meet these specifically included criteria, it is deemed non-responsible and cannot be awarded the contract. In B-401663.4, the GAO sustained a protest to a lowest price technically acceptable (LPTA) procurement conducted by the Department of Veterans Affairs (VA) for construction services in Sarasota, FL, because the awardee failed to meet the solicitation’s definitive responsibility criteria. Among other experience requirements, the request for proposal (RFP) specifically required the contractor to have at least five years of experience as a general contractor and at least five years of experience on earthwork projects. The protestor alleged the awardee was non-responsible as it had not been in business for five years.
The GAO first resolved a preliminary standing matter in favor of the protestor. The VA had alleged that the protestor lacked standing to bring the protest because it was not the next lowest bidder in the LPTA procurement. The GAO determined that since the agency had not evaluated the non-price factors of all offerors, it had no way of definitively demonstrating that the protestor would not be next in line for the award, even though it did not have the next lowest price. The GAO then addressed the protestor’s allegations. It was undisputed that the awardee had not been in business for five years. However, the awardee sought to utilize the experience of its subcontractor to meet the RFP’s definitive criteria. The GAO decided that since the RFP used the term “general contractor” to describe the requirement at issue, the only reasonable interpretation would require the prime contractor or the awardee to have at least five years of experience as a general contractor doing earthwork projects.
The decision explained that while generally, subcontractor experience may be used to satisfy definitive responsibility criteria relating to experience for the prospective prime contractor, this was not possible when the solicitation specifically required that only the prime contractor’s experience be considered. In this case, since the prime contractor had only been in business since the year before, it did not meet the definitive responsibility criteria of the solicitation and was therefore deemed non-responsible. In sustaining the protest, the GAO referred the matter to the SBA for review under its Certificate of Competency (COC) procedures since the awardee was a small business and recommended the VA to continue evaluating other offers and select the next lowest priced technically acceptable proposal for award.
The FAR requires contractors to be deemed responsible before they may be awarded federal contracts. Contractors must carefully consider the general responsibility standards outlined in the FAR and specific responsibility criteria outlined in the solicitation to avoid responsibility-related complications before award. When challenging contract awards, contractors should be aware of any extraneous factors that may impact the determination of responsibility of their competitors. Contractors in such situations must also carefully review the RFP for any requirements that may be considered specific responsibility criteria and challenge the award decision when the eventual awardee falls short of meeting the requirements.
This Bid Protest 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.
