Recent Protest of Army Acquisition Has Big Implications for Future Corrective Actions

Often regarded as one of the simplest acquisition methods, Lowest Price Technically Acceptable (LPTA) procurements award the contract to the offeror that both meets an agency’s technical requirements and offers the lowest price. Yet when the Army set out to acquire a replacement for an existing Indefinite Delivery/Indefinite Quantity (IDIQ) contract through an LPTA procurement, things got complicated. In fact, a whopping 21 companies ended up protesting at GAO. When the army tried to correct the problematic procurement with corrective action, the original awardees took the case to the COFC. But it didn’t end there, and the case eventually made its way to the Court of Appeals for the Federal Circuit (CAFC). The zigzagging case sets a precedent for whether an agency must narrowly tailor corrective action to fit a procurement’s perceived flaw or if the corrective action need only be rationally related to that flaw. 

A Seemingly Straightforward Ask

It should have been simple. The Army sought to replace an existing indefinite-quantity multiple award contract for commercial off-the-shelf (COTS) items like laptops, desktops, and printers. Wanting to buy a large amount of equipment, the Army created and asked vendors to fill out an extensive spreadsheet to report information about the products they were proposing. But it turned out that the spreadsheet was complex and confusing, and out of 58 proposals, only 9 were technically acceptable under the pass/fail criteria. Most of the other 49 had fallen victim to the baffling spreadsheet format. It was a pretty dramatic failure rate, and 21 of the disqualified offerors headed to GAO to protest.


The Bones of a Protest

The disappointed offerors complained that there had been nothing wrong with their offers. The problem, they argued, was that the confusing format of the Army’s spreadsheet and the instructions for filling out the spreadsheet. In fact, the spreadsheets had been so confusing that the offerors had been disqualified for filling them out in a way the Army considered wrong, not for any substantive defect with their offered products.

There was something to their argument. The purpose of the form in a procurement is to figure out whether a vendor meets the requirements of the solicitation—not to figure out whether the vendor can fill out a form! But GAO never got to decide on the case because the agency preemptively decided to take corrective action by opening discussions with all offerors, getting revised proposals (both price and technical), and making new award decisions. The agency also set out to level the playing field by giving offerors a listing of all prices proposed, without identifying the offeror that proposed them.


Debate Over the Correct Corrective Action at COFC

The background behind the Army’s corrective action is a DFARS regulation stating that for Department of Defense procurements valued at over $100M, discussions are the norm. Yet two awardees protested the correctly action to the COFC, saying that the Army’s corrective action went too far. Rather than open discussions, the protestors said, the Government should have used clarifications to correct the problem. Furthermore, they felt that the corrective action had been prejudiced against them now that their prices had been exposed.

The COFC applied a “narrowly tailored” test to the protest on the belief that the Government is obligated to restrict any corrective action to treat the perceived problem. To open discussions means that the Government must give all offerors an opportunity to revise their proposals, and then submit their best and final offers. In clarifications, however, an individual can just clarify an aspect of the proposal (not change the entire proposal itself). The COFC agreed that the problem could have been corrected with clarifications, sustaining the protest and forbidding the planned corrective action.


The CAFC Weighs In

In response to the COFC’s decision, the Army and three of the original awardee protestors appealed to the Court of Appeals for the Federal Circuit (CAFC). The CAFC rocked the boat once again, saying that the Army had done the right thing when they chose to open discussions, and that the COFC had applied the wrong standard in coming to their decision.

The question, then, is what test do you apply to a corrective action? The COFC had followed a trend in recent lower court decisions in which corrective action must “narrowly target” the perceived flaws in a given procurement. But the Court said that the test is simply that the corrective action have a reasonable basis. In other words, the corrective action doesn’t necessarily have to be narrow, as long as there’s a rational reason for the steps taken. The appellate court thought that the regulation making discussions the norm in procurements of this size clearly justified the Army’s corrective action. Also, the agency felt that revised proposals and releasing the prices would create better outcomes. And the CAFC agreed.


Wider Implications of the CAFC’s Ruling

There are two aspects of this ruling that have wider implications for future cases. First, the decision stops what had been a growing trend to limit the scope of corrective action to perceived defects. Next, it indicates that you can’t correct errors like the one in the Army’s acquisition with clarifications. As such, the Government will be limited in their ability to use clarifications as future corrective action. Moving forward, the Government will have more latitude in its correction actions. But the Government won’t be able to use clarifications—as opposed to discussions – so broadly. Finally, with large indefinite-quantity multiple award contracts like this one, which are typically valued at over $100M, we will probably see many more situations in which the Government conducts discussions. Hopefully, this will allow for better proposals, and better contracts.

Dell Federal Systems v. US, 17-2516. Oct 5, 2018

For more on this case, listen to my interview on Federal News Radio’s “Federal Drive with Tom Temin.”

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