Recently, after losing a contract for full line food service with the Defense Logistics Agency, a company protested at GAO. At the heart of their protest was the fact that the agency had used a solicitation criterion to assess their proposal that hadn’t been shared with bidders during the solicitation. GAO was tasked with judging whether the procurement had been handled fairly, and ultimately, they sided with the losing bidder. GAO’s ruling has implications for contractors who find themselves surprised to lose out on contracts due to undisclosed evaluation criteria.
A Seemingly Straightforward Solicitation
The Defense Logistics Agency (DLA) sought a prime vendor to run a warehouse and distribution system for food and non-food goods, serving the military and other Federal agencies in Japan, Singapore, Diego Garcia, and the Philippines. They were looking for full line food service (i.e. food service that extends to other hard commodities like plastic forks, straws, cups, etc.), and sought a competitor with proven experience doing as much. Beyond experience, DLA rated bidders in the areas of warehouse location, capacity, and price.
The protestor, EFS Ebrex SARL (“Ebrex”), had a very good proposal and a substantial price advantage. In fact, their proposal quoted the price of about $64M, while the winner’s proposal came with the price tag of almost $70M. But, in the eyes of DLA, Ebrex’s 10% premium was insufficient to overcome their poor rating in the category of experience. Having a proven track record of full line food service distributor experience, Ebrex was surprised to receiving an experience rating of “marginal.” But it turned out that the agency had imposed a threshold never mentioned in the solicitation, which was ultimately Ebrex’s downfall.
The Undisclosed Threshold
Although DLA had made it clear that they would rate bidders by their experience delivering full line food service distribution, they hadn’t specified an important qualification used in the evaluation. Only after the contract was awarded did the agency reveal that contenders needed to have concurrent full line food service contracts that would amount to 80% of the estimated annual dollar requirement for the contract. DLA wanted bidders to demonstrate a certain level of scale in terms of their operations, not just general experience doing so.
If Ebrex had been far from the 80% threshold, perhaps they wouldn’t have bothered to protest. But Ebrex fell just below the requirement. Other than the threshold, there wasn’t a huge difference between the two companies’ proposals, save for Ebrex’s better price. At GAO the disappointed bidder argued that this specific evaluation criterion should have been disclosed in the solicitation.
GAO Examines the Tension Between Qualitative and Quantitative Evaluation Criteria
The legal test that GAO applied was this: an agency doesn’t have to put everything in the solicitation, so long as the consideration it’s using is “reasonably and logically encompassed” by the disclosed criteria. In other words, if the 80% threshold could be “reasonably and logically encompassed” by the known evaluation criteria of proven experience in full line food service distribution, then DLA could fairly omit it from the solicitation.
In this case, GAO determined that an 80% threshold isn’t something an offeror can reasonably expect just by looking at DLA’s evaluation criteria. Although GAO gives agencies the benefit of judgment, this case represents the tipping point at which the issue upholds a protest.
Although the solicitation described a qualitative evaluation, one part of it ended up being rigidly quantitative. Instead of judging where a bidder’s experience fell on a spectrum, the agency applied a numerical pass/fail test, which seemed inconsistent with (or at least surprising given) the disclosed criteria. If DLA had applied qualitative judgment to the experience factor, they might well have concluded that Ebrex’s better price was worth experience that nearly amounted to 80% of the contract value.
Now, DLA will have to take another look at their evaluation criteria, decide what they want, express it clearly in the solicitation, and then have a new round of offers and evaluations. So it’s back to the drawing board.
For more on this case, listen to my interview on Federal News Radio’s “Federal Drive with Tom Temin.”