In February 2023, the Department of Energy (DOE) agreed to take corrective action following three bid protests filed at the Government Accountability Office (GAO). Thereafter, two of the original protestors, Kupono Government Services, LLC and Akima Systems Engineering, LLC, filed protests challenging the scope of DOE’s corrective action. In Kupono Gov’t Servs., LLC; Akima Sys. Eng’g, LLC, B-421392.9 (June 5, 2023), GAO sustained the protests, finding that DOE neither appropriately explained nor described its reasoning for the corrective action. In this blog, PilieroMazza reviews the facts of the case and offers important takeaways for government contractors who may be looking to file a bid protest in the future.
The Facts
In December of 2022, DOE awarded Eagle Harbor a hybrid indefinite delivery, indefinite quantity (IDIQ) contract for the management and operation of the agency’s national training center, which included cost-plus-award-fee, labor-hours, and fixed-price contract line items. Following the award, three disappointed offerors filed bid protests with GAO, challenging the agency’s evaluation of cost and non-cost proposals, the adequacy of discussions, and the reasonableness of the agency’s source selection decision. In response to the protests, DOE issued a notice indicating that it was going to take corrective action during which it would allow offerors to revise cost proposals only, would review other areas of its evaluation, and would make a new source selection decision. As a result, DOE requested that the protests be dismissed. Kupono objected to the dismissal of its protest, arguing that the agency’s corrective action was too narrow and that technical proposal revisions should also be allowed. However, GAO explained that any challenge to DOE’s proposed corrective action would constitute a new protest. GAO also highlighted that because DOE stated that it would review other areas of its evaluation, this could lead to the agency allowing revised technical proposals as well. Consequently, all three protests were dismissed as academic.
On February 27, 2023, shortly after GAO dismissed the prior protests, Kupono filed the subject protest challenging DOE’s proposed corrective action based on the contents of the agency’s dismissal request. Thereafter, on March 10, 2023, DOE sent letters to the offerors with additional information outlining its proposed corrective action, and establishing a March 29th deadline for submission of revised cost proposals. Akima filed its protest challenging the agency’s corrective action on March 29th, shortly before the deadline for revised costs proposals. Kupono also supplemented its initial corrective action protest after the agency issued its March 10th letter. Both protesters argued that the agency’s corrective action was improperly limited to the submission of revised cost proposals, that their respective cost and technical proposals are inextricably intertwined, and that, as a result, they should be permitted to revise both portions of their proposals. The protests were consolidated.
GAO’s Holding
At the outset, GAO explained that agencies have broad discretion in determining how to implement corrective action and that it will only object if an agency’s corrective action is unreasonable in relation to the error the agency is attempting to correct. Similarly, GAO reiterated that agencies are allowed to limit which parts of a proposal offerors may revise. However, agencies cannot prohibit offerors from revising parts of their proposal that are materially impacted by the agency’s corrective action. Measured against these principles, GAO sustained the protests for two reasons.
First, GAO found that the agency failed to articulate what, specifically, the flaws were in the procurement process. The record included a declaration from the contracting officer in support of DOE’s decision to take corrective action. With respect to the agency’s cost evaluation, the declaration included references to “mathematical errors” made and “errors in certain assumptions” that had been used by the evaluators. But according to GAO, the declaration offered no insight into, or information about, the nature of the errors the agency identified in its cost evaluation or how those errors impacted its evaluation. With respect to the agency’s technical evaluation, the contracting officer’s declaration included a representation that there were “some areas where the evaluations did not follow the applicable provisions of the solicitation and regulations as fully as they could have” and that DOE “will revise those areas of the evaluations.” Again, GAO concluded that this offered no insight into the nature of the errors the agency identified or how those errors impacted the evaluation.
Second, GAO found that because it could not tell what the concerns were that gave rise to the agency’s decision to take corrective action, it could not determine whether the agency’s proposed corrective action—soliciting only revised cost proposals—was appropriate to remedy DOE’s unidentified concerns.
When determining what recommendation to make, GAO explained that the protestors had shown that because the agency was soliciting a cost-reimbursement type contract, their respective cost and technical proposals are inextricably intertwined. In this regard, both protestors were able to identify examples of how revisions to their cost proposals would necessarily impact their technical proposals. For instance, Kupono directed GAO to the solicitation’s proposal instructions for the staffing plan where offerors were told to “detail their ability to recruit, obtain, and retain personnel to ensure stable operations, to address their plans for the use and retention of incumbent staff, and to address risks inherent in their proposed staffing approaches.” Kupono argued that a change to its cost proposal would affect its proposed technical approach to recruiting, obtaining, and retaining personnel. Similarly, Akima detailed how its technical proposal’s description of employee health insurance benefits would be impacted by any modifications to its cost proposal.
Ultimately, GAO found that DOE erred in limiting its corrective action to cost proposal revisions only, and recommended the agency permit offerors to revise any aspect of their proposals or, in the alternative, any aspect of their proposals impacted by cost proposal revisions.
Takeaways
- While agencies have broad discretion in implementing corrective action, the corrective action must be appropriate to remedy the concerns that prompted the agency to take corrective action.
- Offerors cannot be prohibited from revising aspects of their proposals that are materially impacted by an agency’s corrective action.
- GAO will sustain a protest challenging an agency’s corrective action where an agency fails to articulate the flaws in the procurement process that prompted corrective action—because without that information, GAO cannot determine whether the corrective action is a reasonable remedy to those flaws.
- The deadline to file a protest challenging a proposed corrective action can depend on several factors. However, an offeror cannot wait for the results of corrective action to play out and then challenge the scope of the corrective action.
If you have questions about this case or want to discuss a potential bid protest, please contact Sam Finnerty, the author of this blog, or another member of PilieroMazza’s Government Contracts or Bid Protests practice groups.
