Link: GAO Opinion
Agency: Department of the Army
Disposition: Protest denied.
Keywords: Material Terms of an RFP
General Counsel P.C. Highlight: Clearly stated RFP requirements are considered material to the needs of the government, and a proposal that fails to conform to such material terms is unacceptable and may not form the basis for award. It is a fundamental principle in a negotiated procurement that a proposal that fails to conform to a material solicitation requirement is unacceptable.
AC4S, Inc., a small business, protests the elimination of its proposal from consideration for award under a request for proposals (RFP), issued by the Department of the Army for information technology services.
The RFP was issued as a total set-aside for small business, to establish a multiple award indefinite-delivery/indefinite-quantity (ID/IQ) contract for a range of services and solutions necessary to implement the agency’s enterprise infrastructure and infostructure goals. To achieve this end, the RFP sought to enter into “performance-based” arrangements with successful offerors. The RFP noted that establishing performance based arrangements introduced several changes from traditional procurement approaches, including the use of a statement of objectives (SOO) rather than a statement of work (SOW). Under a SOO, the government describes its requirements in terms of desired objectives, and offerors are free to propose solutions that they believe will best meet or exceed those objectives. After award, the agency monitors and evaluates contractor performance using performance metrics established by the contract. These metrics gauge a contractor’s level of success in meeting SOO objectives, and provide for performance-related incentives and disincentives. The RFP also advised that the agency contemplated making award without discussions. According to the RFP, the awards would be made to offerors with proposals determined to be the most beneficial, considering three evaluation factors: mission support, performance risk, and price.
The agency made award without discussions, and AC4S received its debriefing. During the debriefing, AC4S learned that its proposal had received a red/unacceptable rating under the management approach subfactor, which resulted in a red/unacceptable rating for the entire mission support evaluation factor, and a determination that AC4S’s proposal was unacceptable overall. Specifically, AC4S had improperly modified a metric of Table 1 by omitting the phrase “in subcontracting” from the government-specified metric “usage of SBS [small businesses] in subcontracting.” The agency determined that this omission materially altered the government-specified performance metric and that the proposal therefore failed to conform to a material term of the RFP.
AC4S protests that the agency’s assessment of a deficiency under the mission support subfactor was improper because the “inadvertent omission” of the phrase “in subcontracting” from one metric did not change AC4S’s intent to meet the SOO’s objective to increase small business subcontracting. AC4S argues that its intent to meet the objective was apparent from Table 1 and from its proposal throughout, in which AC4S repeatedly discussed its intent to subcontract 30% of the work to other small business subcontractors. GAO states that clearly stated RFP requirements are considered material to the needs of the government, and a proposal that fails to conform to such material terms is unacceptable and may not form the basis for award. It is a fundamental principle in a negotiated procurement that a proposal that fails to conform to a material solicitation requirement is unacceptable.
Under a performance based contracting arrangement, performance metrics are more than mere proposal evaluation tools. Rather, the metrics become the measurable performance standards used to assess the contractor during performance, and to determine the application of performance incentives and disincentives. Indeed, the measures, metrics, ALQ, and incentives/disincentives establish the performance levels that are required to meet the objectives specified by the SOO, and are critical aspects of the resulting performance-based contract. In this case, the agency provided certain government-specified performance metrics reflecting the level of performance that the government required, and the agency repeatedly cautioned the offerors that these metrics were not to be revised in any way. Such clearly stated RFP terms are undoubtedly material to the needs of the government, and failure to conform to such terms renders a proposal unacceptable. Moreover, based on a review of the RFP and AC4S’s proposal, GAO finds that it is readily apparent that AC4S’s modification of the performance metric at issue did, in fact, materially alter the metric’s meaning.
The applicable government-provided performance metric, “usage of SBs in subcontracting,” was specified to provide a common, clearly understandable and measurable basis for monitoring awardee’s success in meeting the above objective during performance. The metric, “usage of SBs,” as modified by AC4S, however, fails to reflect the intent of the SOO objective to assure achievement of subcontracting targets and allow for mentorship of small businesses, or the intent of the provided metrics, because it captures AC4S’s own efforts as a small business along with those of its small business subcontractors. The extent to which AC4S’s modified performance metric deviated from the SOO objective and government-specified metric is apparent when it is considered that AC4S also included its own efforts as a small business in its proposed percentage small business usage in ALQ 1.d, contrary to the RFP’s instructions. In Volume IV of its proposal, AC4S stated that “AC4S is retaining 80% of the contract towards small businesses. The 80% includes 50% for AC4S.” On the same page of the proposal, in Table 3 – Subcontracting Participation Goals, AC4S confirms that 30% of the contract will be subcontracted to small businesses. However, rather than enter the 30% figure from Table 3 into ALQ 1.d, as instructed, AC4S entered “80 percent.” The Agency was aware that awardee’s under this contract would likely outgrow their small business status and were prevented from including themselves in this calculation.
The overall effect is that, by including its own efforts in the small business utilization percentage of ALQ 1.d, and by omitting the phrase “in subcontracting” from metric 1.d, AC4S made it possible to compensate for failure to meet its subcontracting objective by increasing its own share of contract performance. Therefore, the omission of the phrase “in subcontracting” had a material effect on AC4S’s commitment to conform to the specified small business usage metric required by the RFP. The protest is denied.