Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Thursday, May 29, 2014, 9:45pm EST
System Studies & Simulation, Inc., B-409375.2, B-409375.3, May 12, 2014
Deciding on the prices to offer in response to a solicitation for a federal government contract is not exactly an easy process. It requires a multitude of considerations, including the work required, the number of personnel needed to do that work, the labor rates of those personnel, and much more. Making this process even more difficult, the procuring agency will sometimes change the requirements of the procurement without warning. As you may be able to guess, agencies aren’t really supposed to do that.
In System Studies & Simulation, Inc., the Dept. of the Army issued a solicitation seeking advanced instructor pilot support services. The solicitation anticipated the award of an ID/IQ requirements-type contract to provide instructor pilots to perform flight instruction on various types of helicopters. Offerors were instructed to calculate their offered prices based on quantity estimates included in the solicitation.
The solicitation included an estimated requirement for 63 instructors across 6 different helicopter types. The protester System Studies & Simulation, Inc. (“S3”) submitted a proposal in response to the solicitation based on these estimates. There was one offeror with a lower proposed price than S3, and award was made to that lowest priced offeror.
S3 was actually the incumbent contractor for the requirement, already providing the helicopter instructors for the Army. The day after the award was made to the other offeror, S3 was informed by the Army that the requirements of its current contract would be reduced significantly.
After a discussion with the Army, S3 learned that the cut in requirements was not only limited to its current contract, but the Army was reducing its requirements for the foreseeable future. As S3 submitted its proposal for the new solicitation based on the original requirements, it was understandably upset by the news.
S3 filed a protest with GAO, arguing that the Army’s change to the requirements substantially altered the procurement requiring a solicitation revision. The requirements changed from 63 instructors across 6 helicopter types, to an estimated requirement of 18 instructors across 7 helicopter types. S3 asserted that had it known of the significant reduction in requirements, it would have altered its proposal. GAO agreed with S3, finding that S3 was prejudiced by the Army’s failure to revise the solicitation once it became aware of the change in requirements.
GAO stated that as a general rule, it is improper for an agency to make a contract award on a basis that is fundamentally different from the basis of competition specified in the solicitation. Where a change in requirements is discovered, the agency should inform offerors of the change and allow them an opportunity to submit revised proposals based on the revised requirements.
The Army made two primary arguments in response to the protest. First, the Army argued that the agency official that made the award decision was not aware of the changed requirements at the time she made the award decision. However, GAO pointed to evidence that the commanding officer of the agency was aware of the change in requirements. As a result, GAO determined that the organization as a whole was aware of the change in requirements, which should have resulted in a solicitation revision.
The Army also argued that because the solicitation anticipated the award of a requirements contract, there was no obligation for the government to order the estimated quantities included in the solicitation. GAO was unpersuaded by this argument, as well. GAO concluded that a requirements contract does not relieve an agency from the fundamental obligation to use the most accurate estimates of its requirements in conducting a procurement.
This obligation exists because without accurate estimates provided by the agency, offerors cannot prepare proposals that accurately reflect the agency’s needs. Without accurate proposals, the agency cannot reasonably determine if it is getting the best possible price for its requirements.
Ultimately, GAO determined that the Army’s award decision was improper, as the agency did not afford offerors an opportunity to compete for the actual requirements. There was no way to conclude how the competition would have actually played out if the offerors had known of the changed requirements before submitting their proposals. As a result, GAO sustained the protest and recommended that the Army either amend the solicitation to reflect the actual requirements, or cancel the solicitation and start over.