Decided: February 10, 2022
Agency: Department of the Air Force
Disposition: Request Granted
Keywords: Facility Clearance; Joint Venture; Corrective Action
This case makes clear that requiring a Joint Venture (JV) to themselves have a facility clearance when where all of its component members have the requisite clearance, violates Small Business Administration (SBA) JV regulations. As long as the component members of the JV have the requisite clearance, a solicitation cannot also require the JV itself to have the requisite clearance. This case is also an example of a procedural aspect of the protest process, a request for recommendation of reimbursement of fees, rather than a request for a decision on the merits of a protest. GAO may recommend reimbursement of protest costs, when a procuring agency takes corrective action in response to a protest, if GAO determines that the agency unduly delayed taking corrective action in the face of a clearly meritorious protest.
Companies should thoroughly evaluate the potential for success with any protest situation. The time, expense, and negative consequences associated with challenging your Government customer warrants a strategic evaluation between your executive leadership, capture, proposal, and legal teams. General Counsel has the experience and drive to assist clients with assessing award decisions, developing legal courses of action, filing either as an unsuccessful bid protestor or the awardee intervenor, litigating the protest, and developing post-decision lessons learned for more effective future business development practices.
Summary of Facts
Amaze Technologies, LLC, challenged the terms of Fair Opportunity Proposal Request (FOPR) No. FA4890-21-R-0001, issued by the Department of the Air Force for training, operations, communications, and administrative services. The solicitation’s required offerors to possess a top-secret facility clearance, stating that if “the offeror does not have the required clearance at the time of proposal submission,” the offeror is not eligible for award. Amaze is a small business mentor-protégé JV composed of two entities, each of which possesses a top-secret facility clearance, but the JV itself does not possess a facility clearance. In an email exchange between Amaze and the Air Force, the agency stated that JVs composed entirely of members with top secret facility clearances would meet the facility clearance requirement regardless of whether the JV itself possessed a facility clearance. However, the Air Force later amended the solicitation to include the statement: “In the case of Joint Ventures (JVs), the JV itself must possess the required clearance.”
On June 17, 2021, Amaze protested to GAO, arguing that the solicitation’s facility clearance requirement, violated an SBA regulation providing: “[a] JV may be awarded a contract requiring a facility security clearance where either the JV itself or the individual partner(s) to the JV that will perform the necessary security work has (have) a facility security clearance.” At the time Amaze filed its protest, another protest, filed by InfoPoint, raising virtually the same legal issue had been pending before GAO. In the InfoPoint protest, GAO sought SBA’s comments and SBA agreed with the protester’s argument that the Air Force’s JV facility clearance requirement violated the SBA regulation and a provision of the National Defense Authorization Act for Fiscal Year 2020 (2020 NDAA) that expressly prohibits Department of Defense (DOD) agencies from requiring that a JV itself possess a facility clearance where all of its component members have the requisite clearance.
On July 9, 2021, GAO sent notice to the parties that it intended to seek SBA comments, which were due by July 26, 2021, and the parties’ responses to SBA’s comments were on August 5. The notice stated that the parties should advise GAO by August 6 if they “believe[d] further filings or documents [were] needed by our Office to issue its decision in this proceeding.” The agency disagreed with SBA’s conclusion, but neither party advised that further submissions were necessary. As a result, GAO did not request any further submissions or set a new due date for the agency report. On August 27, 2021, GAO sustained InfoPoint’s protest. On September 1, 2021, the agency informed GAO that it would likely take corrective action within two weeks, by amending the FOPR to comply with the 2020 NDAA and SBA regulation. On September 22, 2021, Amaze filed this request.
Basis of Protest
Amaze seeks GAO recommendation for reimbursement of attorneys’ fees and costs, arguing filed protest was clearly meritorious and agency unduly delayed taking corrective action.
GAO explained that when a procuring agency takes corrective action in response to a protest, GAO may recommend reimbursement of protest costs under 4 C.F.R. § 21.8(e) if GAO determines that the agency unduly delayed taking corrective action in the face of a clearly meritorious protest. A protest is clearly meritorious where a reasonable agency inquiry into the protest allegations would have shown facts disclosing the absence of a defensible legal position.
Here, GAO found that Amaze’s protest was clearly meritorious because the solicitation’s facility clearance requirement was expressly prohibited by 2020 NDAA. Since the protest’s merit should have been apparent to the agency upon reasonable inquiry into the protest allegations, GAO concluded that Amaze’s protest was clearly meritorious.
On the issue of undue delay, GAO has previously held that “[i]n general, if an agency takes corrective action in response to a protest by the due date for its report in response to the protest, we consider such action to be prompt and will not recommend reimbursement of protest costs, even where the protest is clearly meritorious.” GAO has generally used the agency report due date as a presumptive deadline for prompt corrective action because, in a typical protest, the agency report is the first substantive filing to which a protester must respond. However, GAO noted that there are rare circumstances in which the agency’s delay in taking corrective action causes a protester to incur unnecessary effort and expense in pursuing its remedies before GAO even where no agency report is filed.
GAO explained that, here, GAO sought SBA’s input and invited the parties to inform GAO whether they believed any further submissions were required for GAO to make its decision. GAO noted that, at this point, the agency was firmly on notice that SBA would file its comments by July 26, 2021, the protester would be required to respond to those comments by August 5, and absent request by the parties to present further information, GAO could consider the protest record fully developed and render a decision based on the SBA comments and the parties’ responses alone. All of this briefing was set to occur after the initial due date for the agency report on July 19, 2021 and over a month after the agency had already received SBA’s June 22 comments in the InfoPoint protest, which raised the same issue. While GAO never received a formal agency report, it found that the protest record was fully developed after the parties responded to the SBA’s comments on August 5. Despite this, the agency did not indicate an intent to take corrective action until September 1, 2022, 76 days after Amaze filed its protest and four weeks after the record was fully developed.
GAO determined that this timeline “does not demonstrate that the agency took appropriate and prompt steps to investigate and resolve the issue of whether the solicitation violated the 2020 NDAA.” GAO concluded that the agency’s decision to delay corrective action until after Amaze had reviewed and responded to the SBA comments caused Amaze to “expend unnecessary time and resources to make further use of the protest process in order to obtain relief” and to “incur unnecessary effort and expense in pursuing its remedies.” Thus, GAO found the agency unduly delayed taking corrective action in the face of a clearly meritorious protest and recommended that the Air Force reimburse the protester its reasonable costs of filing and pursuing its protest, including attorneys’ fees.
Our Government Contracts Practice Group has extensive experience in government contract law, helping clients solve their government contract problems relating to the award or performance of a federal government contract, including bid protests, contract claims, small business concerns, and teaming and subcontractor relations. If you need more guidance or information, contact Craig Lawless, Senior Counsel in our Government Contracts practice area at General Counsel, P.C., 703-266-1865.