Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Wednesday, May 16, 2014, 11:22am EST
MindPoint Group, LLC, B-409562, May 8, 2014
A common issue that faces many employers is the question of whether an individual working for them should be classified as an employee or an independent contractor. This issue typically arises in the context of taxes, and the IRS provides guidelines to assist companies with making the correct determination. However, outside of the realm of taxes, this issue can be quite important in government contracting, as well.
A recent bid protest case before GAO, MindPoint Group, LLC, provides a good illustration. In MindPoint Group, the protester challenged an award of a contract under a solicitation issued by the Department of Justice for IT infrastructure support. The solicitation was issued as a set aside for economically-disadvantaged, women-owned small businesses. The solicitation contained a limitation on subcontracting requirement—requiring the awardee to incur at least 50% of the cost of the work with its own employees.
The protester’s final proposal showed that it would perform 53.5% of the work with its own employees. However, there was a question of whether one of the employees offered by the protester, a Systems Administrator, was actually an employee, or rather an independent contractor. While the Systems Administrator was listed among the employees, he was referred to as an independent contractor elsewhere in the proposal. In addition, the letter of commitment from the Systems Administrator stated that he would be an independent consultant and not an employee.
Based on the information in the proposal, the agency determined that the Systems Administrator was an independent contractor, and should not have been counted as an employee of the protester. Without counting the System Administrator as an employee, the protester would only be incurring 45% of the costs of the work with its own employees, falling short of the 50% requirement imposed by the limitation on subcontracting clause. As a result, the protester’s proposal was determined to be unacceptable. Because its protest was unacceptable, GAO determined that the protester was not an interested party and denied the protest.
During the protest, the protester provided information supporting its position that the Systems Administrator was actually an employee. However, because this information was not contained in the protester’s proposal, GAO did not give it any weight. As we’ve previously discussed, it is an offeror’s responsibility to include all necessary information in its proposal establishing the merits of its proposed approach. Failing to do so puts an offeror at risk that its proposal will be rejected.