Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Friday, January 31, 2014, 11:42am EST
Kardex Remstar, LLC, B-409030, January 17, 2014
It is not uncommon in a federal procurement for the contracting agency to communicate with offerors regarding their proposals before making an award decision. How the agency conducts these communications will determine the obligations the agency has to the offerors.
In a previous article, we discussed the obligations imposed upon an agency that conducts “discussions” with offerors. Discussions are generally defined as exchanges with an offeror either to obtain information essential to determine the acceptability of the offeror’s proposal, or allow the offeror to revise its proposal. If an agency does conduct discussions with offerors, those discussions must be meaningful. To be meaningful, the agency is required to identify to the offeror all of the deficiencies in its proposal. In addition, an agency cannot just conduct discussions with one offeror, but rather must engage in discussions with all offerors being considered for award.
Unlike discussions, “clarifications” do not need to be held with every offeror being considered for award. Clarifications are limited exchanges between the agency and an offeror in order to resolve minor or clerical mistakes in a proposal. These exchanges are not meant to allow revisions or modifications to the offeror’s proposal, and thus can be held with individual offerors as necessary. But what about a situation where an agency conducts “clarifications” that veer into the territory of discussions?
This was the situation in Kardex Remstar, LLC, a recent bid protest decision released by GAO. In Kardex, the Department of Veterans Affairs issued a Request for Quotations for vertical storage units. The RFQ contemplated the issuance of a delivery order after a reverse auction conducted among holders of Federal Supply Schedule contracts.* After review of Kardex’s quotation, the agency initiated what it characterized as clarifications. The agency specifically informed Kardex that the clarifications would not allow any changes to its price, yet the clarifications also asked if Kardex would provide any additional price discounts.
In addition to the inquiry of additional discounts, the agency submitted a spreadsheet with 34 questions regarding areas of Kardex’s quotation that either did not meet the requirements of the RFQ, or did not provide required information. The agency requested a response for each of the 34 issues. The “clarifications” apparently did not end there, as the agency conducted several more rounds of questions and answers with Kardex. Ultimately, the agency determined that Kardex’s quotation’s was technically unacceptable, because it did not meet a specific requirement of the RFQ. Oddly enough, however, the specific requirement leading to technical unacceptability was never mentioned by the agency in the multiple rounds of communications regarding Kardex’s proposal. Kardex challenged the agency’s technical evaluation of its quotation in a protest to GAO.
Kardex argued that despite the agency’s characterization of communications as clarifications, the agency effectively conducted discussions. GAO agreed with the protester, noting that it is irrelevant how an agency classifies communications with an offeror, rather it is the actions of the parties that determine if the communications constitute discussions or clarifications.
In this case, GAO found that the communications with Kardex requested a response on 34 requirements in the RFQ that Kardex’s proposal either did not meet or failed to provide sufficient information for. GAO found that these requested responses, as well as the agency’s request for additional discounts, were necessary to determine if Kardex’s quotation was acceptable. The requested responses also effectively resulted in Kardex being allowed to supplement its proposal. These factors led GAO to the conclusion that the communications between the agency and Kardex were in fact discussions rather than clarifications.
GAO also determined that the agency’s communications with Kardex were unfair. Despite several rounds of discussions with Kardex, the agency never actually identified the one RFQ requirement that Kardex did not meet that led to its quotation being rejected as technically unacceptable. An agency that conducts discussions is required to ensure that those discussions are meaningful. By failing to inform Kardex of the specific deficiency in its quotation, GAO determined the agency’s discussions to be insufficient. As a result, GAO sustained the protest.
*GAO noted that because this is a Federal Supply Schedule procurement, the discussions regulations for negotiated procurements (FAR part 15) technically do not apply. However, exchanges with offerors in FSS procurements must still be fair and equitable, thus GAO uses the part 15 standards for guidance.