Link: GAO Opinion
Agency: Federal Emergency Management Agency
Disposition: Protest denied; request for reimbursement denied in part and sustained in part.
Keywords: Cancellation of RFP; Award of Protest Costs
General Counsel P.C. Highlight: Cancellation of a procurement is justified where the Agency determines that its needs have changed and the RFP as written no longer meets those needs; Corrective action taken during a protest but well after the Agency Report and Protester’s Comments are filed will justify recommendation of payment of protest costs and fees on a clearly meritorious protest.
The Federal Emergency Management Agency (FEMA) issued a request for proposals (RFP) to provide generator maintenance, and subsequently awarded the contract to a vendor following its evaluation of proposals. After this award, KAES Enterprises, LLC, one of the unsuccessful bidders, protested the award to GAO on the primary basis that its proposal had been improperly excluded from the competitive range without consideration of its price. GAO conducted an “outcome prediction” alternative dispute resolution (ADR) conference, during which the parties were notified that KAES would likely be successful in its protest and that GAO would likely recommend that FEMA reassess KAES’s proposal to see if it should properly fall in the competitive range. In response, FEMA canceled the contract award, canceled the solicitation, and stated its intent to draft a new solicitation and to re-solicit the requirement, stating that its technical needs changed to the point where the contract award under the original solicitation would be inadequate to support its needs.
KAES protested this cancellation, claiming a number of different protest grounds. First, KAES asserts that the cancellation lacked credibility and was a pretext to avoid having to award the contract to KAES. This basis was found to be lacking. GAO presumes that procurement authorities act in good faith unless the record shows an intent by the agency to injure the protestor. Here, KAES general assertion of bad faith by FEMA did not evidence the necessary intent.
Next KAES claimed that it would be prejudiced by the cancellation because it prices were presumably exposed. GAO again points to the fact that this assertion lacks evidence. There was no evidence that KAES’s prices have been exposed, and further, there was no showing that KAES would be otherwise prejudiced by the cancellation to an extent greater than the other offerors.
Finally, KAES argued that the cancellation is inconsistent with the corrective action recommended by GAO during the ADR conference. However, during the conference, the GAO attorney did not recommend corrective action, rather he advised the parties of the likely recommendation in the event that the protest was sustained. For these reasons, GAO denied KAES’s protest of FEMA’s cancellation.
KAES also requested two reimbursements, one for the costs of pursing its original protest (challenging its exclusion from the competitive range), and the other for the costs of preparing its proposal on a procurement that was subsequently cancelled. GAO denied KAES’s request for reimbursement for the costs of the preparing its proposal because the expenses represented typical costs of doing business and competing for government contracts where the reasons for cancelling the solicitation were found to be unobjectionable. However, GAO recommended that KAES be reimbursed its costs for protesting FEMA’s decision to exclude it from the competitive range without considering its price.
In considering whether to grant a reimbursement of protest costs, GAO considers whether the procuring agency took corrective action in response to a protest, if so, did the agency unduly delay in taking corrective action in the face of a clearly meritorious protest. Here, because the result of the ADR conference was that the protest would likely be sustained, GAO deemed the protest clearly meritorious. Additionally, GAO found that FEMA did not take the corrective action promptly in the face of a clearly meritorious protest. GAO has traditionally held that corrective action will be considered prompt if it is taken before the due date for the agency report responding to the protest, will not be considered prompt if it is taken after that date. In summary, GAO denied the cancellation protest, denied the request for payment of bid and proposal costs, but granted the request for payment of protest costs relating to the meritorious protest ground.