Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Thursday, June 20, 2013, 11:18pm EST
IBM-U.S. Federal, B-407073.3, -.4, -.5, -.6, June 6, 2013
Cloud computing is extremely popular these days, so it is not surprising that we are starting to see protests of procurements related to the cloud. But, even where an agency has its head in the cloud, it must still follow the FAR in making its award.
In IBM-U.S. Federal, the Central Intelligence Agency was seeking to award a single fixed-priced ID/IQ contract for cloud computing services. Five offerors, including IBM and Amazon, submitted proposals in response to the solicitation. After evaluations of the proposals within the competitive range, the CIA selected Amazon for award. IBM filed a protest with GAO challenging several aspects of the award decision. One of the grounds of protest was that the agency materially relaxed the requirements of the solicitation after award which resulted in unequal treatment of offerors. GAO agreed with this protest ground, and sustained the protest.
The solicitation actually informed offerors that the agency would engage in post-award negotiations with the awardee, so the actual post-award negotiation was not at issue. What was at issue was a provision in the solicitation that required the awardee to certify that all software provided under the resulting contract would be free of computer viruses. During the post-award negotiation, Amazon suggested modifying the contract language so that the certification would only apply to software developed and provided by Amazon.
IBM argued that by agreeing to Amazon’s suggested change, the agency materially altered the terms of the solicitation. It is a well established principle of government contracting that agencies must treat all offerors equally, and provide a common basis for the preparation of proposals. If an agency changes or relaxes solicitation requirements, either before or after receipt of proposals, the FAR (Sec. 15.206) requires the agency to amend the solicitation and notify all offerors so that they may have an opportunity to respond to the changed requirements.
During a hearing before GAO, the agency surprisingly admitted that it had not considered the impact of the modified language, and despite the change understood that Amazon was certifying that all provided software would be free of computer viruses. As evidence, the agency pointed to additional provisions of the contract which required Amazon to protect against malicious code. The agency argued that the change to the certification language was rendered insignificant by the other language of the contract, and thus did not amount to a material relaxation of the solicitation requirements.
GAO did not give much weight to the agency’s argument, finding that the record did not support a conclusion that the agency decided to allow the modification based on the other language of the contract. While GAO will consider the entire record, it gives greater weight to the agency’s reasons and judgments made at the time of the evaluation, rather than post hoc rationalizations made after a protest. Here, the agency admitted that it did not consider the consequences of the change to the certification language. Thus, GAO found no basis to accept the agency’s argument that the modification was not material, and sustained the protest on that basis.
The lesson from this case can really come from both the side of the awardee and that of the protester. Awardees in the position to conduct post-award negotiations should be careful not to negotiate a change to the solicitation requirements. If such a change is material, it could open the award up to a sustainable protest ground. And on the flip side of that coin, it may be important for an unsuccessful offeror to pay attention to any post-award modifications to a contract, as it could present an opportunity to protest and possibly re-open competition.