Matter of Deloitte Consulting LLP
Agency: Department of the Treasury, Bureau of the Fiscal Service
Disposition: Protest Sustained
Decided: March 23, 2020
Keywords: Material Solicitation Terms
General Counsel P.C. Highlight: A proposal that takes exception to a solicitation’s material terms and conditions (price, quantity, quality, or delivery of the goods or services being provided) should be considered unacceptable and cannot form the basis for an award.
Summary of Facts
Deloitte Consulting LLP protests the issuance of a task order to Grant Thornton LLP by the Department of the Treasury, Bureau of the Fiscal Service, under BPA call request No. ARC-511003-19-0001, issued for the Department of Housing and Urban Development (HUD), which is seeking an expansion of its utilization of the OneStream XF2 software solution for its budget formulation requirements. The Bureau issued the solicitation on July 26, 2019 and anticipated the issuance of a fixed-price BPA task order with a 13-month period of performance.
Under the solicitation, proposals would be evaluated on the basis of price; demonstrated knowledge and experience/past performance; expertise of proposed consulting team; and method and approach. The Bureau received responses from Deloitte and Grant Thornton.
The initial technical evaluation team (TET) determined that Deloitte’s quotation “had the higher technical evaluation score” and merited award, despite its higher quoted price.
The Bureau issued the task order to Deloitte on September 6 and Grant Thornton filed a protest challenging the award. On September 27, the Bureau advised GAO that it would take corrective action by reevaluating quotations and making a new award decision. The Bureau convened a new TET and requested and received additional information from both vendors regarding their past performance references. The TET then recommended award to Grant Thornton, finding that while Deloitte had the higher technical evaluation score, the difference in score did not warrant paying more than twice the price proposed by Grant Thornton.
The contracting officer stated that while the original award decision found that “Grant Thornton’s response represented a much higher risk of not meeting the required schedule with the proposed level of effort and labor mix,” the reevaluation of quotations by the TET found that Grant Thornton would be able to make a complete on-time delivery. Grant Thornton’s quotation was selected for award and this protest followed.
Basis of Protest
Deloitte’s protest made several arguments, but the most interesting one was that the award to Grant Thornton was improper because Grant Thornton’s quotation took exception to material solicitation terms and conditions. The Bureau argued that because Deloitte’s quotation also contained assumptions that took exception to material solicitation terms, Grant Thornton couldn’t have been prejudiced.
Protest Sustained
GAO explained that a proposal or quotation that takes exception to a solicitation’s material requirements should be considered unacceptable and may not form the basis for an award. Material terms are terms which affect the price, quantity, quality, or delivery of the goods or services being provided. GAO further explained that when determining the technical acceptability of a proposal or quotation, an agency may not accept at face value a promise to meet a material requirement when there is significant countervailing evidence to the contrary. Moreover, a proposal or quotation that contains an ambiguity as to whether the vendor will comply with a material requirement of the solicitation renders the proposal or quotation unacceptable.
Here, the solicitation stated that the agency would evaluate vendors’ technical approach and methodology, including assumptions, and instructed vendors to address the tasks and explain the approach for handling each one. The PWS stated the period of performance would be thirteen months and would take place in three sequential phases.
Grant Thornton’s revised quotation contained two assumptions indicating that although Grant Thornton will make a “concerted effort” to perform the required tasks, it may elect to move the performance to a later warranty period or an undefined “future phase.” GAO found that the two assumptions in Grant Thornton’s quotation take exception to the material terms of the PWS – namely when the services would be delivered. Grant Thornton’s assumptions created ambiguity as to when the future phase would occur and whether it would take place outside the 13-month performance period.
GAO disagreed with the Bureau’s argument that Deloitte also took exceptions to material terms. Instead, GAO determined that those exceptions addressed the possibility of out-of-scope changes to the PWS requirements. Specifically, those assumptions stated that Deloitte would work with the government to negotiate changes to the task order if the government required a change in scope or schedule. In contrast, the assumptions in Grant Thornton’s quotation stated that the vendor may elect to perform the PWS tasks on a schedule other than what is set forth in the PWS.
GAO concluded that the Bureau improperly issued the task order to Grant Thornton because of the exception to the solicitation’s requirement to meet the PWS’s stated schedule. Since the agency cannot issue the task order to Grant Thornton based on a quotation that takes exception to material solicitation terms, and Deloitte was the only other vendor that is eligible for award, GAO concluded that Deloitte was prejudiced by the agency’s error.
GAO sustained the protest on this basis.