Matter of Sparksoft Corporation
Decided: June 2, 2023
Agency: Department of Health and Human Services
Disposition: Protest Denied
Keywords: Best Value; Corrective Action
Protest Insight
This case is an important reminder that even though GAO may sustain a protest and require the agency to take corrective action and reevaluate proposals, the successful protestor may still not ultimately win award of the contract. Here, Sparksoft spent time and resources pursuing multiple protests of the award, and while GAO sustained multiple grounds of the protest and the agency took corrective action multiple times, Sparksoft was ultimately unsuccessful in this final protest and did not win the award of the contract.
Companies should thoroughly evaluate the potential for success with any protest situation. The time, expense, and negative consequences associated with challenging your Government customer warrants a strategic evaluation between your executive leadership, capture, proposal, and legal teams. General Counsel has the experience to assist clients with assessing award decisions, developing legal courses of action, filing either as an unsuccessful bid protestor or the awardee intervenor, litigating the protest, and developing post-decision lessons learned for more effective future business development practices.
Summary of Facts
Sparksoft Corporation, a woman-owned small business, protests the issuance of a task order to RELI Group, Inc., a historically underutilized business zone (HUBZone) small business, by the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS). The agency issued the task order under task order request for proposal (TORP) No. RFP-CMS-220988, for the performance of the agency’s Multidimensional Information Data Analytics System (MIDAS) requirement.
CMS issued the solicitation on April 25, 2022, seeking proposals to “operate, maintain, and provide development services” for MIDAS. The TORP advised that proposals would be evaluated on the basis of four factors: (1) corporate experience; (2) oral presentation; (3) section 508 compliance; and (4) price. The corporate experience factor was “significantly more important” than the oral presentation factor, and the non-price factors, when combined, were “significantly more important” than price.
CMS received proposals from Sparksoft and RELI by the closing date for receipt of proposals. The contracting officer concluded that RELI’s proposal merited an award and issued the task order to that firm on July 27. Sparksoft filed a protest challenging the award, but CMS advised GAO that it would take corrective action, which consisted of reconvening the TEP and reevaluating the proposals. The contracting officer reviewed the revised evaluation and again found that RELI’s proposal merited an award based on a tradeoff between the price and non-price evaluation factors. The contracting officer found that “[a]lthough Sparksoft represents a slightly technically superior proposal than that of RELI, RELI represents a lower price in comparison to the proposal submitted by Sparksoft and ultimately the level of the technical superiority of Sparksoft’s proposal does not justify the significant price premium of approximately $2.3 million.”
The agency issued the task order to RELI on September 20 and on September 26, Sparksoft filed a protest of the second award decision. On December 27, GAO sustained the protest, concluding that the agency unreasonably evaluated RELI’s proposal in connection with the corporate experience and oral presentation factors; that the award decision relied on the flawed technical evaluation; and the award decision was inconsistent with the solicitation’s award criteria regarding corporate experience and relied on unsupported assumptions. GAO recommended that the agency reevaluate RELI’s technical proposal in a manner that ensures that both the protester’s and awardee’s proposals are evaluated on an equal basis, and that the agency make a new award decision that ensures that the comparison of the offerors’ corporate experience is consistent with the solicitation’s award criteria, adequately supported, and adequately documented. CMS reconvened the TEP and the contracting officer made a new award decision, which again selected RELI’s proposal for award. The agency advised Sparksoft of the new award decision and this protest followed.
Basis of Protest
Sparksoft argues that the award to RELI was unreasonable because the agency’s most recent corrective action failed to remedy the basis on which GAO sustained the protest in the prior decision. Specifically, Sparksoft argues the award decision was unreasonable because it relied on flawed evaluations, and was inconsistent with the solicitation’s award criteria, by improperly diminishing the importance of the corporate experience factor and the advantages of the protester’s proposal under that factor.
Protest Denied
GAO explained that, generally, in a negotiated procurement, “an agency may properly select a lower-rated, lower-priced proposal where it reasonably concludes that the price premium involved in selecting a higher-rated proposal is not justified in light of the acceptable level of technical competence available at a lower price.” While an agency has broad discretion in making a tradeoff between price and non-price factors, an award decision must acknowledge and document any significant advantages of the higher-priced, higher-rated proposal, and explain why they are not worth the price premium. An agency that fails to adequately document its source selection decision bears the risk that GAO may be unable to determine whether the decision was proper.
CMS’s prior award decision concluded that although Sparksoft’s proposal was more highly rated under the corporate experience factor, the benefits of Sparksoft’s proposal did not justify its higher price. The award decision noted: “Benefits of experience tend to be short-lived as new contractors undergo normal learning curves, such that while corporate experience is the most important factor, small variations in quality between two vendors minimize the effect of this variation.” GAO’s prior decision agreed with Sparksoft, finding that neither the award decision nor the agency’s response to the protest, reasonably explained why the agency assumed that the “[b]enefits of experience tend to be short-lived as new contractors undergo normal learning curves.” GAO also determined that the agency did not reasonably explain why this assumption was consistent with the terms of the corporate experience factor, which did not advise that the agency would discount advantages in experience as short-lived in the manner described in the award decision. GAO sustained the protest and recommended that the agency take corrective action to address these concerns.
GAO noted that the new award decision addressed the flaws in the evaluation of RELI’s proposal under the corporate experience and oral presentation factors identified in the prior decision and did not include the rationale that “[b]enefits of experience tend to be short-lived.” Sparksoft first argues that the new award decision was unreasonable because “CMS did not conduct a new tradeoff analysis at all, and simply reworded parts of the document to attempt to sanitize it in view of GAO’s findings in Sparksoft’s second protest.” GAO explained that “an agency’s corrective action in response to a decision by our Office sustaining a protest is expected to address the basis on which the protest was sustained. For this reason, we find no merit to the protester’s contention that the new award decision was flawed simply because it made changes to address the errors our Office identified in the prior award decision.”
GAO also found no merit to Sparksoft’s contention that the award decision did not reflect a new tradeoff decision, since the new award decision, by a new contracting officer, followed a new evaluation by the TEP that addressed two areas where our prior decision found that the evaluations of RELI’s proposal were unreasonable.
Sparksoft also argued that the contracting officer’s best-value tradeoff was inconsistent with the solicitation because it selected RELI’s lower-priced, lower technically rated proposal over the protester’s higher-priced, higher technically rated proposal. However, GAO determined that the tradeoff decision “expressly acknowledged the stated award criteria, recognized the advantages that Sparksoft’s higher-priced proposal offered under the more heavily weighted corporate experience factor, but concluded that those advantages did not merit award over RELI’s proposal.” GAO explained that although the TORP provided that corporate experience factor was “significantly” more important than oral presentation and the non-price factors were “significantly” more important than price, “nothing in the solicitation prohibited the agency from selecting the lower-technically rated, lower-priced proposal for award.” Thus, GAO denied the protest.
Our Government Contracts Practice Group has extensive experience in government contract law, helping clients solve their government contract problems relating to the award or performance of a federal government contract, including bid protests, contract claims, small business concerns, and teaming and subcontractor relations. If you need more guidance or information, contact Lauren Travis, Senior Counsel in our Government Contracts practice area at General Counsel, P.C., 703-556-0411.