Link: GAO Opinion
Agency: General Services Administration
Disposition: Protest sustained.
In a procurement covered by the Trade Agreements Act (TAA), protest of an award to a vendor whose quotation identified products that were not TAA-compliant is sustained, where the agency failed to follow required evaluation procedures for TAA procurements, improperly failed to ascertain whether the products identified by the protester were TAA-compliant, and did not conduct meaningful discussions with the protester even though the agency regarded the protester’s quoted price as unreasonably high.
General Counsel P.C. Highlight:
Tiger protests that the agency unlawfully awarded the contract to a non-TAA- compliant vendor (Vantage) and improperly rejected Tiger’s quotation. GAO states that in a procurement covered by the TAA, such as the one here, an agency is prohibited from procuring, or even considering, non-TAA-compliant products unless the head of the contracting activity makes an [i]ndividual determination of non-availability, that is, a determination that no TAA-compliant goods are available in sufficient and reasonably available quantities of a satisfactory quality. In this regard, an agency must [c]onsider only offers of U.S.-made or designated country end products, unless no offers of such end products were received. Only if no offer for a TAA-compliant product is received may an agency procure a non-TAA-compliant product, and only after the head of the contracting activity makes an individual non-availability determination.
Tiger argues that the agency violated the TAA and its implementing regulations when it considered price before determining TAA compliance, evaluated Vantage’s and [REDACTED] quotations even though their vehicles were not TAA-compliant, and awarded the contract to Vantage without obtaining the required non-availability determination from the head of the contracting activity. Tiger also complains that the agency failed to affirmatively determine that Tiger’s vehicles complied with the TAA.
As an initial matter, GAO notes that it is not clear from the record that Tiger’s vehicles are, in fact, TAA-compliant. Consistent with this record, the contracting officer’s determination was only that Tiger’s vehicles may be TAA-compliant. Nonetheless, as noted above, the FAR requires that the agency consider only TAA-compliant products, which necessarily requires that the agency first determine whether Tiger’s vehicles were TAA-compliant in order to ascertain whether any TAA-compliant products were available. If the agency had determined here that Tiger’s vehicles were TAA-compliant, then the remaining vendors’ quotations for non-TAA-compliant vehicles should have been eliminated from consideration and the agency should have evaluated only Tiger’s quotation against the RFQ’s evaluation criteria, including evaluating Tiger’s price for reasonableness as further discussed below. If, however, the agency had determined that Tiger’s vehicles, like the other vendors’ vehicles, were not TAA-compliant, the head of the contracting activity would have been required to issue a non-availability determination, if he or she found it was warranted, before the agency could have selected a quotation for non-TAA-compliant vehicles for award. None of these events occurred here. Instead, in violation of FAR sect. 25.502, the agency failed to determine whether Tiger’s vehicles complied with the TAA and made award based on a quotation for non-TAA-compliant vehicles without first obtaining a non-availability determination from the head of the contracting activity. GAO sustains the protest on these bases.
The agency asserts that Tiger was not prejudiced by any potential error in the evaluation, including TAA compliance, because it was not eligible for award due to its unreasonable price. It is a fundamental requirement that a government agency cannot award a contract at more than a fair and reasonable price, and there is nothing in the TAA or its implementing regulations that indicates that TAA-compliant products can be acquired for an amount greater than a fair and reasonable price. In this regard, FAR sect. 15.402(a) states that a contracting officer must purchase supplies and services at a fair and reasonable price. GAO states that if the agency, in accordance with FAR sect. 25.502, determines that Tiger’s vehicles are TAA-compliant, and then the agency must evaluate Tiger’s quotation, including whether Tiger’s quoted price is fair and reasonable. GAO recognizes that the agency determined that Tiger’s price was exorbitantly unreasonable and found Tiger ineligible for award on this basis. However, the record also confirms that the agency failed to raise this issue during discussions, even though it held numerous rounds of discussions with the vendors and requested revised quotations inviting vendors to reduce their price. Although the agency asserts that discussions were not intended and were not held, GAO finds that the numerous questions and clarifications issued to vendors followed by the agency’s request for best and final offers, which included revisions to vendor’s prices, constitutes discussions as contemplated by the FAR.
Although the solicitation here did not require the agency to hold discussions with vendors, once an agency chooses to do so, as occurred here, the discussions are required to be meaningful; that is, the agency is required to raise with a vendor significant weaknesses and deficiencies identified in the vendor’s quotation. Discussions cannot be meaningful if a vendor is not advised of the significant weaknesses or deficiencies that must be addressed in order for its quotation to be in line for award. Tiger’s quoted price was viewed by the agency as a deficiency, as Tiger’s price was the sole basis for the agency’s finding that the quotation was ineligible for award. In holding discussions with Tiger, but not raising with the firm the concern that Tiger’s price was unreasonable, the agency did not provide Tiger with meaningful discussions. GAO finds a reasonable possibility that Tiger was prejudiced by the agency’s failure to hold discussions concerning the reasonableness of the firm’s price. Had the agency raised its concern with Tiger, then Tiger would have had the opportunity to explain why its price was fair and reasonable or to reduce it, such that the agency may have ultimately found the price to be fair and reasonable and, thus, Tiger’s quotation would have been in line for award. Coupled with the agency’s failure to properly evaluate TAA eligibility, GAO finds that the agency’s failure to hold meaningful discussions prejudiced the protester, and GAO sustains the protest on these bases.