Agency: Department of Housing and Urban Development (HUD)
Disposition: Protest Sustained
Decided: April 26, 2017
General Counsel P.C. Highlight: Agencies must evaluate proposals consistent with stated evaluation criteria. Agencies must document their evaluations sufficiently, such that a reviewing body understands the process utilized to come to a decision. A failure to adequately document agency determinations may result in a sustained protest.
Summary of Facts
On May 8, 2016, HUD issued a competitive 8(a) set-aside, seeking proposals for mortgage compliance reviews, evaluation of internal controls, data analysis, and other financial operations tasks designed to identify and reduce risks to the Federal Housing Administration’s Mutual Mortgage Insurance Fund (MMI). This fixed price, indefinite-delivery, indefinite quantity (IDIQ) contract had a base year and four option years. The RFP called for a best value tradeoff, considering technical approach, management plan, key personnel, past performance, and price. According to the solicitation, the evaluation factors were of equal importance, but that non-price evaluation factors, when combined, were considered significantly more important than the price factor.
With regard to past performance, of relevance here, where an offeror proposed a subcontractor for more than 20 percent of the value of the contract, past performance information on the subcontractor was also to be submitted.
Six proposals were submitted, including from Verdi, the incumbent. After submission, the contract specialist requested offerors revise their proposals and offered a revised schedule. All offerors but Verdi completed a revised proposal. After consideration of revised proposals, HUD awarded the contract to Falcon.
Verdi, who received evaluations of unacceptable for Management Plan and Past Performance, filed a protest. During the course of the protest, the Agency declared their intention to seek corrective action and the protest was dismissed as academic. As part of their corrective action, the Agency re-evaluated proposals. This resulted in Verdi receiving a more favorable rating under Management Plan, but their evaluation of unacceptable for Past Performance remained. Because Verdi remained ineligible for the award, the Agency did not issue a new source selection decision.
Verdi filed a second protest, challenging the Agency’s past performance evaluation, HUD’s price evaluation, and HUD’s best value tradeoff.
Standing to Protest
The Agency first argued Verdi was not an “interested party” because Verdi was not next in line for the award. GAO disagrees with this analysis. This award was based on a cost/technical tradeoff basis – not a lowest-priced, technically acceptable offer. As such, determining “best value” requires the agency to consider differences between proposals to determine relative quality. Thus, it cannot be said Verdi would not have received the award.
Next, the Agency argues Verdi did not submit a modified proposal as requested, and thus, because the Agency could have refused to consider the proposal, Verdi does not have standing to object to the award. GAO notes that while HUD could have rejected Verdi’s proposal for failing to submit a revised proposal, they failed to do so. Thus, HUD effectively waived any objection they may have to this failure.
When a protester challenges the evaluation of past performance and source selection, GAO reviews the evaluation and award decision to determine if the evaluation was consistent with the evaluation criteria, was reasonable, was consistent with procurement statutes and relevant case law and regulations. Further, GAO ensures the Agency evaluation was properly documented.
HUD’s written evaluation of Verdi’s past performance was limited to the written debriefing provided to Verdi. Nothing in the record established the Agency evaluated the past performance of Verdi’s subcontractors, as required by the RFP. Finally, the Agency stated in the debriefing letter Verdi’s lack of access to HERMIT precludes the firm for being able to successfully perform relevant tasks. However, nothing in the RFP required HERMIT access.
Given these facts, GAO found HUD’s evaluation was inconsistent with the RFP terms, inadequately documented, and unreasonable. Thus, the protest was sustained on this ground.
Verdi objected to Agency’s price evaluation, in that it appeared the agency only evaluated base year pricing. The RFP, in contrast, stated the offeror’s total evaluated price would include consideration of the total price for all options. Further, the RFP incorporated FAR 52.217-5, which requires including option prices in the evaluation for purposes of award.
In considering objections to price evaluation, GAO does not substitute their judgement, rather GAO reviews the record to determine whether the evaluation and subsequent decision is reasonable, and consistent with the evaluation criteria stated in the solicitation, as well as applicable laws and regulations.
HUD’s documentation of price evaluation was extremely limited. Further, there was nothing in the record to establish the Agency considered prices including all option periods, as required by both the relevant FAR provision and the requirements of the RFP. As such, Verdi’s protest regarding Agency’s price evaluation is also sustained.
Finally, Verdi challenges the Agency’s best value tradeoff. The record established the Agency had a two sentence best value tradeoff. On its face, the evaluation is inadequate. Further, the tradeoff, as documented, establishes the Agency only considered base year pricing. Of concern, since the past performance and pricing evaluations were lacking, GAO notes the best value tradeoff couldn’t have possibly considered Verdi’s properly assessed situation.
GAO recommends HUD reevaluate all price proposals consistent with the RFP, and also reevaluate Verdi’s past performance, consistent with the decision. All reevaluations should be adequately documented.