One of the most common, and challenging, arguments made in a post-award bid protest is that the contracting officer’s evaluation was arbitrary and capricious. The challenge with this argument is overcoming the substantial deference that the GAO and Courts grant to a contracting officer’s judgment. Because of this deference, it can be difficult to establish that the contracting officer’s assessment of strengths and weaknesses in an offeror’s proposal is arbitrary. In a recent decision by the Court of Federal Claims, however, the Court reached just this conclusion. The case, 2M Research Services, LLC v. United States, is a useful primer in the specific types of facts that are necessary to meet this high threshold.
2M Research Services, LLC initially filed a protest with the GAO against the Federal Emergency Management Agency’s (“FEMA”) award for the provision of technical and administrative support for administration of grant programs to Vision Planning & Consulting (“VPC”). Under the terms of the Solicitation, FEMA was to perform a best-value tradeoff under which offerors’ technical proposals were significantly more important than price. In the GAO protest, 2M asserted the following arguments: (i) VPC was not qualified for the award, (ii) the Agency failed to reasonably evaluate VPC’s proposal, (iii) VPC violated the limitations on subcontracting clause; and (iv) VPC lacked the necessary past performance history. In response, FEMA stated that it would take corrective action and the GAO accordingly dismissed the protest as academic.
FEMA’s “corrective action” was in name only. In its “reevaluation” of proposals, it determined that 2M and VPC were the only two contractors in the competitive range, i.e., with technical ratings of “Good” or higher and with fair and reasonably priced proposals. After discussions with these two offerors and the submission of revised offers, VPC again received the contract. During its debriefing, 2M learned that despite providing additional past performance history, its rating for past performance fell from “Satisfactory” to “Neutral.” Additionally, 2M received only a “Good” rating for its Work Plan despite that FEMA failed to identify any weakness. Moreover, in the agency’s second evaluation of 2M, FEMA failed to credit 2M for a “Strength” that FEMA had previously identified in its initial evaluation of 2M’s proposal.
2M elected to again protest the award, this time with the Court of Federal Claims. In its Complaint, 2M alleged that FEMA’s award was irrational and unlawful. Specific allegations included that: (i) VPC’s proposal failed to satisfy the evaluation criteria, (ii) VPC’s proposal violated the limitations on subcontracting clause, (iii) VPC’s work structure failed to match its price proposal, and (iv) the decision by the Source Selection Authority (“SSA”) lacked adequate documentation. The Court agreed.
While recognizing the substantial burden faced by the protestor (showing a “clear and prejudicial” violation of the procurement regulation) and the high deference the Court must afford the contracting officer (deferring to any reasonable basis for the agency’s decision), the Court nonetheless concluded that there was a deviation of the evaluation criteria, lack of independent judgment by the SSA, and continued “unfair and unequal treatment” of 2M by FEMA.
First, the Court agreed that VPC’s proposal expressly violated the limitation on subcontracting clause and that the FEMA “relaxed” the stated evaluation criteria by finding otherwise. VPC’s proposal stated that it would be completing only 40 percent of the work. The Court found that this distribution of labor violated FAR 52.219-14, which requires that a prime contractor perform at least 50 percent of the cost of contract performance incurred for personnel. In an attempt to justify its decision not to reject VPC’s proposal, FEMA argued that “when it is unclear whether a proposal complies with the subcontracting clause, [the] offeror can be given an opportunity to cure that defect during discussions.” Rejecting this argument, the Court found there was no ambiguity regarding whether or not VPC’s proposal complied with the limitation on subcontracting clause and therefore FEMA could not permit VPC to revise its proposal during discussions. Relatedly, the Court also found that the lack of any independent judgment or documentation by the SSA on this issue and the SSA’s complete reliance on the Source Selection Evaluation Board’s rational for permitting VPC to remain a viable offeror rendered the SSA’s decision arbitrary and capricious.
The Court next determined that FEMA’s evaluation of VPC’s staffing and recruiting plan was arbitrary and capricious. Despite acknowledging that the agency is entitled to “great deference,” the Court concluded that FEMA improperly awarded VPC a “superior” rating on this technical element of its proposal. Key language of the Court’s decision includes:
While VPC’s staffing and key personnel plan may be theoretically sufficient, it seems clear to this Court that VPC’s proposal did not meet the most basic of requirements in order to receive a ‘Superior’ rating—it was not almost devoid of risk.
This language—in which the Court rejects the Agency’s technical evaluation of VPC’s proposal despite finding that evaluation “theoretically sufficient”—may prove valuable to contractors in future post-award protests. The Court’s decision appears to offer an expanded foothold for contractors to argue that an Agency’s technical evaluation can be rejected even when that conclusion is theoretically adequate.
Finally, the Court concluded that the procurement evidence a “pattern of unfairness.” Specifically:
When looking at the Administrative Record as a whole, it becomes clear to this Court that FEMA repeatedly overlooked deficiencies in VPC’s proposals, relaxed Solicitation requirements, and amended its Technical Evaluations in favor of VPC….
FEMA continued in its unfair and unequal treatment by failing to provide a rational explanation for VPC’s inclusion in the competitive range, instead opting to re-evaluate the proposals to further tip the scales against 2M. Such a decision smacks of disparate treatment, and, while that issue is not expressly raised by the plaintiff, this Court cannot ignore that when something ‘looks like a duck, walks like a duck, and quacks like a duck, then it’s a duck.’ (citation omitted)
While it is gratifying to see a Court expressly call out the Agency for what amounts to intentional violations of the procurement regulations, “bad faith” is not mentioned and there are no indications of what repercussions, if any, FEMA will face other than being enjoined from awarding the contract to VPC.
In sum, this is a strong case for contractors and will likely be relied on heavily in future bid-protests to establish the outer limits of agency discretion. However, we continue to search for cases that impose consequences for Agencies on what are clear, intentional violations of procurement regulations.