By Andrew Victor and Robert Nichols

In Total Home Health, B-417283, B-417283.2, a decision made public this month, the Government Accountability Office (GAO) sustained a protest where the Department of Veterans Affairs (VA) had misled the protester by discussing only some, but not all, of the overpriced Contract Line Items (CLINs) that made the protester’s pricing uncompetitive.  The decision also demonstrates the low evidentiary standard to establish prejudice.

The VA conducted an LPTA procurement for medical services and equipment.  After receiving six initial proposals, the VA concluded that all of the proposals were technically acceptable and decided to conduct discussions to obtain the best price.  During discussions, the Contracting Officer (CO) advised the protester that its price proposal was “relatively weak.”  In response, the protester asked the CO if the VA could provide any additional comments on its price.  The VA replied that it had anticipated lower pricing on three specific CLINs.  The protester accordingly submitted a revised price proposal that lowered its pricing for those three CLINs.  The VA, however, awarded the contract to another offeror, the price of which was about $11.3 million lower.  Indeed, the protester’s price was fourth lowest.

The protester complained to GAO, arguing that the VA had misled it during discussions.  The protester asserted that the agency’s focus on the three particular CLINs was incomplete because it did not reveal the fact that the agency also found other CLINs to be overpriced.  And even if the protester had lowered its prices for the three specified CLINs to $0, it still would not have beat the price of the awardee.  GAO agreed and sustained the protest on this basis.

In doing so, GAO explained that, if an agency engages in discussions in an LPTA procurement, it only needs to advise an offeror that its price is too high.  But if it elects to provide more information about overpricing on some of the CLINs, it must address overpricing on all of the CLINs.

GAO also found that the protester established competitive prejudice — even though it was had the fourth lowest price.  The protester did so through a declaration of its president who stated that, had the VA advised that the protester’s price was high in other than the three CLINs, the protester would have been able to submit a more competitively priced proposal.  GAO stated that it would not assume that the protester could not have submitted the lowest price.

After Total Home Health, contractors should expect agencies to be less forthcoming in discussions for LPTAs.  Where the agency does discuss some overpriced CLINs, however, it must also discuss other overpriced CLINs that make the proposal uncompetitive.  If the agency fails to do so, contractors can take comfort that they likely were misled and establish prejudice through an appropriate declaration.  Lastly, while GAO’s decision on this discussions requirement could be read as only applying to LPTAs, we believe that this rule could apply in other contexts.