February 8, 2022
In 2019, Nichols Liu LLP published its Briefing Paper Should We Protest. While the lawyers of the firm have handled some significant cases for major contractors (including three multi-billion-dollar protests last year), last month we were involved in an unusual circumstance at the U.S. Court of Federal Claims (COFC): persuading the COFC to effectively “reverse” a GAO decision in one case, while preserving its client’s award with novel legal arguments in the second case.
Rare Reversal of GAO Decision
In CGS-SPP Security Joint Venture v. United States, the U.S. Department of State sought guard services for the U.S. Embassy in Australia, with award to be made on the low-price-technically-acceptable (LPTA) basis. The solicitation included inconsistent provisions regarding the submission of proposals: one provision instructed offerors to deliver proposals to a post office box at the U.S. Department of State, while the other provision instructed offerors to email their proposals to the same office but lacked a designated recipient or an email address.
CGS-SPP Security Joint Venture (CGS-SPP) reasonably emailed its proposal to the Contracting Officer listed on the cover page of the solicitation. That person, however, did not read CGS-SPP’s email because she had given internal direction to her Contract Specialist to collect all proposals for evaluation. The Contract Specialist was unaware of the proposal, since CGS-SPP did not copy him on the email, so the agency unintentionally omitted the proposal from its evaluations.
When CGS-SPP learned of the award to a competitor—at a higher price than CGS-SPP had submitted—it asked Nichols Liu to challenge the decision at GAO. GAO found that the solicitation was patently ambiguous and that CGS-SPP should have filed a pre-award bid protest of the ambiguity. GAO therefore dismissed the post-award protest as untimely.
Parties that disagree with an outcome at GAO can file a second protest at the COFC. These follow-on actions are not technically appeals in that the court does not affirm or vacate the GAO decision. Rather, the COFC makes its own independent ruling, although it often agrees with GAO’s reasoning and outcome.
CGS-SPP followed this process. At the Court, CGS-SPP acknowledged the solicitation’s inconsistency in the method of submitting proposals and the lack of designated recipient in the solicitation, but persuaded the Court that it had acted reasonably in submitting the proposal via email. CGS-SPP also successfully claimed that it had acted reasonably in submitting its proposal to the correct government office and the designated contracting officer. To the extent the agency intended for the Contract Specialist to receive proposals, the solicitation did not say so, and any ambiguity as to the proper recipient was not apparent on the face of the solicitation—thus contradicting GAO. The Court enjoined the award and ordered the agency to recompete the contract or reevaluate proposals to include CSG-SPP’s proposal.
Hopefully this reevaluation will lead to the agency “flipping” the award to CGS-SPP, which should be the LPTA offeror. As Dan Gordon, the former head of bid protests at GAO, said in his article Bid Protests: The Costs are Real, But the Benefits Outweigh Them, this is an exceedingly rare circumstance.
Case of First Impression at the COFC on SAM Registration
In the other case, G4S Secure Integration LLC v. United States, disappointed offeror, G4S Secure Integration, LLC (“G4S”), protested the award of a State Department contract for security services for the U.S. Embassy in Angola to CGS-ORSA Security, LLC (“CGS-ORSA”). In a case of first impression at the COFC, the court opined that the requirements set forth in FAR 52.204-7 (July 2018) regarding System for Award Management (“SAM”) registration are mandatory.
The solicitation incorporated FAR 52.204-7, which requires offerors to register in SAM before submitting an offer. Both G4S and CGS-ORSA submitted their respective proposals as joint ventures (“JVs”), a common business practice. Although CGS-ORSA’s individual partners were registered in SAM, G4S argued that CGS-ORSA, the JV entity itself, was not registered.
In deciding the protest, the court held that the registration requirements in FAR 52.204-7 apply to JV entities, not just their members. In making its ruling, the court distinguished GAO decisions addressing analogous circumstances because the procurements were FAR Part 14 procurements and the award being protested was a FAR Part 15 procurement.
Despite the lack of registration, the Court held G4S was not prejudiced. To prevail in a protest, the protester must not only prove that the agency erred but also that, but for the error, the protester would have had a substantial chance of receiving the award. CGS-ORSA noted a particular iteration of the prejudice rule—i.e., a protester is not prejudiced when it also benefits from an agency’s error. While G4S was also a JV with its members registered with SAM, the JV entity itself was not. Simply stated, G4S could not establish that it had a substantial chance of receiving the award and could not prevail.
The court’s decision leaves two takeaways for contractors:
Differences Can Arise Between GAO and COFC. Under GAO’s analyses of the FAR clause, minor informalities related to SAM registration are waivable. But the court held these same errors are not waivable in the FAR Part 15 context. This holding seems to conflict with GAO’s repeated point that SAM registration is a matter concerning responsibility, and not a material obligation of the offeror. Although the opportunity to cure minor errors is a rule under FAR Part 14 procurements, responsibility determinations and the SAM registration requirement under FAR 52.204-7 apply to all procurements. Moreover, FAR Part 15 procurements allow offerors to correct mistakes and deficiencies before award, such as through discussions. We believe that we haven’t seen the last of these kinds of cases and that there will be future decisions that focus on responsibility and FAR Part 15 procurements.
Proper SAM Registration is Paramount. SAM registration is not as simple as it seems. As with other entities, unincorporated JVs can register in SAM with (1) a unique Tax Identification Number (“TIN”) from the IRS; (2) a unique identity identifier (a DUNS Number); and (3) a bank account. Contractors should start registration ASAP and resolve any issues that might arise in the process. Having the JV entity registered prior to offer submission should mitigate the protest issues litigated in the G4S case.