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Posted on Friday, January 19, 2018

GAO Sustains Protest Where Agency Failed to Meaningfully Consider OCI

A recent GAO decision highlights the fundamental procurement principle that agencies must evaluate proposals consistent with the terms of the solicitation.

In AdvanceMed Corporation, the protestor argued that the awardee, Safeguard Services, LLC, was ineligible for award of a task order because its parent company had an organizational conflict of interest (OCI) that was expressly prohibited by the solicitation. AdvanceMed also challenged the agency’s finding that Safeguard’s proposal was technically acceptable when its acceptable rating was contingent on remediation on several issues that had not actually been remediated. GAO sustained the protest on both grounds.

The solicitation at the center of the protest was issued under HHS’s unified program integrity contractor (UPIC) multiple-award IDIQ contract. The task order was to provide services in a geographic area known as the southeast jurisdiction. The solicitation required offerors to submit information regarding conflicts of interest, including disclosure of “all current/active and known future non-foreign contracts that could give rise to an actual, potential, and/or apparent [OCI] for itself, its parent(s) and affiliate(s).” The solicitation then expressly stated that it considered it to be a conflict for the awardee to perform as a contractor under the procurement and as a Medicaid management information systems (MMIS contractor in the same geographic jurisdiction.

Safeguard was awarded the task order for the southeast jurisdiction. In its proposal, Safeguard disclosed that its parent company performed MMIS contracts in four states in the southeast jurisdiction. Despite this disclosure, Safeguard represented that there were no OCIs and no mitigation was required. The agency’s preaward OCI memorandum also did not address Safeguard’s parent company’s contracts. In response to the protest, the agency argued that this was merely a “perceived conflict.” The GAO rejected the agency’s argument, noting it was “inconsistent with the clear language of the solicitation, which states that they present a conflict.” GAO sustained the protest, finding that the agency’s actions were unreasonable because there was nothing in the record to document that the agency had meaningfully considered the conflict.

The solicitation also included compliance with Section 508, which requires certain technology to be accessible to people with disabilities, as an evaluation factor. The solicitation stated that, “[t]o be technically acceptable, the offerors proposed Electronic and Information Technology (EIT) supplies and or services must conform to applicable Section 508 accessibility standards,” and required offerors to complete a Section 508 Product Assessment Template.

The Section 508 compliance officer found that Safeguard’s EIT did not meet the compliance requirements, and noted that “This Section would be considered acceptable contingent upon the contractor’s remediation of these issues.” Safeguard was then assessed an “Acceptable*” under the 508 Compliance factor, accompanies by the notation: “*This criteri[on] is considered acceptable, contingent upon the contractor’s remediation of the issue(s) identified in the 508 [c]ompliance [o]fficer[‘]s review.”

GAO rejected the agency’s argument that “the [agency’s] evaluation was reasonable because [it] ‘understood that [Safeguard] could remediate the concerns’ and was able to determine that Safeguard ‘had the ability to comply with Section 508 requirements.’” GAO found that “there is nothing in the record that shows that the awardee’s proposal addressed or remediated the issue noted by the 508 compliance officer,” and held that it was unreasonable for the agency to conclude that Safeguard’s proposal was technically acceptable “where an acceptable rating was expressly contingent upon remediation, and the identified issues were not remediate.”

While agencies are given significant discretion in the procurement process, this protest highlights that GAO will sustain protests where an agency’s evaluation is undocumented or inconsistent with the solicitation’s stated evaluation criteria.

Berenzweig Leonard is teaming up with Red Team Consulting for a monthly newsletter featuring upcoming contracts, key protest decisions, legal updates, events, and more. This post was published in the January 2018 Monthly Insights newsletter. To sign up for Monthly Insights, please click here.

Stephanie Wilson is a Partner at Berenzweig Leonard, LLP. She and Terry O’Connor lead the firm’s Government Contractspractice. Stephanie can be reached at swilson@berenzweiglaw.com.