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Agencies Must Allow Offerors to Submit Revised Proposals Following a Material Change to Solicitation Terms 

by | Jul 16, 2020 | Government Contracts

It is not unusual for an agency to revise a solicitation when taking corrective action in response to a bid protest. A recent bid protest decision by GAO confirms that if an agency makes a material change to the solicitation’s terms, it must allow offerors to submit revised proposals in response to that change.

In Computer World Services Corporation, B-418287.3 (June 29, 2020), CWS protested the award of a task order by the U.S. Coast Guard on multiple grounds, including that the agency’s award decision was based on a flawed price evaluation. The solicitation had provided that the agency was to consider price and two non-price evaluation factors, and that as to price, the agency was to evaluate total prices for price reasonableness and selected unburdened labor rates for price realism. The agency had concluded that CWS’s total proposed price was unreasonably high and that CWS’s proposed unburdened labor rates were unrealistic. 

GAO sustained the bid protest, finding that the agency’s price evaluation was based on a flawed independent government estimate (IGE) and the benchmark unburdened hourly rates used for comparison by the agency were irrationally selected. GAO also sustained CWS’s protest as it related to the agency’s evaluation of the non-price factors for the awardee.

In response to GAO’s decision, the Coast Guard issued a corrective action notice that detailed the agency’s plan to revise the price evaluation methodology, stating: 

In addition we are revising the Factor 3 evaluation criteria in Section 5 of the RFQ by removing the limited realism analysis from the evaluation. Thus, the only evaluation under Factor 3 will be the reasonableness evaluation of the total evaluated price. An amendment will not be issued reflecting this change; this email serves as the official notification. We are requesting that you revalidate your price quote through 18 May 2020. If your company decides not to revalidate, it will not be included in this revised evaluation. USCG will not be accepting new price quotations. Also, your company has the option to withdraw your quotation if they would like to do so. An email response is due no later than noon Thursday, 19 March 2020.

CWS submitted another protest, this time challenging the agency’s proposed corrective action and arguing that it was improper for the agency to make a material change to the solicitation terms – eliminating the price realism analysis – without issuing an amendment to the solicitation and allowing offerors to submit revised proposals. 

The Coast Guard argued that the removal of the price realism analysis was an immaterial change to the solicitation, because the requirements that offerors propose an adequate staffing approach and level of effort did not change.

GAO disagreed with the agency and sustained the protest. GAO cited to legal precedent that a change to a solicitation’s evaluation criteria constitutes a material change to the solicitation, and therefore concluded that the agency’s removal of the price realism analysis was a material change. GAO stated:

A change to a solicitation’s evaluation criteria to eliminate consideration of the realism of proposed hourly rates necessarily will fundamentally affect the vendors’ pricing and staffing strategy. For example, a firm could choose to submit a low, or even below-cost price for business reasons, and, such a quotation would not be subject to rejection based solely on the low or below-cost price in the absence of a price realism evaluation requirement.

GAO further noted that the agency’s argument that the change was immaterial was undercut by evidence that the price realism factor had, in fact, impacted the offerors’ proposal strategy in this procurement. In reviewing the initial quotations, the agency had conducted discussions with offerors and advised them that certain hourly rates were unrealistic, and both the awardee and the protestor had revised their pricing in response. GAO concluded the agency was required to “amend RFQ and afford all firms an opportunity to submit revised quotations based on the revised evaluation scheme.”

This decision highlights the importance of closely reviewing an agency’s proposed corrective action. While agencies are generally given significant latitude in taking corrective action, if that corrective action results in a material change to the solicitation’s requirements or evaluation scheme, it must afford offerors the opportunity to submit revised proposals. 

Stephanie Wilson is a Partner and Co-Director of Government Contracts at Berenzweig Leonard. She can be reached at [email protected].