CAGE-y Evaluation: Agency Unreasonably Failed to Consider CAGE Codes Provided in Proposal

Facilities security clearances are a common requirement for Department of Defense procurements. While important for national security reasons, these solicitation requirements can also create confusion with respect to evaluation. A recent GAO decision demonstrates how confusion can arise when a contractor holds multiple CAGE codes, only one of which corresponds to a cleared facility.

BDO USA, LLP, B-416504.2 (May 22, 2019), involved a procurement by the United States Air Force, Transportation Command for financial and auditing support operations. The Air Force issued the RFQ to holders of Professional Services Schedule (“PSS”) contracts on the GSA’s Federal Supply Schedule.

Importantly, the solicitation required offerors to possess valid facilities security clearances in order to be considered for award. As GAO summarized, “the RFQ required that an offeror submit a cover letter identifying the commercial and government entity (CAGE) code and GSA PSS contract number of the prime and any teaming partner/subcontractor.” Prospective contractors were also required to complete and submit a Department of Defense Contract Security Classification Specification form (DD Form 254), which was provided with the RFQ.

BDO was a PSS contract holder and was interested in submitting a bid in response to the RFQ. Importantly, there are two CAGE codes associated with BDO, 6YTU0 and 32ZC7. While BDO’s facilities security clearance was issued under the 6YTU0 code, its PSS contract was issued under the 32ZC7 code.

In response to the RFQ, BDO submitted a proposal and identified 6YTU0 as its CAGE code, as that was the code of the cleared facility. The Air Force subsequently rejected BDO’s proposal because the CAGE code provided by BDO did not match the code on BDO’s PSS contract.

BDO subsequently protested its elimination before GAO, but its protest was denied. According to GAO, “our Office denied the protest because we found that BDO’s quotation and subsequent clarifications did not clearly establish that it satisfied the RFQ’s requirements.”

Following BDO’s unsuccessful protest, the Air Force determined that none of the submitted proposals met the RFQ’s requirements, and cancelled the Solicitation. Roughly two months later, however, the Air Force reissued the RFQ without modification. At this time, the Air Force also advised BDO that the RFQ had been “restored” but the only proposal revision BDO would be allowed to make was to its CAGE code.

BDO responded by revising its proposal to list the 32ZC7 code associated with its PSS contract as its CAGE code. The revised proposal further instructed the Air Force to “[p]lease note that CAGE Codes 32ZC7 and 6YTU0 are assigned to the same entity.” The proposal further explained that the 6YTU0 code was associated with the cleared facility that would be utilized during contract performance. BDO also provided a detailed explanation of why it possessed two CAGE codes.

Nevertheless, the Air Force again eliminated BDO’s proposal from further evaluation. According to the Air Force, “contract award must be made to CAGE Code 32ZC7 and CAGE Code 32ZC7 must have the active FCL.” But the Air Force did not discuss whether the 6YTU0 code was also linked to BDO and whether that facility security clearance would be sufficient to satisfy the RFQ’s requirements.

BDO once again protested its elimination. BDO argued that its proposal had clearly demonstrated the same entity held both the PSS contract and a valid facility security clearance. It further argued that the Army had unreasonably interpreted the RFQ to require the same CAGE code for both the PSS contract and the cleared facility.

GAO agreed with BDO that the Air Force had unreasonably concluded BDO was ineligible for award. According to GAO, “the agency’s analysis of BDO’s compliance with the FCL requirements of the RFQ, based solely on the CAGE code identified in BDO’s cover letter, failed to account for the fact that a single entity could have multiple CAGE codes.” As such, GAO sustained the protest and recommended the Air Force reevaluate BDO’s proposal, and give full consideration to whether the facility security clearance associated with the 6YTU0 code satisfied the Air Force’s requirements.

Facilities security clearance requirements are frequently a point of confusion within the government contracting community, as the circumstances in BDO make plain. Unfortunately, it sometimes takes one (or more) GAO protest(s) to vindicate an offeror’s eligibility.