GAO: Agencies Must Consider Information Gathered by Reverse Auction Providers

What are federal contractors supposed to do when FedBid (now Unison) requests additional information related to a proposal and the awarding agency ignores that information in its awarding decision?

GAO recently held that the agency must consider all information gathered by reverse auction providers.

In BCW Group, LLC, B-417209, 2019 WL 1398813 (Comp. Gen. Mar. 27, 2019), BCW protested the Department of Interior, Bureau of Indian Affairs’ award to another offeror. The award was the result of a reverse auction conducted by FedBid, on behalf of the agency.

The reverse auction was for work related to procurement, installation, and maintenance of Promethean ActivPanels, or other similar products. BCW’s bid included a general verification that it complied with “all terms listed by the Buyer[,]” but the bid did not specifically state that it included the required one-year maintenance. At the close of the reverse auction, a representative of FedBid reached out to BCW asking the following:

Is your bid price correct, complete (meaning all items requested are included in your bid) and inclusive of all costs the Buyer would incur if your bid is selected?

In response, BCW confirmed that the price included, among other things, “once a year maintenance for 3 years on the panels I install.”

The agency subsequently reviewed the five submitted bids and chose a different offeror because BCW’s offer, although lower priced, did not specifically mention the required maintenance. The agency did not review the exchange between FedBid and BCW, where BCW confirmed that maintenance was included in its offer, because the contracting officer was “not aware that FedBid” had the post-bid exchange with BCW regarding the maintenance issue. BCW protested that its lower priced bid should have been accepted because it met the procurement requirements.

The core issue addressed by GAO was how FedBid and the agency should have handled FedBid’s follow up question and BCW’s response.

To understand FedBid’s role in this procurement, we need to provide a brief overview of FedBid and reverse auctions, compliments of GAO. FedBid was the largest third-party provider authorized to conduct government-wide reverse auctions. While FedBid’s website is still active, it was recently acquired by Unison. (All references to FedBid within this blog post incorporates Unison as they are effectively one and the same following the acquisition).

Reverse auctions are intended to encourage multiple vendors to compete against each other for a solicitation by bidding lower than other vendors for that solicitation. Theoretically, this lowers the price the agency pays for a fairly uniform product or service. Generally, the bidder who submitted the lowest price bid, in line with the procurement’s technical requirements, will be the awardee. In 2017, reverse auctions accounted for approximately $1.5 billion in government acquisitions.

With this background, there is still the question of how BCW lost the bid even though it was the lowest-priced offeror and its proposal satisfied the procurement’s technical requirements. Fortunately, GAO provides a clear answer.

Here, FedBid was conducting the reverse auction on behalf of the Bureau of Indian Affairs. In this arrangement, the agency authorized FedBid to act on the agency’s behalf. When FedBid reached out to BCW for clarification as to the provision of maintenance on the provided products, it did so on behalf of the agency.

GAO wrote that “FedBid is a private company. However, as we have stated before, when FedBid hosts a reverse auction on its website for the government, it acts as an agent for the agency conducting the procurement.” In essence, BCW’s communications with FedBid were as if BCW was communicating directly with the agency.

With this close interworking of FedBid and the agency, GAO found that “the agency was required to consider” the information provided by BCW at FedBid’s request “in evaluating the bids it received.” GAO said it did not matter that the contracting officer claimed that he did not know FedBid reached out to BCW because “the agency authorized FedBid to act on the agency’s behalf.” BCW was the lowest bidder and also complied with FedBid’s request for information regarding its maintenance of the Promethean ActivPanels, which complied with the Solicitation. For these reasons, GAO found ” that the agency was required to consider [FedBid’s requested] information before making an award.”

Unfortunately for BCW, the awardee had already performed the contract, so GAO only awarded BCW reimbursement for its bid preparation costs.

For the rest of us, BCW’s lesson is one well-learned. When an agency relies on a third-party reverse auction provider for a procurement, the agency must consider all communications between that provider and the offerors in making its awarding decisions.