Preaward Notice Did Not Affect Timeliness Of Price Realism Protest

An agency’s preaward notice did not start the “clock ticking” for an unsuccessful competitor’s subsequent GAO bid protest.

In a recent decision, the GAO held that the protesters were not required to file their GAO bid protests within 10 days of receiving the agency’s preaward notice because the protests were based on an allegation that the agency had failed to conduct a price realism evaluation–and the protesters were not made aware of the awardee’s price in the preaward notice.

The GAO’s decision in B&B Medical Services, Inc.; Ed Medical, Inc., B-409705, B409705.5 (June 29, 2015) involved a VA procurement for home oxygen services to patients in Veterans Integrated Services Network 9.  The solicitation was issued as a total small business set-aside.

The solicitation called for a “best value” evaluation based on technical capability, past performance, socicoeconomic status, and price.  The solicitation specified that “[p]roposals unrealistically high or low in price, when compared to the Government estimate, and market conditions evidenced by other competitive proposals received, may be indicative of an inherent lack of understanding of the solicitation requirements and may result in proposal rejection without discussion.”

B&B Medical Services, Inc. and Ed Medical, Inc. submitted proposals.  On October 24, 2014, the VA issued a preaward “Notification to Unsuccessful Offeror” to each company.  The notice informed each company that its proposal was unsuccessful and that further proposal revisions would not be considered.  The notice stated that award would be made to First Community Care, LLC.  The notice provided that “[n]o response is required unless a basis exists to challenge the size status or small business status of the apparently successful offeror . . ..”  The notice did not disclose FCC’s price.

On March 13, 2015, the VA posted on FedBizOpps a notice of award to FCC.  The notice of award disclosed FCC’s price.  On March 20, 2015, B&B filed a GAO bid protest challenging the VA’s alleged failure to conduct a price realism evaluation of FCC’s proposal.  On March 23, EMI filed a similar protest.

The VA argued that the protests should be dismissed as untimely because they were not filed within 10 days of when the protesters received the preaward notices.  The GAO disagreed.

The GAO noted that under its Bid Protest Regulatons, “a protest other than one based on alleged improprieties in a solicitation must be filed no later than 10 calendar days after the protester knew, or should have known, the basis of protest.”  The GAO continued: “[s]ince the VA’s October 24 notice did not disclose the award prices, and since the focus of these protests is that the award prices were unrealistic, we see no support for VA’s contention that the notice provided sufficient information to alert the protesters to the issue they now raise–i.e., whether the awardee’s prices can be viewed as realistic.”

The GAO held that B&B and EMI had timely filed their protests within 10 days of when they knew or should have known of the basis of protest.  Turning to the merits, the GAO found that the VA had not properly evaluated FCC’s proposed price for price realism.  The GAO sustained the protests.

The GAO’s strict bid protest timeliness rules can be confusing.  In small business set-aside procurements, pre-award notices can add to the confusion.  As in this case, a typical pre-award notice provides the name of the apparent successful offeror, but little else upon which a protest might be based.

The GAO’s decision in B&B Medical Services, Inc.; Ed Medical, Inc. demonstrates that the mere receipt of a pre-award notice does not necessarily mean that the 10-day protest clock starts ticking.  Where, as here, a subsequent protest is based on information that was not included in the pre-award notice (and that the protester did not otherwise know or have reason to know), the protest will be timely if filed within 10 days of when the protester learned (or should have learned) that information–notwithstanding the earlier receipt of a pre-award notice.

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