GAO Won’t Let Agencies Sweep Solicitation Non-Compliance Under the Rug

An agency can’t award an offeror a contract if its proposal doesn’t conform with a material solicitation requirement. So if, for example, the solicitation requires certain types of documentation showing an offeror’s right to use property, but the awardee offers something different, GAO will likely sustain a protest.

Put differently, GAO won’t let an agency relax key solicitation requirements even though the agency might, during evaluation, accept the non-complying proposal.

This scenario played out recently in Hope Village, Inc., B-414342.2 et al. (Feb. 21, 2019). There, the Bureau of Prisons was seeking residential re-entry center and home confinement services. The solicitation noted that BOP contemplated awarding one to four IDIQ contracts on a best-value tradeoff basis considering three factors: past performance, technical/management, and price.

One of the subfactors under the technical/management factor focused on site location. BOP noted that it would evaluate the suitability of a site based, in part, on offeror’s right to use the location. The solicitation’s instructions specifically required offerors to “submit official documentation that demonstrates they have a right to use, signed by both parties” that was “limited to deeds, leases, bills of sale, options to lease, options to buy, contingency leases, or contingency deeds. The solicitation did not specify any additional documentation that could be used to show an offeror’s right to use a proposed property.

To meet this requirement, the awardee submitted a “letter of intent,” between the awardee and landlord, to sign a formal lease and a “master lease” between the landlord and an unnamed third party. The awarded characterized this letter as an option to lease. In evaluating the awardee’s proposal, the agency accepted this evidence as valid proof of the awardee’s right to use its proposed property.

The protester argued that the solicitation did not list letter of intent to lease as an acceptable document to show right to use. Nonetheless, the agency argued that, despite using the term “intent to lease,” the letter actually constituted a contingency lease or option to lease because “it explicitly stated that it was contingent on [awardee] ‘winning and securing the government contract’ and was signed by [awardee] and the landlord.”

GAO found the agency’s position wrongheaded for a few reasons. First, the solicitation listed multiple types of acceptable documents, but a “letter of intent” was not among them. Second, even though the agency and awardee saw the letter as an option to lease or as a contingency lease, the document itself was clearly something else: a letter of intent.

In fact, the letter explained that it was not a lease and that lease would be negotiated between the awardee and landlord in the future. And third, even if the “letter of intent” could be construed as an option to lease or a contingent lease, the “letter of intent” noted that any agreement for a lease was null and void if not contract was not awarded by May 1, 2017. (The agency didn’t award the contract until October 19, 2018.)

In summarizing its analysis, GAO essentially noted that the agency skimmed over the solicitation’s clear requirements in handing the contract to the awardee:

The solicitation here clearly required the agency to consider the “validity of the offeror’s right to use,” which included “both the legality of the instrument and the nature of the interest . . . as it relates to any potential risk it poses to the government.” . . . . However, there is nothing in the record showing that the agency contemporaneously analyzed the legality, the nature of the interest, or the continued viability of the letter of intent provided by [the awardee]. Instead, the record shows that the agency concluded that the letter of intent was an option to lease as set forth in the compliance matrix without any assessment of the legality of the letter of intent or the nature of the interest. . . . Similarly, the record shows that the agency also concluded that the letter of intent and the master lease were “satisfactory as valid proof of right-to-use- without any further consideration of the validity of the offeror’s right to use as required by the solicitation.

Ultimately, GAO sustained the protest and provided corrective directions to the agency. It also recommended that the agency pay the protester’s costs.

As with many GAO decisions, this decision reminds offerors that strict compliance with the solicitation’s requirements is imperative. And that goes for the agency, too. If the agency sweeps non-compliance under the rug, GAO–like a good parent–will make the agency return to the job and do it right.