After a protest was filed at the GAO, a procuring agency delayed implementing the mandatory statutory suspension of work, then amended the awardee’s contract to permit the awardee to fully perform before the suspension actually kicked in.

Then the agency got caught.

In a recent decision, the GAO sustained a protest because the agency had circumvented the GAO’s bid protest process.  But while the agency got busted–a good thing–the penalty it will pay is less than satisfactory.

The GAO’s decision in SCB Solutions, Inc.–Reconsideration, B-410450.2 (Aug. 12, 2015) involved a VA RFQ for personal identity verification cards.  The RFQ was issued via the GSA’s eBuy system to holders of GSA Schedule 70 contracts.  The RFQ stated that award would be made on a lowest-priced, technically-acceptable basis.

The RFQ called for the issuance of a single, fixed-price delivery order for 400,000 PIV cards.  The PIV cards were to be provided in five production runs of 80,000 each.  Within 30 days of award, the contractor was to deliver a test run of 100 cards.  After the agency accepted the test run, the contractor was to deliver the remainder of the first production run; delivery of the other production runs would follow.

After evaluating quotations, the VA made award to XTec, Inc. on September 10.  The VA waited 12 days–until September 22–to notify SCB Solutions Inc. of the award.  SCB filed a GAO protest the same day it received the VA’s notification.  In its protest, SCB argued that its proposal (which was lower-priced than XTec’s) had been improperly evaluated as technically unacceptable.  The GAO notified the VA of the protest on September 23.

In October, the VA submitted an agency report responding to the protest.  SCB then submitted comments on the agency report.  Following the receipt of SCB’s comments, the VA notified the GAO that it had decided to take corrective action.  Specifically, the VA stated that it would terminate XTec’s contract for the convenience of the government.  The VA also stated that, at the time the statutory stay of performance was implemented, XTec had produced all of the cards, but had not delivered them to the VA.

SCB filed a request for reconsideration.  SCB argued that the VA’s corrective action provided no meaningful remedy.  SCB contended that, by terminating XTec’s contract for convenience after XTec had produced all of the cards, FAR 12.403(d) permitted the VA to accept the PIV cards and pay XTech 100 percent of the contract price.  SCB argued, in essence, that the supposed corrective action was meaningless.

After SCB filed its request for reconsideration, the GAO learned what the VA had done behind the scenes.  On September 23–the same day the GAO had notified the VA of SCB’s protest–the VA modified XTec’s contract to require one bulk delivery of the 400,000 PIV cards.  Additionally, although the Competition in Contracting Act required the VA to “immediately” direct XTec to case performance, the VA did not direct XTec to suspend performance until two days after receiving notice of the protest.  The GAO continued:

The VA’s decision to terminate the contract after modifying the contract to accelerate delivery, and after the awardee substantially performed (and where the agency had no intention of resoliciting its requirements) is not the commonly understood meaning of an agency’s representation that it is terminating the underlying contract.

The GAO granted SCB’s request for reconsideration.  The GAO then sustained SCB’s protest on the merits, finding that the solicitation contained a latent ambiguity that prevented SCB from fairly competing.  Because the delivery order had been fully performed and the VA did not intend to resolicit its requirements, the GAO recommended that SCB be reimbursed the costs of preparing its quotation, as well as the reasonable costs of filing and pursuing its protest and its request for reconsideration.

The VA’s gamesmanship in this case was appalling.  Rather than play fair and follow the rules, the VA tried to pull a fast one on the GAO (and SCB) by delaying its unsuccessful offeror notice, delaying implementation of the mandatory suspension, and accelerating delivery by XTec.

While I am glad to see that the VA got caught, it is unfortunate that the only penalty that the VA will pay is to reimburse SCB’s costs.  In that regard, I don’t blame the GAO–there wasn’t much more that the GAO could do under the circumstances.  Let’s just hope that the reimbursement of costs, plus any public attention this case generates, will prevent anything like this from happening again.