GAO Awards Costs After Agency Unduly Delays Corrective Action

GAO recently awarded the reasonable costs of filing and pursuing a protest to an agency’s evaluation and award decision, after finding that the agency unduly delayed corrective action in response to a clearly meritorious protest. Let’s take a look.

Markit! Forestry Management, LLC–Costs, B-417910.3 (Apr 7, 20200), involved a U.S. Department of Agriculture Forest Service solicitation for vegetation removal and silvicultural treatments for national forests in and around the Rocky Mountain region. It was a FAR part 12 procurement set aside for small businesses. It anticipated award of multiple indefinite-delivery, indefinite-quantity (IDIQ) fixed-price contracts on a best-value tradeoff basis.

The evaluation was based on price and the following non-price factors: past performance; experience/key personnel; performance of work plan and techniques; quality control plan; and utilization of biobased products. When combined, the non-price factors were approximately equal to price. The solicitation contained nine contract line item numbers (CLINs) for different manual vegetation treatments. And it said that the agency would subjectively evaluate price proposals to determine the reasonableness and realism of each CLIN price.

The agency received 21 proposals, including Markit!’s. It informed Markit! during the evaluation, that its prices were found to be extremely high and not fair or reasonable. So Markit! revised its proposal.

Though not anticipated by the solicitation, the agency awarded separate contracts for mechanical and manual vegetation treatment services. It awarded a contract to Markit! for three of the manual CLINs, after it found Markit!’s mechanical CLIN pricing was still unacceptable.

Markit! protested the awards, alleging “that the agency failed to award the contracts on a best-value tradeoff basis” and relied on unstated evaluation criteria instead of the RFP. Markit! argued that “the agency improperly evaluated prices on an acceptable/unacceptable basis,” which was inconsistent with the solicitation’s requirement that the agency evaluate all prices’ reasonableness and realism.

The agency defended its price evaluations and best‑value tradeoff decision in its agency report. So, Markit! filed comments and a supplemental protest challenging the “reasonableness of the government’s independent cost estimate and the agency’s failure to evaluate probable cost to the government.”

Then, on the date the supplemental agency report was due, the agency filed its notice of intent to take corrective action, citing its “concerns regarding the procurement.” It said it would take corrective action to “cure any possible errors discussed in the supplemental protest” by reevaluating price proposals and making a new award decision. The agency also confirmed that the corrective action was intended to render the original protest academic.

GAO will recommend reimbursement of protest costs in certain cases where it finds the agency unduly delayed corrective action where the protest was clearly meritorious and, to put it bluntly, wastes the protester’s time. GAO found there was delay here: “[b]y waiting until after submission of comments to announce its intent to take corrective action, the agency’s corrective action was not prompt with respect to the initial protest grounds.”

GAO also found the protest to be clearly meritorious in part because the agency didn’t follow its own procedures for determining price reasonableness. “[a]lthough every offeror included certain CLIN prices that were at least 15 percent above or below the government estimate for these CLINs, those proposed prices were not assigned an overall rating of unacceptable” even though the agency had said it considered all prices more than 15 percent higher or lower than the government estimate to be unreasonably high or unrealistically low.

Because the agency delayed the corrective action past the date of the initially filed comments on the agency report, and there were clear flaws in the evaluation, GAO recommended the protester’s costs be reimbursed. As this decisions shows, an agency may have to reimburse costs where it delays its corrective too far.