GAO Denies Protest to LPTA Solicitation Ridden with Cost Uncertainty and Local Zoning Code Conflicts

Federal agencies have long been afforded wide discretion in defining solicitation requirements to meet their contracting needs. But are a solicitation’s requirements acceptable even where they’re likely to conflict with local zoning codes? What about where the solicitation documents conflict with one another on whether certain requirements are considered “requirements” at all? And finally, is an LPTA procurement acceptable where such conflicts have undoubtedly led to price uncertainty among the bidders?

GAO says, “yes” to all of these, so long as the requirements meet the agency’s needs.

In Flaherty Family Trust, B-414563.3 (Aug. 16, 2018), GSA issued an RLP seeking to lease a “professional” office space location for the Department of Homeland Security U.S. Customs and Border Protection port in Savannah, Georgia. GSA anticipated award to the lowest-price technically-acceptable offeror. 

The main RLP contained general internal space qualifications. But a separate “Agency Special Requirements” document provided specialized usage and internal space specifications that were inconsistent with the main solicitation. The RLP also required 44 government parking spaces with an additional 96 public-parking spaces within a quarter mile. But these parking specifications did not comply with local county zoning codes for majority of potential office locations.

The Flaherty Family Trust timely protested both of these patent ambiguities. Shortly thereafter, GSA issued an amendment clarifying that the Special Requirements were included in the RLP “for informational purposes only,” to show offerors, generally, “what will be built inside the provided shell.” GSA’s amendment assured offerors that the main RLP (which omitted utilities costs) would control in the event of conflict. But, during protest litigation, GSA instead argued that the Special Requirements (which included utilities costs) should have been used to formulate the operating costs for the proposed rental rates.

Thus, Flaherty, still unclear on which costs to include in its bid and how to deal with potential zoning code violations, filed a supplemental protest of the amended solicitation. In its decision, GAO agreed with Flaherty that GSA’s post-protest adversarial stance was inconsistent with the amendment. GAO also acknowledged: (1) the possibility that confusion regarding the highly-specialized uses of the Special Requirements would cause substantial price discrepancies among offerors; and (2) the probability of zoning code violations due to the solicitation’s parking requirements.

But GAO denied the protest on both bases. Regarding the cost variation allegation, GAO explained: “A solicitation must contain sufficient information to allow offerors to compete intelligently and on an equal basis,” but “[t]here is no legal requirement, however, that a competition be based on specifications drafted in such detail as to eliminate completely any risk or remove every uncertainty from the mind of every prospective offeror.”

Accordingly, GAO held, “while the RLP does not provide definite information regarding the agency’s internal space requirements, we are not persuaded that this omission leaves offerors without a basis to formulate meaningful operating costs and compete intelligently for the overall requirement.” According to GAO, the solicitation did not clearly require offerors to include the specialized use costs in their bids; so, if they were in fact required, “the contractor would be entitled to an equitable adjustment” of operating costs under the contract’s changes clause. 

And regarding the parking specifications allegation, GAO explained: “It is within a contracting agency’s discretion to determine its needs and the best method to accommodate them, and we will not question an agency’s determination of its needs unless that determination has no reasonable basis” and, “[t]he fact that a solicitation’s requirements may be burdensome or even impossible for an offeror to meet does not make them objectionable, if the requirements properly reflect the agency’s needs.” Thus, GAO denied the second claim based on the protester’s failure to establish: (a) that no offeror could meet parking specifications and “still meet the [zoning] requirement”; and (b) “that there is a less restrictive means that could be utilized to meet the applicable requirement.”

In the end, Flaherty Family Trust serves as a clear and important reminder to federal contractors of the vast discretion afforded to agencies in expressing their needs and defining requirements to meet those needs. An agency is not required to eliminate the risk and uncertainty from the minds of prospective offerors, even where the requirements may be impossible to meet, and even in a lowest-price technically-acceptable procurement—where the price of acceptable offers is determinative of the final award. It is up to the offeror to either: (1) clarify and directly comply with all requirements to meet the agency’s needs; or (2) provide a less restrictive means for meeting the agency’s needs when compliance with the stated requirements is impossible.

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