GAO: Failure To Explain Prejudice Doomed Otherwise Successful Protest

Imagine that you’re a manufacturer of appliances, and respond to a solicitation seeking one of your appliances (on a brand name basis). You, of course, propose to provide your appliance. But you lose out on an award to an offeror that submits an offer for a different appliance that admittedly does not comply with the solicitation’s minimum requirements.

In this situation, you’d probably be fairly upset. And as a recent GAO decision acknowledged, you’d likely have a successful basis of protest—that is, if you could establish that you were prejudiced by the government’s award decision, and if you understood what exactly the GAO means by “prejudice.”

The facts in Glem Gas S.p.A, B-414179 (Feb. 23, 2017) are fairly straightforward. The protest involved a solicitation issued by the Navy, seeking 270 gas stoves for base housing at the U.S. Naval Air Station in Sigonella, Italy. The solicitation specifically identified a stove model manufactured by Glem Gas on a brand-name-or-equal basis. To be considered equal to Glem Gas’s stove, a different stove had to possess various salient characteristics, including a depth of 60 centimeters and capacity of 95 liters.

Unsurprisingly, Glem Gas proposed its own stove to meet the agency’s needs. But because the specified model was no longer manufactured, it proposed the latest model with even greater capabilities.

Gaeta Ship Supply SRL proposed an alternative stove manufactured by a different company. This stove did not comply with the Navy’s minimum requirements—it had a depth of 50 centimeters and capacity of 92 liters. But even though Gaeta’s proposed stove did not satisfy the Navy’s minimum stated requirements, the Navy awarded the contract to Gaeta.

Glem Gas protested, arguing that the Gaeta’s proposal failed to meet the solicitation’s requirements and, as a result, should have been found technically unacceptable. The Navy responded by acknowledging that Gaeta’s offered stove did not meet the solicitation’s requirements. But it called these deviations “minor . . .and inconsequential.” Because “the stoves are functionally interchangeable and will perform identically,” the Navy found that waiver of the dimension specifications was appropriate.

GAO disagreed with the Navy’s argument. It explained:

Under a brand name or equal solicitation, a firm offering an equal product must demonstrate that the product conforms to the salient characteristics of the brand name product listed in the solicitation. In general, the particular features of the brand name identified in the solicitation as salient characteristics are presumed to be material and essential to the government’s needs, and quotations offering other than the brand name product that fail to demonstrate compliance with the stated salient characteristics are properly rejected as unacceptable.

Thus, because the solicitation specifically identified the stove’s dimensions as salient characteristics, Gaeta’s failure to propose a stove in conformity with them should have rendered its proposal unacceptable.

But this finding did not end GAO’s analysis. Instead, GAO noted that an agency may waive compliance with a material solicitation requirement if doing so will not prejudice other offerors. So here, GAO considered the potential prejudice to Glem Gas as a result of the Navy’s waiver.

Now, one might think that prejudice in this situation is obvious: if Gaeta had been kicked out of the competition, Glem Gas might have been awarded the contract. But that’s not how GAO looks at prejudice in these cases. In cases like these, GAO’s test for prejudice is whether the protester, had it known that the agency wouldn’t enforce its minimum requirements, would have proposed something different. In other words, would Glem Gas have proposed a different (and cheaper) stove had it known that the Navy wouldn’t enforce the stated depth and capacity requirements?

GAO found that Glem Gas had not shown that its own proposal would have been any different:

Although we agree with Glem Gas that the Navy improperly waived the RFQ’s salient characteristics by selecting the awardee’s non-brand name stove, we also agree with the agency that the protester has not shown that it was prejudiced by the waiver. As the Navy points out, Glem Gas has not alleged that it would have quoted a lower price for its brand name model, or that it would have offered another similar product, if it had known that the agency would waive the RFQ’s salient characteristics at issue here. We thus have no basis to sustain Glem Gas’ protest.

Despite being correct on the law—arguing that the Navy’s waiver of the salient characteristics was improper—Glem Gas’ protest was denied.

The Glem Gas decision is an important reminder that it is not always enough for a protester to prove that the awardee’s product didn’t satisfy the solicitation’s salient characteristics. The protester must also demonstrate that it was prejudiced by the agency’s waiver of the salient characteristics. And in the GAO’s eyes, “prejudice” means that the protester would have changed its own proposal in some way—not just that the awardee would have been excluded.