GAO: Misrepresentation on Key Person Availability Sinks Proposal

Agencies rely on the representations made by offerors in their proposals to determine how capable each offeror is. In many cases, key personnel are so vital to an offeror’s chance of success that any change to the key personnel must be approved by the agency prior to such a change taking place. Logic follows that the risk of losing a possible award outweighs any benefit that may be reaped from stretching the truth. Nonetheless, from time to time an offeror will decide to give it a try, hoping that any inaccuracies will be overlooked, or will simply unintentionally misrepresent a detail. But, as one offeror learned, the possibility of such inaccuracies being discovered is high, and the end result is far from ideal.

The decision is ASRC Federal Data Solutions, LLC, B-421008 (Dec. 2, 2022). In June 2022, the Department of Health and Human Services (DHHS) issued a request for quotations (RFQ) looking for information technology (IT) services. The RFQ required that proposals include information on the technical capabilities and qualifications for three key personnel. Each of the three individuals identified as key personnel would be evaluated on their technical experience, qualification, accomplishments, and abilities. When combined, the key personnel’s evaluation was equally as important as the other two non-price factors, and the three non-price factors were significantly more important than price. Four offers were submitted in response to the solicitation, including Awardee and Protester. Although the incumbent contractor did not submit an offer, a “sister company” of the incumbent, which was also the eventual Protester, did.

Awardee’s proposal conveyed that Awardee had contingent offers for two “critical incumbent leaders” (Individual 1 and Individual 2) that would fulfill the roles of key personnel. In contrast, Protester’s proposal contained exclusive letters of commitment from those very same two critical incumbent leaders. Rather, Awardee’s inclusion of two of the critical incumbent leaders came to light in a review of the Agency Report. Protester raised the issue in a supplemental protest alleging material misrepresentation, also known as a bait and switch.

To prove material misrepresentation, a Protester must show:  (1) that the awardee either knowingly or negligently represented that it would rely on specific personnel that it did not have a reasonable basis to expect to furnish during contract performance; (2) that the misrepresentation was relied on by the agency; and (3) that the agency’s reliance on the misrepresentation had a material effect on the evaluation results.

GAO determined, in its review, that Awardee’s inclusion of Individual 1 in its proposal was not a material misrepresentation. This was because the record contained a multitude of communications, beginning in June 2021, between Awardee and Individual 1 which demonstrated Awardee had a reasonable basis to believe that Individual 1 would work with Awardee.

GAO determined that the inclusion of Individual 2 in Awardee’s proposal was a material misrepresentation. Just like Individual 1, Individual 2 had initially accepted a contingent offer from Awardee in June 2021. Unlike Individual 1, GAO determined that Awardee’s continued communications with Individual 2 displayed a change to its intent to work with Awardee. By the time of proposal submission, communications with Individual 2 marked a clear desire to not work with Awardee and to not be included in Awardee’s proposal. In fact, Individual 2 even referenced its commitment to Protester in an email shortly before the submission date. GAO stated this email meant that Awardee should have been aware of Individual 2’s commitment to Protester, and that it did not have a reasonable basis to expect Individual 2 to work with Awardee. Therefore, Awardee’s proposal included a misrepresentation, satisfying the first element necessary to establish material misrepresentation.

Turning to the second element, agency reliance, GAO determined that the agency relied on the misrepresentation when evaluating proposals. In the RFQ, the agency had stressed the importance of the qualifications of the proposed key personnel, and that they carried great weight in the decision-making process. The agency specifically referenced the importance of Individual 2’s “strong qualifications” and “extensive experience” in its decision-making process.

Finally, GAO determined that the agency’s reliance on Awardee’s misrepresentation and inclusion of Individual 2 had a material effect on the evaluation results, in which the agency determined the 18.5% price premium of Awardee’s proposal was warranted.

Having met all three factors for material misrepresentation, GAO concluded that Awardee had made a material misrepresentation when it included Individual 2 in its proposal. Accordingly, GAO recommended that the agency terminate the contract with Awardee and exclude Awardee from any further competition in a new selection decision.

This decision shows the importance of ensuring that the information contained in proposals is as accurate and up to date as possible. Commitments made over a year before proposal submission, without more recent confirmation—in writing if possible—can lead to exclusion from competition and/or awards being revoked, whether intentional or not.

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