GAO: Protestors Must Show Intervening Offerors Would Not be in Line for Award to be Interested Party

In order to have a bid protest sustained, a protestor must have a reasonable chance of being awarded the contract if the protest succeeded. Often, this just means that the protestor’s own proposal must be acceptable to the awarding agency in the first place. What many contractors do not know, however, is that if intervening offerors would be in line for the award even if the protest was sustained, the protestor will not be considered an interested party by the GAO.

The GAO came to the above conclusion in a June 10, 2021 decision, Gulf Civilization Gen. Trading & Contracting Co., B-419754 (June 10, 2021). In this case, the Defense Logistics Agency (DLA) had issued a request for proposals (RFP) for excess property management services, among other services, on December 15, 2020. Award for the RFP was to be on a best-value tradeoff basis, with factors of past performance and price. Past performance was “significantly more important than price” for this RFP.

Gulf Civilization General Trading & Contracting Company (Gulf) submitted a proposal along with 25 others on the RFP. The DLA ranked the offers by price at first, ranking Gulf’s proposed price twelfth. Another company, Asahi, submitted the second lowest price. After evaluating the offerors for past performance, the DLA determined that Asahi had a substantial confidence past performance rating, the highest possible confidence rating. As Asahi had proposed the second-lowest price as well as having a top past performance rating, the DLA decided it was unnecessary to consider the past performance of the remaining offerors and awarded the contract to Asahi. Gulf filed a protest thereafter.

Gulf’s protest argued the award was improper for multiple reasons. The GAO addressed two of them: That the DLA had failed to conduct a price realism evaluation, and that the DLA’s decision to evaluate the past performance of only the two lowest-priced proposals under the RFP was improper. The GAO rejected both arguments, finding them to contradict the express terms of the solicitation and to be untimely.

The GAO then dismissed the remainder of Gulf’s arguments by stating that Gulf was not an interested party, and so even if its arguments were correct, it didn’t matter. Only interested parties may protest a federal procurement, and only protestors that are “an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of a contract or the failure to award a contract” are interested parties. 4 C.F.R. § 21.0(a)(1). “Determining whether a party is interested involves consideration of a variety of factors, including the nature of the issues raised, the benefit or relief sought by the protester, and the party’s status in relation to the procurement.”

“In a post-award context,” the GAO explained, “we have generally found that a protester is an interested party to challenge an agency’s evaluation of proposals only where there is a reasonable possibility that the protester would be next in line for award if its protest were sustained.”  “In this regard, we have explained that where there are intervening offerors who would be in line for the award even if the protester’s challenge was sustained, the intervening offeror has a greater interest in the procurement than the protester, and we generally consider the protester’s interest to be too remote to qualify as an interested party,” the GAO continued, citing HCR Constr., Inc.; B-418070.4, May 8, 2020.

In this case, the DLA had responded to Gulf’s protest arguing that two other proposals demonstrated the relevant experience for the RFP and had received favorable customer evaluations. Although the GAO normally would not consider such an argument as the agency hadn’t formally concluded those proposals would receiving the best rating, it still concluded Gulf “failed to reasonably establish that it would be next in line for award” if its protest was sustained.

Recalling a then-recent Federal Circuit case , the GAO noted that “to succeed in showing that it has a direct economic interest to be an interested party, a protestor must make a sufficient showing that it had a ‘substantial chance’ of winning the contract.” To demonstrate this “substantial chance”, the protestor not only must sufficiently challenge the eligibility of the awardee, but also intervening offerors.

Here, the GAO concluded that Gulf failed to show the nine other offerors with lower prices lacked proper standing for award. “Specifically, the agency provided the protester with sufficient information upon which it could–and should have–challenged its relevant standing with respect to the intervening offerors.  Specifically, DLA’s agency report disclosed the identities of the nine intervening offerors, as well as produced the complete past performance proposal volumes and past performance questionnaires for at least two of the intervening offerors.” As Gulf knew there were other offerors with lower proposed prices and that two of them demonstrated substantial past performance, it failed to show it had a substantial chance at award by arguing any flaws with the evaluation of intervening offerors.

While the rule held here isn’t necessarily new (A similar finding was made in Automated Power Sys., Inc., B-246795 (Feb. 20, 1992)), we do find the application of the rule a bit concerning. While Gulf wasn’t the lowest priced offeror, it wasn’t the highest priced offeror like in Automated, it was middle of the pack. Further, the GAO edged towards performing an evaluation of other offerors on the DLA’s behalf by saying the two other offerors that demonstrated relevant experience basically means they would be in line for award before Gulf. It is fair that a protest for an offeror that has no chance anyways can be dismissed, but this rule seems to suggest that a protestor must show with a high degree of confidence that it would win, not merely a reasonable possibility that it would win. This is an additional burden on protestors that could make it more difficult to challenge agency decisions, which already is quite difficult to begin with.

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