GAO Sustains Protest to GSA Strategic National Stockpile Acquisition Based on Agency’s Failure to Conduct Meaningful Discussions

GAO recently sustained a bid protest to a General Services Administration (GSA) acquisition for warehousing and deployment services at the strategic national stockpile–a literal “stockpile” of the nation’s largest supply of critical pharmaceuticals, medical equipment and supplies, and emergency supplies. GSA issued this solicitation and conducted this acquisition on behalf of the Administration for Strategic Preparedness and Response (ASPR), an operating agency of the Department of Health and Human Services (HHS). But according to GAO, in evaluating offerors under its solicitation, here, GSA failed to provide offerors with the meaningful discussions required by the FAR. So, GAO sustained the protest and recommended that GSA: reopen the procurement to conduct meaningful discussions with offerors, accept and evaluate revised proposals after doing so, and make a new award decision on that basis.

GAO’s decision in Life Science Logistics, LLC, B-421018.2 (Apr. 19, 2023), involved a solicitation issued by GSA, on behalf of the ASPR agency of the HHS, seeking a contractor to provide a fully-managed service solution to the strategic national stockpile. By way of brief background, the ASPR is the agency that “leads the nation’s medical and public health preparedness for response to, and recovery from, disasters and public health emergencies[.]” A key component of the ASPR’s mission is this strategic national stockpile, “which contains the nation’s largest supply of potentially life-saving pharmaceuticals, medical supplies, medical equipment, and emergency supplies[.]”

GSA’s solicitation sought warehousing services and deployment services “for pharmaceutical products and disaster relief supplies and equipment intended to support government disaster relief and preparedness efforts.” Specifically, it sought a contractor to provide ASPR with “the necessary expertise with suitable storage, management of medical products, monitoring, logistics, reporting, and emergency staging for delivery of government-provided medical supplies for a national emergency at Site F.”

GSA issued the solicitation under Federal Acquisition Regulation (FAR) parts 12 and 15, contemplating award of a contract with a five-year base performance period and five one-year option periods. The solicitation said award would be made using a best-value tradeoff based on three non-price factors, in descending order of importance: (1) technical approach; (2) management approach; and (3) past performance. And it said that all nonprice evaluation factors, when combined, would be considered significantly more important than price.

The solicitation said a proposal receiving a rating of “not acceptable” for any factor would be ineligible for award, and that GSA would not evaluate any corresponding price proposals. The solicitation said that GSA’s intention was to make this award without conducting discussions but that GSA also “reserved the right to hold discussions if it determined during the evaluation of proposals that discussions were necessary.”

GSA received two timely proposals for the solicitation. GSA conducted a conformance check of the two proposals, convened a Q&A session with each offeror, established a competitive range, and held discussions with both offerors. As relevant to the instant protest, GSA’s discussions with the protester only covered GSA’s “concerns regarding potential contamination of [protester]’s proposed site, schedule slippage related to possible excavation, and the rates for two labor categories.” After discussions, GSA reviewed the two offerors’ proposals and discussion question responses and assigned each offeror adjectival ratings.

The protester was initially rated: Good for its technical approach; Excellent for its management approach; Acceptable for its past performance; and Good overall. Its evaluated price was $198,444,382. And the awardee was initially rated: Excellent for its technical approach; Excellent for its management approach; Excellent for its past performance; and Excellent overall. And its evaluated price was $236,437,623.

Upon the filing of a timely protest at GAO, GSA took voluntary corrective action to amend the solicitation, solicit proposal revisions, conduct a new evaluation, and make a new award decision. So, the initial protest was dismissed accordingly. During its corrective action, GSA issued solicitation amendment 3, revising the solicitation’s statement of work, instructions, and evaluation criteria. Specifically, it “added a requirement to submit standard blueprints for the proposed facility on 24-inch by 36-inch paper, in color, sufficiently detailed to depict the solicitation requirements.” Amendment 3 was also issued with a cover letter stating that GSA was requiring the complete resubmission of all proposals–noting that any prior proposal submissions would not be reviewed as part of GSA’s reevaluation. It also stated that GSA again reserved the right to make award from the revised proposals without discussions.

GSA received proposals from the same two initial offerors, and the protester’s revised proposal was not materially different than its initial proposal. GSA again performed a conformance check, evaluated the new proposals, and held virtual Q&A technical clarification sessions with each offeror. But this time around, GSA did not engage in discussions with either offeror.

This time, the protester was rated: Not Acceptable for its technical approach; Excellent for its management approach; Acceptable for its past performance; and Not Acceptable overall. And its price was not evaluated based on the assigned ratings from the reevaluation. The awardee, this time around, was rated: Excellent for its technical approach; Excellent for its management approach; Acceptable for its past performance; and Excellent overall. And its evaluated price from the reevaluation was $238,674,507.

For its technical approach, GSA assigned the protester’s proposal four significant weaknesses and two weaknesses based on: (1) the security drawings lacking the required specifications and details; (2) failure to provide the necessary access and egress points in the facility; (3) failure to provide multiple routes to the highway system; and (4) failure to provide sufficient accessibility to the parking lots. Specifically, GSA said the protester failed to show adequate understanding the facility space requirements, submitted drawings omitting critical details of the security requirements, and failed to “depict a posture of understanding the complexities of delivering the complex facility conditioning required of ASPR’s mission.” Because its technical approach was found unacceptable, the protester’s price was not evaluated, and GSA did not conduct a best-value tradeoff. Instead, GSA again made the award to the initial awardee.

Upon GSA’s re-award of the solicitation to the awardee, the protester filed another timely protest at GAO challenging GSA’s re-evaluation and award decision. Specifically, the protester challenged GSA’s evaluation of its technical proposal, arguing that its initially-submitted and latter technical proposals were not materially different, and “because GSA failed to raise in discussions during the initial evaluation the significant weaknesses that resulted in its proposal being rated as not acceptable in the subsequent evaluation, it did not conduct meaningful discussions.”

In response, GSA disputed the assertion that the protester’s latter proposal was “materially unchanged” from its initial proposal. GSA also argued that: it was not required to provide the protester with meaningful discussions because its corrective action evaluation was to be “de novo,” meaning it was to be a new evaluation or an evaluation “from the beginning”; and it had warned offerors via the cover letter to amendment 3 that GSA was not intending to conduct discussions.

GAO began its discussion with some long-standing, more general rules regarding agency discussions, rooted in the FAR and GAO precedent, stating:

To be meaningful, discussions must lead an offeror into those areas of its proposal that require modification, amplification, or explanation. At a minimum, the agency must discuss all deficiencies, significant weaknesses and adverse past performance information to which the offeror has not had an opportunity to respond.

Then, turning to the facts of the instant protest, GAO covered what an agency is required to do in this regard when it requests and re-evaluates revised proposals after a corrective action (or similar agency action), stating:

When an agency seeks revised proposals, its reevaluation may identify flaws in a materially-unchanged proposal that the agency would have been required to discuss with the offeror, had the flaws been identified when the proposal was initially evaluated. In that situation, the agency must reopen discussions in order to disclose its concerns, thereby giving all offerors similar opportunities to revise their proposals.

GAO elaborated on this requirement, stating:

In this context, the requirement to reopen discussions is predicated on the fact that the underlying evaluated concern should have been apparent to the agency when it initially evaluated proposals prior to conducting discussions. For example, we have sustained protests for failing to reopen discussions where the agency’s initial evaluation was inconsistent with evaluation criteria or otherwise inadequate.

Then, applying these standards to the case at hand, GAO explained:

Here, as discussed above, when GSA evaluated the protester’s [initial] proposal, the agency rated the proposal as good under the technical approach factor and did not assess any significant weaknesses. Then, when the agency evaluated [protester]’s (essentially unchanged) [latter] proposal, [GSA] assessed four significant weaknesses and rated the proposal as not acceptable under the technical approach factor. Despite GSA’s argument that the initial and latter proposals are materially different, it is undisputed that the content giving rise to the significant weaknesses was present in both proposals but overlooked in the prior evaluation.

In support of these findings, GAO specifically noted GSA’s failure at the protest hearing to identify any material changes between protester’s initial and latter proposals in regard to several of the specifications. GAO also pointed out GSA’s response to the question of why the issues giving rise to the Not Acceptable rating in the latter proposal were not taken into account in evaluation of the initial proposal–to which GSA responded: “Because we realized that we said that we were going to evaluate it in a specific way, but we weren’t checking for all the details that we should have been.”

As such, GAO noted there was no dispute of the fact that the drawings in the protester’s proposal that gave rise to the significant weaknesses were “materially the same in both proposals.” GSA, instead, argued that protester included in its latter proposal an aerial photograph of the site at issue that ultimately resulted in GSA assessing the three significant weaknesses. It was this aerial photo, according to GSA, that made the issues “apparent for the first time.”

But GAO was not buying it. GAO explained that GSA had already acknowledged multiple times that the initial proposal drawings showed the same issues and same failures to meet the solicitation’s access/egress requirements. And thus, GAO said that the access/egress-based significant weakness raised by GSA in its reevaluation should have been “apparent without the addition of the aerial photo,” and GAO also said, “the same reasoning applies to the significant weaknesses that pertain to accessibility of the parking lot and the number of routes to the highway system from the site.”

GAO then turned to GSA’s second argument–that it was not required to open new discussions after its corrective action “because the corrective action evaluation was a ‘de novo‘ evaluation[.]” In that regard, GAO found “the agency’s attempt to negate its obligation to provide meaningful discussions on this basis unavailing.” GAO further explained:

While the agency may have intended to restart the competition entirely anew, this was not conveyed to the offerors. The agency only instructed offerors to submit new proposals and advised that prior proposal submissions would not be reviewed as part of the reevaluation. There was nothing about disregarding the initial round of discussions with [protester], which identified some areas of concern with [protester]’s proposed approach, but not others.

As such, because the issues giving rise to the significant weaknesses in the protester’s proposal were apparent in both the initial and latter proposals–but GSA did not advise the protester of the significant weaknesses in its initial proposal–GAO found that GSA’s discussions were not meaningful. And it sustained the protest on that basis, recommending that GSA: reopen the procurement; conduct “appropriate and meaningful discussions” with both offerors; request and evaluate revised proposals; and make a new award decision.

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Given the amount of discretion GAO typically affords contracting agencies regarding the methods and procedures they choose to utilize in any given evaluation, this GAO decision sets an important boundary on that discretion. Where an agency does decide to conduct discussions with offerors at any time during its evaluation or reevaluation, those discussions must be meaningful–(at a minimum) pointing offerors to any deficiencies, significant weaknesses, or adverse past performance information apparent to the agency at that time. Indeed, even an agency’s corrective action, solicitation of revised proposals, and/or purported “de novo” evaluation of such revised proposals does not relieve agencies of the requirement to make any discussions it conducts meaningful.

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