Limitation On Subcontracting Information Was Permissible “Clarification,” Says GAO

A procuring agency did not engage in impermissible discussions by allowing a small business to verify its intent to comply with the applicable limitation on subcontracting.

In a recent bid protest decision, the GAO held that the information regarding the small business’s compliance with the subcontracting limits was a permissible “clarification,” and did not require the agency to open discussions with all offerors in the competitive range.

The GAO’s bid protest decision in L&G Technology Services, Inc., B-408080.2 (Nov. 6, 2013) involved an Air Force solicitation for aerospace ground equipment support services.  The solicitation was issued as an 8(a) set-aside.

Trinity Analysis & Development Corporation submitted a proposal.  The Air Force subsequently engaged in three rounds of discussions with Trinity and the other offerors in the competitive range.  However, these discussions did not include the question of whether Trinity would comply with the solicitation’s limitation on subcontracting.

After discussions concluded, the Air Force announced that the contract had been awarded to Trinity.  L&G Technology Services, Inc., an unsuccessful competitor, filed a GAO bid protest.  L&G argued, in part, that Trinity would not comply with the applicable limitation on subcontracting.

After a conference call with the GAO, the Air Force announced that it would take corrective action by seeking written clarification from Trinity regarding Trinity’s intent and ability to comply with the solicitation’s subcontracting limit. The GAO dismissed L&G’s protest as moot.

The Air Force then sent Trinity a notice requesting that Trinity clarify its intent to comply with the limitation on subcontracting.  The Air Force requested that Trinity provide various information regarding the portion of the work to be performed by Trinity and its subcontractors.

Trinity responded by verifying that it would comply with the subcontracting limit, and submitted the requested information.  After receiving Trinity’s response, the Air Force reaffirmed its earlier award decision.

L&G filed a second GAO bid protest.  In its second protest, L&G complained that the Air Force had acted improperly by accepting the additional information from Trinity.  L&G argued that this information went beyond a mere clarification and constituted discussions that permitted Trinity to revise a deficient proposal.  L&G pointed out that when an agency opens discussions with one offeror, it must open discussions with all offerors in the competitive range.

The GAO explained that under the FAR, clarifications are “limited exchanges” between an agency and an offeror for the purpose of clarifying certain aspects of a proposal, and do not give an offeror the opportunity to revise or modify its proposal.  Discussions, on the other hand, occur when an agency communicates with an offeror for the purpose of obtaining information essential to determine the acceptability of a proposal, or when the agency provides the offeror with an opportunity to revise or modify its proposal in some material respect.

In this case, the GAO wrote, the Air Force “merely sought verification of the offeror’s intent to comply with its subcontracting obligations during performance, and did not provide for the submission of a revised proposal.”  Similarly, “Trinity’s response merely explained an aspect of the offeror’s proposal that was otherwise vague.”

The GAO continued, “[q]uite simply, in light of the ambiguity in Trinity’s proposal, the Air Force, consistent with its letter stating its intent to take corrective action in response to L&G’s prior protest, conducted a limited exchange with the offeror to clarify the ambiguity. As such, the exchange here constituted clarifications.”  The GAO denied the protest.

The L&G Technology Services decision is a good reminder that not all unilateral communications between an offeror and an agency constitute “discussions.”  Where, as in this case, a communication is limited to improving the agency’s understanding of a vague or ambiguous aspect of an offeror’s proposal, the communication may be deemed a permissible clarification.

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