GAO bid protests regarding a competitor’s compliance with the applicable limitation on subcontracting can be difficult to win.
As the GAO held in a recent bid protest decision, unless the competitor’s proposal “on its face” should have led the procuring agency to recognize that the limitation on subcontracting would be violated, the agency is free to assume that the offeror intends to comply. Of course, as was the case in the recent decision, it doesn’t hurt the protested company to specifically state that it will comply with the limitation on subcontracting.
The GAO’s bid protest decision in DBI Waste Systems, Inc., B-408304, B-408304.2 (Aug. 5, 2013) involved a VA SDVOSB set-aside contract for recycling and trash removal services at a VA Medical Center. The solicitation included the VA Acquisition Regulations’ limitation on subcontracting clause, which provides that for service contracts, a SDVOSB must perform at least 50 percent of the personnel costs.
After evaluating competitive proposals, the VA made award to Conquistador Services, LLC. A competitor subsequently filed a protest with the GAO, alleging in part that Conquistador intended to subcontract “virtually the entire project” to a non-SDVOSB.
The GAO wrote that “[a]s a general matter, an agency’s judgment as to whether a small business vendor will be able to comply with a subcontracting limitation presents a question of responsibility not subject to our review.” However, “where a proposal, on its face, should lead an agency to the conclusion that a vendor has not agreed to comply with the subcontracting limitation, the matter is one of the quotation’s acceptability.”
In this case, “nothing on the face of Conquistador’s quotation, including the terms of its proposed subcontracting agreement, takes exception to the RFP’s limitation on subcontracting, or suggests that the awardee will not comply with that limitation in performing the contract.” In fact, the GAO noted, “the subcontracting agreement explicitly states that in no event will Conquistador perform less than the percentage required by the subcontracting limitation . . ..” The GAO denied the bid protest.
The DBI Waste Systems case illustrates the difficulty of winning a GAO bid protest based on the allegation that the awardee will not comply with the subcontracting limitation. Unless the awardee’s proposal “on its face” demonstrates a lack of compliance, the GAO is likely to deny the protest.
Small businesses should also take note of Conquistador’s subcontracting agreement, which specifically pledged to comply with the subcontracting limits. For small businesses concerned about potential protests against their own future awards, such a provision is not a bad idea.