Subcontracting Plan Discrepancy Proves Costly To EAGLE II Offeror

A discrepancy in a business’s subcontracting plan may have cost the offeror its shot at a position on the enterprise acquisition gateway for leading-edge solutions II IDIQ contract.

As demonstrated in a recent GAO bid protest, the business was downgraded on the small business participation factor because of a discrepancy in its proposal regarding subcontracting with SDVOSBs.  Without the discrepancy, the large business might have landed a slot on EAGLE II.

The GAO’s decision in Oasis Systems, LLC, B-407273.54; B-407273.61; B-407273.64 (June 19, 2014) involved the U.S. Department of Homeland Security’s EAGLE II procurement.  The EAGLE II solicitation anticipated the award of multiple IDIQ contracts under which DHS would place orders over the life of the contract.

The solicitation called for awards to be made on a best value basis considering price and five non-price factors: corporate experience, past performance, program management, staffing, and small business participation.  The non-price factors, combined, were to be significantly more important than price.

The small business participation factor included three subfactors.  Under the first subfactor, offerors were to submit a subcontracting plan that stated the officer’s goals with respect to using small businesses and SDBs.  The solicitation advised offerors that the DHS expected proposed subcontracting plans to contain 40 percent for small businesses, 3 percent for HUBZones, 5 percent for SDVOSBs, WOSBs, and SDBs, and 6 percent for VOSBs.  To receive credit under the second subfactor, offerors were to submit a signed mentor-protege agreement.  Under the third subcontractor, the solicitation instructed offerors to submit percentage targets for SDB participation and the offeror’s plan for compliance.

Oasis Systems, LLC was one of 28 offerors to submit proposals under the EAGLE II solicitation’s unrestricted track.  In its evaluation of Oasis’s proposal, the DHS assigned Oasis a “Satisfactory” adjectival score for its corporate experience, an “Excellent” score for its past performance, a “Superior” score for its staffing, and scores of “Good” for program management and small business participation.

With respect to the small business participation factor, the evaluators commended Oasis’s plan to provide significant subcontracting opportunities for small businesses and SDBs.  However, the evaluators noted a “conflict” in Oasis’s proposal: although Oasis proposed to exceed the 40% small business goal, and although all four of Oasis’s team members were identified as SDVOSBs, Oasis’s overall SDVOSB goal was only 3%.  Based in large part on this discrepancy, Oasis was assigned a “Good” score under the small business participation factor, instead of a higher adjectival rating.

After conducting a tradeoff analysis, the DHS concluded that Oasis was not one of the highest-rated proposals, and notified Oasis that it had not been selected for award.

Oasis filed a GAO bid protest challenging the DHS’s evaluation.  Oasis argued, among other things, that it should have been rated “Excellent” under the small business participation factor because it proposed only small business team members and proposed to exceed the DHS’s small business subcontracting goal.  Oasis pointed out that one of the awardees, Grant Thornton, LLP, received an “Excellent” score even though its proposed core team members included large businesses.

Reviewing the evaluation record, the GAO found that the DHS had appropriately credited Oasis for the positive aspects of Oasis’s subcontracting plan.  However, the evaluators also identified a discrepancy in the subcontracting plan data, and according to the DHS, “it was not clear from Oasis’s subcontracting plan whether the firm proposed to actually exceed DHS’s VOSB subcontracting targets because of the discrepancy in the proposal.”  The GAO held that the “Good” rating took into account both the positive aspects of Oasis’s subcontracting plan, “as well as the issues identified with respect to the SDVOSB percentages and dollars.”

The GAO also rejected Oasis’s contention that Grant Thornton was arbitrarily rated higher than Oasis on the small business participation factor.  The GAO noted several differences between the firm’s subcontracting plans, and stated that “as discussed above, Oasis’s proposal was reasonably assigned a good rating primarily because of the conflict identified in the firm’s subcontracting plan with respect to its VOSB and SDVOSB goals.”  The GAO denied the protest.

For large businesses, small business subcontracting plans are sometimes taken for granted–but in some cases, a subcontracting plan can make or break a procurement.  In Oasis’s case, a spot on EAGLE II may have been lost, at least in part, because of a glitch in its subcontracting plan.

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