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Wednesday, February 18, 2015

Prospecting for "interested party" status to sustain a protest

The two most recent posts prior to this one dealt with, in the earlier case, whether an actual bidder was an "interested party" such as to allow a protest, and the more recent post dealt with the question whether changes in contract requirements might require a new solicitation. This case deals both with standing as an "interested party" and changes in a contract requiring a new solicitation, in a twist on both topics: who is a "prospective" bidder or offeror.

The first case presented, deals with the usual situation of a protest of a solicitation in which there is no allegation of a change requiring a new solicitation, by an alleged "prospective" bidder, and concludes with one statement describing, in somewhat categorical language, that the timing of the protest determines whether a protestor is an "interested party" as a "prospective" bidder.

The second case presented deals with the case of a protest by an alleged "prospective" offeror which alleged changes in the contract that require a new solicitation. This protest was brought clearly outside the bounds of who is "prospective" as required by the first case, but the protest was allowed and the protestor was found have "interested party" status. It, in effect, articulates an exception to the usuall rule.

As usual, don't rely on the cases as presented here; read the original at the link.

MCI Telecommunications Corp. v. US, 878 F. 2d 362 - Court of Appeals, Federal Circuit 1989
Believing that AT & T's proposal failed to conform with material, mandatory requirements of the solicitation, and that the GSA, after awarding that contract to AT & T, impermissibly waived mandatory contract requirements rather than resolicit the contract, MCI sought to challenge the award of the contract by bringing a protest before the GSA board. MCI did not participate in the bidding process.

The board is empowered to hear such protests upon request of "an interested party." [T]he term "interested party" means, with respect to a contract or proposed contract described in subparagraph (A), an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract.

MCI claimed that, although it was not an "actual offeror or bidder" with respect to the original solicitation, it is a "prospective bidder or offeror" in the event of a resolicitation, and that its economic interest is directly affected by the award to AT & T.

Accordingly, to establish that it is an interested party, MCI must convince us that it is a prospective bidder or offeror, under a correct legal interpretation of that term. This case, then, poses the question whether a would-be protestor wishing to bring about a resolicitation on which it says it intends to bid has the necessary status, even though it failed to either bid in response to the original solicitation or to protest before the close of the proposal period for the original solicitation.

The language of section 759(f)(9)(B) plainly establishes, by use of the word "prospective," that, in order to be eligible to protest, one who has not actually submitted an offer must be expecting to submit an offer prior to the closing date of the solicitation. After the date for submission of proposals has passed, however, the would-be protestor can no longer realistically expect to submit a bid on the proposed contract, and, therefore, cannot achieve prospective bidderhood [yes, bidderhood; a new one on me] with regard to the original solicitation.

Since the opportunity to qualify either as an actual or a prospective bidder ends when the proposal period ends, MCI's stated intention to submit a proposal in response to any resolicitation, and its efforts to secure resolicitation by filing a protest, can do nothing to create the necessary interested party status. Accordingly, no matter how well founded MCI's charges that the GSA waived
mandatory contract requirements and that a resolicitation should occur, MCI's argument that it is an interested party must be rejected.
Matter of: Poly-Pacific Technologies, Inc., B-296029, June 1, 2005
Poly-Pacific Technologies, Inc. protests the modification of contract. Poly-Pacific argues that the agency improperly relaxed the performance requirements in the contract beyond what was reasonably contemplated by the underlying solicitation.

The original solicitation sought proposals that required offerors to both lease plastic media and recycle the resulting SBM in compliance with regulations, and offerors were thus required to propose technical solutions and pricing for both the lease and recycling components of the work. Due to changes in EPA rules regarding the recycling of the plastic media, after work had begun on the awarded contract, the contract was modified to drop that requirement.

Poly-Pacific did not submit a proposal in response to the RFP, as it was not then on the list of qualified providers authorized to lease the plastic media, although it did become an authorized provider subsequently, and before the complained-of contract modifications.

Poly-Pacific argues that the modification of UST’s contract improperly relaxed the performance requirements, thereby changing the scope of work anticipated by the RFP and resulting in an improper sole-source contract of the modified work.

Once a contract is awarded, however, our Office will generally not review modifications to that contract, because such matters are related to contract administration and are beyond the scope of our bid protest function. An exception to this rule arises where a protest alleges that a contract modification changes the work from the scope of the original contract, since the work covered by the modification would otherwise be subject to the statutory requirements for competition absent a valid determination that the work is appropriate for procurement on a sole-source basis. [I usually refer to this exception as the "relation back rule", because it relates back to the essence of the solicitation, allowing a protest of the solicitation, and taking it out of the contract dispute processes (which do not allow a third party to protest).]

Although challenges to the relaxation of contract requirements are less common than challenges to contract modifications that enlarge a contract’s scope of work, our Office recognizes that both fall within this exception, and we will consider whether modifications of performance requirements result in work that should be subject to competition.

In assessing whether a contract modification is outside the scope of the original agreement, we examine whether the original nature or purpose of the contract is so substantially changed by the modification that the original and modified contracts are essentially and materially different. In assessing whether the modified work is essentially the same as the effort for which the competition was held and for which the parties contracted, we consider factors such as the magnitude of the change in relation to the overall effort, including the extent of any changes in the type of work, performance period, and costs between the modification and the underlying contract.

Where an agency has relaxed a contract’s performance requirements, our Office also looks to whether the change in requirements was the type that reasonably would have been anticipated under the solicitation, and whether the modification materially changed the field of competition for the requirement.

We disagree with the agency’s view that the modification does not materially change the requirements of the contract or result in a fundamental change to the nature of the work. The original solicitation sought proposals that required offerors to both lease plastic media and recycle the resulting SBM in compliance with regulations, and offerors were thus required to propose technical solutions and pricing for both the lease and recycling components of the work.

Furthermore, Poly-Pacific contends, and the agency does not dispute, that the costs of leasing plastic media with no recycling requirements is as much as 50 percent less than the costs of leasing plastic media with recycling requirements. An agency may not modify a contract by changing or relaxing requirements where the resulting work is fundamentally different from the work anticipated by the original solicitation. Evidence suggesting that proposals submitted on the basis of a modified contract’s relaxed requirements could result in more competition and lower prices generally weighs in favor of finding that the contract modification was improper.

In our view, the modification resulted in a material and fundamental change to the nature of the work that changed the field of competition and that work, therefore, should have been competed on a full and open basis.

Although the modification of UST’s contract occurred approximately 2 years ago, we find that Poly-Pacific’s protest is timely. Upon learning through news accounts that UST was under investigation for allegedly failing to recycle the SBM according to the contract, Poly-Pacific diligently pursued information regarding UST’s performance. Poly-Pacific made several unsuccessful attempts to obtain information from the agency regarding UST’s contract following the news accounts of the investigation of UST. The agency did not inform Poly-Pacific of the modification until February 25, 2005. We conclude that Poly-Pacific diligently pursued the information that forms the grounds for this protest, and its filing of the protest within 10 days of its notice of the modification is timely.

Finally, we find that the protester was prejudiced by the agency’s improper modification of the contract. As discussed above, Poly-Pacific is a qualified source to provide type V plastic media, and thus could participate in a competition for the work now required under the contract modification.
Under the ABA Model Procurement Code, a prospective bidder or offeror can protest provided it is "aggrieved". It is aggrieved if there was a material defect in the solicitation which wronged (prejudiced) the protestor. Such a protest must be filed within a time period (14 days under Guam law) from the time the aggrieved protestor knows or should have known of the facts by which it became aggrieved.

One protest case before the Guam Public Auditor, as with the Poly-Pacific case, involved a protest made years after the award of a contract. The Public Auditor decided, based on the facts of the case, that the protest was timely filed.

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