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Thursday, October 15, 2015

Speak to thee only with thine ayes?

The whole purpose of corrective action and discussions in best value procurement is to make sure everyone (government and offerors alike) is on the same page. If you're already on the page, you don't need further discussion. It's a process driven more by the principle that government should maximize its spending requires by getting fair and reasonable prices for things it buys, egged on by the principle of competition (the more, the merrier) rather by the principle of fairness and equity.

In the GAO case below, there were three competing offerors for a project: the incumbent (Northrop Grumman), who pretty much already knew what was required, and two relevant others (Solers, and Pragmatics). Each offeror proposed vastly different means and methods of achieving the desired outcome. It was a best value solicitation, so price was not alone determinant, but the offered prices had to be evaluated as reasonable in the context of each bid.

The two non-incumbents protested award to the incumbent, arguing they didn't get a fair shake in the evaluation. Corrective action, including further discussions, took place, but the incumbent then protested it was disadvantaged in the process.

Of course, you should read the decision at the link below. This presentation is crafted for my own purposes and does not fully or contextually represent the original.

Matter of: Northrop Grumman Systems Corporation, B-410990.3, October 5, 2015
Northrop Grumman Systems Corporation (Northrop Grumman) of Herndon, Virginia, protests the corrective action being taken by the Department of Defense, Defense Information System Agency (DISA), in connection with earlier protests of a task order issued to Northrop Grumman for software development and integration services. Northrop Grumman contends that the corrective action, which included reopening discussions with offerors in the competitive range, is unreasonable and competitively prejudices Northrop Grumman, because its award price and evaluation ratings were disclosed after award. We deny the protest.

The RFP provided for the issuance of a hybrid task order on a best-value basis considering the following evaluation factors in descending order of importance: technical/ management approach, present/past performance, and cost/price. The non-cost evaluation factors, when combined were significantly more important than the cost/price factor. The solicitation provided detailed instructions for submitting separate technical/management approach, present/past performance, and cost/price proposals, including sanitized and unsanitized copies of cost/price proposals.

The RFP stated that cost/price proposals would be evaluated for completeness, reasonableness, unbalanced pricing, and realism. Offerors were also advised that cost/price proposals could be rejected for being unrealistically low, unreasonably high, or unbalanced.

As relevant here, the agency found that the offerors’ final cost/price proposals were complete and reasonable, and that the offerors could realistically perform the effort at their proposed costs/prices. No probable cost adjustments were made to their final proposals. DISA’s contracting officer conducted a cost/technical tradeoff among the FPRs submitted by Northrop Grumman, Solers, and Pragmatics, and determined that Northrop Grumman’s proposal provided the best value to the government.

Pragmatics and Solers were provided written debriefings that disclosed Northrop Grumman’s technical/management approach and present/past performance ratings and included summary discussions of the agency’s cost/technical tradeoff between the awardee and the respective unsuccessful offeror. Solers and Pragmatics filed protests challenging DISA’s cost evaluation, best-value determination, and selection decision. Solers also challenged the agency’s technical and past performance evaluations.

DISA advised the parties that it would take corrective action in response to the protests. The agency stated that it would reevaluate Northrop Grumman’s, Pragmatics’s and Solers’s FPRs; conduct additional discussions and request and evaluate further FPRs, if necessary; and make a new source selection decision. We subsequently dismissed Solers’s and Pragmatics’s protests as academic.

During the corrective action process, DISA determined that there were flaws in its pre-corrective action cost realism analysis that required further discussions and proposal revisions. DISA contends that the cost realism analysis and source selection decision were inadequately documented and contained conclusory statements that failed to explain the evaluators’ rationale for finding that the three offerors’ vastly different proposals were realistic.

Northrop Grumman protests DISA’s decision to reopen discussions and permit Pragmatics and Solers to fully revise their proposals. The protester contends that these actions competitively harm Northrop Grumman, because its award price and evaluation ratings were disclosed. Northrop Grumman asserts that DISA’s pre-corrective action cost realism analysis was substantively correct, and that the alleged error that DISA was trying to correct was, at most, a perceived failure to document the analysis as explicitly as agency counsel would have liked. Northrop Grumman asserts that DISA has not otherwise identified any substantive, prejudicial errors in the cost realism analysis or initial award that required reopening discussions. In this regard, the protester maintains that DISA’s corrective action was unreasonable and disproportionate to the alleged error, and yields no benefits to the procurement process that would outweigh the competitive harm to Northrop Grumman.

DISA readily acknowledges that the disclosure of Northrop Grumman’s winning price puts the protester at a competitive disadvantage, but the agency argues that it reasonably determined that reopening discussions was necessary to correct deficiencies in its cost/price evaluation and to ensure that the new award decision would be based on a fair best-value determination. DISA contends that its pre-corrective action cost realism analysis and source selection decision were inadequately documented and contained conclusory statements that failed to explain the evaluators’ rationale for finding that such vastly different proposals were realistic. In this regard, DISA maintains that in taking corrective action, the agency could not determine that its cost evaluators’ conclusions and DISA’s earlier best-value determination were reasonable, and that the other competitive range offerors were not prejudiced. DISA argues that a more accurate and comprehensive realism analysis could have a significant impact on the agency’s best-value tradeoff decision.

Northrop Grumman responds that DISA had more tailored options to address the alleged evaluation error, such as seeking clarifications, limiting discussions, or restricting Pragmatics and Solers from revising their proposed labor mixes, FTEs, or technical/management approach proposals. Northrop Grumman claims that the evaluation notices that were provided to Pragmatics and Solers had nothing to do with the alleged error, i.e., further documenting DISA’s earlier cost realism analyses. The protester also points out that simply because offerors propose different technical approaches does not necessarily mean that their proposals are unrealistic. Moreover, to the extent that DISA had new concerns during reevaluation about the offerors’ proposed labor categories, key personnel, or past performance projects, Northrop Grumman complains that the agency should have addressed such concerns during its pre-award discussions.

DISA disputes the protester’s assertion that the information needed to perform a proper cost realism analysis could be obtained through clarifications or limited discussions with the offerors. Rather, DISA argues that in order to correct key personnel discrepancies and unrealistic aspects of their cost/price proposals, offerors would have to make corresponding revisions to their technical/management approach proposals. In this respect, DISA asserts that its cost evaluators could not perform a proper realism analysis or recommend cost adjustments without knowing what each proposed labor category would be performing under each CLIN. DISA also maintains that its discussions had to be meaningful and permit the offerors to address new technical deficiencies that were uncovered as part of the agency’s reevaluation.

Contracting officers in negotiated procurements have broad discretion to take corrective action where the agency determines that such action is necessary to ensure a fair and impartial competition. As a general matter, the details of a corrective action are within the sound discretion and judgment of the contracting agency. The decision whether to reopen discussions is largely a matter left to the agency’s discretion. We have repeatedly observed that the possibility that the contract may not have been awarded based on the most advantageous proposal has a more harmful effect on the integrity of the competitive procurement system than does the possibility that the original awardee, whose price has been properly disclosed, will be at a disadvantage in the reopened competition. Where the corrective action taken by an agency is otherwise unobjectionable, a request for revised price proposals is not improper merely because the awardee’s price has been exposed.

DISA has presented both a flaw in its cost/price evaluation requiring corrective action, and a reasonable basis for reopening the competition. DISA’s concern--that the evaluators failed to explain their rationale for finding the vastly different proposals realistic--provided a reasonable basis for the agency to question its best-value determination. Based on our review of the record and the parties’ arguments, we find that any competitive harm to Northrop Grumman by the disclosure of its award price, is outweighed by DISA’s reasonable concern that its earlier best-value determination was tainted by a flawed cost/price evaluation that prejudiced other competitive range offerors.

We also find that DISA reasonably determined that it should reopen discussions and permit the competitive range offerors to submit fully revised FPRs. In our view, DISA was not required to tailor the scope of its corrective action to clarifications or limited discussions. Generally, offerors in response to an agency request that discussions be opened or reopened may revise any aspect of their proposals they see fit--including portions of their proposals which were not the subject of discussions. Moreover, as part of its corrective action, an agency can, as here, amend the RFP to add requirements that will require the submission of revised proposals and is not required to limit proposal revisions to only address these changes.

DISA discovered that the offerors’ (including the protester’s) FPRs contained deficiencies and discrepancies in their technical, past performance, and/or cost/price volumes. Where an agency identifies new weaknesses in a proposal during a reevaluation of that proposal in an acquisition where discussions have previously occurred, the agency is required to discuss the new weaknesses with the offeror. The possibility that an award may not have been based on the most advantageous proposal because, for example, discussions are not meaningful, has a more harmful effect on the integrity of the competitive procurement system than the fear of an auction; generally the statutory requirements for competition take priority over any possible concern regarding auction techniques.
Nick Wakeman, whose blog post brought this to my attention, said:
But don’t cry for Northrop; they still very well might win the contract. They are the incumbent, and despite the challenges incumbents have faced in winning recompetes, incumbency is still an advantage. As the incumbent, you would think this also gives an advantage to Northrop because of the customer intimacy. So, stayed tuned and we’ll see how this one turns out.

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