Protest must be timely and protestor must show prejudice, and a footnote about issue of contract dispute vs solicitation dispute

The following is from a protest decision of the GAO. This protest involved two protests from two protestors in the same solicitation. One protest illustrates by example when a protest is not "timely". The other illustrates a protestor's lack of prejudice, and thereby standing to protest.

Bear in mind my proclivity to re-work the original articles, leave out critical citations, paraphrase and so on, so read the original decision at the link if you need to rely on it.

Matter of: AeroSage, LLC; SageCare, Inc., File: B-415607; B-415607.2; B-415607.3, January 3, 2018 AeroSage, LLC, and SageCare, Inc., protest the award of a contract to Tayrona Oil, Inc., issued by the Defense Logistics Agency (DLA), for 5,000 gallons of fuel to the Milwaukee Veterans Administration Medical Center (MVAMC).

The protesters primarily allege that DLA unreasonably modified the purchase request's delivery schedule without issuing an amendment. We dismiss SageCare's protest and deny AeroSage's protest.

MVAMC placed a purchase request with DLA for 5,000 gallons of fuel for delivery. The request (1) represented that the procurement was being conducted as a small business set-aside, (2) confirmed that delivery was for 5,000 gallons of fuel on Friday, October 13, (3) requested quotations by no later than 11:30 a.m. on Thursday, October 12, and (4) provided that award would be made on a lowest-priced, technically-acceptable basis. DLA timely received quotations from the three firms that it had solicited, Tayrona, AeroSage, and SageCare. Tayrona submitted the lowest-priced quotation of $2.3487 per gallon.

The contracting specialist represents that he notified Tayrona via telephone on the morning of October 12 that its quotation was selected for award. Shortly after contacting the awardee, however, the contracting specialist represents that he was contacted via telephone by an official with the Department of Veterans Affairs indicating that the delivery had to be rescheduled for Tuesday, October 17. The contracting specialist contacted Tayrona via telephone to confirm whether the company would agree to the revised delivery schedule at the same awarded price, and the awardee confirmed.

Following that telephone conversation, the contracting specialist then emailed Tayrona to confirm that DLA was going to award the order to Tayrona and indicated that the delivery date was now Tuesday, October 17. The contracting specialist then emailed AeroSage and SageCare respectively to indicate that neither firm submitted the lowest-priced, technically acceptable quotation. Those emails also indicated that the delivery date was now Tuesday, October 17.

AeroSage's protest:

Following receipt of the notice, AeroSage filed an agency-level protest with DLA on October 12. The primary protest allegation raised by AeroSage was that [t]he contracting officer solicited the RFQ for requirement delivery for Oct[ober] 13, 2017, but awarded the purchase order for delivery four days later, October 17, 2017 thus prejudicing the protester by changing the date, and thereby creating pricing uncertainty on the new delivery date. On Monday, October 23, AeroSage filed the instant protest with our Office.

AeroSage's protest decision:

AeroSage argues that the agency unreasonably changed the solicitation's delivery schedule without amending the solicitation and allowing all offerors to compete against the new schedule. The protester contends that "[a] four day change in a solicitation time can both dramatically impact price/availability and the risks quoters are able to accept to provide best prices to [the] government." "AeroSage was prejudiced in this solicitation with a significant change in the solicitation prior to award."

We have generally recognized that when the government changes its requirements prior to award, it must notify all offerors of the changed requirements and to afford them an opportunity to respond to the revised requirements. Moreover, a contract's period of performance is generally considered to be a material solicitation requirement.

Our Office will not sustain a protest, however, unless the protester demonstrates a reasonable possibility of prejudice, that is, unless the protester demonstrates that, but for the agency's actions, it would have had a substantial chance of receiving the award. Here, the protester has offered no evidence that it was in fact prejudiced by the agency's failure to amend the delivery schedule by four days through the issuance of an amendment. The protester has not asserted that, let alone substantiated how, it would have reduced its unit pricing by an amount that would have overcome the awardee's price advantage. AeroSage's unsupported speculation that the change in delivery schedule could have impacted its proposed price is insufficient to establish competitive prejudice.

There is another teachable moment in footnote 6: The Government argued that the change in delivery schedule was a matter of contract administration, and thus not a proper subject for a protest dispute. As discussed above, however, the change occurred after proposals were submitted and evaluated, but before the contract award was formally made on October 13. Therefore, we do not find that the schedule change can reasonably be considered as a matter of contract administration, and therefore would be proper subject matter for a protest, if only the protestor had standing.

AeroSage's protest is denied.

SageCare's protest:

On November 22, SageCare filed a request to intervene in AeroSage's protest. On the same day, our Office denied the request to intervene on the basis that SageCare was a disappointed offeror, not the awardee of the protested contract.[3] We further explained that "[t]o the extent that SageCare, a disappointed offeror, believes that there were errors in the procurement, SageCare must file its own protest subject to our Bid Protest Regulations." SageCare subsequently filed its protest on November 24.

DLA moved to dismiss SageCare's November 24 protest as untimely because it was filed more than 10 days after the protester's owner and president had actual knowledge that SageCare had not been selected for award and of the change to the delivery schedule. Our Bid Protest Regulations contain strict rules for the timely submission of protests. Under these rules, a protest based on other than alleged improprieties in a solicitation must be filed no later than 10 calendar days after the protester knew, or should have known, of the basis for protest, whichever is earlier.

SageCare's protest decision:

SageCare seems to measure the timeliness of its protest from when SageCare's president received the awardee's price information through the agency report submitted in response to AeroSage's protest. DLA's October 12 notice to SageCare's president, however, clearly indicated that the protester's quotation was not the lowest-priced, technically-acceptable quotation, and that delivery was moved to Tuesday, October 17. Thus, the protester was aware of the material facts relevant to its asserted protest ground related to the modification of the delivery schedule as of October 12. Its November 24 protest, filed more than 40 days later, is untimely, and therefore the protest is dismissed.

SageCare's protest is dismissed.

Procurement controversies -- Estonia

Estonia has an interesting public procurement law, delegating almost all details to a regulatory scheme. See the unofficial English translation here. Read that (pretty short and sweet) and you too will know everything I know about the subject.

I do not write to explain or opine on Estonian or any other law, only to use factual situations, as they appear in the articles cited and then cut, paraphrased and rearranged to my liking, as "teachable moments" to compare and contrast Guam's ABA Model Procurement Code based laws and regulations. So, turning now to the controversy du jour,

Furniture maker accuses Tax Board of bias in public procurement

Estonian furniture maker AJ Tooted is disputing the public procurement for supplying furniture for the new main office of the Tax and Customs Board. AJ Tooted won the first procurement held in March submitting the cheapest offer of 800,000 euros.

Then, in May, the Tax Board’s work environment council inspected the existing working conditions and found that the workplaces of several employees did not comply with ergonomic requirements.

By the end of May, the Tax Board had cancelled the first procurement and announced a new call to tender. AJ Tooted has now disputed the decision to cancel the first procurement.

Last week the dispute panel of public procurement announced that the tender documents of the second tender were partly illegal because they were too specific. Among others, the Tax Board is demanding that the frame must be made of 12mm birch, that the seat must be exactly 700 mm wide and that the manufacturer must submit compliance certificates.

The only furniture maker that complies with such requirements is Estonian furniture giant Standard that, for instance, is the only one who has certificates required by the tax board. Other companies don’t have not obtained compliance certificates for tailor-made furniture. A representative of the tax authority said that such strict requirements were necessary so that all bidders can understand them in the same way.

I have to say I am a bit puzzled by the facts stated. Is AJ Tooted, for instance, complaining that the specifications were too narrowly drawn, prejudicing its bid or award? Or is the Tax Board saying it wants to rebid the contract because it got the specs all wrong to begin with? Either of these scenarios, or others that may be speculated, offer analytical exercises.

For purposes of this post, though, I just want to make a simple assumption, even if it is not the situation they're facing in Estonia. I will assume that AJ Toot, who won the award, is complaining about the cancellation of the bid because the furniture "giant" Standard is behind the cancellation of the award. And I will assume that its furniture did not in fact meet the meet the "ergonomic requirements" of the work environment council.

What I point to under this scenario is the difference between a solicitation dispute and a contract dispute, and of course, I discuss this in the context of Guam's law, not Estonia's. The basic rubric is, can a competing bidder complain, after award, that the winning bidder did not deliver the goods the solicitation documents specified?

Guam law would usually say no. It distinguishes between disputes concerning the method of source selection, the solicitation or the award of a contract (5 GCA § 5425) from a contract dispute (§ 5427). As a general rule, competing bidders may be aggrieved and protest the solicitation, but have no standing in a contract dispute. Thus, if the contractor did not provide precisely the thing that was specified, that is an issue between the government and the contractor alone, as the only two parties who are "privy" to the contract. Under contract law generally, the government has the right to accept the nonconforming goods, but in doing so reserves the right to claim damages arising from the nonconformity.

But the situation could be different if the facts are altered: it depends on the degree of non-conformance. If the goods the government accepts are materially "beyond the scope" of what was solicited, the acceptance of them relates back to the integrity of the process, and may be treated as a fault of the solicitation process. 

Here, AJ Toot was not prejudiced by the overly restrictive specifications, and it would be unfair to penalize it for providing, substantially, what it was the government ordered. 

If the government nevertheless decides that it cannot continue to use the equipment its own specifications required because of the ergonomic requirements, it should first elect to terminate the contract before rebidding, under the termination for convenience clause and procedure Guam law allows.  In that case, AJ Tooting would at least be compensated for certain damages, including some of the profit it was expecting, offset by any damages caused by nonconforming goods delivered (which I have only assumed in this scenario).