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Semantic Differences Between Claim and Appeal Do Not Deprive Board of Jurisdiction; CBCA 6021, Michaelson, Connor & Boul v, Department of Housing and Urban Development

The Civilian Board of Contract Appeals held that it had jurisdiction to consider an appeal of the contracting officer’s denial of a claim seeking payment for services outside the scope of the contract. While the appellant’s submissions provided contradictory statements as to whether it sought payment under its contract or sought payment for uncompensated work performed outside the contract, the board held that the appeal relied on the same set of operative facts as the claim presented to the CO and that it could consider the appeal on the merits.

Michaelson, Connor & Boul sought payment for services provided to the Department of Housing and Urban Development supporting an agency program for reacquiring certain properties from mortgagees. After the complaint was filed, the board raised concerns about whether the claim presented to the contracting officer was the same claim that MCB presented on appeal. MCB was ordered to clarify whether it is seeking relief (1) under the contract identified in the notice of appeal, (2) under no contract, or (3) under a different contract. Based on its response, MCB was then ordered to show cause why the claim described in its complaint was based on the same operative facts as those in its claim presented to the CO.

In February 2010, HUD awarded MCB a contract to serve as HUD’s mortgagee compliance manager, whose primary responsibility was to assist HUD with ensuring lender compliance with property conveyance requirements of HUD’s real-estate portfolio. After the contract ended, MCB submitted a claim requesting payment in the amount of $661,312.81, which MCB stated was incurred relevant to work performed “in connection to” the mortgagee compliance manager contract. In its claim, MCB alleged that, following the award of the contract, HUD asked MCB to perform extra work and agreed to reimburse the appellant the cost of performance. MCB additionally both HUD and MCB personnel were consistent in their shared belief that the reacquisition services were not expressly required under the mortgagee compliance manager contract and that MCB would need to be paid for performing these services. The CO denied this claim and MCB appealed.

In its complaint, MCB stated that it appalled the CO’s denial of its claim for costs in connection with the mortgagee compliance manager contract. MCB alleged that HUD asked it to perform services not required by the contract and that HUD committed to paying for these services. In its complaint, MCB sought the exact same monetary relief that it did in its certified claim submitted to the CO.

After receiving the complaint, the board ordered MCB to clarify the basis of its appeal. The board explained that it awards money under the Contract Disputes Act only under valid procurement contracts. In this case, MCB’s complaint did not plainly allege that the claim arose under a contract. The board ordered MCB to clarify whether it sought relief under its mortgagee compliance manager contract, under a different contract, or under no contract.

In response, MCB asserted that its claim and appeal sought payment for services under the mortgagee compliance manager contract. However, the board noted the contradictions between the original claim and the appeal, pointing out out that MCB’s certified claim alleged that HUD and MCB personnel consistently demonstrated that they believed the work was outside the scope of the subject contract. The board noted that this assertion was repeated in MCB’s appeal.

The board then ordered MCB to demonstrate that the claim presented to the CO was the same as presented in the appeal. The board also questioned whether anyone at HUD with authority to modify the mortgagee compliance contract authorized MCB to perform the services, explaining that this would be the only way the claim and appeal could rely on the same operative facts. Under that circumstance, the certified claim and complaint could be construed as alleging a constructive change.

With its response to the show cause order, MCB filed a motion for leave to amend its complaint. MCB sought to delete language from its initial complaint regarding relief sought for services outside the scope of its contract, and to clarity that it sought payment for services performed in relation to the subject contract. MCB asserted that its appeal was based on the same operative facts as its claim.

In response, HUD argued that MCB failed to show that anyone with contracting authority ordered MCB to perform the reacquisition services, or that there was an adequate basis for a claim whether resting on a change order, a constructive change, or an implied contract. Further, HUD argued that the amended complaint was not the same claim as that presented to the CO.

The board held that the allegations MCB raised in this appeal are fundamentally the same as those asserted in its claim to the CO. In both documents, MCB sought payment for relevant work that it alleged was directed by HUD during performance of the mortgagee compliance manager contract, and asserted that HUD had agreed to pay for the services, but had not. Further, MCB requested the exact same amount in the claim and appeal. Thus, the board concluded MCB relied on the same operative facts in its complaint filed at the Board as those in its claim presented to the contracting officer.

Although MCB used various phrases to describe the relationship between its claim for reacquisition services and the mortgage compliance manager contract, the board held the differences were de minimis and did not defeat a finding of jurisdiction. While MCB used various terms to describe the work—such as extra-contractual or outside the scope of the contract—the board found these semantic differences immaterial.

The board also held that MCB’s failure to assert a contract or identify a cognizant HUD official who directed the work did not preclude its jurisdiction, finding those matters went to the merits of the claim, not the board’s ability to consider it.

Michaelson, Connor & Boul is represented by Margaret A. Dillenburg of Law Offices of Margaret Dillenburg, P.C. The government is represented by Jonathan English, Dean Roy, and Julie Cannati, Office of General Counsel, Department of Housing and Urban Development.

GAO Scolds Army for Failing to Produce Responsive Documents in Timely Manner; GAO B-415458.3, Conley & Associates Inc.

Protest challenging the agency’s evaluation of proposals is sustained, where the agency improperly credited the awardee for its use of cost-plus-fixed-fee surge support personnel when the solicitation specifically provided the agency would evaluate the offerors’ ability to meet the requirement using only fixed-price support, and where the agency credited the awardee for strengths related to its transition plan, but failed to assign similar strengths to the protester. GAO also found the agency’s cost realism evaluation inadequate, because it failed to analyze the sufficiency of the offerors’ proposed labor categories and labor hours to complete the work.

GAO also expressed its dissatisfaction with the agency’s cooperation with the protester’s and GAO’s document requests.

Conley & Associates Inc. protested the Army’s award of a contract for C4ISR equipment support services to Valkyrie Enterprises Inc., arguing that the agency departed from the RFP’s evaluation criteria, unequally evaluated the technical proposals, and failed to conduct an adequate cost realism evaluation.

First, Conley argued the agency improperly considered Valkyrie’s non-core contractor field services representatives and field service network under evaluation criteria limited to “core” CFSR support. According to Conley, this error resulted in the improper assignment of a strength to Valkyrie’s proposal for an individual that Valkyrie never proposed as a “core” CFSR. Conley argued it was prejudiced, because the source selection authority concluded that this “backbench” CRSR offset one of Conley’s strengths.

GAO agreed. The RFP specified that the agency would evaluate an offeror’s demonstrated ability to respond to a minimum of five incident reports at the same time at multiple locations worldwide, utilizing fixed-price core CFSR support, without reliance on service providers who are not part of this contract. However, the agency considered elements of Valkyrie’s non-core CFSR support when evaluating this element. The agency concluded that Valkyrie reduced risk by proposing backup/surge CFSRs, even though the solicitation provided that only core support would be considered for this area. The awardee itself acknowledged that it did not include this support as fixed-price core support, but provided for the additional hours under the non-core cost-plus-fixed-fee CLIN.

The agency argued that Valkyrie’s strength was warranted because its “non-core” CFSR approach of utilizing internal assets rather than subcontractors added additional flexibility, but GAO found the agency essentially double counted a strength for Valkyrie’s internal non-core CFSRs and maritime support network. Valkyrie already received this strength under the evaluation criteria concerning the offeror’s approach to utilize and coordinate the use of non-core CFSRs. GAO also agreed that Conley was prejudiced, as the SSA expressly identified this aspect of Valkyrie’s proposal in the tradeoff decision as an offset to one of Conley’s strengths.

Next, Conley argued the agency assigned Valkyrie strengths for low risk aspects of its transition plan, without assigning similar strengths to Conley’s proposal despite the agency’s conclusions that Conley’s approach essentially eliminated transition risk. Under this factor, the agency found that Valkyrie possessed a lease agreement for an appropriate facility and that this was a low risk approach for the transition plan. Additionally, the agency noted that Valkyrie proposed two contingency primary storage facilities—one of which was Conley’s incumbent facility—should a problem arise in retaining their proposed primary storage facility.

Conley argued this strength was unreasonable because Valkyrie’s proposal lacked details concerning compliance of the contingency facilities with the PWS requirements, and should have been evaluated as a risk that Valkyrie lacked commitment to its proposed primary facility. Alternatively, Conley argued that if the strength was justified, the evaluation was unequal because it did not receive a similar strength for proposing its existing, incumbent, fully-operational primary storage facility, which according to the agency’s own evaluation meant that transition risk is essentially eliminated. Conley also argued the agency failed to evaluate its proposal for transition risk, denying Conley the opportunity to achieve other strengths.

GAO agreed. While there is no general requirement that incoming and incumbent offerors receive the same evaluation regarding the transition from one contract to another, GAO noted that when an agency recognizes the low risk of a non-incumbent offeror’s transition approach, the agency will often recognize a strength in the incumbent contractor’s ability to obtain the same result. In this case, the agency concluded that Valkyrie’s proposed use of Conley’s primary storage facility presented less transition risk, but did not assign Conley’s proposal a strength similar to the strength assigned to Valkyrie’s proposal. In addition, the agency apparently failed to consider Conley’s presumably low transition risk under the program management factor, while it did assign Valkyrie a strength in this area. GAO found the evaluation was unequal and sustained these grounds of protest.

Next, Conley alleged the agency failed to consider information indicating that at least one of Valkyrie’s proposed “core” CFSRs was no longer available. Conley asserted that Valkyrie’s “start of work brief” listed one “core” CFSR as “Candidate Identified” and “TBD.” However, GAO found that this core CSFR was available at the time of the evaluation and award decision, and therefore Conley’s allegation was factually incorrect.

However, GAO noted the Army repeatedly failed to promptly and fully respond to documents requests concerning this area of the protest. Specifically, despite Conley’s requests for all documents, including post-award exchanges, the agency did not provide all responsive documents for nearly 60 days. Instead, in response GAO’s instructions to reexamine its records, the agency asserted that there were no additional responsive documents. Finally, in response to GAO’s third request, the agency located 12 additional responsive documents, which included Valkyrie’s start of work brief. This document, an email attachment, appeared to show that one of the “core” CFSRs in Valkyrie’s proposal was not part of Valkyrie’s plan for performance, and had been replaced by the entries “Candidate Identified,” and “TBD.”

GAO admonished the agency for its failure to diligently examine its records for responsive documents and asked the Army to provide a sworn affidavit from the contracting officer describing the agency’s efforts to identify all responsive documents and certifying that document production was complete. Although GAO remained concerned about the agency’s failure to timely provide responsive documents, it concluded that the record in this area was sufficiently complete to support its denial of these protest grounds. Valkyrie submitted affidavits explaining that its proposed core CFSRs were available and that the contradictory information was submitted in error.

Finally, Conley argued that the agency’s cost realism analysis failed to assess the offerors’ proposed CPFF labor hours and reimbursable materials costs, and instead limited its review to the realism of proposed labor rates. In response, the agency conceded that its cost realism analysis was limited to assessing the offerors’ proposed labor rates using a standard deviation methodology, but argued that its analysis was reasonable since an agency is not required to conduct an in-depth cost analysis, or to verify each and every item in assessing cost realism.

GAO acknowledged that an agency is not required to conduct an in-depth cost analysis, or to verify each and every item in assessing cost realism. However, GAO also explained that when a solicitation requires offerors to propose their own labor hours and labor mix in response to the agency’s requirements or a sample task, the agency’s failure to analyze whether the labor hours and labor mix are realistic to successfully perform the requirements renders the cost realism analysis unreasonable.

In this case, the RFP required the offerors to review 38 selected C4ISR incident reports to be used as a basis to extrapolate costs for 1,000 incident reports for the “core” CFSRs and 71 incident reports for “non-core” CFSRs. The offerors were to identify the costs of responding to the incident reports based on their approach. With respect to “time on site,” offerors were to estimate the necessary labor hours based on the selected incident reports and their expertise with the relevant C4ISR systems.

Because the RFP instructed offerors to propose their own unique labor hours, labor/skills mix, and materials costs in response to the selected incident reports, a cost realism analysis that failed to analyze these unique factors is inadequate. GAO concluded that an analysis limited to proposed labor rates was not reasonable.

Conley & Associates Inc. is represented by Scott F. Lane and Katherine S. Nucci of Thompson Coburn LLP. Valkyrie Enterprises LLC is represented by J. Bradley Reaves and Beth V. McMahon of ReavesColey, PLLC. The government is represented by Wade L. Brown, Peter S. Kozlowski, and Kimberly Maltby, Department of the Army. GAO attorneys Eric M. Ransom and Edward Goldstein participated in the preparation of the decision.

Agency Failed to Consider Proposed Efficiencies Before Making Upward Cost Adjustment; GAO B-415944, Trident Vantage Systems, LLC; SKER-SGT Engineering & Science, LLC

Protests alleging an impaired objectivity organizational conflict of interest are denied, where the performance of an affiliate of the awardee on another contract for the agency did not include evaluating or testing the awardee’s products or solutions. A protest challenging the agency’s evaluation of relevant experience and past performance is sustained, where the agency failed to document its evaluation or demonstrate that it meaningfully considered the scope of offerors’ past performance contracts in comparison to the current procurement. Finally, GAO sustained one challenge to the agency’s cost realism adjustments, finding that the agency failed to consider the protester’s proposed efficiencies before making the adjustment, and denied another challenge, finding that the protester failed to support its decision to eliminate highly-skilled but expensive subcontractor support in favor of its own workforce.

Trident Vantage Systems LLC and SKER-SGT Engineering & Science LLC protested the National Aeronautics and Space Administration’s award of an engineering, research, and scientific support services contract to HX5 LLC, alleging the agency failed to consider an organizational conflict of interest and erred in its evaluation of proposals.

First, the protesters argued NASA failed to meaningfully consider an alleged impaired objectivity OCI stemming from HX5’s performance on a different NASA contract for Glenn Research Center, where the contract under dispute will be performed. Specifically, HX5 Sierra LLC (a joint venture between HX5 and another firm) performs the test facility operations, maintenance, and engineering (TFOME) services contract for the center. According to the protesters, HX5 Sierra will evaluate HX5’s own work on the disputed contract.

In response, the agency noted that the contracting officer determined that nothing in HX5 Sierra’s work could give HX5 the opportunity to benefit on this contract, or vice versa. According to the CO, the TFOME contractor provides facility-focused support services related to the management, operations, maintenance, and engineering of test facilities and laboratories at GRC. Under the contract, the customers are NASA projects that require testing of NASA articles. In other words, the TFOME contractor will not support the awardee of the contract at issue. Further, the TFOME contractor does not actually direct or control any test activities; rather, NASA either performs the testing or maintains complete control over the test activities.

GAO found the agency’s explanation reasonable and that the CO convincingly refuted the protesters’ allegations. GAO found the protesters’ allegations misrepresented the nature of the TFOME contract and were generally speculative in nature. Absent hard facts or an allegation of a direct financial benefit to HX5, GAO denied these grounds of protest.

SSES also protested NASA’s evaluation of proposals under the relevant experience and past performance factor, specifically challenging the agency’s relevancy determinations. SSES argued the evaluators failed to consider scope as part of the assessment of relevancy, and that the contemporaneous record is inadequately documented.

The solicitation required offerors to provide performance information for past or current contracts that were relevant to the GEARS requirement, and were instructed to provide information about each contract, such as the contract title, contract type, total dollar value, and a brief description of the work. The solicitation established that only contracts deemed relevant in terms of the scope of work would be considered.

GAO found that the entirety of the contemporaneous evaluation record that discussed relevant experience and past performance is the SEB’s briefing to the SSA, which GAO considered sparse. For each offeror, the SEB created a table providing the contract information provided by each offerors—number, name, etc.—by simply copying the information from the proposals. The SEB then assigned an overall rating of relevant, somewhat relevant, or highly relevant. GAO found no discussion of the scope of the offerors’ past performance contracts, nor any rationale for the assigned relevancy ratings.

Given the lack of documentation of the agency’s evaluation, GAO had insufficient information to assess its reasonableness. GAO found no evidence the evaluators meaningfully considered the scope of the offerors’ past performance, even though the RFP established that, as a threshold matter, only contracts relevant in scope to the requirement would be considered. GAO also noted that the agency’s post-protest explanations unavailing. For example, the CO explained that H5X’s performance of operations and quality assurance services under the engineering contract NAICS code translated into experience performing some of the work required under the current contract’s statement of work. However, GAO failed to see how simply having a NAICS code with the term engineering in it—notably, a different NAICS code than the GEARS procurement—demonstrated relevance to GEARS in terms of scope.

GAO also found the agency’s relevancy conclusions were inconsistent and did not withstand scrutiny. For example, SSES noted that two of its contracts were deemed highly relevant, while a third contract for the same work but of higher value, was found to be only relevant. While the agency attempted to justify the difference in ratings, GAO found NASA’s response unhelpful.

SSES also argued that HX5’s high level of confidence rating appears inconsistent with the solicitation’s ratings criteria. The solicitation stated that a high level of confidence rating was reserved for offerors whose relevant past performance was highly pertinent to the requirement. However, despite its high level of confidence rating, HX5 had only one prior contract deemed relevant and one deemed somewhat relevant, and its major subcontractor had one relevant contract and three somewhat relevant contracts. GAO agreed that the rating appeared at odds with the evaluation conclusions. Accordingly, GAO sustained both SSES’s relevant experience and past performance challenges.

Next, both protesters challenged the agency’s cost realism adjustments to their respective proposals. In the staffing element of SSES’ mission suitability proposal, the protester proposed a reduction of work-year equivalent employees over the life of the contract. SSES based its plan on the government’s estimated staffing levels and its proposed innovations and efficiencies. The SEB assigned the proposal a significant weakness under this element, finding that the reduction in staff was unsubstantiated. In their briefing, the evaluators included a chart showing the total WYEs SSES proposed, and documented the key areas impacted by the WYE reductions. No additional information was documented in the evaluation report regarding this weakness.

Based solely on the significant weakness, the cost committee performed a probable cost adjustment to “straight-line” SSES’s year 1 WYEs across each year of performance. This adjustment, coupled with an increase to direct labor rates to track with the government estimate, resulted in an upward adjustment of nearly $22.5 million in direct labor alone.

SSES challenged this adjustment, arguing that NASA failed to consider numerous innovations and efficiencies that substantiated the proposed WYE reductions. Specifically, SSES included three pages of substantiating information in the innovations and efficiencies part of its proposal, which was to be assessed under the fourth element of the understanding the requirements subfactor. In addition, SSES also included the substantiating information detailing its proposed innovations and efficiencies in its cost proposal. Further, SSES noted the cost adjustment appeared to have been based solely on the significant weakness assigned to its proposal, while the record lacked any evidence the agency considered these efficiencies.

GAO agreed, finding the agency did not support its cost adjustment. GAO agreed that the adjustment appeared to be based solely on the assigned weakness without considering the rest of SSES’s proposal. Contrary to the agency’s conclusion that the staffing reductions were unsubstantiated, GAO identified numerous efficiencies documented in SSES’s proposal. If the agency had concerns about SSES’s assumptions, it failed to document them in the evaluation. Accordingly, GAO sustained SSES’s protest on these grounds

TVS also objected to the agency’s upward adjustments to its proposal under the following five cost elements: overhead, other direct costs, subcontractor labor, general and administrative expenses, and award fee. However, GAO found none of the challenges provided a basis to sustain the protest. For example, TVS protested the agency’s upward adjustment under the minor subcontractor labor element.

In its proposal, TVS recognized the “essential” “advanced skillsets” being fulfilled with minor subcontractor labor, as well as the relatively high labor rate for these WYEs. However, TVS also proposed to replace some of the minor subcontractors with labor categories from its direct labor pool. Based on its concern that the highly specialized subcontractor employees could not be replaced by employees from TVS’s own workforce, the agency removed the WYEs from the direct labor pool and replaced them in the minor subcontractor category, resulting in an upward adjustment to TVS’s price.

Though TVS challenged this decision, GAO found the protester acknowledged that some of the work would be best procured by subcontracts and that the agency’s staffing estimates were accurate, but nonetheless used its business judgment to reduce the minor subcontractor support and rely on its own employees. Further, the agency made no adjustment to the net labor hours, only to the categories. Based on the agency’s well-documented concerns and TVS’s own acknowledgement of the expertise of the subcontractor employees, GAO found no reason to sustain the protest.

The protesters are represented by Daniel R. Forman, and Hart W. Wood of Crowell & Moring LLP, for Trident Vantage Systems, LLC; and by Adam K. Lasky, Howard W. Roth, Ryan M. Gilchrist, and Daniel P. Radthorne of Oles Morrison Rinker & Baker LLP, for SKER-SGT Engineering & Science, LLC.

HX5 LLC is represented by Jonathan D. Shaffer, John S. Pachter, Mary Pat Buckenmeyer, and Todd M. Garland of Smith Pachter McWhorter PLC. The government is represented by Alexander T. Bakos, Callista M. Puchmeyer, Macallister A. West, James P. Burke, and Lisette S. Washington, National Aeronautics and Space Administration. GAO attorneys Noah B. Bleicher, and Peter H. Tran participated in the preparation of the decision.

GAO Unravels Tangled Data Rights Challenge to Air Force Helicopter Procurement; GAO B-416027, Sikorsky Aircraft Corporation

Protest challenging the agency’s interpretation of various solicitation requirements is denied, where the DFARS limits the government’s rights to detailed manufacturing or process data, but does not preclude the government from contracting for the delivery of this data or receiving this data with lesser rights. GAO found other challenges to the solicitation terms untimely, where the government had already signaled its interpretation of the RFP language during a Q&A prior to the deadline for proposals, and found other protest grounds premature, because they were filed following discussions but prior to award, and therefore only speculated at the outcome of the agency’s evaluation.

Sikorsky Aircraft Corporation protested the Air Force’s interpretation of the terms of its request for proposals for a helicopter to replace the UH-1N helicopter. Sikorsky objected to a number of positions taken by the agency during discussions and alleged the agency is treating offerors unequally.

First, Sikorsky argued that a clause in the RFP would require offerors to deliver source code and relinquish rights in excess of what is permitted by regulation. The protester noted that DFARS § 227.7203-1(c) says that offerors “shall not be required, either as a condition of being responsive to a solicitation or as a condition for award, to sell or otherwise relinquish to the Government any rights in computer software developed exclusively at private expense,” except for certain identified exceptions.

However, the RFP stated that for operation, maintenance, installation, and training (OMIT) software data (other than commercial software), the agency was willing to accept government purpose rights. Read in context, the protester argued this language implied that the government is unwilling to accept less than government-purpose rights in noncommercial computer software regardless of funding source. According to Sikorsky, the DFARS provides that the government is only entitled to receive restricted rights in noncommercial software developed at private expense, but this language requires offerors to relinquish greater rights than those to which the government is entitled.

Sikorsky conceded that its argument was untimely because the alleged conflict between the RFP and the DFARS is plain on the face of the solicitation. However, the protester asked GAO to waive its timeliness rules under an exception for issues significant to the procurement community. Sikorsky argued the issues are significant, in part, because the special contract clauses included in this RFP are clearly contrary to regulation, and similar special contract clauses have been included in multiple previous Air Force procurements over the last several months.

GAO declined to waive its timeliness rules to consider this argument. During the course of the protest, the agency advised GAO and offerors that it did not read the RFP language as requiring the provision of government-purpose rights in either noncommercial computer software developed at private expense or in technical data that constitutes DMPD developed at private expense. The agency also advised offerors that they could revise their proposals if necessary to respond to the clarification. GAO found this clarification rendered Sikorsky’s protest moot, and dismissed these grounds.

Sikorsky also challenged the agency’s interpretation of other language in the RFP and the agency’s evaluation. As an initial matter, GAO noted the uniqueness of Sikorsky’s arguments. Sikorsky argued that its challenge to an additional ambiguiy in the RFP was timely because it was not evident until the agency issued is evaluation notices. Further, the ambiguity was made more acute when the agency reaffirmed its position in responding to Sikorsky’s agency-level protest.

On the other hand, GAO noted that protests arguing that an agency evaluated proposals in a manner inconsistent with the RFP are usually filed after the agency makes it award decision or following a debriefing. GAO typically dismisses protests as speculative if they merely allege an agency may evaluate proposals improperly. While challenges to the terms of a solicitation should be resolved as early as possible in the process, the debriefing exception to GAO’s timeliness rules are meant to preclude defensive protests filed before the agency has taken final action and before actual knowledge that a basis for protest exists.

In this matter, Sikorsky identified an ambiguity during discussions, which required it to file a protest within 10 days, or prior to the next closing date for proposals. However, it also alleged unequal treatment, grounds which GAO generally considers premature when filed before an award decision. Considering each ground separately, GAO found some were untimely, some were timely, and others were premature.

Sikorsky argued that the agency’s interpretation of the solicitation potentially required the delivery of source code and detailed manufacturing or process data, which contradicted the language in the RFP. The protester argued that it reasonably read certain exclusions of DMPD as entirely excluding delivery of DMPD and, by extension, entirely excluding delivery of source code, and that it learned of the agency’s contrary readings for the first time during discussions. Specifically, Sikorsky explained that the agency indicated in discussions that the RFP may require the delivery of both technical data that constitutes DMPD and of source code, which the protester contends is impermissible. The agency affirmed this view in its response to Sikorsky’s agency-level protest.

First, GAO found this protest ground was not speculative or premature, because the agency effectively announced how it intends to evaluate proposals. On the merits, Sikorsky argued that the DFARS clause granting unlimited rights in technical data necessary for OMIT excludes DMPD from that grant of rights. Further, the protester observed that the RFP requires an offeror to provide certain technical data and computer software necessary for OMIT at the lowest practicable segregable level that does not require DMPD. According to Sikorsky, this suggests that DMPD should not be provided for both technical data and computer software necessary for OMIT. The protester argued that the equivalent to DMPD for computer software would be source code.

GAO concluded that Sikorsky’s interpretation of the solicitation was not reasonable. While Sikorsky correctly argued that the DFARS section excepts DMPD from a more general grant of unlimited rights in data necessary for OMIT, GAO noted that the rights to and delivery of items are legally distinct concepts. GAO found that the DFARS provision addresses the rights that the government be entitled to in delivered DPMD, but has no bearing on whether the government may contract for delivery of DMPD. In other words, the DFARS does not give the government unlimited rights to DMPD but does not preclude the government from contracting for it. In fact, the relevant DFARS provisions specifically contemplate that the government may sometimes receive DMPD with lesser rights.

GAO agreed that the RFP provided that OMIT data for certain specific areas should be delivered in a way which excludes DMPD, but noted that OMIT data is not limited to those specific areas. Therefore, the RFP did not categorically exclude delivery of DMPD from the technical data package.

GAO also found Sikorsky’s interpretation of the RFP’s requirements for the delivery of source code to be unreasonable. The relevant clause required delivery of certain “OMIT Data” which was defined to include both “technical data” and “computer software.” While computer software is not expressly defined in the solicitation, the clause incorporated the DFARS definition of computer software, which specifically includes “source code.” Therefore, a requirement to potentially deliver source code necessary for OMIT is plain on the face of the solicitation. GAO found that Sikorsky’s argument rested on the erroneous premise that the RFP treats computer software as though it were technical data, when in fact it distinguished between the two categories. The clause incorporated the DFARS definitions of technical data and computer software, which are mutually exclusive. Therefore, the mere inclusion of computer software alongside technical data in the defined category “OMIT Data” cannot be reasonably read as a redefinition of technical data to include computer software.

Next, Sikorsky argued that the agency’s interpretation of a statement of work task concerning the baseline technical data package to be provided under the contract, rendered it impossible for offerors to determine which contract data requirements list items will include OMIT or other than OMIT data, preventing offerors from competing on a common basis. According to Sikorsky, it reasonably interpreted the SOW task to mean that OMIT data should be provided under CDRL A136 (concerning product drawings or models and associated lists), while non-OMIT data, including data necessary for re-procurement, should be provided under CDRL A097 (concerning the technical data package generally). However, during discussions, the agency indicated that the RFP made no distinction between OMIT data and non-OMIT data at the CDRL level, and that this reading is not consistent with the RFP. The agency affirmed this view in its response to Sikorsky’s agency-level protest.

Sikorsky argued that because the SOW provision required offerors to furnish data necessary for re-procurement and data necessary for depot maintenance in two separate sentences, and also references two separate CDRLs, that a division of the two types of information at the CDRL level is a natural reading of the SOW provision. Sikorsky argued that the agency’s contrary reading—that the RFP does not distinguish between OMIT data and non-OMIT data at the CDRL level—is confusing and contrary to the RFP because it provides offerors with no guidance as to what should be provided in response to the two CDRLs.

However, GAO found this interpretation unreasonable. While the SOW paragraph separately required information necessary for re-procurement and information needed for maintenance, the referenced CDRLs were not clearly distinguished along those lines, nor did they, by their own terms, distinguish between OMIT and other than OMIT data. For example, GAO noted that CDRL A136 appeared to include requirements for data necessary for both maintenance and re-procurement. Accordingly, GAO denied these protest grounds.

Next, Sikorsky argued that the agency improperly applied a clause governing the government’s license rights in commercial computer software “to be” obtained on behalf of or transferred to the government, to software licenses already in the government’s possession. According to Sikorsky, it became clear during discussions that the agency unreasonably read the clause as applying to commercial computer licenses already in the government’s possession. Instead, the protester argued the clause applies only to licenses to be obtained on behalf of or transferred to the government under the contract, and therefore cannot be read to apply to licenses already in the government’s possession. However, GAO found this the argument was untimely, as the agency advised offerors of its view of this clause during a question and answer period.

Next, Sikorsky argued that the agency erred in rejecting its proposed attachments identifying a list of configuration items and depot-level repairables because the solicitation contemplated finalizing the lists of such items post-award. Sikorsky argued that the RFP did not prohibit the furnishing of such attachments, and that the agency is insisting on an unbounded view of what these items might comprise, and therefore is imposing an impossible standard on offerors for the first time in discussions. Alternatively, Sikorsky argued it did not claim in its proposal that additional items could not be identified during performance, and therefore did not intend for the attachments to be viewed as taking exception to the terms of the solicitation.

In response, the agency explained that the solicitation did not request or require the submission of such a list, and that certain provisions of the solicitation contemplated the identification of configuration items and depot-level repairables after award. Additionally, the agency noted in its ENs that the associated CDRLs themselves included timetables for finalizing the relevant lists of configuration items and depot-level repairables. The agency interpreted the attachments as an attempt on Sikorsky’s part to limit the enforceability of the SOW provision.

GAO found that, at best, this protest ground was a premature challenge to the evaluation. GAO found that Sikorsky’s contention that the RFP did not forbid the furnishing of such attachments is not incompatible with the agency’s view that the RFP did not require that an offeror provide them. Sikorsky did not argue that the agency could not identify additional configuration items or depot-level repairables post-award, and acknowledged that it did not intend the lists to be definitive or to take exception to the solicitation. Because the documents may simply represent information about Sikorsky’s technical approach, GAO found this argument, essentially, a premature challenge to the results of the technical evaluation.

Finally, Sikorsky argued that, because another offeror has offered a Sikorsky-manufactured aircraft but has not approached Sikorsky to secure necessary intellectual property licenses, the agency is treating offerors unequally or conducting unequal discussions. GAO found this argument premature, even assuming Sikorsky correctly characterized the contents of a competitor’s proposal. If Sikorsky is excluded from the competitive range or not selected for award, it may raise whatever evaluation errors it deems appropriate, including unequal discussions or unequal treatment, at that time.

Sikorsky Aircraft Corporation is represented by Marcia G. Madsen, David F. Dowd, Luke Levasseur, and Roger Abbott of Mayer Brown LLP; and by Maryann P. Surrick, and Heather A. Bloom, Lockheed Martin Corporation. The government is represented by Erika L. Whelan Retta, Alexis J. Bernstein, Michelle D. Coleman, Aaron Tucker, Michael D. Carson, Briana L. White, and Major George M. Ebert, Department of the Air Force. GAO attorneys Michael Willems and Edward Goldstein participated in the preparation of the decision.

Contractor Cannot Base a Claim on Agency Conduct that is Inconsistent with the Plain Language of the Contract; CBCA 5540, Mare Solutions Inc. v. Department of Veterans Affairs

Appeal of the agency’s denial of claims seeking monetary relief on a construction contract is (1) granted in part where the contractor’s expert testimony on a highly technical requirement was more compelling than the lay opinion of the agency’s construction control representative, and (2) denied in part where the contractor’s interpretation of another requirement—and agency conduct that was consistent with the contractor’s interpretation—contradicted the plain language of contract.

Mare Solutions Inc. appealed two claims to the CBCA arising out of contract to build a parking garage for the Department of Veterans Affairs. The first claim concerned a dispute over whether Mare was required to install expansion coupling on an electrical conduit. The conduit installed in the garage had buckled. VA contended that the buckling had been caused by Mare’s failure to install required expansion couplings, which would have allowed for movement of the conduit. Mare, however, believed couplings were not required under the contract. With the parties at loggerheads, Mare sought a declaration from the CBCA on whether the coupling was required.

The second claim involved a dispute over “head-end” equipment, which would allow VA’s analog security system to interface with the garage’s digital closed-circuit television system. Initially, VA had indicated that it was responsible for the head-end equipment, but when the construction was almost completed, VA determined that Mare was responsible for the equipment. Mare installed the head-end equipment, but believing the equipment was not a contract requirement, the company sought reimbursement. VA denied the claim, and Mare appealed to the CBCA.

As to the first claim, the board found that the contract specifications only required expansion couplings in three situations: (1) where conduit crossed an expansion joint, (2) where couplings were shown in the drawings, and (3) as required by the National Electric Code. Almost all the witnesses agreed that the first two situations were inapplicable: none of the conduits crossed expansion joints, and the drawings did not show any expansion couplings.

Thus, the only basis for requiring couplings was compliance with the National Electric Code. Mare presented expert testimony from two highly qualified engineers, both whom testified that couplings were not required by the National Electric Code. In response, VA did not present any experts but instead relied on the observations of the agency’s construction control representative. The representative—who acknowledged “I’m not an expert on [expansion couplings], but I know what I see”—believed that the buckling was caused by thermal expansion and that the couplings would have prevented this problem.

The board determined that this was a highly technical issue best suited to experts. Accordingly, CBCA found Mare’s experts far more persuasive on this issue than the VA’s construction representative. The board concluded that Mare’s position—i.e., couplings not required—was consistent with the terms of the contract.

Turning to the head-end equipment, the board found that the contract required Mare to install “a complete Video Surveillance System.” Additionally, the specifications stated that “if using a camera as part of CCTV network, a video encoder shall be used.” The board concluded that there could be no dispute that Mare was required to install head-end equipment.

Mare, however, argued that it was not required to provide the equipment because the contract drawings did not include head-end equipment. The board dismissed this argument, noting that the drawings Mare relied on were for another project and had been mistakenly included the parking garage drawings. Indeed, VA had informed all bidders about the mistake in questions and answers before award. Mare should have been on notice that it could not rely on those drawings. What’s more, if Mare had concerns about ambiguities in the contract, it should have raised them prior to bid closing.

Mare also contended that VA’s actions during performance were consistent with Mare’s interpretation of the head-end requirement. VA had indicated early on that it would furnish the head-end equipment, and the agency had even sought quotes for the equipment. While acknowledging VA’s missteps in handling the issue, the board noted that absent a formal modification, the agency’s actions did not change the contract requirements. The board refused to consider extrinsic evidence of agency conduct where the terms of the contract were unambiguous. Therefore, the board granted Mare’s expansion coupling claim but denied the claim on head-end equipment.

Mare is represented by James R. Mall of Meyer, Unkovic & Scott LLP. The government is represented by Neil S. Deol, Office of General Counsel, Department of Veterans Affairs.

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