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Withdrawal of Agency-Level Protest Not an Adverse Action by Agency Re-tolling Protest Deadline; GAO B-415628, Aurora Storage Products Inc.

Protest alleging that the agency improperly eliminated the protester’s quotation from consideration is dismissed as untimely, where the protester failed to file its protest within 10 days of learning its basis for protest, and where the protester’s withdrawal of its agency-level protest was not an adverse action by the agency.

Aurora Storage Products Inc. protested the General Services Administration’s award of a task order for file storage systems to Tennsco Corp., arguing that the agency improperly eliminated its quotation from consideration for award, failed to timely notify Aurora of the award decision, and failed to adequately respond to Aurora’s agency-level protest.

GSA issued the solicitation on behalf of the Department of Justice. According to Aurora, Mid-Atlantic Filing Distributors submitted a quotation on Aurora’s behalf, acting as Aurora’s authorized GSA dealer. However, the agency determined that Mid-Atlantic was not eligible for award, because it does not hold a GSA Federal Supply Schedule contract.

After being notified of the award decision, Aurora filed a timely agency-level protest with the contracting officer. Before the contracting officer issued a response to the protest, Aurora stating its intention to protest through the Department of Justice Office of Inspector General. The contracting officer explained that the OIG would handle an allegation of misconduct differently than the procurement office would handle a protest and asked Aurora if it wanted to withdraw its agency-level protest. Aurora did not withdraw its agency-level protest, and later filed another protest with GAO making the same allegations.

The agency argued that the protest is untimely, because Aurora withdrew its agency-level protest and did not file its protest with GAO until more than 10 days after notification of the award decision. Aurora argued that its protest was timely because it filed within 10 calendar days of learning of actual or constructive knowledge of initial adverse agency action. In support, Aurora asserted that the CO provided an inadequate response to its protest, which it considered adverse agency action.

GAO disagreed, finding that the CO’s communication did not constitute adverse action. The CO did not convey what view the OIG would take in response to Aurora’s allegation, but neutrally described how the process would differ. Further, an allegation raised to the OIG is not a protest as the term is understood for GAO’s jurisdiction. While the CO stated she considered the agency-level protest to be withdrawn, GAO also did not find this to be an adverse action. Although Aurora stated that it did not wish to withdraw its agency-level protest, it also repeatedly told the CO that it was not seeking a decision from her and instead wanted the OIG to review its allegations. According to GAO, these statements clearly indicated that Aurora did not wish the agency to decide its protest in accordance with FAR procedures. Because Aurora’s agency level protest was not the subject of adverse agency action, GAO found its current protest to be untimely.

Aurora Storage Products Inc. is represented by Patrick J. Reeks. The Department of Justice is represented by John R. Caterini and Kristen Bucher Hahn. GAO attorneys Alexander O. Levine and Jennifer D. Westfall-McGrail participated in the preparation of the decision.

Solicitation for Best Value Procurement Reasonably Incorporated Modified Technical Standards for Newly Developed Parachute System; GAO B-415240, Complete Parachute Solutions Inc.

Protest challenging the terms of a solicitation is denied, where the agency reasonably incorporated into the solicitation a modified industry technical standard for its newly development parachute system, and where the protester suggested no alternative standard that should be used instead. GAO also noted that its bid protest jurisdiction does not extend to requiring the agency to use more stringent technical standards.

Complete Parachute Solutions Inc. protested the terms of a request for proposals issued by the Marine Corps for parachutes, arguing that the agency should adopt more stringent specification and testing standards.

CPS challenged the incorporation of the Industry Association Technical Standard 135 into the solicitation because that performance specification and testing standard is used in connection with the fabrication and approval of civilian sport parachutes. The protester also alleged that TS 135 is intended for use in connection with the fabrication and testing of reserve canopies deployed in the event of the main canopy’s failure or emergency parachutes used in life-saving circumstances. CPS also explained that the design characteristics identified for a “high glide” parachute are fundamentally incompatible with the requirements of TS 135. Finally, the protester claimed that the solicitation contemplated the award of a contract based on proposals and bid samples without any requirement for testing and approval of the offered products prior to award.

In response, the Marine Corps argued that the enhanced multi-mission parachute system performance specification takes precedence over the terms of the TS 135, as stated in the RFP. The agency also argued that there are no agreed-upon or preexisting military or civilian standards for the fabrication and testing of its newly developed parachute system. The agency explained that the testing system used for the prior system led to uncertain risks and left questionable whether those standards could achieve the highest possible safety. In light of this, the agency explained that it adopted and modified certain TS requirements for their life-saving functionality.

GAO denied the protest, explaining that the protester’s attempt to have the agency adopt more stringent technical standards was outside of its bid protest function. Further, GAO noted that CPS had not suggested any alternative standards the agency should use or offered any empirical data showing why the agency’s method was inadequate. Given the absence of well-defined and well-recognized standards applicable to the Marine Corps’ new parachute system, GAO found no object to the agency’s decision to incorporate the TS 135 standard in its solicitation.

GAO also found that the evaluation scheme for the best value procurement was designed to reward superior system performance and superior system safety, and that under these criteria, the protester could show that it met or exceeded the RFP’s requirements. Finally, GAO found no reason to object to the agency’s decision to rely on proposals and bid samples to make its selection decision, rather than on a testing regimen conducted either before proposals are submitted or during the agency’s selection activities.

Complete Parachute Solutions Inc. is represented by William M. Jack and Amba M. Datta of Kelley Drye & Warren LLP; and Robert L. Feldman, of Law Offices of Robert L. Feldman. The government is represented by Korvin S. Kraics, United States Marine Corps. GAO attorneys Scott H. Riback and Tania Calhoun participated in the preparation of the decision.

Flexible RFQ Permits FSS Vendors to Propose Labor Categories Other Than Those Stated; GAO B-415400, Ruchman and Associates Inc.

Protest challenging the agency’s acceptance of quotations for a blanket purchase agreement is denied, where the RFQ did not require offerors to propose the exact labor categories listed in the solicitation as long as the categories used reasonably matched the agency’s requirements, and where the protester itself proposed labor categories that were not listed in the RFQ.

Ruchman and Associates Inc. protested the Drug Enforcement Agency’s establishment of a blanket purchase agreement for accounting and finance support services with Information Technology Coalition Inc., challenging the agency’s evaluation and price realism analysis.

First, Ruchman alleged that DEA should have rejected quotations submitted by ITC and another competing vendor because their underlying Federal Supply Schedule contracts did not contain the RFQ’s exact labor categories or other categories that could perform the required functions. Ruchman also alleged that the agency’s price realism analysis was unreasonable and undocumented, and that a proper in-depth realism analysis would have revealed that ITC and another competing vendor proposed unrealistic prices. Finally, Ruchman challenged the unacceptable ratings assigned for security and past performance, among other areas of the evaluation.

In response, DEA noted that the RFQ did not require vendors to propose the exact labor categories in the RFQ; rather, DEA argued, the solicitation requested that vendors propose equivalent labor categories that matched the job descriptions provided in the Statement of Work. The agency further noted that not only did Ruchman propose labor categories with titles different from those in the RFQ, but other offerors did the same and had the same understanding of the solicitation. The agency asserted that given the flexibility permitted by the RFQ and understood by the vendors, its decision not to disqualify vendors was reasonable.

DEA also maintained that it followed the language in the solicitation explaining that it would compare price quotes to the independent government cost estimate without evaluating separate cost elements. In DEA’s view, it reasonably concluded that ITC’s price was realistic thought it was 6 percent less than the IGCE. Lastly, the agency defended its assignment of unacceptable ratings to Ruchman’s proposal under the security and past performance factors.

GAO denied the protest in part and dismissed it in part. GAO first found that DEA reasonably decided to accept the vendors’ proposed labor categories because they were reasonably considered as meeting the agency’s needs. GAO determined that Ruchman was not prejudiced by the agency’s broad consideration of labor categories because the protester itself successfully proposed labor categories that were not stated in the RFQ.

GAO also denied the protester’s challenge to DEA’s price realism analysis, finding that the solicitation provided for the very comparative analysis that the agency performed. As a final matter, GAO dismissed Ruchman’s challenge to the agency’s evaluation of its own quotation since the protester lacked standing to challenge the evaluation of ITC. Even if Ruchman’s quotation was deemed acceptable, it was the third lowest price for an LPTA procurement, and therefore, would not be in line for award.

Ruchman and Associates Inc. is represented by Thomas P. McLish, Elise A. Farrell, Joseph W. Whitehead, and Scott M. Heinberg, of Akin Gump Strauss Hauer & Feld LLP. Information Technology Coalition Inc. is represented by Daniel R. Forman, Elizabeth Buehler, Charles Baek, and Rosamond Xiang, of Crowell & Moring LLP. The government is represented by James E. Hicks and Susan M. Colarco, Department of Justice. GAO attorneys Stephanie B. Magnell and Amy B. Pereira participated in the preparation of the decision.

Late Substitution of Offeror for Subsidiary in Size Protest Not Allowed; SBA No. SIZ-5873, Conrad Shipyard LLC

Appeal of the dismissal of two size protests is denied, where the SBA area office properly dismissed the size protest filed by the appellant’s subsidiary because it was not an interested party and where the area office properly dismissed as untimely the appellant’s attempted amendment of its subsidiary’s protest to substitute appellant’s name for that of its subsidiary, where the attempt was filed more than five days after notice of award.

Conrad Shipyard LLC appealed the dismissal of two size protests by the Small Business Administration area office. The Department of Transportation awarded a contract for the construction of an ice-breaking tugboat to Gulf Island Shipyards LLC. The contract was set aside for small businesses with NAICS code 336611, Ship Building and Repairing, with a size standard of 1,250 employees.

The first protest was timely filed by Conrad’s subsidiary, Conrad Orange Shipyard Inc. Five days later, and 12 days after notice of award, Conrad filed what it styled an amendment to Conrad Orange’s protest seeking to substitute itself for Conrad Orange. The area office dismissed Conrad Orange’s protest because Conrad Orange was not an offeror and thus not an interested party. The area office also dismissed Conrad’s amendment, finding it to be an untimely protest.

On appeal, Conrad argued that the dismissals were improper, because its amendment was not an attempt to change the protester outside the five-day protest window, but merely the correction of a minor clerical error. Conrad argued that the Area Office incorrectly disregarded the law allowing the amendment of original filings. Conrad cited to Rule 15 of the Federal Rules of Civil Procedure, which allows amendments to pleadings. Conrad also cited the regulations of the Office of Hearings and Appeals, which permit the amendment of original filings to remedy discrepancies when doing so will not prejudice other parties.

Further, Conrad argued that the area office disregarded an earlier finding in a size protest stemming from a related procurement in which the area office determined that GIS exceeded the 1,250-employee size standard. Conrad asserted that Conrad Orange was an interested party, because as a subsidiary of Conrad it had a direct economic interest in the award. Finally, Conrad argued that the dismissal of the protests contradicted SBA’s mission to assist small businesses.

GIS argued that Conrad Orange was not an interested party because it had no connection to the solicitation. Further, GIS asserted that the area office properly determined Conrad’s amendment to be a separate, untimely size protest. The amendment was in fact a filing by a completely different entity and could not be considered a correction of a minor clerical error.

OHA held that only an interested party may file a size protest, and that an interested party must be an offeror. Because Conrad Orange was not an offeror, it was not an interested party and had no standing to protest. OHA then considered whether the area office should have allowed Conrad to amend the earlier filing. OHA first noted that the Federal Rules of Civil Procedure do not control SBA proceedings. In addition, although OHA’s regulations allow amendment of original filings, the regulations do not permit such amendments in size determinations at the area office level. Further, although OHA may allow amendments to a filing, it does so at its discretion. OHA found no basis to question the area office’s decision not to allow Conrad’s requested amendment.

OHA also held that Conrad was not permitted to amend the original protest after the filing deadline, explaining that substitution of a party was not a minor clerical error but a “major alteration.” Further, although Conrad Orange’s protest was timely, Conrad’s was not. And while Conrad argued that its own filing did not have sufficient detail to be considered a viable protest, and so was clearly an amendment to Conrad Orange’s protest, OHA held that the area office determined only that Conrad’s filing was an untimely protest, not that it was a sufficient protest.

OHA found no basis to allow Conrad’s subsidiary to protest on its behalf, or that such a prohibition ran counter to SBA’s mission. OHA held that SBA’s mission was guided by regulations that must be applied equally and fairly. OHA denied Conrad’s appeal of the dismissal of both protests.

Conrad Shipyard LLC is represented by Karl Dix, Jr. and Garrett E. Miller of Smith, Currie & Hancock, LLP. Gulf Island Shipyards LLC is represented by Jonathan T. Williams, Jacqueline K. Unger, and David J. Medalia of PilieroMazza, PLLC.

Agency Cannot Assert an Equitable Estoppel Defense to Contractor’s Breach of Contract Claim Where the Contractor was Unaware of its Own Prior Inconsistent Conduct; ASBCA No. 60314, Appeal of ABB Enterprise Software Inc.

Contractor’s motion for summary judgment on its claim against the government for breach of a software licensing agreement is granted, where the government possessed more copies of the software than permitted by the plain language of the agreement and where the government could not establish—as part of an equitable estoppel defense—that the contractor had known about and acquiesced to the additional copies.

ABB Enterprise Software Inc. had a contract with the Navy to supply software and licenses for naval maintenance requirements. ABB’s predecessor had entered a licensing agreement with the Navy that only permitted use of one copy of software at one server at specified locations. At some point early in contract performance, however, two copies of the software were installed on ten aircraft carriers. ABB only discovered that extra copies were being used on the ten ships several years later. ABB demanded that the Navy stop using the extra copies, but the Navy claimed it was in compliance with the contract. ABB filed a complaint with ASBCA, alleging breach of contract. In response, the Navy asserted an affirmative defense of equitable estoppel. The parties both moved for summary judgment.

The Navy argued that the licensing agreement could only be understood in the context of the parties’ prior course of dealing, which permitted two copies of the software to be installed on aircraft carriers. The board, however, reasoned that it did not have to consider the parties’ course of dealing where the plain language of the contract was clear. Here, the licensing agreement explicitly stated that licenses provided to the Navy were only for the number of servers identified in an attached Licensing Matrix. The Matrix, in turn, only permitted use of the software at one server at each of several specified locations. The terms of the agreement did not include an exception for aircraft carriers, and the Navy had not shown that the parties had any other agreement that allowed for the use of two copies on aircraft carriers. The Navy breached the licensing agreement by continuing to use the unauthorized copies

Nevertheless, the Navy argued that because ABB’s predecessor had failed to protest the multiple installations on aircraft carriers, ABB was precluded from alleging breach under the doctrine of equitable estoppel. But the board found that equitable estoppel only applies when the party to be estopped knew the true facts but allowed the other party to continue to perform under a misapprehension. In this case, the board found, there was no evidence that ABB had known of the extra copies on the aircraft carriers. The Navy had not proven that ABB was silent while knowing that the software had been installed twice on aircraft carriers, nor that this silence somehow mislead the Navy into believing that ABB would not assert its contract rights in the future. The Navy’s equitable estoppel defense failed.

The board granted ABB’s motion for summary judgment and denied the Navy’s cross-motion.

ABB is represented by Jeanne A. Anderson and Jeffrey M. Young. The government is represented by Ronald J. Borro, Henry Karp, and Rachel J. Goldstein of the U.S. Department of the Navy.

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