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Weakness Reasonable, but Agency’s Justification Irrational; FAA ODRA 18-ODRA-00844, Protest of Aquila Fitness Consulting Systems Ltd.

Protest challenging the technical evaluation is sustained in part, where the agency lacked a rational basis for weaknesses assigned to the protester’s proposal. In one area, ODRA found the protester addressed the factor the agency concluded was absent. In a second area, while the protester’s proposal failed to address a required office task, the assessed weakness concluded that the error reflected a broad misunderstanding of funding structure, FAA laws, regulations, and policies, which ODRA considered irrational.

Aquila Fitness Consulting Systems Ltd. protested the Federal Aviation Administration’s award of a contract to operate a fitness center to Strive Well-Being Inc., challenging the evaluation of its proposal and arguing the agency treated offerors unequally.

First Aquila challenged a weakness regarding a solicitation requirement that the contractor collect fees from agency employees, make copies of checks, and deposit them into an FAA account. The evaluators concluded that Aquila did not expressly state it would comply with this requirement. However, ODRA found that the proposal affirmatively promised that funds would be deposited. While the agency evaluators found the language vague, ODRA disagreed, noting that the solicitation instructions directed offerors to be concise. Further, ODRA found the awardee had addressed the requirement in a similar manner, but was not assessed a weakness.

Next, Aquila challenged the agency’s finding that it had not proposed a process for reporting membership and locker fees, revenue, and check collections. While ODRA found that the proposal did not expressly state how Aquila would manage this process, it also found the weakness irrational. While ODRA found that Aquila’s proposal failed to acknowledge an office task, the weakness stated the proposal reflected a broad misunderstanding of funding structure, FAA laws, regulations, and polices, which ODRA considered a leap.

ODRA also found the agency evaluators failed to explain their concerns about the cost of software the protester proposed to use. Further, the agency changed its rationale for this weakness during the protest proceedings, which ODRA discounted as an unreasonable post hoc explanation.

However, ODRA found that other weaknesses involving reporting and member recruitment efforts were supported by the record and a reasonable reading of the proposal. ODRA also found the agency reasonably assigned the proposal a weakness for failing to segregate proposed resumes into the two labor categories required by the solicitation, and a second weakness for proposing an individual who did not meet all the solicitation requirements.

ODRA also denied grounds arguing the agency failed to assess certain strengths to Aquila’s key personnel approach, finding that the agency had erred in assigning a rating that was higher than warranted, given the absence of strengths under this factor. Because addressing the alleged missing strengths would not raise the overall rating higher than its already inflated level, ODRA found any errors were not prejudicial.

Next, the protester argued the awardee had not performed work similar in size and scope to the requirement, and therefore did not warrant its past performance rating. ODRA rejected the argument about the size of the contracts, but considered the protester’s argument about the scope of the awardee’s past work. Aquila argued the awardee’s references failed to demonstrate experience with the administrative tasks of operating a fitness center, whereas its own addressed these requirements. According to Aquila, Strive’s failure to demonstrate experience with half of the requirements rendered its “excellent” rating unreasonable.

The agency argued that the past performance evaluation did not involve a comparison to a checklist of tasks in the SOW. Rather, the evaluators defined scope as experience with the day-to-day management and operation of a fitness center, and providing of group fitness instruction. ODRA agreed, finding the solicitation defined relevant scope as “similar” to the requirement, not identical. Based on that standard, ODRA found the past performance evaluation reasonable.

Based on its conclusion that several of the weaknesses assessed to Aquila’s proposal lacked a rational basis, ODRA concluded that Aquila had demonstrated it had a reasonable chance for award, absent the errors. Of nine proposals submitted in response to the solicitation, Aquila’s was rated third highest technically. The two higher-rated proposals—including the awardee’s—were both higher priced. Because addressing the errors in the evaluation would result in Aquila achieving a higher technical rating, and would narrow the point difference between its proposal and the awardee’s, ODRA considered it possible the agency might have reached a different best value tradeoff decision. ODRA recommended the agency reassess proposals and render a new award decision.

Aquila Fitness Consulting Systems Ltd. is represented by Alexander J. Brittin of Brittin Law Group, PLLC. Strive Well-Being Inc. is represented by Sanjay R. Sangani, Director of Operations. The government is represented by William J. Selinger and Diana Truong, FAA Headquarters

Appeal Granted When Reasonable Inquiry Unlikely to Have Identified Utility Lines in Work Area; ASBCA No. 61816, Appeal of GSI & Whitesell-Green JV

Appeal of the agency’s denial of a claim for compensation for additional work under a construction contract is granted, where a reasonable review during a site visit was not likely to have uncovered a partially hidden gas line leading through the building to be demolished into an adjacent facility. While the agency disclaimed the accuracy of its information about the location of utilities in the area, the board held this statement alone was insufficient to shift the risk to the contractor.

GSI & Whitesell-Green JV appealed the contracting officer’s denial of its claim for additional compensation under its contract for building renovations.

The Air Force awarded the appellant a contract to renovate an aircraft hangar, which required the contractor to demolish the building down to the frame and foundation and to design and rebuild it with a new foam fire suppression system.

The solicitation described the location of the existing utilities, but the Air Force disclaimed the accuracy of this information. The contract stated that the government provided information to the best of its knowledge, but cautioned that vendors would be required to verify all existing utility locations prior to starting work.

After demolition began, the appellant identified a short section of pipe that exited the wall at the corner of a small mechanical room attached to the hangar, which led into an adjacent building. This pipe was a gas line that began at the gas meter, ran through the hangar to be demolished, and into the adjacent building. The line provided gas to both buildings.

The bid documents/contract did not show a gas line or other utility in this location. The appellant explained that it failed to notice the gas line due to the size of the pipe, the fact that the pipe had been painted the same color as the rest of the two buildings, and the fact that the pipe was a different color from the gas meter. There was no indication in the record that the Air Force knew that the pipe was a gas line. The board concluded that the only way for a bidder to have ascertained whether it was a gas line would have been to cut a piece out of the wall, which would have been impracticable on a short site visit and almost certainly would have been barred by the Air Force.

GSI-WG agreed that the contract required it to demolish the line and cap it. However, the appellant objected to the CO’s request that it provide temporary gas service to the adjacent building and then relocate the gas meter to provide permanent service to that building. Nonetheless, GSI-WG performed the work and later submitted a claim, which was denied. This appeal followed.

First, the board considered whether the agency could escape liability by disclaiming the accuracy of its information about the location of utilities and requiring the contractor to verify them. The board acknowledged that a contract may shift a specific risk to a contractor, but explained that an agency may not transfer risk by merely asserting that information provided may be inaccurate.

The board held that the situation fell into the latter category. While the Air Force clearly put GSI-WG on notice that the information provided pre-bid might not accurately identify all utilities, it did not go beyond that. The contract did not clearly convey that the Air Force intended the disclaimers to override the Differing Site Conditions and Changes clauses with respect to undisclosed utilities. Thus, an offeror would not have been aware that, if it found an unidentified utility line that necessitated work on the gas supply to a different building, then it would bear the financial consequences. Absent clear language to this effect, the board declined to interpret the disclaimer clauses in the agency’s favor.

However, the board noted that both the gas meter and pipe were visible on the site visit, and therefore considered whether a reasonable contractor would have noticed the pipe and discerned it connected to an undisclosed utility.

In support of its position, the appellant noted that none of the 28 site visit attendees asked the Air Force about the pipe, even though they collectively submitted 146 questions about the work. According to the appellant, had any of the attendees identified the pipe as a potential issue, some sort of query would have been submitted. While this argument is speculative, the board agreed that it suggested that none of the other visitors were concerned about the pipe.

The appellant also noted the hangar to be demolished was a nearly half-acre in size and was filled with miles of struts, supports, pipes, conduits, ducts, conductors and hoses, all of which crisscrossed throughout the structure. Further, Bidders had only a few hours to inspect the entire facility, inside and out. The court agreed that finding this pipe during a relatively short site visit would have been like finding a needle in a haystack. While an observant person might have spotted the pipe, that person would have also needed to discern that the pipe was a gas line, even though it was painted a different color than the gas meter and while both other contractors and base personnel went about their duties. The board found the appellant convincingly demonstrated that identifying the pipe as a gas line went beyond the bounds of a reasonable site visit inquiry.

The board granted the appeal.

GSI & Whitesell-Green JV is represented by Josh Owens, President. The government is represented by Jeffrey P. Hildebrant, Air Force Deputy Chief Trial Attorney, and Lieutenant Colonel Byron G. Shibata, USAF, Trial Attorney.

Area Office Gave Appellant Clear Notice That Affiliation Was On the Table: SBA No. SIZ-5985, Size Appeal of Tesecon Inc.

Appeal of the area office’s size determination is denied, where the appellant was given clear notice the area office was considering whether it was affiliated with other firms through the owner’s family relationships and common investments, and yet failed to make any rebuttal. OHA also noted the appellant offered no rebuttal evidence during the appeal and found it difficult to see how the appellant could offer a rebuttal, given the clear ownership and business connections among the firms found to be affiliated.

Tesecon Inc. appealed the area office’s determination that it is not an eligible small business for the procurement at issue.

The U.S. Army Corps of Engineers issued a solicitation for construction services as a small business set-aside under NAICS code 236220, with a $36.5 million annual receipts size standard. After Tesecon was identified as the apparent awardee, Hollon Contracting filed a size protests alleging that Tesecon is affiliated with multiple other firms, due to shared ownership and offices. The protest specifically mentioned Richard Miller’s ownership of these companies.

In response to the protest, Tesecon identified its alleged affiliates. During the course of the size determination, the area office learned that Richard Miller, Tesecon’s owner, was involved with other businesses with his brothers, and investigated the relationships of these businesses.

The area office concluded that Tesecon, by itself, is a small business. However, the area office found that Richard Miller is a fifty percent owner in the company that is Tesecon’s landlord, which is also the former landlord of a company owned by Miller’s brother. Richard Miller and another individual each own fifty percent of another firm. The brothers are also involved in three related companies as owners and officers. Further, Tesecon has contractual relationships with some of these firms.

The area office concluded the brothers share an identity of interest based on their family relationship and may be treated as one party, with their interests aggregated. The area office found the brothers had the ability to control several of their shared businesses and that there are financial relationships among the businesses. The area office gave Tesecon the opportunity to rebut these assumptions, which it declined to do.

Because the combined average annual receipts of Tesecon and its affiliates, less inter-affiliate transactions, exceeded the $36.5 million size standard, the area office determined the appellant is not an eligible small business for the procurement. This appeal followed.

First, Tesecon argued the area office failed to provide the opportunity to rebut the presumption of an identity of interest among the Millers due to their family relationship. While the area office inquired about their relationship, the appellant argued there is nothing in the record showing the area office presumed the Millers were affiliated based upon a shared identity of interest.

Tesecon also complained the area office found it was affiliated with three other firms based on common management, but without actually finding that the officers in question could control the firms. According to Tesecon, the area office is obligated to determine if the officers can actually control the company before making a finding of affiliation. However, the area office did not examine whether Richard Miller had the power to control any of the other firms.

Tesecon also challenged the area office’s calculation of the companies’ receipts, arguing that it failed to deduct intercompany transactions and failed to deduct amounts collected by one firm on behalf of other entities.

However, OHA found it clear that the Miller brothers were involved in businesses together and hold common investments. Given their common involvement in several interests, OHA found it clear that they would act in concert in pursuit of their investments. Thus, they were properly treated as one party, with their interests aggregated, under the identity of interest rule, on two grounds— familial relationships and common investments.

OHA found the area office had informed Tesecon that its size had been challenged and that it was alleged to be affiliated with other companies. OHA found it clear from the area office’s inquiries about the relationship between the brothers, their investments, and the intercompany transactions, that it was inquiring about affiliation. Because Tesecon had counsel, OHA found those issues were clearly communicated.

Further, the connections between the brothers and their business interests is so clear, OHA found it difficult to see what rebuttal could have been made. OHA also noted Tesecon did not offer any evidence that could be used to rebut the presumption. Finally, OHA found the area office did account for intercompany transactions and payments collected for other entities when calculating the combined companies’ receipts.

Tesecon Inc. is represented by Megan C. Connor, Julia Di Vito, and Meghan F. Leemon of PilieroMazza PLLC.

Protester Failed to Show It Could Obtain Land Use Agreement with Iraqi Government to Provide Services; GAO B-417223.2, Sallyport Global Holdings

Protest challenging agency’s decision to meet its requirements through the award of a sole-source contract is denied, where the awardee held an exclusive land use agreement with the government of Iraq and therefore was the only responsible source for the services. Regardless of the exclusivity of the awardee’s arrangement, GAO also noted the protester provided no evidence it could obtain a land use agreement with the Iraqi government, and therefore would not have been a responsible source for the services, even if the agency had held a full and open competition.

Sallyport Global Holdings protested the Army’s award of a sole-source contract for base life support services at Camp Taji, Iraq, to SOS International LLC, arguing that the agency’s sole-source rationale is unreasonable and that the award should be made under full and open competition.

The agency based its decision on its understanding that SOS had an exclusive land use agreement with the government of Iraq, and therefore was the only responsible source for the services.

In its protest, Sallyport argued that it could obtain a land use agreement with the Iraqi government that would enable it to perform the requirement, and therefore the agency’s assumption that there was only one responsible source was erroneous.

The Army explained that while coalition forces controlled and operated Camp Taji green zone after the invasion of Iraq, the Iraqi government had regained sovereign control over this area in connection with the draw down of military forces. At that point, the Iraqi government contracted with western firms to continue to provide BLS services at the Camp Taji green zone, and in that connection, executed an exclusive LUA with SOS to ensure continuity of those services. The Army explained that the current agreement between SOS and the Iraqi government was reaffirmed on March 14, 2018, and is effective for three years. The agreement also prevents other firms from using the facilities and infrastructure at the Camp Taji green zone.

Given the agency’s evidence of the exclusivity arrangement between SOS and the Iraqi government, GAO found it reasonable for the Army to determine that SOS would be the only responsible source for the required services.

Sallyport challenged certain agency documents supporting the Army’s original justification and approval as “post hoc” explanations for the sole-source determination, but GAO found this argument misdirected. The agency provided letters from the U.S. Embassy in Iraq documenting the exclusivity agreement between Iraq and SOS, which Sallyport argued should be disregarded, as they were submitted during the heat of litigation.

But GAO explained that, rather than establishing a new rationale for the sole source J&A, the letters supported the veracity of the underlying assumptions of the J&A, that SOS had an exclusive land use agreement that precluded the Army from holding a competition for the services. In addition, the letter was prepared by Department of State officials that are not a party to the litigation; it follows that the letter was not “prepared in the heat of litigation” as GAO uses the concept in its cases.

Finally, GAO noted that Sallyport produced no evidence that it could secure its own land use agreement with the Iraqi government. To the extent Sallyport challenged the procedures the agency used to create the J&A, GAO found the protester was not prejudiced, because absent a land use agreement with the Iraqi government, Sallyport was not a responsible source for the services.

Sallyport Global Holdings is represented by Kara L. Daniels and Sonia Tabriz of Arnold & Porter Kaye Scholer, LLP. SOS International LLC is represented by Bradley D. Wine, Sandeep N. Nandivada, and Caitlin A. Crujido of Morrison & Foerster LLP. The government is represented by Wade L. Brown, Department of the Army. GAO attorneys Scott H. Riback and Tania Calhoun participated in the preparation of the decision.

Protester Convinces DoD to Back Down on Use of LPTA for Cyber Procurement; GAO B-417392.1, Inserso Corporation

Inserso Corporation challenged the Air Force’s decision to use a lowest-price, technically acceptable approach in a solicitation for IT and cybersecurity services, resulting in the agency’s withdrawal of the solicitation and announcement that it would resolicit the requirement using tradeoff evaluation criteria.

Inserso argued that Section 813(c) of the FY2017 NDAA, as amended by Section 822 of the FY2018 NDAA, provided that DoD should avoid the use of LPTA for acquisitions of IT or cybersecurity services. In addition, Inserso argued that the performance standards for this procurement were broad and open-ended, and therefore the use of LPTA was precluded by DoD’s source selection procedures.

Prior to the filing of the protest, the agency asserted that Section 813(b) of the FY2018 NDAA was not yet implemented in the DFARS, but Inserso argued that all other subparagraphs in Section 813 became effective when the bill was signed into law. Thus, the language obligating DoD to limit the use of LPTA procedures for certain procurements is valid and enforceable.

Because the agency disagreed with this interpretation, Inserso therefore argued the agency did not meaningfully consider how to avoid the use of LPTA procedures to the maximum extent practicable, as required by the language in the NDAA.

Before GAO could reach a decision on the merits, the agency announced it would take corrective action by redrafting the solicitation using tradeoff evaluation criteria.

Inserso Corporation is represented by Richard Rector and Daniel Cook, DLA Piper.

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