Protest alleging that agency should have cancelled the solicitation due changed requirements is denied. After receiving proposals, the agency issued an amendment to the only offeror in the competitive range, asking the offer to add costs to its proposal to account for the impact of COVID-19. The protester argued that that this amendment reflected a change in the agency’s requirement that necessitated a cancellation of the solicitation. GAO, however, found that the effects of COVID-19 on offerors’ priced did not amount to a material change in the agency’s requirements. The agency was not required to cancel the solicitation to account for the pandemic. The protester raised other challenges to the evaluation, but GAO found those arguments untimely.
The Department of Veterans Affairs issued a solicitation for the construction and lease of an outpatient clinic. Progress for Bakersfield Veterans, LLC (PBV) submitted three offers in response to the solicitation. The VA eliminated PBV’s three offers from the competitive range.
The elimination of PBV left one offeror, SASD Development Group, in the competitive range. The VA issued a solicitation amendment to SASD asking it to add costs to its proposal to cover additional cleaning required due to the COVID-19 pandemic. SASD submitted a revised proposal. The VA awarded the contract to SASD. PBV protested.
Under the FAR, an agency is required to amend a solicitation when its requirement change. Additionally, if an agency amends a solicitation after receiving offerors, and the amendment is so substantial so as to exceed what prospective offerors could have reasonably anticipated, the agency should cancel the solicitation and issue a new one. Applying these principles, PBV argued that the COVID-19 pandemic changed the VA’s requirements, so the agency should have cancelled the solicitation to reflect the impact of the pandemic on price.
GAO rejected this argument. The VA did not change its requirements or terms of the solicitation in any material way. While the global pandemic resulted in price increase for the SASD, the effects of COVID-19 on the awardee’s price did not amount to a material change in the agency’s requirements. The VA was not required to cancel and resolicit to account for the pandemic.
The solicitation stated that the VA could only issue a lease if the leased property was considered an operating lease under and OMB Circular A-11. That circular defined an operating lease as one where the ent due over the lifetime of the lease does not exceed 90 percent of the fair market value of the property. The VA had found that SASD price was below the 90 percent threshold. But PBV argued that in considering SASD’s price, the VA had excluded certain property enhancements that should have been included in the rent. Had these items been included in SASD’s price, its lease may not have exceeded the 90 percent, operational threshold.
GAO found this argument untimely. The solicitation specifically included a list of the items that the VA would exclude from the rental rate. All the items PBV complained about were on this list. If PBV objected to the exclusion of these items in the rent calculation, it should have challenged the terms of the solicitation before the proposal deadline.
PBV filed a supplemental protest alleging that the VA had improperly waived a requirement that a property be free of use restrictions. PBV contended that the VA knew prior to award that SASC’s property not yet obtained zoning and environmental approval from the local government.
But GAO also found that this argument was untimely. PBV knew before it filed its initial protest that SASD’s property was not free of zoning use restrictions. In fact, weeks before the award decision, PBV had filed suit against the City of Bakersfield challenging its decision to allow SASD to shortcut the environmental review process. If PBV believed the agency had erred in waiving the zoning requirement, it should have raised that issue in the initial protest, not in a supplemental protest.
PBV is represented by Elizabeth Jochum, Zachary Prince, and Nora Brent of Smith Pachter McWhorter PLC. The agency is represented by Kristin Grotecloss and Kathryn Downey of the Department of Veterans Affairs. GAO attorneys Mary G. Curcio and John Sorrenti participated in the preparation of the decision.
