Agency Attempted Clarifications But Ended Up Conducting Unequal Discussions; DevTech Systems, Inc., GAO B-418273.3, B-418273.4

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Protest alleging unequal discussions and objecting to cost realism analysis is sustained. The protester alleged that a “request for clarification” sent to the awardee amounted to discussions, and that the failure to hold similar exchanges with the protester constituted unequal discussions. GAO agreed. The exchanges with the awardee constituted discussions because they permitted the company to rehabilitee an area of its proposal that did not comply with the solicitation. Once the agency allowed the awardee to fix potions of its proposal, it had to give the protester the same opportunity. The protester also challenged the agency’s cost realism evaluation. GAO sustained, finding the agency had failed to adequately explain cost adjustments made to offerors’ proposals.

The U.S. Agency for International Development (USAID) issued a solicitation to holders of a Public Financial Management IDIQ contract. The solicitation sought proposals to provide financial management in Indo-Pacific countries.

USAID received proposals from four offerors, including DevTech Systems, Inc. and International Development Group Advisory Services, LLC (IDG). USAID selected IDG for award. DevTech protested. In response to the protest, USAID took corrective action to reevaluate proposals. Following a reevaluation, USAID once again selected IDG for award. DevTech protested again, USAID took a second corrective to reevaluate proposals.

After the second reevaluation, USAID again selected IDG, fining that the company had a higher-rated and lower-cost proposal than DevTech. DevTech filed a third protest.

During the first corrective action, DevTech had asked offeror to confirm that their key personnel were still available. DevTech argued that this request constituted discussions. Given that the agency was holding discussions, DevTech contended that the USAID should have advised the company of other deficiencies and significant weaknesses in its proposal. Because USAID did not advise DevTech about other deficiencies or weaknesses, DevTech contended that the agency did not conduct meaningful discussions.

GAO agreed that when an agency permits offerors to update key personnel during corrective action, those requests are discussions. But an agency can also limit the scope of proposal revisions to key personnel. Here USAID reasonably limited revisions to key personnel. The request did not otherwise allow for other revisions. Thus, the agency was not required to advise DevTech about deficiencies or weaknesses.

Next, DevTech claimed USAID held unequal discussions. The solicitation contained a limit on the unburdened consulting rates allowable under the task order. The rate ceiling applied to both prime and subcontractors. IDG proposed subcontractor rates that exceeded the limit. During the first corrective action, the contracting officer sent IDG a “request for clarification” asking the company to confirm that its subcontractor rates would comply with limitation on rates on the solicitation. In response, IDG stated it subcontractors would comply with rate ceiling. DevTech argued that although the exchange with IDG was labeled as a clarification, it actually amounted to discussions. And because DevTech was not given a similar opportunity to revise its proposal, USAID effectively held unequal discussions.

GAO agreed with DevTech. The exchanges with IDG constituted discussions because they permitted the company to address and rehabilitee an area of its proposal that did not comply with the solicitation. IDG’s response to USAID’s request assured that its subcontractors would comply with limits on consulting rates despite the content of its proposal. Because USAID conducted discussions with IDG, it was obligated to provide DevTech with an opportunity for discussions.

USAID argued that even if its exchanges with IDG constituted discussion, DevTech had not been prejudiced because its protest also included rates that exceeded the limit, and the agency had ultimately treated offerors equally by adjusting all offerors’ rates. But GAO found the adjustment irrelevant. Regardless of how the agency adjusted priced, the fact remained USAID requested information from IDG that was not included in its proposal. Had USAID done the same with DevTech, the company could have material improved its prospects for award.

DevTech further complained that USAID’s final and technical cost evaluations were flawed because they differed significantly from the prior two evaluations. GAO, however, didn’t see a problem. The fact that a reevaluation after corrective action varies from the original evaluation does not constitute evidence that the reevaluation was unreasonable.

DevTech objected to the USAID’s cost realism analysis. DevTech challenged the upward adjustment of its proposed costs. GAO found that the USDAID had failed to explain the basis for the adjustments.

DevTech also challenged the evaluation of IDG’s costs arguing that USAID did not adjust its costs enough to cover the level of effort promised for project management. Indeed, DevTech had proposed a level of effort for project management that was ten times greater than IDG’s. GAO found that the record did not support USAID’s failure to further adjust IDG’s costs.

DevTech is represented by David B. Dixon, Robert C. Starling, and Toghrul Shukurlu of Pillsbury Winthrop Shaw Pittman LLP. The intervenor, IDG, is represented by C. Peter Dungan and Holly Drumheller Butler of Miles & Stockbridge P.C. The agency is represented by John B. Alumbaugh and Eugene J. Benick of the USAID. GAO attorneys Jonathan L. Kang and Laura Eyester participated in the preparation of the decision.

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