Protest alleging agency failed to consider impact of a corporate transaction is denied. Before award, an offeror sold one of its divisions to another company. The agency awarded the contract to the successor company. The protester claimed the agency had not properly considered the transaction. GAO disagreed, finding the agency was well aware of the transaction and had properly accounted for it. The protester contended the acquiring company was not a proper successor because it had not acquired rights to the predecessor’s IDIQ contract. But GAO found a company can transfer rights in a proposal without having to novate an underlying IDIQ contract.
Background
The Navy awarded a task order for professional support services to Alion Science and Technology Corporation. An unsuccessful offeror, ICI Services Corporation, protested. ICI alleged that Alion had sold its Naval Systems Business division to another company, Serco, Inc., and that the Navy failed to consider the impact of this sale when evaluating proposals.
In response to the protest, the Navy took corrective action. The Navy decided to exclude Alion, but Alion protested. The Navy reinstated Alion and asked for final proposals. Serco, as successor-in-interest to Alion, submitted a final proposal. The Navy awarded the task order to Serco.
ICI filed another protest. ICI contended the Navy had not properly evaluated Serco’s eligibility for award as a successor to Alion. ICI also objected to the Navy’s cost realism evaluation, and it alleged Serco had a conflict of interest.
Legal Analysis
- Navy Properly Assessed Impact of Corporate Transaction — In considering an agency’s assessment of a corporate transaction, GAO looks to whether the agency was aware of the transaction and the certainty of the transaction. Here, the Navy was aware of the transaction and fully considered it as part of the evaluation. Moreover, the evaluation was certain; indeed, it was completed before the award decision. Alion was entitled to assign its proposal to Serco.
- Novation of IDIQ Contract Was Unnecessary — ICI contended Serco was not a successor to Alion because Serco had not acquired rights in Alion’s underlying IDIQ contract. GAO found this argument conflated contact novation with assignment of a proposal. The government may novate a contract after a corporate transaction. But an assignment, not a novation, is appropriate when a corporate transaction merely transfers a proposal. A novation was not required for Serco to be a successor to Alion’s proposal.
- Alleged Error in Cost Realism Evaluation Not Prejudicial — ICI alleged the Navy erred in upwardly adjusting the company’s proposed cost. But even without the adjustment, the Navy still would have selected Serco. Serco’s technical superiority would have still outweighed ICI’s cost advantage.
- No Hard Facts to Support Alleged OCI — ICI claimed Serco had an unfair access OCI from working as a subcontractor on another program. GAO found this argument was based on speculation. Mere suspicion of a conflict does not establish a conflict.
ICI is represented by Shomari B. Wade, Michael J. Gardner, Brett Castellat, and Christopher M. O’Brien of Greenberg Traurig, LLP. The intervenor, Serco, is represented by Daniel R. Forman, James G. Peyster, and Zachary H. Schroeder of Crowell & Moring, LLP. The agency is represented by Samantha Hogue and Sabrina Hay of the Navy. GAO attorneys Louis A. Chiarella and Peter H. Tran participated in the preparation of the decision.
