Despite Agency’s Provocative Metaphysical Distinction Between a Contractor-Subcontractor Relationship and the Bond Between Subsidiaries, Provision that Precluded Subcontractor from Satisfying Certification Requirement Was Unduly Restrictive; Booz Allen Hamilton, Inc., GAO B-418449

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Protest challenging the terms of a solicitation for a task order is sustained. The solicitation required that the prime contractor be an Independent Public Accountant (IPA). GAO found this requirement unduly restrictive. The requirement was based on little more than the agency’s unsubstantiated belief that IPA’s provide high quality work. Additionally, despite the agency’s intriguing views on the bond and culture of subcontractors vs. corporate subsidiaries, GAO found the agency had no good reason to require that only prime contractors could satisfy the IPA requirement. GAO also found that the IPA requirement for the task order exceeded the scope for the underlying IDIQ contract.

The Marine Corps issued an RFQ to holders of the Navy’s Financial Improvement and Audit Readiness IDIQ contract. The Marines’ RFQ contemplated award of a task order for audit services. The RFQ required that the prime contractor or its affiliate be an Independent Public Accountant (IPA) certified by the American Institute of Certified Public Accountants.

Booz Allen Hamilton (BAH) asked the Marines to define the term affiliate for purposes of being an IPA and whether the term included a subcontractor. The Corps stated that the term did not include subcontractor, so the IPA requirement could not be satisfied by a subcontractor. BAH filed a protest, alleging that the IPA requirement was unduly restrictive.

In response to the protest, the Marines argued that the IPA requirement was necessary because and IPA would provide the agency with more credible audit advice. GAO was not persuaded, noting that the IPA requirement appeared to be based on little more than the program manager’s belief that an IPA will provide high quality work. The agency, however, had provided no empirical evidence was to why an IPA was uniquely qualified to perform the audit services. It does not follow that an IPA will provide high quality work solely by virtue of being an IPA.

BAH also objected the Marines’ interepretation of the IPA provision, which probhibited offers from fulfilling the requirement with a subcontractor. The Marines argued this limitation was necessary because the relationship between a prime and subcontractor, which is a partnership for a specific project, is different from the “bond between true subsidiaries,” which lends itself to the culture of the organization. GAO found that the agency’s unsupported views on the bond and culture of subsidiary relationships did not demonstrate why a subcontractor could not fulfill the IPA requirement.

BAH also claimed that the IPA requirement was invalid because it exceeded the scope of the underlying IDIQ contract. GAO agreed. The IDIQ contract only required that firms have comprehensive knowledge of the audit process. While the IDIQ made general references to an IPA, GAO found that these references provided background and context for the work to be performed; they did not notify contract holders that future task orders would be limited to contractors there were themselves IPAs.

BAH is represented by Gary J. Campbell, G. Matthew Koehl, Nathaniel J. Greeson, and Lidiya Kurin of Womble Bond Dickinson (US), LLP. The agency is represented by Ellen B. Clark of the Marine Corps. GAO attorneys Lois Hanshaw and Evan C. Williams participated in the preparation of the decision.

GAO - Booz Allen Hamilton