Protester Claims Mistaken Labor Rates Were a Mere Clerical Error, But GAO Finds Mistaken Rates Resulted in Noncompliant Proposal; Mission Essential, LLC, GAO B-418767

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Protest challenging offeror’s exclusion from the competition is denied. The protester mistakenly proposed labor rates below a minimum floor set by the solicitation. The agency rejected the protester’s proposal as noncompliant. The protester argued that the mistaken rates could have been addressed during a cost realism evaluation. But GAO found that mistaken rates made the proposal ineligible warranting rejection before any substantive evaluation. The protester also contended the mistaken rates were a clerical error that could have been remedied through clarifications. GAO, however, determined that the mistaken rates were a deficiency that could only be resolved through discussions, not clarifications.

The Army issues a solicitation seeking linguist services. The solicitation included a government furnished pricing model that specified the labor categories, number of positions, and the labor rates that offerors were supposed to propose. The model included a minimum labor rate, or floor rate, for each category. The solicitation provided that any offeror that proposed rates below the government’s floor rate would be ineligible for award. Before the proposal deadline, the Army issued an amendment that upwardly adjusted many of the floor rates in the pricing model.

Mission Essential, LLC submitted a proposal in response to the solicitation. Unfortunately, Mission’s Essential’s proposal used floor rates provided in the initial solicitation, not the amendment. While performing an initial compliance review of proposals, the Army discovered that Mission Essential had proposed rates below the government’s amended floor rates. Accordingly, the Army excluded Mission Essential’s proposal as non-compliant. Mission Essential protested.

Mission Essential alleged that the Army acted unreasonably by rejecting its proposal instead of addressing the apparent mistake in rates through a cost realism adjustment. Mission Essential alleged that the Army could have fixed the apparent mistake in the same manner it would have for any aspect of proposed costs deemed unrealistic—namely, by making a probable cost adjustment instead of simply eliminating the proposal from the competition altogether.

GAO found this argument misplaced. The solicitation expressly stated that the Army would perform a proposal compliance review before substantively evaluating proposals. Thus, any cost realism evaluation would have occurred after the initial compliance review. Because Mission Essential’s proposal never passed the initial review, the Army was not required to evaluate cost realism.  Moreover, Mission Essential’s mistake could not be remedied with a cost realism adjustment. The solicitation expressly stated that any offeror that proposed rates below the floor rates would be ineligible for award.

Next, Mission Essential argued that it made an unintentional mistake in proposing the low rates. The company contended that this minor mistake could have corrected through clarifications.

Contrary to Mission Essential’s argument, GAO fond that the noncompliant rates were not a minor error, but rather a deficiency. The solicitation expressly provided that proposing noncompliant rates would result in an ineligible proposal. That Mission Essential may have intended to propose rates that exceeded the floor rates did not negate the fact it actually proposed noncompliant rates. Moreover, GAO did not believe that Mission Essential’s mistake could be resolved through clarifications. To be eligible for award, Mission Essential’s proposal would have required submission of a new pricing model. Providing an offeror an opportunity to revise its proposal to cure a deficiency would result in disucssions, not clarifications. In any event, GAO concluded, even if it were to agree that Mission Essential’s mistake could be resolved through clarifications, an agency is permitted but not required to engage in clarifications. The FAR expresses no limitations on an agency’s discretion in seeking clarifications.

Finally, Mission Essential contended that the Army had improperly rejected its proposal without first determining whether rejection was in the government’s best interest as required by the solicitation.

GAO noted that the contemporaneous record did not demonstrate how or if the Army determined that the rejection of Mission Essential’s proposal was in the government’s best interest. Nevertheless, GAO noted that the contracting officer had sufficiently explained his reasoning during a subsequent hearing.  The contracting officer took into account various criteria when deciding to reject Mission Essential’s proposal, including the effect on competition, the fact that he already possessed a pool of qualified contractors able to perform the work, the time and impact of remedial action, and the fari treatment of similarly-situated offerors. GAO found nothing untoward in the contracting officer’s analysis.

Mission Essential is represented by Craig A. Holman and Michael E. Samuels of Arnold & Porter Kaye Scholer, LLP. The agency is represented by Major Abraham L .Young, Lieutenant Colonel Stephen M. Hernandez, Harry M. Parent, and Andrew J. Smith. GAO attorneys Louis A. Chiarella and Peter H. Tran participated in the preparation of the decision.

 

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