Protest alleging a consultant conflict of interest, misleading discussions, and a flawed price realism evaluation is dismissed in part and denied in part. The protester alleged the awardee had retained a former agency official as a consultant, which gave it an unfair competitive advantage. But the protester knew of this consultant before the proposal deadline and yet only raised the issue as a supplemental protest after submission of the agency report. GAO found that the protester had waived this argument by waiting too long to raise it. The protester further argued the agency conducted misleading discussion that forced the protester to upwardly adjust its price. GAO found there was nothing misleading or coercive about the discussions, and the protester had willingly raised its price. Finally, the protester alleged that the agency failed to properly evaluate the awardee’s unrealistically low labor rates. GAO found that there was either no error in the realism evaluation or that the protester had not been prejudiced by an error.
The Defense Information Systems Agency issued a solicitation seeking management operations for the Department of Defense Information Network/Defense Information System Network. Three offerors, including General Dynamics Information Technology and Leidos, Inc., submitted proposals. DISA found that Leidos’ and General Dynamics’ proposals were relatively equal under the most important technical/management factor. But Leidos’ price was $320 million, or 19 percent, lower than General Dynamics. DISA awarded the contract to Leidos. General Dynamics protested, alleging that Leidos had received an unfair competitive advantage and objecting to the conduct of discussions and the price evaluation.
General Dynamics alleged the agency failed to adequately investigate whether Leidos had an unfair competitive advantage from retaining a consultant who was a former DISA official.
GAO, however, found this protest argument untimely. General Dynamics knew Leidos had retained the former agency official before the proposal deadline. Indeed, General Dynamics had informed the agency of its concerns with the consultant two months before proposals were due. Additionally, after the notice of award, during its debriefing, General Dynamics asked DISA about the consultant and whether the agency had investigate the potential conflict. When General Dynamics filed its initial protest, it did not raise the consultant issue. It was only after the agency report that General Dynamics filed a supplemental protest raising the conflict issue for the first time.
General Dynamics attempted to argue that it was only after receiving the agency report that the company became aware of the lack of documentation concerning the consultant conflict. But GAO found this argument “too-cute-by-half.” Five days before the agency report, DISA had responded to General Dynamics request for documents, which did not include any documents related to the alleged consultant conflict. General Dynamics did not object to the lack of documents concerning the consultant. Rather, it appeared to GAO that General Dynamics was attempting to leverage the lack of documents in the agency report as evidence that DISA failed to properly investigate the alleged conflict. GAO refused to let General Dynamics recharacterize its protest with an argument the company knew about but failed to raise in the initial protest.
General Dynamics also claimed that DISA engaged in misleading discussions that forced the company to upwardly adjust its proposed labor rates.
GAO rejected this argument. During the first round of discussions, DISA notified General Dynamics that some of its rates were unrealistically low. In response, General Dynamics submitted additional information to substantiate its rates. DISA, however, was still not satisfied. At that point, General Dynamics elected to raise its rates.
GAO did not believe anything about this was misleading or coercive. If General Dynamics believed DISA was mistaken in not accepting it additional information after the first round of discussions, it could have offered additional information or asked the agency about its position. Instead, General Dynamics “welcomed” the opportunity to raise its rates. GAO reasoned that General Dynamics could not insist that its position was true, assent to the agency’s point of view, and then reverse itself during a protest to argue that the agency erred by not accepting the company’s initial position.
Next, General Dynamics challenged the price realism evaluation of Leidos’ proposal, arguing that DISA did not perform a meaningful analysis of the performance risk associated with Leidos’ proposal. But GAO found that Leidos’ arguments went nowhere.
For example, Leidos argued that DISA had misapplied the number of government estimated numbers to the offerors labor rates. Basically, DISA calculated a price by multiplying the estimate hours for each labor category by the offerors rates. DISA acknowledged that it made an error in the applying the estimated hours to the rates. But GAO found that Leidos had not been prejudiced by this error. Had the agency applied the correct estimates the difference between Leidos’ and General Dymanics’ prices would have been greater. Leidos’ price would have decreased and General Dynamics’ would have increased.
General Dynamics further contended that DISA bent over backwards to minimize the risk of Leidos’ low rates. But GAO found that evaluation reasonable. Using salary data from the Economic Research Institute, DISA found that some of Leidos’ rates were unrealistic. But the agency also considered other aspects of the Leidos’ proposal before concluding that the risk of Leidos’s low prices was minimal. General Dynamics simply disagreed with DISA’s conclusions.
General Dynamics claimed the realism evaluation was flawed because DISA failed to meaningfully consider Leidos’ low profit rate. But the record showed that DISA was aware of and reasonably considered Leidos’ profit rates. DISA raised this issue in discussions with Leidos and, based on Leidos’ response, reasonably concluded that the low profits did not present a significant performance risk.
Finally, General Dynamics argued that Leidos’ rates for the first two task orders were substantially below the historical rates in the IGCE and thus were inadequate to retain the workforce. GAO, however, found that DISA reasonably determined the IGCE was not a reliable source to be used in the evaluation. Thus, the fact that Leidos’ rates were below the IGCE was not necessarily a problem. What’s more Leidos’ rates were based on the company’s actual salary data. Thus, regardless of whether they were above the threshold rates used in the agency evaluation, those happened to be the rates that Leidos paid and would pay to its employees.
General Dynamics is represented by Michael F. Mason, Stacy M. Hadeka, Christine A. Reynolds, and Adilene Rosales of Hogan Lovells US LLP as well as Noah B. Bleicher, Carla J. Weiss, Marc A. Van Allen, and Lindsay C. Harrison of Jenner & Block LLP. The intervenor, Leidos, is represented by James J. McCullough, Michael J. Anstett, and Katherine L. St. Romain, and Fried, Frank, Harris of Shriver & Jacobson LLP as well as J. Scott Hommer, III, Rebecca E. Pearson, Emily A. Unnasch, Christopher G. Griesedieck, and Taylor A. Hillman of Venable LLP. The agency is represented by Colleen A. Eagan and Anthony J. Balestreri, Defense Information Systems Agency. GAO attorneys Louis A. Chiarella and Peter H. Tran, participated in the preparation of the decision.
