Protest alleging that the agency failed to properly investigate a violation of the Procurement Integrity Act is sustained. The protester alleged the awardee had improperly obtained access to the protester’s pricing information. The awardee claimed that it had been able to divine the pricing information from other sources. The court found that the awardee’s possession of this knowledge was suspicious enough to warrant an investigation. While it was possible for the awardee to have obtained the information from legitimate sources, the actual source of the information had not been established. The court remanded to the agency to conduct a PIA investigation.
Background
The Navy awarded a blanket purchase agreement for Microsoft software licenses to Insight Public Sector, Inc. After learning of the award, an unsuccessful offeror, Dell Marketing, emailed the Navy raising a concern about the price evaluation. Dell stated that Insight may have priced some of its CLINs with promotional prices for the Microsoft licenses that were no longer available.
In response to Dell’s email, the Navy suspended the award to Insight to reevaluate pricing. The Navy allowed Dell and Insight to submit revised bids. Dell submitted a bid that was $87 million less than Insight’s. The Navy awarded Dell the BPA.
Insight filed a protest with GAO. The agency record from the GAO protest revealed that Dell had contacted the Navy about Insight’s promotional pricing. Before GAO resolved the protest, Insight filed suit with the Court of Federal Claims, alleging that the Navy had failed to properly investigate a potential violation of the Procurement Integrity Act. Insight contended there was no way Dell could have known about the alleged promotional pricing without access to bid proposal information.
Legal Analysis
- Elements of PIA Violation – Proving a PIA violation requires showing that (1) a government actor, (2) knowingly disclosed proposal or source selection information, (3) before award. Agencies must investigate a reported PIA violation and determine whether it will impact the award.
- Insight Timely Raised Potential Violation – The government argued that it was not obligated to investigate a potential violation because Insight had not timely notified the government of a violation. A party must notify the government within 14 days of discovering a violation. The government argued Insight should have learned of the violation when the Navy suspended the award to reevaluate. The court was not persuaded. When the Navy took corrective action, Insight was not aware that Dell had emailed the agency about the promotional pricing. Moreover, there was nothing in the Navy’s corrective action that indicated Dell was the source of the pricing issue. Insight only learned of the potential violation when it received the agency report in the GAO protest. Once Insight learned of the violation, it raised the issue in a timely manner.
- Insight Sufficiently Alleged a Violation – The court found that Insight had sufficiently alleged the possibility that the Navy disclosed proposal information. The government attempted to argue that Dell could have learned of the promotional pricing without receiving proposal information. The court reasoned that while it was plausible that Dell could have learned of the pricing without proposal information, those contentions were speculative, and they did not foreclose the possibility that a violation occurred.
- The Alleged Violation Required an Investigation – Citing another case, Jacobs Tech. Inc. v. United States, 100 Fed. Cl. 198 (2011), the government argued that PIA investigation was unnecessary. In Jacobs, the court had found an investigation was not required because the awardee had merely made an educated guess about the agency’s needs based on its experience as incumbent contractor, not because it had access to source selection information. But Jacobs found no violation because the awardee had obtained data while working for the agency. Here, Dell had not obtained data as incumbent. What’s more, the information it possessed concerned a competitor’s pricing, not the agency’s needs. The difference warranted an investigation in this case.
Insight is represented by Kyle R. Jefcoat, David R. Hazelton, and Julia A.C. Lippman of Latham & Watkins LLP. The intervenor, Dell, is represented by Craig A. Holman, Amanda J. Sherwood, and Aime JH Joo of Arnold & Porter Kaye Scholer LLP. The government is represented by William P. Rayel, Brian M. Boynton, Martin F. Hockey, Jr., and Douglas K. Mickle of the Department of Justice as well as by Tracey Ferguson of the Naval Information Warfare Center and Stephen T. O’Neal of the General Services Administration.
