Subcontractor That Can Recommend Services That Prime Would Provide Has Unmitigated OCI; GAO B-416937, Safal Partners Inc.

Protest alleging the awardee’s subcontractor had an unmitigated impaired objectivity organizational conflict of interest is sustained, where the subcontractor held a separate contract under which it monitored grantees and recommended them for technical support services that it would be eligible to provide under the contract at issue. GAO denied a challenge to the technical evaluation, finding that some errors in the assessment of weaknesses did not prejudice the protester because the awardee’s quotation was higher rated in most technical factors and was significantly lower priced. GAO also denied a protest alleging the agency held improper discussions, finding that the agency was required to request a price reduction from all offerors, and that other requested changes to the price quotations did not constitute discussions because they merely addressed clerical errors.

Safal Partners Inc. protested the Department of Education’s award of a task order to support the Charter Schools Program to Manhattan Strategy Group, arguing that the evaluation was unreasonable, that the agency engaged in disparate discussions, and that the agency failed to properly investigate an organizational conflict of interest affecting the awardee.

First, the protester challenged four weaknesses assessed to its proposal under the technical approach factor, as well as its marginal rating under the quality and time commitment of proposed personnel factor.

The agency assigned Safal’s quotation a weakness for failing to plan an annual kick-off meeting. The agency argued the weakness was reasonable because the protester’s proposed management plan necessitated such a meeting. Safal argued the agency treated offerors unequally because the awardee’s quotation was not assigned a weakness for failing to contain a kick-off meeting, as required by the PWS. GAO agreed that the kick-off meeting was required and that the agency unreasonably failed to note the awardee had failed to plan one.

The protester’s quotation was assessed a second weakness for proposing an approach that heavily referenced consultation/direction with the department, which was contrary to the PWS requirement that technical assistance be driven primarily by the contractor. The agency pointed to language in the quotation stating that technical assistance would be “coordinated with [the agency] (e.g., via team calls with CSP staff) to minimize the iterations of review by [agency] staff.” However, GAO disagreed. GAO found the agency failed to support the weakness with any other detail. GAO considered the statement that support would be coordinate with the agency insufficient to show that the protester tried to shift responsibility to the agency.

GAO found the agency reasonably assessed a weakness regarding the number of planned meetings. While the protester alleged the agency took issue with its plan to hold meetings virtually, rather than in person, GAO found the record show the agency was concerned with the frequency of meetings, not the format.

Finally, the agency assessed Safal’s quotation a weakness for failing to explain Safal’s approach to providing high quality technical assistance. The agency found the quotation relied more upon Safal’s current performance rather than a full explanation of its approach to the requirement being procured. Safal argued that its quotation noted that the protester will add staff, apply its quality assurance procedures to expanding technical assistance requirements, review needs assessments and assistance plans, and select partners with subject matter expertise and experience. However, GAO agreed that the plan lacked sufficient detail.

Overall, GAO concluded that two of the four weaknesses were either disparately assessed or unsupported by the record.

Under the quality and time commitments of proposed personnel factor, the agency assigned a weakness because there was not enough information to ascertain if the vendor planned to have enough staff to effectively execute on specific tasks. The protester challenged this weakness, arguing that it was assessed solely on the basis of the narrative and labor charts in the technical quotation, and, specifically, the absence of a more detailed breakdown of labor hours by table. According to Safal, the weakness was unreasonable because its business quotation made clear that ample hours and expertise were proposed for each task, and because the source selection authority had reviewed Safal’s business quotation and was aware of the ample staffing. Safal argued that if the SSA had independently evaluated Safal’s quotation under the quality and time commitments of proposed personnel factor, employing his knowledge of Safal’s business quotation, he would not have adopted the weakness in the consensus evaluation.

However, GAO noted that the RFQ restricted vendors’ technical quotations to 40 pages. Safal’s technical quotation ran a full 40 pages, so if the SSA had considered the information in the protester’s business quotation, he would have effectively waived the page limitation to Safal’s advantage. Accordingly, GAO found this argument meritless.

In considering the errors in the evaluation, GAO concluded that Safal was not prejudiced, because the awardee’s quotation was rated higher in all but the least important technical factor and was significantly lower-priced. Therefore, fixing the errors was not likely to result in a change to the award decision.

Next, the protester argued the agency engaged in price discussions and unreasonably failed to conduct discussions of technical quotations. In response, the agency argued that it had only allowed vendors an equal opportunity to clarify or correct minor inconsistencies and clerical errors in their quotations. GAO sided with the agency. Because the value of the task order exceeded the simplified acquisition threshold, the agency was required by the FAR to seek a price reduction. Therefore, the agency’s request that all three vendors consider providing final discounts to their GSA rates before submitting revised business quotations would not be considered price discussions.

Safal also argued that the request that MSG complete an optional task matrix constituted discussions as conducted under FAR part 15 because MSG was afforded an opportunity to revise or modify its quotation. According to the protester, without that optional task matrix, it was not clear the agency could have calculated a total price for the awardee. However, GAO disagreed. While the agency did ask MSG to complete the optional task matrix and include travel expense, the awardee’s failure to provide this information initially did not prevent the agency from calculating a total price that appeared to have been accurate, except for the identified omission of certain travel expenses. According to GAO, this was the kind of omission that was minor, apparent, and easily correctable, such that the correction of this error constituted clarifications.

Finally, Safal argued that the awardee’s subcontractor, WestEd, has an impaired objectivity OCI, because of WestEd’s role in performing the Charter Schools Monitoring and Data Collection contract for the agency. A central requirement of that contract was the implementation of an on-site monitoring process for gathering information and data to ensure project performance by grantees. According to Safal, WestEd could benefit itself financially by both recommending grantees for technical assistance under the DCM contract and providing that assistance under the NCSRC contract.

After the protest was filed, the CO assessed the potential OCI and concluded that the agency, not WestEd, makes all the relevant final determinations. The CO did not explicitly find that WestEd did not have an OCI, although he did conclude that, based on a lack of authority, WestEd could not in the performance of the DCM contract funnel work to itself under the current requirement.

However, GAO found this conclusion unreasonable, noting that WestEd had substantial involvement in the monitoring processes under the DCM contract that would lead, eventually, to technical assistance services being provided to grantees under the NCSRC contract. Because the contracting officer’s OCI analysis applied an improper legal standard to the facts, GAO found the investigation unreasonable and sustained the protest.

Safal Partners Inc. is represented by Adam K. Lasky, David Y. Yang, Erich Potter, and Daniel P. Radthorne of Oles Morrison Rinker & Baker, LLP. Manhattan Strategy Group LLC is represented by Antonio R. Franco, Michelle E. Litteken, Patrick T. Rothwell, and Jacqueline K. Unger of Piliero Mazza PLLC. The government is represented by Mark Motta, and Michael S. Taylor, Department of Education. GAO attorneys Kenneth Kilgour and Jennifer D. Westfall-McGrail participated in the preparation of the decision.