Identifying Two Acceptable Offerors in an LPTA Procurement Is Key
By Captain Jeremy D. Burkhart
In a Lowest Priced Technically Acceptable (LPTA) procurement, award is made to the lowest priced offeror who is also deemed to be technically acceptable.1 When quotations are received, procuring agencies typically rank the offerors by price, technically evaluating each offeror until a technically acceptable offeror is found. At that point, the temptation is to stop evaluating. The LPTA has been identified and award can be made. Most people might think the contracting team’s job is finished, but the end of source selection is often not the end of the process. The best practice is to continue evaluating offerors for technical acceptability until a second, and perhaps even a third, technically acceptable offeror is identified. Having additional offerors who are “next in line” provides the agency with a basis to have potential bid protests dismissed.
When a new award is announced, disappointed offerors have the ability to protest the award decision, either to the agency itself, the Government Accountability Office (GAO), or to the Court of Federal Claims (COFC).2 While the chance to “stay alive” for award consideration is incentive enough for many firms to protest, the incumbent contractor has an especially strong financial incentive to protest. The Competition in Contracting Act (CICA) mandates an automatic stay when the agency receives notice of a protest filed within ten days of award, or five days after the date offered for a required debriefing.3 Contract performance must remain suspended until the protest is resolved.4 For incumbent contractors, protesting is often simply a matter of dollars and sense. If the incumbent’s legal fees for pursuing the protest are less than the expected profit from continued performance, there is a strong incentive to protest.
With the protest filed and the CICA stay in place, it is now up to the attorneys to litigate the merits of the source selection. This process can take anywhere from 100 days for protests filed at the GAO,5 to a potentially much longer period of time for protests filed at the COFC. All the while, the new contract cannot be awarded, and the customer is stuck with a potentially under-performing contractor operating off an outdated requirement. An astute Contracting Officer can insulate the agency from some of this risk simply by taking the extra step to evaluate and identify more than one technically acceptable offeror in an LPTA procurement.
Protests Considered by the GAO
In order for a protest to be considered by the GAO, a protester6 must be an interested party, that is, an actual or prospective offeror whose direct economic interest would be affected by the award or failure to award a contract.7 The GAO has consistently held that a protester has a direct economic interest only when it will be next in line to receive the award should its protest be successful (“a protester is not an interested party where it would not be in line for contract award were its protest to be sustained”).8 Therefore, in an LPTA procurement, if a protest is filed by an offeror who is not next in line for award, the agency can provide the GAO with the source selection documentation showing that another technically acceptable offeror exists who would be next in line were the awardee to be knocked out, and have the case dismissed. However, this cannot occur if only the awardee was evaluated for technical acceptability. In that case, there is no offeror who is next in line because the second-highest priced offeror could potentially be technically unacceptable. Accordingly, the protester will necessarily be an interested party to challenge the award because the record does not establish that any intervening vendor is technically acceptable, and thus necessarily next in line for award ahead of the protester.9
Protests Considered by the COFC
This same general rule and reasoning applies to protests before the COFC, although there the rule is described in terms of prejudice. Regardless of whether there was an error in the procurement process, a COFC protester must demonstrate prejudice in order to have standing to protest.10 In order to establish that it was prejudiced, a party must “show that it had a substantial chance of being awarded the contract but for the alleged violation of the procurement statute or regulation.”11 In addition, to qualify as an “interested party,” a protester must establish that: (1) it was an actual or prospective bidder or offeror, and (2) it had a direct economic interest in the procurement or proposed procurement.12 The COFC has held that in an LPTA procurement, a protester who has not challenged intervening lower-priced offerors lacks prejudice for purposes of standing and does not have a “direct economic interest” to qualify as an interested party.13 Likewise, the COFC has specifically found standing in cases where the protester, although higher-priced, has challenged the intervening offerors in addition to the awardee, rather than just the awardee.14
For example, let’s assume an LPTA procurement has five offerors, named 1–5, who submit quotes. For simplicity’s sake, let’s assume the offerors price their proposals in the same price order that they are named—with 1 being the lowest-priced proposal and 5 being the highest-priced proposal. Here, 1 is evaluated, but found to be technically Unacceptable. So the source selection team moves on to evaluate 2. If 2 is found to be Acceptable, many contracting offices will stop evaluating because 2 is the LPTA offeror. However, it would be prudent to evaluate 3 for technical acceptability as well. If 3 is found to be technically acceptable, the agency has now identified 3 as a “next in line” offeror. After award to 2 is announced, if 4 or 5 file a bid protest, the agency can move to dismiss the protest because 4 and 5 are not interested parties.15
Best Practice
It is highly recommended that Contracting Officers evaluate and identify multiple technically acceptable offerors in an LPTA procurement. This additional evaluation should be reflected in contemporaneous documentation and the Source Selection Decision should include a note that identifies the additional offerors who were deemed to be technically acceptable. The number of offerors that need to be evaluated and identified as technically acceptable depends on several factors. It is recommended that at least one additional technically acceptable offeror is identified other than the awardee. However, in certain circumstances, it may be wise to identify more than one. Considerations include the value of the procurement, overall number of offerors, whether the incumbent is one of the unsuccessful offerors, and the time and resources required to technically evaluate additional offerors (“simple” evaluations that can be conducted quickly favor identifying multiple additional technically acceptable offerors).
Agency attorneys litigating bid protests in LPTA procurements should communicate with the contracting team in order to determine if a next in line offeror exists. If so, the attorney should immediately file a motion to dismiss for lack of interested party status because the protester would not be next in line for award even if its protest were to be sustained. These motions are relatively simple, requiring only a brief recitation of the facts, citations to the law, and the evaluation documentation proving that a next in line vendor exist between the awardee and the protester.
A few extra hours of technical evaluation on the front end could save the government months of stayed performance on the back end. Or, as Ben Franklin would prefer to say, an ounce of contract formation prevention is worth a pound of bid protest litigation cure. TAL
CPT Burkhart is a Trial Attorney in the Contract and Fiscal Law Division (KFLD) at USALSA.
Notes
1. FAR 15.101-2.
2. FAR 33.103-33.105; 31 U.S.C. § 3553.
3. 31 U.S.C. § 3553(c) and (d).
4. The agency can “override” the CICA stay of performance, but only when “urgent and compelling circumstances” justifies doing so. 31 U.S.C. § 3553(c).
5. 31 U.S.C. § 3554(a)(1); 4 C.F.R. § 21.9(a).
6. Generally, the term “protester” is spelled with an “-er” in protests at GAO and with an “-or” (“protestor”) in protests before the COFC or CAFC. For purposes of consistency within this article, “protester” is spelled with an “-er” throughout.
7. 4 C.F.R. § 21.0(a)(1); Cattlemen’s Meat Co., B-296616, Aug. 30, 2005, 2005 CPD ¶ 167 at 2 n.1.
8. CACI Dynamic Systems, Inc., B-406130, Feb. 28, 2012, 2012 CPD ¶ 77 at 8.
9. SKE Italy Srl, B-414884.3, Jan. 24, 2018, 2018 CPD ¶ 37 at 7 n.2; AllWorld Language Consultants, Inc., B-414244, B-414244.2, Apr. 3, 2017, 2017 CPD ¶ 111 at 3 n.2.
10. Data Gen. Corp. v. Johnson, 78 F. 3d 1556, 1562 (Fed. Cir. 1996).
11. CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. 462, 494 (2013); see also Data Gen. Corp., 78 F. 3d at 1562 (“[T]o establish prejudice, a protester must show that, had it not been for the alleged error in the procurement process, there was a reasonable likelihood that the protester would have been awarded the contract.”).
12. Distrib. Solutions, Inc. v. United States, 539 F.3d 1340, 1344 (Fed. Cir. 2008).
13. Universal Marine Co., K.S.C. v. United States, 120 Fed. Cl. 240, 248–249 (2015) (“Direct economic interest requires a showing that but for the alleged error, Universal Marine had a ‘substantial chance’ of winning the contract.”)( citing Statistica, Inc. v. Christopher, 102 F.3d 1577, 1582 (Fed. Cir. 1996)).
14. Hyperion, Inc. v. United States, 115 Fed. Cl. 541, 557 (2014) (highest-priced of four “Acceptable” offerors in an LPTA solicitation demonstrated prejudice where by challenging the proposals of all three lower-priced offerors, including the awardee).
15. SKE Italy Srl, B-414884.3, Jan. 24, 2018, 2018 CPD ¶ 37 at 7 n.2; Universal Marine Co., K.S.C., 120 Fed. Cl. at 248–249.