News Releases
September 8, 2015
From Federal News Radio

by Jason Miller

An interesting bid protest decision came down from the Government Accountability Office recently that could have broad repercussions, especially in wake of all the mergers and acquisitions happening in the federal marketplace.

First the basics of what happened:

GAO ruled in favor of FCI Federal in its protest of a $209 million contract award to USIS’ Professional Services Division in July 2014 to support 68 Homeland Security Department Citizenship and Immigration Services field offices and 10 asylum offices throughout the United States.

FCI Federal claimed CIS didn’t reasonably consider and document how it reviewed the allegations of fraud against the awardee’s parent company in determining USIS PSD’s responsibility.

“We sustained the protest, finding that the record showed that the contracting officer failed to obtain and consider the specific allegations of fraud alleged by the Department of Justice (DOJ) against the awardee’s parent, relying instead on general media reports,” GAO wrote in its decision on Aug. 5, which was posted later in the month. “We also found that the contracting officer failed to consider the close relationship between the awardee and its then parent company, USIS LLC, with respect to the contemplated approach to contract performance, mistakenly believed that the two companies were separate, and misunderstood the legal standards related to affirmative responsibility determinations.”

Basically what GAO is saying is when a company is sold from one parent to another or if one company takes over another in a merger or acquisition, the contracting officer needs to reassess the proposal and whether the new company is capable of meeting the solicitation’s requirements. The agency also must document this evaluation as part of its review of the bids.

A FCI Federal spokesman said the company was pleased with GAO’s decision.

Its attorney, Claude Goddard of the Polsinelli law firm, said the bid protest judgment clarifies the linking of responsibility determinations and awards.

“A responsibility determination, by law, must be made before an award decision, but the award decision should be made as soon as possible after the responsibility determination,” Goodard said. “The agency failed to follow those rules here. It tried to take a short cut by using a responsibility determination to justify an award decision made nearly 10 months earlier. In doing so, the agency ignored important developments — the sale of the business entity that submitted the offer — that rendered the original award decision outdated and obsolete. The awardee in its proposal had relied extensively on the past performance, corporate experience and corporate resources of its parent corporation, and the agency had relied on those same factors in assigning the awardee’s proposal high technical ratings. None of those factors applied, however, once the awardee was sold to another contractor. The agency erred by trying to use the later responsibility determination to justify an award that no longer was rationally based given the changed circumstances.”

GAO recommended CIS reopen discussions with all offerors remaining in the competition, request revised proposals, undertake a new evaluation of those revised proposals and make a new selection decision.

The full article can be found here