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Basis for protesting bid may be that RFQ unduly restricts competition

The Government Accountability Office (GAO) recently ruled in favor of a bid protester on the issue of whether a request for quotations (RFQ) unduly restricted competition. The decision provides insight into how to increase the chances of a successful bid protest concerning this issue.

Background

The General Services Administration (GSA) issued an RFQ for document-processing machines for the national distribution center of the Internal Revenue Service in Bloomington, Illinois. The RFQ requested bids for four PS200—or equivalent—inserter-folder machines and four high-capacity feeders. (“PS200” is a brand name.) All eight machines were required to have the capacity to handle 500 sheets. In addition, the machines were to—

  1. Be able to feed up to 1,000 sheets and have load-on-the-fly capability. (Load-on-the-fly capability allows a user to load additional sheets into the feeder while the feeder is operating.)
  2. Have feeder swap capability for up to 10 sheet feeders per machine.
  3. Have an envelope feeder able to handle all types of envelopes from letters to flats.

The award was to be a fixed-price contract going to the lowest-priced, technically acceptable bidder.

Apparently, only the protester and the awardee bid on the contract. Initially, the protester was awarded the contract, but the awardee successfully challenged the initial award at the agency level. As a result of the agency’s decision, the protester filed with the GAO.

Basis for bid protest

The protester challenged the three specifications enumerated above. The protester maintained that these requirements were too restrictive of competition and amounted to a sole-source requirement.

The protester maintained the first specification could be met by having two of its machines running at the same time, thereby obviating the need for load-on-the-fly capability. The operator could alternate between the machines to provide continuous operation and avoid system interruption. (Presumably the two machines would be cheaper than one PS200 machine, but the GAO’s decision isn’t clear on this point.)

Through discussions, the parties concluded that the protester’s machines would in fact meet the second specification. (The GAO did, however, recommend that the agency clarify any subsequent RFQs containing this requirement.)

The protester maintained that its envelope feeder handles most common sizes of envelopes, but that switching to a substitute feeder for the odd sizes would only take 30 seconds.

Decision and rationale

The procuring agency is best suited to determine its needs because its contracting officers best know the conditions under which the equipment, supplies, and services have been or will be employed. But if a bidder challenges the restrictive nature of a specification, the procuring agency must establish that the specification is reasonably necessary to meet its needs. When the GAO reviews a challenge on this basis, it does not reevaluate the agency’s specification, but rather reviews whether the agency’s specification is reasonable—that is, determines whether the specification can withstand logical scrutiny.

In response to the protester’s objection to the first specification, the agency conceeded that the protester’s approach would result in continuous operation, but that the protester’s approach would require additional employee time and storage space and possibly result in more paper jams. The GAO found that the agency had not established a need for less employee time and less space and had not provided any evidence to show that the protester’s approach would cause more paper jams.

In response to the protester’s object to the third specification, the GAO found that the agency provided no explanation for why it needed a feeder that would handle all types of envelopes instead of using a system that would involve changing out the feeder for nonstandard envelopes.

Ultimate GAO recommendation

The GAO sustained the protest and recommended that the IRS reevaluate and document its needs and then reissue its RFQ with specifications reasonably necessary to meet those needs.

The GAO also recommended that the protester be reimbursed its costs for pursuing the protest, including reasonable attorney fees.

Lesson learned

In this case, the protester was initially awarded the contract, but then it was snatched away from the protester at the agency level. In looking for ways to recover its favorable award status, the protester carefully examined the specifications in the RFQ and provided a rationale basis to explain how its product was an equivalent product for the agency. This may be an especially valuable approach to take when an RFQ specifies a brand-named product, but leaves the door open for a product equivalent to that product.

For more details, see Pitney Bowes, Inc., B-413876.2, decided February 13, 2017.

Items on this web page are general in nature. They cannot—and should not—replace consultation with a competent legal professional. Nothing on this web page should be considered rendering legal advice.

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Tuesday, 22 August 2017

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