The Court of Federal Claims (COFC or Court) recently enjoined the General Services Administration (GSA) from evaluating proposals and awarding contracts under the highly publicized Polaris Program. While the decision impacts the Women-Owned Small Business (WOSB), Service Disabled Veteran Owned Small Business (SDVOSB), and Small Business (SB) pools specifically, it stands to make a much more significant impact on the procurement as a whole with Judge Eleni Roumel determining that certain solicitation requirements are deficient and ordering GSA to amend the solicitation before proceeding. This blog summarizes the decision and offers insights regarding how the injunction impacts contractors’ approach to the Polaris bidding process.
In SH Synergy, LLC v. U.S., two separate small business, mentor-protégé joint ventures challenged the solicitation for GSA’s Polaris government-wide acquisition contract (GWAC). Through the Polaris GWAC, GSA seeks to acquire IT services and IT-based solutions from different pools of approved small business IT providers. GSA estimates the value of potential procurements issued through the GWAC will be between $60 to $100 Billion.
The protest challenged the solicitations for three separate pools—the SB, WOSB, and SDVOSB solicitations—arguing GSA drafted them in a way that violated procurement laws. In particular, the protesters argued that:
- GSA improperly barred them from submitting proposals on the SB pool solicitation due to a misinterpretation of the Small Business Administration’s (SBA) regulation 13 C.F.R. § 125.9(b)(3)(i);
- the solicitations violated 13 C.F.R. § 125.8(e), a regulation, which governs joint venture offerors on government procurements and contains rules applicable to mentor-protégé joint venture offerors; and
- GSA’s decision not to evaluate price at the IDIQ award level violated 41 U.S.C. § 3306(c)(3), which requires the government to consider price, except in limited circumstances.
COFC agreed with the protesters on two of the three arguments.
The Court’s Decision
On the first argument—whether GSA misinterpreted 13 C.F.R. § 125.9(b)(3)(i)—COFC upheld GSA’s interpretation of the regulation. 13 C.F.R. § 125.9(b)(3)(i) provides that “[a] mentor that has more than one protégé cannot submit competing offers in response to a solicitation for a specific procurement through separate joint ventures with different protégés.” GSA interpreted this regulation to mean that if two mentor-protégé joint ventures share the same mentor, they cannot submit competing offers under the same solicitation. The Court rejected the protesters’ notion that 13 C.F.R. § 125.9(b)(3)(i) only applies to forming the mentor-protégé joint venture as its language covers mentor-protégé relationships throughout their life cycle. The Court referred to dictionary definitions of “competing” and “offer” to discern their plain meaning. The finding was that because the Polaris Program procurement would have winners and losers, as not all offerors would receive an award, offerors were necessarily competing against each other for an award. The Court, therefore, agreed that two mentor-protégé joint ventures that share the same mentor cannot submit competing offers under the same solicitation.
Second, the protesters argued that the terms of the solicitations violated 13 C.F.R. § 125.8(e), which provides that “[a] procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors, generally.” In particular, the protesters argued that GSA violated 13 C.F.R. § 125.8(e) by applying the same evaluation criteria for “Relevant Experience” to the projects submitted by all offerors, including protégé firms. The Court reviewed the Polaris Program solicitation’s evaluation criteria, noting that GSA will award IDIQ contracts to the highest, technically rated proposals based, in part, on how well those proposals scored under Relevant Experience. The Court determined that the solicitations’ evaluation criteria did not incorporate any distinct evaluation criteria for evaluating protégé firm’s individually submitted projects under Relevant Experience. Since the Polaris evaluation criteria required GSA to rate each individual project, GSA would necessarily be applying the same evaluation criteria to each project, including those submitted by protégé firms. Thus, for the Polaris procurement to proceed, the Court required GSA to adjust the evaluation criteria as it applies to evaluating protégé firms’ Relevant Experience Projects. However, the Court left it up to GSA as to how it will adjust the evaluation criteria.
Finally, the protesters argued that GSA violated 41 U.S.C. § 3306(c)(3) by failing to consider price on the IDIQ level when evaluating offers. 41 U.S.C. § 3306(c)(1)(B) requires agencies to consider price as an evaluation factor when awarding federal contracts, except for in narrow circumstances. This includes, as relevant here, for “certain indefinite delivery, indefinite quantity multiple-award contracts …. for services acquired on an hourly rate basis” that will “feature individually competed tasks or delivery orders based on hourly rates.” The Court first began by analyzing how “based on hourly rates” applies in this context and determined the phrase was intended to limit the type of task orders eligible for the exception under § 3306(c)(3) to only those based on hourly rates, which are task orders where hourly rates are a fundamental part of, or of central importance to, the task order. Thus, the Court reasoned it is not enough that hourly rates are embedded in the offerors’ bid amount, as GSA attempted to argue. Instead, the Court decided that time and materials (T&M) and labor hours (LH)-style task orders were the only types of task orders that qualify for the exception. In the end, the Court determined the current solicitations do not qualify for the exception under 41 U.S.C. § 3306(c)(3) as there is no evidence that GSA would favor T&M or LH task order types, rather GSA’s own statements indicate the opposite as they show a preference for firm-fixed-price task orders. Thus, if GSA wants to take advantage of 41 U.S.C. § 3306(c)(3), the Court instructed it to redo the solicitations to clearly feature T&M and LH task orders, or GSA could simply forgo the exception and evaluate price.
After demonstrating success on the merits, the Court held that the appropriate remedy here is to prevent GSA from moving forward with the procurement until it revises the solicitations.
Overall, the decision provides useful insights into how COFC interprets certain government contract laws, especially those pertaining to the proper manner to evaluate a protégé firm, i.e., the evaluation criteria itself must be different than the evaluation criteria applied to offerors more generally. More pragmatically, however, the Court’s decision sends GSA back to square one with respect to its Polaris procurement unless the agency successfully appeals. In either case, contractors should not expect a Polaris award anytime soon, but offerors may have another “bite of the apple” if GSA amends the solicitations and seeks revised proposals.
Attorneys in PilieroMazza’s Government Contracts Group are monitoring changes to GSA’s Polaris contract and will report on any new developments. If you have questions concerning Polaris, please contact the authors of this blog, Cy Alba, Eric Valle, and Dozier Gardner.