TITLE:  STG, Inc., B-285910, September 20, 2000
BNUMBER:  B-285910
DATE:  September 20, 2000
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STG, Inc., B-285910, September 20, 2000

Decision

Matter of: STG, Inc.

File: B-285910

Date: September 20, 2000

Kenneth J. Ingram, Esq., and Michael A. Stover, Esq., Whiteford, Taylor &
Preston, for the protester.

Kenneth A. Redden, Esq., U.S. Environmental Protection Agency; and John W.
Klein, Esq., and Audrey H. Liebross, Esq., Small Business Administration,
for the agencies.

Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Proposal submitted prior to the issue date of a request for proposals (RFP)
is an offer in response to the RFP that the contracting agency must consider
where the agency provided the offeror with prior written notice that it
would do so.

DECISION

STG, Inc. protests the rejection of its proposal under request for proposals
(RFP) No. PR-HQ-00-10150, issued by the Environmental Protection Agency
(EPA) for information management services for EPA's libraries, public
information centers and records centers. [1]

We sustain the protest.

On December 3, 1999, EPA published notice in the Commerce Business Daily
(CBD) of the agency's requirement for these services and its intent to issue
the RFP in mid-December. Agency Report, Tab 1, CBD Notice. The CBD notice
stated that EPA contemplated using the Small Business Administration's (SBA)
section 8(a) set-aside program and making two awards, one using the section
8(a) competitive process and the other restricted to Indian Tribal
Concerns/Alaskan Native Corporations. Id.

On or around December 5, EPA posted notice on its Internet site of
circumstances that would delay the issuance of the RFP. Contracting
Officer's Statement at 1. Shortly thereafter, a prospective offeror
requested that EPA release a draft RFP. Id. On December 16, STG sent the
contracting officer the following E-mail message:

As a follow-up to our telephone conversation this morning, and at your
request, I have provided our question to you below.

Background: STG is an eligible 8(a) for the above referenced opportunity
through December 1999. EPA may release a draft RFP in 1999 for the above
referenced program.

Question: Should the EPA release a draft RFP in 1999, and should STG have
the ability to prepare a compliant response to the RFP in 1999, and should
the final RFP not contain any major changes in its content or requirements,
if STG elects to submit our proposal based on the requirements of the draft
RFP, would EPA evaluate our proposal with the other proposals received in
response to the final RFP?

Protest, exh. 1, E-mail Message from STG to EPA. The contracting officer
responded to STG on December 20 with the following e-mail message:

In response to your question, I can't see any reason why we wouldn't
consider/evaluate your proposal if submitted as you state. Obviously, you
would be at your own risk in the event of changes from the draft to the
final RFP -- and you would have to meet the eligibility requirements of the
8(a) set aside.

Id., E-mail Message from EPA to STG.

On December 22, EPA posted a draft RFP on its Internet site. On December 30,
STG submitted a proposal to EPA for consideration under the RFP. Contracting
Officer's Statement at 1.

On March 2, 2000, EPA issued the RFP with a closing date for receipt of
proposals of April 5. STG made no further submissions in response to the
RFP. After receiving proposals, the contracting officer determined that
discussions were necessary and began establishing a competitive range. Id.
at 2. During the competitive range review process, the contracting officer
determined that STG's submission "was not an ‘offer' as defined by the
Federal Acquisition Regulations (FAR) 2.101." By letter of July 13, EPA
notified STG that its submission could not be considered for award. Id.

STG requested and received a debriefing, which was conducted on July 17.
This protest followed. EPA has suspended award of a contract pending
resolution of this protest. Id.

The essential issue here is whether a proposal submitted prior to the date
on which an RFP is issued can be considered an "offer" as defined by the
FAR. This is an issue of first impression. The definition at FAR sect. 2.101
states the following:

"Offer" means a response to a solicitation that, if accepted, would bind the
offeror to perform the resultant contract. . . . [R]esponses to requests for
proposals (negotiation) are offers called "proposals . . .

The agency alleges that a submission cannot "respond" to an RFP until the
RFP is issued; thus it is not an offer, and the FAR precludes consideration
of such submissions. Agency Report at 1-2. The protester alleges that its
proposal clearly responds to the RFP and should be considered under the
terms of that RFP as the agency said it would. Protest at 4-6; Comments at
2-3, 6-7.

Contrary to the agency's position, the FAR does not, in the definition or
elsewhere, preclude consideration of proposals submitted prior to the issue
date of an RFP. Here, before submitting its proposal, STG informed EPA of
the basis for wanting to submit a proposal prior to issuance of the RFP, and
the agency provided written approval for such early submission and stated
that it would consider the proposal under the RFP. STG's proposal was
clearly submitted for consideration under the RFP that subsequently was
issued; the proposal identified the RFP by number, provided detailed price
and technical proposals addressing the requirements and terms to be included
in the RFP as stated in the draft RFP, and stated that STG agreed to comply
with the final terms of the RFP. Thus, as of the RFP issue date, STG's
proposal was already in EPA's possession as a response to the RFP. [2] We
consider STG's proposal to be an offer submitted in response to the RFP.

Since STG reasonably relied on EPA's written determination that its proposal
would be considered by the agency under the RFP, the agency's actions here
of first advising STG that EPA would consider an offer submitted prior to
the RFP's issuance, and then reversing this determination after the closing
date for submission of proposals and excluding STG's offer from the
competition was unfair, and arbitrarily and capriciously diminished the
field of competitors. [3]

We recommend that EPA consider STG's proposal to be an offer responding to
the RFP and evaluate it consistent with the terms of the RFP and applicable
law and regulation. [4] We also recommend that the agency reimburse the
protester its reasonable costs of filing and pursuing the protest, including
attorneys' fees. 4 C.F.R. sect. 21.8(d)(1). The protester should file its claims
for costs, detailing the time expended and costs incurred, with the
contracting agency within 60 days of receiving this decision. 4 C.F.R. sect.
21.8(f)(1).

The protest is sustained.

Anthony H. Gamboa

Acting General Counsel

Notes

1. This protest was decided under the express option provisions of our Bid
Protest Regulations, 4 C.F.R. sect. 21.10 (2000).

2. Whether the proposal is technically acceptable under the terms of the RFP
or should be considered within the competitive range is not at issue here,
and the agency has not produced an evaluation record for our review.

3. We would see no basis to object to an agency's preclusion of the
submission of proposals prior to the RFP's issue date by advising offerors
who submitted such proposals that their proposals would not be considered.
Such notice must be given early enough to permit these firms to timely
submit new proposals by the closing date if they so choose.

4. Set in the background of this protest is the SBA's regulation concerning
the determination of the size status of small business concerns, which
provides that the SBA will determine the size status of a concern as of the
date the concern submits to the procuring agency a written
self-certification that it is small as part of its initial offer. See 13
C.F.R. sect. 121.404 (2000). Prior to this protest, EPA requested a size
determination from the SBA for STG under the size status stated in the RFP.
STG's self-certification submitted with its offer was dated December 30,
1999, and SBA confirmed that STG was small as of that date. Contracting
Officer's Statement at 2. EPA did not notify the SBA that this date was
months prior to the issue date of the RFP. At our request, the SBA commented
on the protest. Although the SBA confirmed STG's status as small based on
the information given to it at that time, it indicates that this
determination could change if the issue date of the RFP is considered. The
SBA further indicates that it did not contemplate at the time its regulation
was drafted that the size status of offerors would be determined on the
basis of dates in advance of the issue date of a solicitation, and requests
that the decision on this protest preserve the SBA's right to interpret its
own regulations based on the present facts. SBA Report at 2-3. The size
status of particular firms is for review by the SBA and not by our Office.
15 U.S.C. sect. 637(b)(6); 4 C.F.R. sect. 21.5(b). Since the SBA made the previous
size determination without knowledge of significant facts, this matter
should again be referred to that agency for appropriate resolution.