TITLE: B-299504.3; B-299504.4, Environmental Protection Agency; CGI Federal, Inc.--Reconsiderations, July 23, 2008
BNUMBER: B-299504.3; B-299504.4
DATE: July 23, 2008
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B-299504.3; B-299504.4, Environmental Protection Agency; CGI Federal, Inc.--Reconsiderations, July 23, 2008

   DOCUMENT FOR PUBLIC RELEASE
   The decision issued on the date below was subject to a GAO Protective
   Order. This redacted version has been approved for public release.

   Decision

   Matter of: Environmental Protection Agency; CGI Federal,
   Inc.--Reconsiderations

   File: B-299504.3; B-299504.4

   Date: July 23, 2008

   Avital G. Zemel, Esq., Environmental Protection Agency, for the
   agency/requester.
   Mark D. Colley, Esq., Christopher R. Yukins, Esq., Kristen E. Ittig, Esq.,
   and Cameron W. Fogle, Esq., Arnold & Porter LLP, for CGI Federal, Inc., a
   requester.

   Linda S. Lebowitz, Esq., Office of the General Counsel, GAO, participated
   in the preparation of the decision.

   DIGEST

   GAO will not grant request to vacate protest decision based on subsequent
   developments where the parties requesting such action have not
   demonstrated that newly-disclosed information has rendered the decision as
   issued invalid, or that the public interest would be served by vacating
   the decision.

   DECISION

   The Environmental Protection Agency (EPA) and CGI Federal, Inc. ask that
   we reconsider our decision in IBM Corp., B-299504, B-299504.2, June 4,
   2007, 2008 CPD para. 64, in which we sustained IBM's protest of the award
   of a contract to CGI under request for proposals (RFP) No. PR-HQ-05-12521,
   issued by the EPA for the upgrade of the agency's financial management
   system. In its protest, IBM argued, among other things, that the agency
   did not reasonably evaluate the offerors' price/cost proposals. We
   sustained the protest, concluding that the agency improperly made upward
   adjustments to fixed-price elements of IBM's proposal and did not
   reasonably evaluate CGI's price/cost proposal. However, because of
   subsequent developments, the agency and CGI ask that we reconsider and
   either rescind (i.e., vacate) or modify our decision sustaining IBM's
   protest.

   We deny the requests for reconsideration.

   BACKGROUND

   The RFP contemplated the award of an
   indefinite-delivery/indefinite-quantity contract under which
   performance-based task orders would be issued.^[1] After evaluating the
   four initial proposals submitted in response to the RFP, the agency
   selected the proposals of IBM and CGI to be included in the competitive
   range. Following discussions, IBM and CGI submitted final proposal
   revisions (FPR). The agency's technical evaluation panel (TEP) evaluated
   the FPRs and reported its results to the contracting officer, who then
   prepared a selection decision with final technical and price/cost
   evaluations for IBM and CGI. The contracting officer recommended that the
   award be made to CGI and, after conferring with the TEP chair and others,
   the agency's source selection authority approved the award to CGI.

   In its protest filed with our Office, IBM argued that the agency
   improperly evaluated proposals, failed to conduct meaningful and equal
   discussions and, as a result, made an unreasonable selection decision. We
   sustained the protest, concluding that the agency improperly adjusted
   fixed-price elements of IBM's proposal and performed an unreasonable
   evaluation of CGI's price/cost proposal.^[2] We recommended that the
   agency reevaluate proposals, consistent with our decision; we further
   recommended that the agency reexamine its requirements, providing offerors
   an opportunity to revise their proposals, if necessary, and that the
   agency make a new selection decision. In addition, we recommended that IBM
   be reimbursed the costs of filing and pursuing its protest, including
   reasonable attorneys' fees.

   EPA'S REQUEST FOR RECONSIDERATION

   In its request for reconsideration, the agency asks that we rescind or
   modify our June 4, 2007 decision sustaining IBM's protest, based on events
   that took place after we issued our decision and based on information not
   previously considered by our Office. In making its request, EPA relies on
   an "Interim Agreement," dated April 3, 2008, between it and IBM, pursuant
   to which IBM, on April 4, 2008, withdrew its proposal from further
   consideration for award during the agency's implementation of our
   recommendation for corrective action and agreed to reimburse the agency
   for the costs paid by the agency to the firm in accordance with the
   above-described recommendation for corrective action.

   Under our Bid Protest Regulations, to obtain reconsideration, the
   requesting party must set out the factual and legal grounds upon which
   reversal or modification of the decision is deemed warranted, specifying
   any errors of law made or information not previously considered. 4 C.F.R.
   sect. 21.14(a) (2008). Here, we conclude that the standard for
   reconsideration has not been satisfied.

   As stated above, in requesting reconsideration, the agency relies on
   events that took place after we issued our June 4, 2007 decision
   sustaining IBM's protest. In this regard, on March 27, 2008, the agency
   suspended IBM from receiving federal contracts based on information
   developed during the course of a federal investigation into activities
   related to IBM's proposal and negotiations in this procurement. According
   to the record, as documented in the requests for reconsideration (not in
   the record as developed during our review of IBM's original protest), the
   agency's debarring official determined that there was adequate evidence to
   support allegations that IBM employees obtained protected source selection
   information relevant to this procurement from an EPA employee--information
   which IBM officials knew was improperly acquired--and that IBM used this
   information during its negotiations to improve its chance of winning a
   contract, in violation of federal procurement procedures and the
   procurement integrity provisions of the Office of Federal Procurement
   Policy Act. Interim Agreement, Apr. 3, 2008. The agency's suspension of
   IBM was issued as a temporary action pending completion of the
   investigation and other possible proceedings, including debarment action.
   Suspension Notice, Mar. 27, 2008.

   Following IBM's receipt of the suspension notice, IBM acknowledged the
   apparent violations by its employees and agreed to withdraw its proposal
   from further consideration for award in this procurement; IBM also agreed
   to refund to the agency all costs paid to IBM in connection with the
   underlying protest and to take other steps, such as conducting a full
   examination of the firm's federal compliance program and cooperating with
   EPA investigators and other federal officials, to promptly and
   appropriately conclude the matter. In return, the agency agreed to
   immediately terminate the temporary suspension and to remove IBM's name
   from the Excluded Parties List, subject to specific terms and conditions.
   Interim Agreement, supra. IBM formally withdrew its proposal on April 4,
   2008.

   In requesting rescission or modification of our decision sustaining IBM's
   protest, the agency states that it "recognize[s] the public interest in
   providing the federal acquisition community and other interested parties
   with the results of [our Office's] thorough analysis in this matter," but
   maintains that "there are countervailing considerations when an offeror's
   efforts to secure a federal contract have been tainted by improper
   conduct," and it asks that we "recognize these circumstances in [our]
   final disposition of the protests." EPA Request for Reconsideration at 2.
   However, we conclude that the agency has failed to provide any basis
   warranting our rescission or modification of the underlying decision
   sustaining IBM's protest.

   In this regard, the agency has cited no legal authority to support its
   request and it has not, for example, demonstrated any error or injury that
   results from the decision as written; moreover, the agency has neither
   alleged nor shown any nexus between the alleged improper use of
   proprietary information by IBM employees and our finding with respect to
   the agency's improper adjustment of fixed-price elements in IBM's
   proposal. In short, the agency has not pointed out any procedural or
   substantive flaw in the underlying decision resulting from subsequent
   events and from information that was not previously disclosed during the
   development of the protest record or at the time the decision was issued
   which would necessitate some sort of correction of that decision in light
   of the newly-disclosed information.

   While we are not aware of any instance in which our Office has been asked
   to rescind a published protest decision, the United States Civilian Board
   of Contract Appeals recently addressed a request that the Board vacate one
   of its decisions. See Hedlund Constr., Inc. v. Dep't of Agriculture, CBCA
   105-R, Civilian B.C.A., June 5, 2008 (citing U.S. Bancorp Mortgage Co. v.
   Bonner Mall P'ship, 513 U.S. 18, 29 (1994), in which the Supreme Court
   explained its view that settlement of a dispute by the parties after the
   issuance of a decision does not justify vacatur of an issued decision).
   See also ROI Invs. v. GSA, GSBCA 14402-R, 99-1 BCA para. 30,353 (absent
   some extraordinary circumstance, the public interest would not be served
   by rescinding a published decision).

   In our view, published decisions provide valuable information to the
   procurement community in terms of, for example, analyzing violations of
   procurement statutes and regulations and explaining why such violations
   provide a basis for sustaining a protest. To the extent that EPA asks that
   we "recognize [the] circumstances" regarding the subsequently disclosed
   investigation and the agreement between it and IBM, the discussion in this
   decision denying the agency's request for reconsideration effectively does
   so. In this connection, we note that our recommendation for corrective
   action was valid under the facts as they existed during our Office's
   review of IBM's original protest, and we expect no further action with
   regard to that recommendation based on subsequent events.

   CGI'S REQUEST FOR RECONSIDERATION

   CGI requests that we vacate the underlying decision sustaining IBM's
   protest on two grounds--first, that IBM was not an interested party and,
   therefore, lacked standing for purposes of filing a protest in light of
   its acknowledged procurement integrity violations resulting in its
   suspension from receiving federal contracts and, second, that "profound
   factual uncertainties undercut the factual conclusions on which the GAO
   decision was premised." CGI Request for Reconsideration at 1.

   Regarding its first argument, CGI points out that a "non-responsible
   bidder" has no interest in the outcome of a procurement--suggesting that a
   suspended offeror would similarly lack the requisite interest for filing a
   protest--thereby implying that IBM's suspension and subsequent agreement
   to withdraw its proposal from consideration for award in this procurement
   should, in essence, void the published decision. Id. at 2. We do not find
   this argument persuasive.

   More specifically, it is clear from the record that when IBM filed its
   protest on February 26, 2007, it was not a suspended contractor. We issued
   our decision sustaining IBM's protest on June 4, 2007. The agency issued
   its notice of suspension on March 27, 2008, and the Interim Agreement
   between the agency and IBM was signed on April 3, 2008. The agency's
   suspension notice stated, "effective immediately, I [EPA's debarring
   official] have suspended [IBM] from participating in Federal procurement
   and nonprocurement activities." Suspension Notice, supra, at 1. Thus, the
   suspension notice makes clear that the suspension was to have an
   immediate, as opposed to a retroactive, effect.^[3] Therefore, since IBM
   had not been suspended from competing for federal contracts at the time
   the protest was filed, during the development of the protest record, and
   when the decision sustaining the protest was issued, the firm was eligible
   to compete under the RFP and had the status of an interested party to
   challenge the agency's evaluation of proposals and award decision.

   Moreover, Federal Acquisition Regulation (FAR) Subpart 9.4, which the
   agency cited in its suspension notice as authority for its actions, makes
   clear that suspension and debarment do not have a retroactive effect. For
   example, FAR sect. 9.405-1(a) provides that "[n]otwithstanding the
   debarment, suspension, or proposed debarment of a contractor, agencies may
   continue contracts or subcontracts in existence at the time the contractor
   was debarred, suspended, or proposed for debarment unless the agency head
   directs otherwise." Therefore, contrary to CGI's suggestion, we have no
   basis to conclude that the suspension and Interim Agreement between the
   agency and IBM should retroactively affect the interested party status or
   standing to protest that IBM had at the time it filed its protest since,
   as stated above, at that time, IBM was not a suspended contractor. In
   other words, until the suspension was imposed and IBM was notified (see
   FAR sect. 9.407-3(c) (requires that a contractor be immediately advised
   when it is suspended)), IBM was "an actual . . . offeror whose direct
   economic interest would be affected by the award of a contract or by the
   failure to award a contract," satisfying our regulatory definition of an
   interested party with standing to file and pursue its protest. 4 C.F.R.
   sect. 21.0(a)(1). On this record, we find no merit in CGI's argument that
   IBM's status as an interested party should be viewed from the vantage
   point of the subsequent events, as set forth above, which would involve
   the complete disregard of the facts as they existed from the point at
   which the protest was filed until the decision sustaining IBM's protest
   was issued.

   Regarding its second argument, we similarly find no merit to CGI's
   allegation that "factual uncertainties," which purportedly cannot now be
   resolved, were the foundation for our decision, thereby compromising the
   precedential value of that decision. As discussed above, no error or
   injury has been demonstrated that would result from the decision as
   written, nor has any nexus between the alleged improper use of proprietary
   information by IBM employees and our finding with respect to the agency's
   improper adjustment of fixed-price elements in IBM's proposal been alleged
   or shown. The value of the underlying decision sustaining IBM's protest
   derives from the legal conclusions that were drawn in the context of the
   existing and known facts. While a subsequent change in facts could lead to
   a different legal conclusion, the facts that emerged based on subsequent
   events do nothing under the circumstances here to alter the validity of
   the original decision, which applied the law to the facts as presented
   during our Office's review of IBM's original protest.

   The requests for reconsideration are denied.

   Gary L. Kepplinger
   General Counsel

   ------------------------

   [1] Details of the facts, arguments, analyses, and conclusions from the
   underlying decision sustaining the protest are not required to understand
   the requests for reconsideration and, therefore, are not repeated here.

   [2] With respect to IBM's other grounds for protest, which we denied, we
   concluded that the agency's technical evaluation was reasonable and
   supported by the record and that the agency conducted meaningful
   discussions with IBM.

   [3] In this regard, the suspension notice also stated that
   "[n]otwithstanding this suspension, IBM may continue awards in existence
   as of the date of this suspension, unless an agency directs otherwise."
   Id.