TITLE: B-299936.2, Gonzales-McCaulley Investment Group, Inc., November 5, 2007
BNUMBER: B-299936.2
DATE: November 5, 2007
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B-299936.2, Gonzales-McCaulley Investment Group, Inc., November 5, 2007

   Decision

   Matter of: Gonzales-McCaulley Investment Group, Inc.

   File: B-299936.2

   Date: November 5, 2007

   Ollie M. McCaulley for the protester.

   Steven Simpson, Esq., for Management Concepts, an intervenor.

   Jonathan A. Baker, Esq., Department of Health and Human Services, for the
   agency.

   Nora K. Adkins, Esq., and James Spangenberg, Esq., Office of General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Agency's decision to cancel a solicitation, after a protest was filed,
   due to a lack of valid delegated procurement authority, was essentially
   pretextual when no other solicitations issued under the invalid delegation
   were cancelled.

   2. Agency did not have a reasonable basis to rescind the selection of a
   vendor for providing training classes under the Government Employees
   Training Act based on its belief that the vendor plagiarized certain
   material from another vendor and included this material in its quotation,
   which the agency found indicated a lack of independent knowledge of the
   course material that rendered the quotation unacceptable, where the agency
   did not reasonably investigate its concerns, the record contains evidence
   that the vendor properly obtained this material from the agency and
   reasonably used it in its quotation, and the vendor's quotation contained
   information that was not plagiarized that was relevant to its knowledge of
   the course material.

   DECISION

   Gonzales-McCaulley Investment Group, Inc. (GMIG) protests the decision of
   the Department of Health and Human Services (HHS) to cancel a solicitation
   for quotations for grants management courses to be taught at the Health
   and Human Services University (HHS-U), as authorized by the Government
   Employees Training Act (GETA), 41 U.S.C. sections 4101-4121 (2000).[1]

   HHS-U was established on February 19, 2003, as an organizational unit of
   the Human Resources Service within the HHS Program Support Center (PSC) to
   develop and manage the Department's training and workforce development. 68
   Fed. Reg. 8040 (Feb. 19, 2003). On April 14, 2003, the Deputy Assistant
   Secretary for Program Support in charge of PSC delegated to the Director
   of the Human Resources Service the authority to approve and acquire
   training through HHS-U under the GETA acquisition authority. Agency Report
   (AR), Sept. 10, 2007, Tab 3, Memorandum, Deputy Assistant Secretary for
   Program Support. [2] HHS-U's training acquisition is administered by a
   Center Manager who, among other things, oversees vendor selection.

   On May 11, 2007, the protester received from HHS-U the solicitation for
   quotations for providing grants management classes for HHS-U's 2008
   schedule. In the solicitation, vendors were requested to provide
   statements of technical capability/subject matter expertise; a statement
   showing the vendor's understanding of the requirements; assurance of
   sufficient staff, resources, and instructor knowledge; a list of the
   grants management courses for which the vendor presents training,
   including a course agenda/content outline and a list of objectives;
   itemized costs; and references. This solicitation also listed and
   described eight grants management training courses for the 2008 fiscal
   year. Initial Protest, July 2, 2007, Tab 1, HHS-U E-mail to GMIG
   Requesting Quotation.

   GMIG and other vendors submitted quotations prior to the May 31 closing
   date. Upon review of the vendors' technical capabilities and prices, HHS-U
   selected GMIG, as well as Management Concepts (the incumbent) and one
   other vendor, to provide grants management training courses at HHS-U. AR,
   July 27, 2007, Tab 1, Center Manager's Statement, at 1. On June 19, GMIG
   received from the Center Manager a confirmation of selection to provide
   the eight grants management courses at HHS-U. Initial Protest, Tab 6,
   HHS-U E-mail to GMIG Confirming Selection.

   Prior to the start of classes, the Center Manager states that she was
   reviewing the Management Concepts website and noticed "a striking
   similarity with the course descriptions, objectives, and topics" in
   comparison to GMIG's quotation. AR, July 27, 2007, Tab 1, Center Manager's
   Statement, at 1. She thus determined that GMIG had submitted "plagiarized"
   material from the Management Concepts website. Id. The record does not
   evidence that HHS-U then sought an explanation or response from GMIG in
   regard to this issue or that HHS-U delved any further into the similarity
   between the two vendors' submissions. On June 27, HHS-U notified GMIG via
   e-mail as follows:

     It came to our attention today that the grants course information you
     included in your proposal is not your own. Therefore, I am withdrawing
     the offer letter from HHS University. We will not be contracting with
     you for grants management training in FY08.

   Initial Protest, Tab 9, Center Manager's E-mail to GMIG, at 1.

   After receiving HHS-U's notice, GMIG contacted the agency and requested
   that HHS-U review GMIG's course book that it had previously provided
   HHS-U, asserting that it was readily apparent that the two vendors had
   different curriculums and that it had shown that it can successfully
   provide the required courses. GMIG also complained that comparing GMIG's
   quotation with another vendor's quotation was improper. Initial Protest,
   Tab 10, GMIG E-mail to HHS-U (June 27, 2007); Tab 11, GMIG E-mail to HHS-U
   (June 28, 2007).

   On June 29, the Center Manager responded, stating "I did review your
   binder. However, it wasn't referenced in your proposal. My decision
   stands," although she invited GMIG "to resubmit a proposal with
   information on courses that GMIG offers. We will be happy to consider it
   for future classes." Initial Protest, Tab 12, Center Manager's E-mail to
   GMIG, at 1. GMIG then protested to our Office the agency's decision to
   rescind the firm's selection to provide grants management courses at
   HHS-U.

   The agency asserted that the rescission of GMIG's selection was reasonable
   because a comparison of the Management Concepts materials (located on its
   Internet site) and GMIG's submitted materials confirms that GMIG copied
   the Management Concepts course descriptions and learning objectives and
   submitted them as their own.[3] As such, HHS-U concluded that there was an
   insufficient basis on which to evaluate GMIG's quotation as technically
   acceptable because GMIG's plagiarism inspired little confidence in regard
   to its independent knowledge of the course material and its ability to
   convey appropriate information through its course instruction. AR, July
   18, 2007, at 2; AR, July 27, 2007, at 3.

   In its comments in response to the agency report on this protest, GMIG
   denied the claims of plagiarism with regard to this information (which
   GMIG states was "very general by its nature"), and countered by providing
   various examples from publicly provided federal government training
   catalogs, including that of HHS-U, with course descriptions and learning
   objectives that were also virtually identical to the course descriptions
   and learning objectives included in GMIG's quotation and on the Management
   Concepts website. Initial Protest, at 2; Protester's Comments, July 31,
   2007, at 5-9, 14. GMIG asserts that a review of the rest of its quotation
   and the course book that it provided to HHS-U reveals that it had the
   requisite understanding and ability to provide courses that were
   significantly different than those offered by Management Concepts, and
   that the agency's rescission of its selection was improper. Initial
   Protest, at 2.

   Shortly after receiving GMIG's comments, HHS requested dismissal of the
   protest based on a discovery that the acquisition had been conducted under
   a delegation of GETA authority that was not effective as to HHS-U. As
   previously stated, on April 14, 2003, the Deputy Assistant Secretary for
   Program Support in charge of PSC delegated to the Director of the Human
   Resources Service the authority to approve and acquire training through
   HHS-U under the GETA acquisition authority. AR, Sept. 10, 2007, Tab 3,
   Memorandum, Deputy Assistant Secretary for Program Support. However, by
   notice of November 23, 2001, PSC had ceased to be an OPDIV. 66 Fed. Reg.
   58,740 (Nov. 23, 2001). Therefore, according to HHS, because the authority
   to redelegate GETA acquisition authority was based on PSC's status as an
   OPDIV, the Deputy Assistant Secretary for Program Support did not, in
   2003, have the authority to redelegate the approval or acquisition of
   training under GETA to the Director of the Human Resources Service. Thus,
   the agency asserted that HHS-U lacked the authority to conduct this
   acquisition.[4] Because of this, it rescinded the selections and cancelled
   this solicitation. On August 7, our Office dismissed GMIG's protest as
   academic due to the solicitation's cancellation.

   On August 8, GMIG protested that the GETA authority was operational at the
   time of GMIG's selection and, alternatively, that the agency's decision to
   cancel the solicitation was solely for the purpose of having its protest
   dismissed. In response, the agency argued that its decision to cancel was
   reasonable because the acquisition was unauthorized as it was conducted
   under an invalid delegation of acquisition authority and that the reason
   for cancellation was not pretextual.

   A contracting agency need only establish a reasonable basis to support a
   decision to cancel a request for quotations. SMF Sys. Tech. Corp.,
   B-292419.3, Nov. 26, 2003, 2003 CPD para. 203 at 4. So long as there is a
   reasonable basis for doing so, an agency may cancel a solicitation, no
   matter when the information precipitating the cancellation first arises,
   even if it is not until quotations have been submitted and evaluated. Id.
   As here, however, where a protester has alleged that the agency's
   rationale for cancellation is but a pretext to avoid awarding a "contract"
   on a competitive basis or to avoid the resolution of a protest, we will
   closely examine the reasonableness of the agency's actions in canceling
   the solicitation. Id.; Griffin Servs., Inc., B-237268.2 et al., June 14,
   1990, 90-1 CPD para. 558 at 3, aff'd, General Servs. Admin.--Recon.,
   B-237268.3 et al., Nov. 7, 1990, 90-2 CPD para. 369. In cases where we
   conclude that the agency's rationale for cancellation is merely a pretext,
   we will recommend appropriate corrective action. See Griffin Servs., Inc.,
   supra, at 3-4; Miller, Davis, Marter & Opper, P.C., B-242933, B-242933.2,
   Aug. 8, 1991, 91-2 CPD para. 176 at 4.

   Here, it appears from the record that HHS is correct in its assertion that
   the GETA acquisition authority had not been validly delegated to HHS-U. We
   believe that this lack of authority would ordinarily provide a reasonable
   basis to cancel a solicitation. However, based on our review of HHS's
   actions here, we conclude that the cancellation of this solicitation was
   pretextual. The record shows that this was the only acquisition, out of
   the hundreds that had been conducted by HHS-U without properly delegated
   authority, that was cancelled when HHS became aware of the lack of
   authority, even though a number of the other HHS-U acquisitions were
   ongoing. See AR, Oct. 12, 2007, Declaration of HHS Director, Division of
   Acquisition Policy, at 5. We recognize that HHS asserted in its response
   to our Office's inquiry that it "expect[ed] and intend[ed] that HHS-U
   would cancel all outstanding requests for quotations for training
   services," but that it apparently had not "adequately communicated [this]
   expectation" to HHS-U. Id. However, whether expected or not, this did not
   occur. Thus, we find on this record that HHS's cancellation appears to be,
   as the protester contends, essentially a pretext to avoid further scrutiny
   and review of its protest.

   Nevertheless, even where the cancellation of a solicitation was a pretext
   to avoid further scrutiny and review of a protest, we will not sustain a
   protest of the cancellation on this basis unless the protester was
   prejudiced, for example, if its initial protest would have been sustained
   but for the cancellation. See Miller, Davis, Marter & Opper, P.C., supra,
   at 5.

   As indicated above, HHS rescinded the selection of GMIG because it
   believed that GMIG had plagiarized from the Management Concepts materials
   in preparing its quotation and that the agency, therefore, had an
   insufficient basis on which to evaluate GMIG's quotation as technically
   acceptable, because GMIG's plagiarism inspired little confidence in regard
   to GMIG's independent knowledge of the course material and its ability to
   convey appropriate information through its course instruction.

   In response, GMIG specifically denies plagiarizing this material from the
   Management Concepts website and provides evidence that the course
   descriptions and learning objectives that it used were virtually identical
   to those in HHS-U's catalog and the catalogs of several other federal
   agencies. HHS does not deny that this is the case. Indeed, the general
   course descriptions included by GMIG in its quotation were included in
   HHS-U's solicitation, so it is not surprising that a vendor offering these
   very courses would copy the solicitation's description and refer to the
   "learning objectives" already identified by the agency in its catalog for
   these courses. We also note that it has not been alleged that GMIG
   plagiarized the course syllabus, also included in its quotation, which
   contained details regarding GMIG's class instruction, or the course book
   that GMIG provided to HHS-U. Indeed, as indicated, the Center Manager was
   aware, after reviewing GMIG's course book, that the "binder of materials
   appear[ed] to be a viable training option." AR, July 27, 2007, Tab 1,
   Center Manager's Statement, at 2. While it may be that there was a reason
   that GMIG should not have been selected to provide these courses, the
   record here shows that HHS-U's Center Manager did not attempt to
   reasonably investigate her suspicions of plagiarism prior to rescinding
   GMIG's selection and, on this record, we find the rescission was not
   reasonably based.[5]

   Given that the agency now has the properly delegated acquisition
   authority, we recommend that HHS-U reinstate the solicitation and
   reevaluate the quotations, considering all information presented by the
   vendors in response to the plagiarism allegations.[6] We also recommend
   that GMIG be reimbursed its costs of filing and pursuing the current
   protest of the cancellation, as well as its earlier protest of the
   rescission of its selection. Bid Protest Regulations 4 C.F.R. sect.
   21.6(a)(1) (2007). [7] GMIG should submit its certified claim for costs,
   detailing the time expended and costs incurred, directly to the
   contracting agency within 60 days after the receipt of this decision. 4
   C.F.R. sect. 21.8(f)(1).

   The protest is sustained.

   Gary L. Kepplinger
   General Counsel

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

   [1] Originally enacted in 1957, GETA provides federal agencies with
   general authority for employee training and authorizes the use of
   non-governmental training resources to meet identified training needs. 41
   U.S.C. sect. 4105.

   [2] On March 30, 1995, the HHS Assistant Secretary for Personnel
   Administration delegated authority to approve and acquire training,
   including the authority to acquire training under GETA, to the heads of
   operating divisions (OPDIV), with redelegations permitted. AR, Sept. 10,
   2007, Tab 1, HHS Transmittal 95.5. On October 2, 1995, PSC was established
   as an OPDIV within HHS, thereby giving PSC the authority to approve,
   acquire, and redelegate the authority to acquire training through GETA. 60
   Fed. Reg. 51,480 (Oct. 2, 1995).

   [3] Our review of the record indicates that the two vendors' course
   descriptions and learning objectives were virtually identical.

   [4] On September 4, 2007, the Deputy Assistant Secretary for Acquisition
   Management and Policy redelegated, under valid authority from a delegation
   of the Assistant Secretary for Administration and Management dated July
   14, 2006, the authority to acquire training under GETA to the Director of
   the Workforce and Career Development Division for HHS-U, with
   redelegations allowed. AR, Sept. 10, 2007, Tab 9, Delegation of Training
   Acquisition Authority, at 1. Accordingly, HHS-U was provided the requisite
   GETA authority to acquire training.

   [5] The agency in its report asserts that GMIG was "given an opportunity
   to resubmit its quote." AR, July 27, 2007, at 1-2. This is not true. The
   record shows that the Center Manager only "invite[d] [GMIG] to resubmit a
   proposal with information on courses that GMIG offers. We will be happy to
   consider it for future classes." Initial Protest, Tab 12, Center Manager's
   E-mail to GMIG, at 1.

   [6] Management Concepts asserts that there are copyright concerns
   regarding the use of its materials that need to be addressed with regard
   to this acquisition. The agency should review these concerns to ascertain
   their validity and take appropriate action. We also recognize that an
   agency's concerns about plagiarism, if justified, could affect the
   determination of the prospective contractor's responsibility.

   [7] We do not recommend that GMIG be reimbursed its claimed quotation
   preparation costs, since it is being provided an opportunity to compete
   for courses under the solicitation.