TITLE: B-310489; B-310489.2, Superlative Technologies, Inc., January 4, 2008
BNUMBER: B-310489; B-310489.2
DATE: January 4, 2008
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B-310489; B-310489.2, Superlative Technologies, Inc., January 4, 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: Superlative Technologies, Inc.

   File: B-310489; B-310489.2

   Date: January 4, 2008

   Kenneth D. Brody, Esq., and Thomas K. David, Esq., David, Brody &
   Dondershine, LLP, for the protester.

   Rafael A. Madan, Esq., and John L. Pensinger, Esq., Department of Justice,
   for the agency.

   Glenn G. Wolcott, Esq., and Ralph O. White, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency did not have a reasonable basis for canceling solicitation where
   agency states that cancellation was necessitated by the agency's
   disclosure of source selection information, which the agency believed gave
   an "unfair advantage" to at least one offeror, and where the agency
   subsequently awarded a sole-source contract to a contracting team that
   included the same contractor to whom the source selection information was
   disclosed.

   DECISION

   Superlative Technologies, Inc. (SuperTec) protests the Department of
   Justice (DOJ), Office of Justice Programs' (OJP) cancellation of request
   for quotations (RFQ) No. 2007Q-025 for services to support the information
   security programs of OJP's Office of the Chief Information Officer
   (OCIO),[1] and the agency's subsequent sole-source acquisition of those
   services from a team comprised of Technical Management Resources, Inc.
   (TMR) and ManTech International Corporation (ManTech).

   We sustain the protest.

   BACKGOUND

   On June 21, 2007, OJP issued RFQ No. 2007Q-025[2], "seek[ing] contractors
   to provide support for the OCIO Information Technology Security Division
   (ITSD)," [3] and stating that "award will be made under the GSA [General
   Services Administration] Information Technology Contract Schedule 70."[4]
   RFQ 2007Q-025, at 1. The solicitation contemplated award of a contract for
   a 12-month base period, with four 12-month option periods, and a total
   estimated value of $13.5 million. The solicitation provided for award
   based on the proposal "most advantageous to OJP," and established various
   technical and cost/price evaluation factors, stating that "technical merit
   is more important than cost or price." Id. at A-3.

   On July 12, proposals were submitted by three offerors, including SuperTec
   and ManTech.[5] Thereafter, the agency determined that, although ManTech's
   proposal "came the closest" to meeting the solicitation requirements, none
   of the initial proposals met all of the solicitation requirements, and
   that discussions were necessary. Contracting Officer's Statement, Nov. 5,
   2007, at 2.

   On July 23, the agency opened discussions with the offerors, identifying
   various aspects of their proposals that required revision. Each offeror
   was provided with the agency's evaluation documents related to its
   proposal; these documents identified various technical strengths and
   weaknesses. Id.

   On July 24, the ITSD director, who was also the contracting officer's
   technical representative (COTR) and had been involved in developing the
   statement of work (SOW) for this solicitation, sent an email to the
   contracting officer and the deputy chief information officer stating that
   she (the COTR) should be "recused from further proceedings." AR, Tab F.
   The email revealed that, prior to submission of proposals, the COTR had
   "consulted with ManTech and [the third offeror]" regarding "requirements,
   pricing and labor categories," and that her communications "may have
   provided an unfair advantage to ManTech and [the third offeror] because
   they had an idea what the labor categories might be in advance." Id. She
   concluded that she "needed to disclose what [she] had done in order to
   protect the reputation of OJP as well as [her own] reputation as Director
   of ITSD." Id.[6]

   Thereafter, the contracting officer cancelled the solicitation,
   summarizing the basis for cancellation as follows:

     Prior to receipt of revised proposals, [I] learned of a potential
     procurement integrity issue that occurred during market research
     activities. The COTR, an OCIO employee, engaged in activity that
     appeared to raise concerns about the integrity of the pending
     procurement because of the disclosure of information about pricing and
     labor categories to the offerors.[[7]] Upon further research and
     consultation with the Office of the General Counsel, [I] cancelled the
     solicitation due to the tainted procurement.

   Contracting Officer's Statement, Nov. 5, 2007, at 2.[8]

   On July 25, the contracting officer wrote to SuperTec, stating:

     OJP has determined it is in the best interests of the Government to
     cancel this procurement. Therefore, RFQ 2007Q-025 is hereby canceled
     effective immediately.

     OJP intends to issue a new RFQ for the OCIO ISSS [information security
     support services] requirement very soon. When it is available, OJP will
     send a copy of the forthcoming RFQ to your company.

   AR, Tab 2.

   In August 2007, the agency states that it "conducted additional market
   research in order to identify other schedules and procurement vehicles."
   Contracting Officer's Statement, Nov. 5, 2007, at 2. In this regard, the
   record contains an email from the COTR to the contracting officer in
   which, under the heading of "Contract Vehicles," the COTR lists various
   existing contracts--all of which are ManTech contracts.[9] AR, Tab O.

   On August 20, the agency states that it "met with [TMR]. . . to discuss
   their interest in [the] pending requirement and later forwarded this
   vendor the formal RFQ."[10] Contracting Officer's Statement, Nov. 5, 2007,
   at 2. On August 24, the agency issued RFQ No. 2007Q-045, which contained a
   SOW virtually identical to the SOW contained in the cancelled
   solicitation. [11] AR, Tab 1; AR, Tab 9. However, RFQ No. 20007Q-45
   contemplated only one 12-month performance period, with an estimated
   procurement value of $2.7 million.[12] The new solicitation provided that,
   "pending an acceptable proposal," the agency anticipated a sole-source
   award to TMR pursuant to its GSA 8(a) STARS GWAC, stating: "Since the
   estimated value of this award will not exceed the 8(a) STARS competitive
   threshold of $3.5 million for directed 8(a) awards, the resultant award
   will be issued to your company on a sole source basis." AR, Tab 9, at 1.

   On September 4, TMR submitted a proposal, offering to use ManTech as its
   primary subcontractor. The agency expressly acknowledges that TMR
   "subcontracted with ManTech to develop [the September 4] proposal."
   Contracting Officer's Statement, Nov. 5, 2007, at 2-3. Much of the
   ManTech-developed September 4 proposal is virtually identical to the
   July 12 proposal ManTech submitted in response to the cancelled
   solicitation. AR, Tab B, Mantech Proposal (July 12, 2007); AR, Tab D,
   TMR-ManTech Proposal (Sept. 4, 2007).[13] The proposal was evaluated as
   "technically exceptional under every evaluation factor."[14] AR, Tab 3,
   Memo from COTR to Chief Information Officer, at 6.

   On September 19, in response to a request from SuperTec regarding the
   status of the procurement, the agency advised SuperTec that the contract
   "will be a directed source under the $3.5 M[illion] threshold." Protest
   Exh. B. On September 28, SuperTec filed this protest.[15]

   DISCUSSION

   SuperTec protests, among other things, that the agency's cancellation of
   RFQ No. 2007Q-025 was merely a pretext to avoid conducting a competitive
   procurement and resolving a potential bid protest. Because we find, based
   on the specific facts presented, that the cancellation was improper, we
   sustain the protest on this basis.

   We recognize that contracting agencies generally enjoy broad discretion in
   determining whether to cancel a solicitation, and need only have a
   reasonable basis for doing so. See, e.g., Surgi-Textile, B-289370, Feb. 7,
   2002, 2002 CPD para. 38 at 2; Encore Management, Inc., B-278903.2, Feb.
   12, 1999, 99-1 CPD para. 33. In this regard, a contracting agency's
   determination that the integrity of a procurement has been compromised may
   form a reasonable basis for cancellation. See Federal Acquisition
   Regulation (FAR) sect. 3.104-7. Nonetheless, where a protester has alleged
   that an agency's rationale for cancellation is but a pretext, that is, the
   agency's actual motivation is to avoid awarding a contract on a
   competitive basis or to avoid resolving a protest, we will closely examine
   the reasonableness of the agency's actions in canceling the acquisition.
   Gonzales-McCaulley Inv. Group, Inc., B-299936.2, Nov. 5, 2007, 2007 CPD
   para. 192 at 5; SMF Sys. Tech. Corp., B-292419.3, Nov. 26, 2003, 2003 CPD
   para. 203 at 4-6; Miller, Davis, Marter & Oper, P.C., B-242933,
   B-242933.2, Aug. 8, 1991, 91-2 CPD para. 176 at 4. Further, in considering
   a protest raising that concern, we view an agency's discretion, though
   broad, as not unfettered. In that regard, the overarching guidance of the
   FAR has direct relevance:

     Government business shall be conducted in a manner above reproach and,
     except as authorized by statute or regulation, with complete
     impartiality and with preferential treatment for none. Transactions
     relating to the expenditure of public funds require the highest degree
     of public trust and an impeccable standard of conduct. The general rule
     is to avoid strictly any conflict of interest or even the appearance of
     a conflict of interest in Government-contractor relationships.

   FAR sect. 3.101-1.

   Based on the record here, we conclude that the agency did not have a
   reasonable basis for canceling the RFQ. Specifically, as explained above,
   the COTR disclosed information to ManTech that she believed may have
   provided ManTech with an "unfair advantage." Thereafter, the agency
   cancelled the procurement citing concerns about "the integrity of the
   pending procurement," "potential organizational conflicts of interest,"
   and "a possible bid protest"--but then awarded a sole-source contract for
   the canceled requirements to a contracting team that included ManTech.
   Further, the sole-source award was based on a ManTech-developed proposal
   that was substantially similar to the earlier ManTech proposal for which
   the COTR suggested ManTech had obtained an "unfair advantage."

   Nothing in the record indicates that the agency gave any consideration to
   whether its contract award to the TMR/ManTech team complied with statutory
   or regulatory requirements regarding procurement integrity or OCIs.[16]
   See, e.g., 41 U.S.C. sect. 423 (2000)[17]; Federal Acquisition Regulation
   (FAR) sect. 3.104[18]; FAR Subpart 9.5[19]. More importantly, in light of
   the integrity concerns expressed by the agency itself, the cancellation
   and subsequent sole-source award to the TMR/ManTech team did nothing to
   address, much less remedy, those concerns. In fact, the events, viewed as
   a whole, support the protester's allegation that the solicitation was
   cancelled to, in effect, avoid further review of the issues raised. On
   this record, the agency did not have a reasonable basis for canceling the
   solicitation.[20]

   The protest is sustained.

   RECOMMENDATION

   We recommend that the agency rescind the cancellation notice regarding RFQ
   No. 2007Q-025, and document its consideration of the procurement integrity
   and/or OCI issues presented by the COTR's disclosure of information, as
   contemplated by the procurement integrity provisions of the Office of
   Federal Procurement Policy Act, 41 U.S.C. sect. 423, and FAR sect. 3.104,
   and the OCI requirements of FAR Subpart 9.5. In this regard, the agency's
   actions should include, but not necessarily be limited to, determining
   what information was disclosed and to whom, whether ManTech or any other
   offeror should be disqualified from the competition, and/or whether a
   level playing field can be established by disclosing the information
   provided to ManTech to all offerors. Following that consideration, the
   agency should conduct a competitive procurement for the requirements under
   the original RFQ, if otherwise appropriate. We also recommend that
   SuperTec be reimbursed its costs of filing and pursuing its protest,
   including reasonable attorneys' fees. SuperTec should submit its certified
   claim for costs, detailing the time expended and costs incurred, directly
   to the agency within 60 days of receipt of this decision. 4 C.F.R. sect.
   21.8(f)(1) (2007).

   Gary L. Kepplinger
   General Counsel

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

   [1] OJP is the primary grant-making bureau of the Department of Justice,
   and the OCIO is responsible for providing information security protection
   for OJP information.

   [2] Although the solicitation identified itself as an "RFQ," the term
   "proposal," as opposed to "quotation," appears repeatedly throughout both
   the solicitation and the agency's procurement record. As discussed below,
   the solicitation contemplated an evaluation and source selection scheme
   similar to those used in negotiated procurements. For the sake of
   consistency, our decision adopts the terminology used by the solicitation
   and the agency record.

   [3] Within OCIO, ITSD is responsible for "building and maintaining the OJP
   Security Program Framework, Certification and Accreditation of systems,
   maintaining an acceptable risk posture, and providing vulnerability
   management, monitoring, incident response, contingency planning, and
   security engineering services." Agency Report (AR), Tab 1, RFQ 2007Q-025,
   at 1.

   [4] SuperTec is the incumbent contractor, and has been performing the
   requirements at issue under its GSA 8(a) STARS (streamlined technology
   acquisition resources services) GWAC (government-wide acquisition
   contract). Section 8(a) of the Small Business Act authorizes the Small
   Business Administration to enter into contracts with government agencies
   and to arrange for performance of the contracts by awarding subcontracts
   to socially and economically disadvantaged small businesses. 15 U.S.C.
   sect. 637(a) (2000). The 8(a) STARS GWAC is a set-aside contract for small
   disadvantaged businesses under which directed-source (that is,
   non-competed) task orders valued at less then $3.5 million may be issued.

   [5] The proposal submitted by the third offeror is not relevant to
   disposition of this protest, and is not further discussed.

   [6] The email states:

     I am the Director of ITSD for the office of the OCIO. I am handling my
     first big procurement and felt that I had enough on the job training to
     see my way through the process. Because this is my first big contract, I
     have had to rely on information from other staff, contractors and my own
     skill set of knowing what was needed to get the job done for OJP. I am
     taking the COTR certification course and today is day two. I am learning
     many things in the class, which indicated to me that I have made
     mistakes.

     I was told that I could discuss the procurement before it was let. When
     figuring out requirements, pricing and labor categories, I consulted
     with Man Tech and [the third offeror]. Because our labor categories were
     so restricted and every one failed, but Man Tech came close, I felt that
     I may have provided an unfair advantage to ManTech and [the third
     offeror] because they had an idea what the labor categories might be in
     advance. As I was listening in class today, I also learned that a
     protest could happen if the contract was too restrictive. After learning
     there are laws with civil penalties associated with them for disclosure
     that provides unfair advantage, I felt that I needed to disclose what I
     had done in order to protect the reputation of the OJP as well as my
     reputation as Director of ITSD. . . . I feel that it is in the best
     interest of the government and OJP if I am recused from further
     proceedings and to start the procurement over to make sure that the
     playing field is level for all parties.

   AR, Tab F.

   [7] The record does not identify with any specificity the information
   "about pricing and labor categories" that the COTR disclosed, nor when
   disclosure occurred, or to whom. Agency counsel suggests that the COTR
   provided information to all of the offerors. Agency Legal Memorandum, Nov.
   29, 2007, at 3. However, the COTR's email states that ManTech and the
   third offeror were potentially recipients of an "unfair advantage," which
   does not support counsel's suggestion, and, instead, implies an advantage
   over a firm that did not receive the information. AR, Tab F.

   [8] Agency counsel characterizes the situation as an "organizational
   conflict of interest," and also acknowledges that cancellation was
   intended to avoid the scrutiny of a bid protest, stating:

     The COTR was new to the position and disclosed information about
     proposed staffing, pricing, and labor categories to the offerors. After
     negotiations concluded, prior to the receipt of revised proposals, the
     CO learn[ed] of this potential organizational conflict of interest (OCI)
     issue. . . . Upon further research and consultation with the OGC, the
     contracting officer cancelled the solicitation due to the tainted
     procurement.

                      *        *        *        *        * 

     Also, this cancellation was a prudent course of action under the
     circumstances as . . . the agency was concerned about a possible bid
     protest (on the basis of the OCI). . . .

   Legal Memorandum, Nov. 5, 2007, at 3, 5.

   [9] The COTR's activities in identifying ManTech contracts were performed
   notwithstanding her previous statement that she should be "recused from
   further proceedings." AR, Tab F.

   [10] TMR is a small business 8(a) contractor who holds a GSA 8(a) STARS
   contract; as discussed below, TMR subsequently teamed with ManTech to
   perform the requirements at issue. The agency has not produced any
   documents regarding communications leading up to that meeting, the
   substance of that meeting, or the attendees.

   [11] The agency agrees that "[t]he requirements remained virtually the
   same." Agency Legal Memorandum, Nov. 5, 2007, at 7.

   [12] The agency states: "The Government estimate for the Group IT 70
   procurement [RFQ No. 2007Q-025] was $13.5 million. Based on a five-year
   award, this figure is an average of $2.7 million per year. For the 8(a)
   STARS GWAC [RFQ No. 2007Q-045], the CO used this [$2.7 million] figure as
   the Government estimate." Agency Legal Memorandum, Nov. 5, 2007, at 3.

   [13] References to ManTech in the earlier proposal are replaced with
   references to the TMR-ManTech team, and it appears that some of the
   personnel initially proposed as ManTech employees are now proposed as
   either TMR employees or as "other direct costs" of TMR. AR, Tab B; AR, Tab
   D.

   [14] Again, this evaluation appears to have been performed by the
   COTR--despite the fact that she had previously stated that she should be
   "recused from further proceedings." AR, Tab F.

   [15] The agency initially argued that SuperTec's protest was not timely
   filed, because SuperTec was notified by a September 14 email that the
   agency had decided to "make award to another vendor," but did not file its
   protest until September 28, more than 10 days thereafter. The agency's
   assertion regarding timeliness is without merit. The agency did not advise
   SuperTec that it intended to make a sole-source award for the cancelled
   requirements until September 19. Further, SuperTec did not learn of the
   agency's basis for canceling the prior procurement, or the identity of the
   contracting team to which the sole-source award was made, until after its
   September 28 protest was filed. On this record, we deny the agency's
   request that the protest be dismissed.

   [16] In responding to this protest, agency counsel appears to argue that
   the procurement integrity and OCI requirements are inapplicable to ManTech
   due to its status as a subcontractor. Legal Memorandum, Nov. 29, 2007, at
   4. It is well settled that, where a subcontractor's knowledge or interests
   create an unfair competitive advantage, that advantage is generally
   imputed to the prime contractor. See, e.g., Ktech Corp., B-285330, Aug.
   17, 2000, 2002 CPD para. 77 at 4-6. Here, where the award to TMR was
   specifically based on the ManTech-developed proposal, the agency's
   assertion that ManTech's status as a subcontractor somehow shields the
   procurement from scrutiny regarding procurement integrity or OCI issues is
   without merit.

   [17] The Office of Federal Procurement Policy Act prohibits a government
   official from knowingly disclosing contractor bid or proposal information
   or source selection information before the award of a Federal agency
   procurement contract to which the information relates. 41 U.S.C. sect.
   423(a).

   [18] Section 3.104 of the FAR contains various procurement integrity
   provisions, including section 3.104-7, which provides: "A contracting
   officer who receives or obtains information of a violation or potential
   violation of [procurement integrity provisions] must determine if the
   reported violation or possible violation has any impact on the pending
   award or selection of the contractor."

   [19] FAR Subpart 9.5 establishes responsibilities, general rules, and
   procedures for identifying, evaluating, and resolving organizational
   conflicts of interest.

   [20] Supertec's protest raises several additional matters regarding the
   agency's contract award to the TMR/ManTec team, including TMR/ManTech's
   pricing of certain categories of labor as "other direct costs," and argues
   that the contract award is outside the scope of TMR's GSA contract. In
   light of our decision regarding cancellation of the procurement, we do not
   address these matters.