TITLE: B-310737.3; B-310737.4; B-310737.5, Native American Industrial Distributors, Inc., April 15, 2008
BNUMBER: B-310737.3; B-310737.4; B-310737.5
DATE: April 15, 2008
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B-310737.3; B-310737.4; B-310737.5, Native American Industrial Distributors, Inc., April 15, 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: Native American Industrial Distributors, Inc.
File: B-310737.3; B-310737.4; B-310737.5
Date: April 15, 2008
Lee P. Curtis, Esq., Anthony L. Steadman, Esq., and Troy E. Hughes, Esq.,
Perkins Coie LLP, for the protester.
James L. Weiner, Esq., Department of the Interior, for the agency.
William K. Walker, Esq., Walker Reausaw, for Chenega Federal Systems, LLC,
an intervenor.
Paul N. Wengert, Esq., and Ralph O. White, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest that agency unreasonably made award of a contract under a Buy
Indian Act set-aside because there are no American Indians holding
management positions in the company is denied where the solicitation did
not impose a specific test for eligibility for award, and the agency
reasonably interpreted the Buy Indian Act as allowing the company to
qualify for award, since the company is a wholly-owned subsidiary of an
Alaska Native Corporation pursuant to the Alaska Native Claims Settlement
Act.
2. Protest that agency improperly selected for award proposal that failed
to provide letters of commitment for key personnel is sustained where
solicitation specifically required offerors to submit letters of
commitment for all key personnel.
DECISION
Native American Industrial Distributors, Inc. (NAID), a small business,
protests the award of a contract to Chenega Federal Systems, LLC, by the
Department of the Interior, Bureau of Indian Affairs (BIA), under request
for proposals (RFP) No. RBK00070010 for information technology
infrastructure services. NAID objects that the contract award was
improperly made to a firm that does not meet the requirements of the Buy
Indian Act, 25 U.S.C. sect. 47, and that the agency overlooked the
omission of required letters of commitment from the Chenega proposal that
should have rendered the proposal unacceptable.
We sustain the protest.
BACKGROUND
The BIA issued the RFP on July 3, 2007, seeking fixed-price proposals to
provide information technology support services in twelve functional
areas, ranging from applications and database support to private branch
exchange (telephone), video teleconferencing, and network support
services. Performance Work Statement at 5-33. The RFP provided for a base
period of 12 months, followed by four optional 12-month extensions.
The RFP provided that award of the contract[1] would be based on
evaluation of five factors, which were listed in descending order of
importance: technical approach, past performance, personnel resources,
corporate experience, and "price/cost." RFP attach. 3, Evaluation Factors,
at 1.[2] With respect to the personnel resources factor, the RFP specified
that the evaluation would consider
The degree to which the staffing approach satisfies the requirements
defined in this document. Include the following: 1. a staffing plan
which addresses capabilities and experience relating to the attached
Statement of Work; 2. resumes for key personnel with letters of
commitment.
Id. at 2.
The RFP also indicated that all contractor personnel (whether key or not)
would be required to submit a signed nondisclosure agreement, and provided
a nondisclosure agreement form. RFP attach. 1, Performance Based Statement
of Work, at 49 ("The Government will provide a Non-Disclosure Statement to
be signed by each Contractor personnel"). The employee nondisclosure
agreement form provided, in relevant part, as follows:
I, _________, am an employee of or a subcontractor to [Contractor Name]
, a contractor acting under contract to the __________ under Prime
Contract No. ____, through Task Order ___. I understand that in the
performance of this task, I may have access to sensitive or proprietary
business, technical, financial, and/or source selection information
belonging to the Government or other contractors. . . . I agree not to
discuss, divulge, or disclose any such information or data to any person
or entity except those persons directly concerned with the performance
of this task order. . . .
In the event that I seek other employment, I will reveal to any
prospective employer the continuing obligation in this agreement prior
to accepting any employment offer.
RFP attach. 2, Non Disclosure Agreement Form, at 1.
As issued, the RFP notified offerors that it was set aside for
service-disabled veteran-owned small business concerns (SDVOSBC), RFP at
95, while also advising that "[t]his acquisition will be a 100% Buy Indian
set-aside under the Buy Indian Act." RFP attach. 4, Instructions to
Offerors, at 1. In response to questions from prospective offerors, the
BIA attempted to clarify its instructions as follows:
No, the [SDVOSBC set-aside] clause was not in error. Buy Indian Act is
the #1 set-aside and preference. Anyone not qualifying under the Buy
Indian Act will be disqualified. Any subcontracting preference is to be
given first to Buy Indian qualified firms and then to Service Disabled
Veteran Owned businesses.
RFP attach. 8, Responses to Offeror Questions, at 14; see also id. at 11,
16, 17, 29 (similar questions and responses).
Five firms submitted proposals, including NAID and Chenega. While we
understand that Chenega's initial proposal included signed nondisclosure
agreements, it did not include letters of commitment for any of the key
personnel identified in the proposal.[3] The BIA evaluators rated
Chenega's proposal as acceptable, and the contracting officer (CO)
ultimately determined that it provided the best value overall. By letter
dated October 25, 2007, the BIA notified NAID that the agency had selected
Chenega's proposal for award. NAID filed a protest of that award decision
with our Office on October 30, and the BIA then took voluntary corrective
action before the due date for an agency report. As a result, we dismissed
as academic the earlier challenge to this procurement. Native Am. Indus.
Distrib., Inc., B-310737, Nov. 20, 2007.
The agency's corrective action primarily involved amending the RFP to
delete the SDVOSBC set-aside, and stating the numerical weighting for the
evaluation factors. RFP amend. Nov. 14, 2007, at 1.[4] After requesting
revised proposals, the BIA received and evaluated final proposal
revisions.
Once again, Chenega's revised proposal did not include letters of
commitment. However, under the heading "Key Personnel," it did include 23
resumes and 22 nondisclosure agreements (that is, the proposal included a
nondisclosure agreement for all but one of the employees identified). In
the certifications section of the proposal, included as required by FAR
sect. 52.212-3, Chenega marked the block to certify that it was a Native
American firm. Supplemental CO Statement at 3. The revised proposal also
stated that Chenega Federal Systems was a wholly-owned subsidiary of
Chenega Corporation, an Alaska Native Corporation. Chenega Revised
Proposal at 3 (Cover Letter). The proposal also included a copy of the
Certificate of Eligibility issued by the BIA on November 18, 1974,
recognizing the Native Village of Chenega, Alaska as an eligible
beneficiary under the Alaska Native Claims Settlement Act. Chenega Revised
Proposal at A-33.
In evaluating Chenega's revised proposal, the evaluators again did not
identify the absence of letters of commitment for Chenega's key personnel.
As relevant here, the final ratings for the NAID and Chenega proposals
were as follows:
+------------------------------------------------------------------------+
| |Technical| Past |Personnel|Corporate Experience| Price |
| |Approach |Performance|Resources| | |
|-------+---------+-----------+---------+--------------------+-----------|
|NAID | 42.0 | 28.0 | 7.6 | 3.8 |$46,718,554|
|-------+---------+-----------+---------+--------------------+-----------|
|Chenega| 47.2 | 33.4 | 7.8 | 5.0 |$51,649,723|
+------------------------------------------------------------------------+
Agency Report, Tab 9, Source Selection Decision, at 6, 18.
After first concluding that Chenega was eligible for award, the CO
concluded that Chenega's higher-rated proposal was worth its higher price.
Id. at 21-22. On December 28, the BIA once again awarded the contract to
Chenega. After NAID received a letter dated December 31 that was labeled
as a combined notice of award and written debriefing, NAID filed this
protest with our Office.
During the development of the record for this protest, NAID inquired about
the absence of Chenega's letters of commitment from the agency report. In
response, the BIA informed counsel for NAID by telephone on March 6 that
Chenega had not provided letters of commitment with its revised proposal.
NAID raised this issue as a supplemental basis of protest on March 7.
Supplemental Protest at 1 n.1. Shortly thereafter, Chenega provided copies
of letters of commitment for its key personnel to our Office and to
counsel for the other parties.
In the BIA report addressing this supplemental protest, the CO provided an
explanation of his views about the acceptability of Chenega's proposal
with respect to key personnel, despite the omission. Specifically, the CO
stated that Chenega's revised proposal was acceptable because "The
Government viewed [Chenega's] proposed key personnel as unchanged from the
original proposal since the Government received the letters of commitment
in the first proposal." Supp. CO Statement at 4. A day later, however,
counsel for the BIA discovered that the CO's representation was incorrect.
Counsel promptly acted to correct the record by acknowledging that the BIA
had never received the letters of commitment from Chenega during the
procurement process. Instead, the BIA acknowledged that it first received
these letters when they were produced by counsel for Chenega during the
course of this protest.
DISCUSSION
NAID argues that the evaluation of revised proposals was unreasonable in
several respects, and that discussions were inadequate. NAID also argues
that Chenega is ineligible for award under the Buy Indian Act set-aside,
and that Chenega engaged in a bait-and-switch of key personnel. During the
protest, NAID withdrew the bait-and-switch allegations, and instead
supplemented its protest to argue that the BIA had overlooked the omission
of required letters of commitment from Chenega's revised proposal. We
conclude that the BIA reasonably found Chenega to be eligible for award of
a Buy Indian Act set-aside contract, but unreasonably failed to consider
Chenega's omission of the required key personnel letters of commitment,
and we sustain the protest on this basis.[5]
First, we consider the argument that Chenega is ineligible for award under
a procurement conducted as a Buy Indian Act set-aside. Citing a court case
and decisions by our Office under Buy Indian Act set-asides, NAID
maintains that, in order to be eligible for award under a Buy Indian Act
set-aside, a firm must have: (1) at least 51 percent American Indian
ownership; (2) American Indians involved in the daily management of the
firm; and (3) an American Indian recipient of the majority of the firm's
accrued earnings. Protester's Comments at 8 (citing Colorado Constr.
Corp., B-290960, Sept. 6, 2002, 2002 CPD para. 162 at 1, and other cases).
NAID argues that neither the individual who serves as president and chief
executive officer of Chenega, nor the individual who serves as the manager
of day-to-day operations, is an American Indian. Id. Therefore, NAID
contends that Chenega is not eligible for award.
The BIA and Chenega argue that the 3-part test cited by NAID is not
required by either the Buy Indian Act or the terms of the RFP. Rather, the
BIA emphasizes first that, regardless of whether American Indians are
involved in the firm's management, Chenega is a wholly-owned subsidiary of
an Alaska Native Corporation (ANC). See Chenega Revised Proposal at 3
(Cover Letter). As a result, the BIA contends that it reasonably concluded
Chenega is an eligible offeror pursuant to the Buy Indian Act.
In considering the application of the Buy Indian Act, we have recognized
that the BIA is entitled to considerable deference in determining the
standards to apply, and the evaluation of whether a particular firm meets
those standards. Cheyenne, Inc., B-260328, June 2, 1995, 95-2 CPD
para. 117 at 4. Unlike the solicitations in the decisions cited by NAID,
the RFP here provided no specific criteria by which eligibility for the
set-aside would be determined. Nor does the statute itself require the BIA
to use particular criteria. Rather, the operative language simply provides
that "[s]o far as may be practicable Indian labor shall be employed, and
purchases of the products . . . of Indian industry may be made in open
market in the discretion of the Secretary of the Interior." 25 U.S.C.
sect. 47 (2000 & Supp. V 2005).
While the protester correctly points out that the BIA has used the 3-part
test in solicitations for services and supplies in the past, we believe
the general statutory scheme provides sufficient discretion for the BIA to
consider Chenega to be an eligible offeror under the Buy Indian Act,
simply because it is the wholly-owned subsidiary of an Alaska Native
Corporation.[6] Accordingly, we deny this ground of protest.
Next, NAID objects that Chenega failed to submit letters of commitment for
its key personnel, and argues that the BIA failed to consider this fact in
its evaluation of Chenega's revised proposal, while the same problem was
labeled as a deficiency for another firm, and contributed to that firm's
proposal being found unacceptable.
The BIA argues that the lack of letters of commitment was actually an
insignificant matter, while Chenega argues that it viewed the
nondisclosure agreements as the "functional equivalent of letters of
commitment," particularly since the RFP did not further describe the
requirement for letters of commitment. E-mail from Counsel for Intervenor
(Mar. 12, 2008) at 1; Intervenor's Second Supplemental Comments at 2.
Moreover, the BIA argues that NAID was not competitively prejudiced by the
agency's relaxation of this requirement in favor of Chenega. According to
the BIA, even if the omission had been identified as a deficiency for
Chenega under the personnel resources factor, Chenega would nevertheless
have been rated superior to NAID overall under the other non-price
factors, and still would have received the contract award.
We disagree on each of these points, which we will address in turn. First,
we note that the purpose of a requirement for an offeror to provide
letters of commitment for key personnel is to preclude an offeror from
proposing an impressive array of employees, being evaluated on that basis,
and receiving award, even where the persons proposed had never committed
themselves to the offeror, and may have had no intention of doing so. Xeta
Int'l Corp., B-255182, Feb. 15, 1994, 94-1 CPD para. 109 at 9; cf. Science
Applications Int'l Corp., B-290971 et al., Oct. 16, 2002, 2002 CPD
para. 184 at 6-7.[7] We also find no basis in the record for the BIA's
claim that omission of the letters of commitment could properly be
considered an insignificant matter. The record here shows that the BIA
overlooked the issue entirely in evaluating both Chenega's initial and
revised proposals. We also note that the BIA's arguments that the omission
of the letters of commitment is insignificant[8]--and that Chenega would
have received the award, even if the agency had noticed the omission of
the letters of commitment--are contrary to how the agency evaluated
another offeror. They are, in essence, new assessments made in the heat of
litigation, and are therefore entitled to little weight in our
deliberations. Boeing Sikorsky Aircraft Support, B-277263.2, B-277263.3,
Sept. 29, 1997, 97-2 CPD para. 91 at 15.
Second, we think the form nondisclosure agreements here cannot reasonably
be seen as substitutes for letters of commitment. The nondisclosure
agreement was limited to just that--a promise not to disclose information.
An employee with little or no intention of working on the contract could
sign the nondisclosure agreement without contradicting that intention.
More generally, neither the BIA nor Chenega has shown anything in
Chenega's revised proposal that could be construed as a substitute for a
letter of commitment from each of the key personnel listed.
Third, even though the RFP did not specify the form or exact content of
letters of commitment, and did not further explain the requirement in the
instructions to offerors, we do not think these facts excuse the omission
of some form of a letter of commitment; that is, a signed statement by
each key employee (or prospective key employee) whose resume is submitted,
which generally confirms that he or she has made a commitment to work for
the offeror on the pending contract if its proposal is successful.
Finally, with respect to the BIA's assertion that NAID has not been
competitively prejudiced here, we again disagree. Our Office will not
sustain a protest unless the protester demonstrates a reasonable
possibility that it was prejudiced by the agency's actions, that is,
unless the protester demonstrates that, but for the agency's actions, it
would have had a substantial chance of receiving the award. McDonald
Bradley, B-270126, Feb. 8, 1996, 96-1 CPD para. 54 at 3; see Statistica,
Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996). We conclude
that the misevaluation was prejudicial to the protester based on our
review of the evaluation record, which shows that the evaluators
considered the omission of letters of commitment by another offeror to be
a significant deficiency. Accordingly, if the BIA had noticed the omission
of these letters from Chenega's proposal, Chenega too could have been
assessed a deficiency in this area--and like that offeror might have been
found unacceptable for the omission--while NAID, with its lower overall
price, could have received the award. Thus, we sustain the protest on this
basis.
CONCLUSION AND RECOMMENDATIONS
During the development of the protest, the BIA reported that it had
learned from Chenega that "most of" its proposed key personnel remained
available (implying that some were not), and that the BIA was prepared to
proceed under the contract awarded to Chenega because the person proposed
as the program manager was still available. Supplemental CO Statement at
4. The BIA's position suggests that the agency may have overstated its
requirements with respect to key personnel by requiring offerors to
provide letters of commitment for all key personnel. Accordingly, the BIA
should first determine whether the requirement for letters of commitment
for all key personnel represents the agency's actual needs. If the BIA
concludes that the RFP requirement for letters of commitment for all key
personnel reflects its needs, we recommend that the agency reevaluate the
existing proposals according to the evaluation criteria in the RFP, and
make a new source selection decision. If, however, the agency concludes
that it does not need letters of commitment--or does not need them for all
key personnel--we recommend that the BIA amend the RFP to accurately state
its requirements, state the basis on which offerors will be evaluated, and
request revised proposals.
With respect to reopening this competition, we note that both the
protester and the intervenor have raised questions about whether the
information provided to each of them before the submission of the final
proposal revisions adequately communicated to them the areas of their
respective proposals requiring correction or amplification. Although we do
not reach any conclusion on the merits about whether these exchanges
constituted discussions--and if so, whether the discussions were
adequate--the BIA should consider conducting discussions with all
competitive range offerors before requesting final proposal revisions.[9]
We also recommend that the protester be reimbursed its costs of filing and
pursuing the protest, including reasonable attorneys' fees. Bid Protest
Regulations, 4 C.F.R. sect. 21.8(d)(1) (2007). The protester should submit
its certified claim, detailing the time expended and costs incurred,
directly to the contracting agency within 60 days of receiving this
decision. 4 C.F.R. sect. 21.8(f)(1).
The protest is sustained.
Gary L. Kepplinger
General Counsel
------------------------
[1] Numerous conflicting statements in the RFP caused offerors to ask the
BIA what type of contract would be issued. The BIA responded that the
"contract will be FFP [firm fixed price] Completion IDIQ using FFP task
orders" (with no explanation of the meaning of "Completion" here). See RFP
attach. 8, Responses to Offeror Questions, at 16, 26. Although portions of
the RFP, including the evaluation factors document, refer to the award of
"this task order," there now appears to be no dispute that the BIA
intended to award a single contract.
[2] The RFP also incorporated contradictory provisions with respect to the
evaluation of options under the price/cost factor: Federal Acquisition
Regulation (FAR) sections 52.217-3, 52.217-4 and 52.217-5. RFP at 107. It
appears from the record that the BIA may have intended to incorporate only
FAR sect. 52.217-5, because it evaluated prices by including the option
years, although it did make certain price adjustments, based on the
potential of deleting some services from the contract scope. While we note
these issues, they are not raised in the protest, and we do not address
them further.
[3] Since our review was focused on the sufficiency of the later source
selection decision, the record of the evaluation of initial proposals was
not fully developed. However, it appears that the BIA evaluators did not
notice the absence of letters of commitment from the Chenega proposal in
this initial evaluation. In contrast, the record reflects that the absence
of letters of commitment in a third offeror's proposal was cited as a
"deficiency" under the personnel resources factor (along with other
concerns), which then resulted in a rating of "unacceptable" under that
factor. Agency Report, Tab 8, Evaluation Panel Consensus Report, at 9.
[4] Although there was more than one amendment to the RFP, the individual
amendments were not numbered; however, they were dated. Accordingly, we
have used the date to identify the specific amendment.
[5] As a threshold matter, BIA argued throughout this protest that NAID is
not an interested party to challenge this award because even if Chenega
were found unacceptable, another offeror's technical score was superior to
NAID's technical score. BIA's contention overlooks the fact that this was
a best value procurement and NAID proposed a lower total price than either
Chenega or the other competitive range offeror. Therefore, the BIA could
have selected NAID under the award criteria by concluding that its lower
price made it the best value, or that the higher-rated proposals of the
other two offerors were not worth their higher prices. For this reason, we
conclude that NAID is an interested party here.
[6] In its comments on this ground of protest, Chenega points out that
several federal government regulatory schemes would all consider a firm in
Chenega's position to be an eligible Indian entity for their respective
programs. Chenega argues that these include: (1) the Small Business
Administration regulations, 13 C.F.R. sect. 124.109(a)(4); (2) the
implementation of the Department of Interior Indian preference in the
agency FAR supplement, 48 C.F.R. sections 1452.226-70 and 1452.226-71; and
(3) the FAR implementation of the Indian Incentive Program, FAR
sect. 26.101.
[7] The BIA cites for support of its position our decision in Science
Applications Int'l Corp., in which the solicitation required each offeror
to submit key personnel resumes and a "written agreement . . . to work for
the offeror effective at contract award." In that decision, our Office
concluded that the key personnel resumes met this requirement where each
resume was signed by the employee, each employee involved was already
employed by the offeror, and each employee included a statement of
personal commitment to the contract effort on the face of the resume. By
contrast, neither the resumes (which are not signed) nor the nondisclosure
agreements here contain any similar statement; furthermore, the resumes
indicate that significantly less than half of the key personnel are
current employees of Chenega or its team members.
[8] We also think that the BIA's claim--i.e., that Chenega's failure to
provide the required letters of commitment is immaterial--is significantly
undercut by the argument the agency made earlier in the development of
this protest. When NAID first objected that Chenega's revised proposal did
not contain the required letters of commitment, the BIA argued that the
omission was inconsequential because the required letters had been
provided in Chenega's initial proposal. It was only after conceding that
the letters were never submitted during the competition that the BIA
argued that the omission could be properly waived.
[9] In this regard, we anticipate that the BIA may want to consider the
letters of commitment that were submitted by Chenega during this protest.
To do so, it appears the BIA will need to reopen discussions with all
offerors remaining in the competitive range to avoid allowing only one of
them (Chenega) to provide information that has a significant bearing on
the evaluation (that is, the letters of commitment). See Corporate Am.
Research Assocs., Inc., B-228579, Feb. 17, 1988, 88-1 CPD para. 160 at 3
(agency receipt of letters of commitment after closing date for submission
of proposals necessitated holding discussions with all offerors).