Asset Protection & Security Services, L.P. v. United States
Filed: September 12, 2020; Redacted Version Issued for Publication: October 1, 2020 (2020)
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Rule of Law:
A disappointed bidder lacks standing to protest a contract award if its proposal fails to conform to a material term of the solicitation, rendering it unacceptable and ineligible for award. A solicitation term is material if it has more than a negligible impact on the price, quantity, quality, or delivery of the contract, and an offeror has the responsibility to submit a proposal that conforms to all material terms.
Facts:
- On August 22, 2016, the Department of Homeland Security, United States Immigration and Customs Enforcement (ICE) issued a request for proposals (Solicitation No. HSCEDM-16-R-00001) for guard, food, and transportation services for a detention center in Florence, Arizona, requiring offerors to propose firm-fixed prices.
- On December 5, 2016, ICE issued Amendment No. 5 to the Solicitation, responding 'Yes' to Question 246, which asked if the Federal Government would issue a tax exemption certificate for Arizona's 4.5% business tax to the successful offeror.
- Asset Protection & Security Services, L.P. (Asset) submitted a proposal that included the statement: 'Sales taxes were not charged due to the government’s expressed intent to provide Team Asset with a tax-exempt certificate, where applicable.'
- On May 31, 2019, ICE issued Amendment 19, clarifying that the government 'CANNOT delegate its tax exempt status to contractors' in response to Question 246. Asset acknowledged receipt but informed the agency its proposal did not require further revision.
- On June 4, 2019, ICE issued Amendment 20, reiterating the clarification that the government 'CANNOT delegate its tax exempt status' and explicitly changing the answer to Question 246 from 'Yes' to 'No.' Asset again informed the agency no changes were deemed necessary to its price proposal.
- On November 21, 2019, ICE issued Amendment 21, allowing offerors to update only their pricing in Volume IV, not narratives. Asset confirmed its proposal's validity and stated no changes to pricing were made except for those caused by new wage determinations.
- Asset's final proposal submitted after Amendment 21 retained the original language stating that sales taxes were not charged 'due to the government's expressed intent to provide Team Asset with a tax-exempt certificate, where applicable.'
- The Solicitation, as amended, clearly stated: 'Any form of contingency pricing is unacceptable and your proposal will be removed from competition as unresponsive.'
Procedural Posture:
- ICE issued Solicitation No. HSCEDM-16-R-00001 for detention center services.
- ICE initially awarded the contract to Akima Global Services, LLC (Akima) on September 26, 2018.
- Asset Protection & Security Services, L.P. (Asset) and another offeror, AKHI, LLC (AKHI), filed bid protests with the Government Accountability Office (GAO).
- The GAO dismissed these protests on November 9, 2018, because the agency agreed to take corrective action.
- ICE re-evaluated proposals and issued a second award to Akima on August 21, 2019.
- Asset filed a second GAO bid protest on September 3, 2019, challenging the second award.
- The GAO dismissed Asset's second protest on October 1, 2019, because ICE again indicated its intent to take corrective action.
- ICE re-evaluated proposals for a third time and awarded the contract to Akima on December 19, 2019.
- Asset filed a third GAO protest, arguing the agency unreasonably deemed its proposal ineligible due to a price contingency and that the evaluation and trade-off analysis were flawed.
- On April 6, 2020, the GAO denied Asset's protest, finding the agency's conclusion that Asset's proposal created a contingency was unreasonable, but ultimately concluded Asset was not prejudiced by the agency's error.
- Asset then filed a bid protest complaint in the United States Court of Federal Claims.
- The Defendant (United States) and Defendant-Intervenor (Akima) filed motions to dismiss, arguing Asset lacked standing because its proposal was non-compliant with the solicitation.
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Issue:
Does a disappointed bidder have standing to bring a bid protest when its proposal fails to conform to a material term of the solicitation, specifically by retaining language about a tax exemption after the agency explicitly clarified that no such exemption would be provided?
Opinions:
Majority - Marian Blank Horn
No, Asset does not have standing to bring a bid protest because its proposal failed to conform to a material term of the solicitation, rendering it non-responsive and ineligible for award. The court explained that a proposal that fails to conform to the material terms and conditions of a solicitation should be considered unacceptable and cannot be awarded. A term is material if it has more than a negligible impact on the price, quantity, quality, or delivery of the subject of the proposal, serving a substantive purpose. Here, the agency initially indicated a tax exemption would be provided but subsequently issued Amendments 19 and 20, explicitly clarifying that the government 'CANNOT delegate its tax exempt status to contractors.' Despite these repeated clarifications and opportunities to revise pricing, Asset deliberately chose not to modify its price proposal to remove the statement that sales taxes were not charged 'due to the government's expressed intent to provide Team Asset with a tax-exempt certificate, where applicable.' This non-conforming language, in the face of clear agency instruction, had a material impact on Asset's proposed firm-fixed price bid because it demonstrated a fundamental misunderstanding or disregard of a key pricing requirement. The court rejected Asset's argument that the phrase 'where applicable' saved its proposal, finding it inconsistent with the amended solicitation. Furthermore, the government is not obligated to seek further clarification from an offeror who fails to submit a compliant proposal; rather, the burden is on the offeror to submit a well-written, conforming proposal. Overlooking Asset's non-compliance would constitute an impermissible waiver of a mandatory requirement for the benefit of only one offeror, leading to disparate treatment. Therefore, Asset's proposal was non-responsive and ineligible for award. Since Asset submitted a non-responsive bid, it lacked standing to challenge the award, and the court lacked subject-matter jurisdiction to hear the protest, a matter that cannot be forfeited or waived. While acknowledging the Government Accountability Office's (GAO) prior decision that the agency's contingency pricing conclusion was unreasonable, the court noted that GAO decisions are not binding and found that the GAO's focus on 'contingency pricing' and 'future negotiations' missed the larger issue of the proposal's responsiveness to material terms.
Analysis:
This case significantly reinforces an offeror's strict responsibility to ensure its proposal conforms precisely to all material terms of a government solicitation, particularly after amendments. It clarifies that an agency's inclusion of a non-compliant proposal in a best value trade-off analysis does not waive the non-compliance or confer standing upon the offeror. The decision underscores that subject-matter jurisdiction, including a protestor's standing, is a fundamental threshold issue that cannot be forfeited or waived by the parties or the agency's actions. Future bidders must exercise extreme diligence in reviewing and revising their proposals in light of solicitation amendments, as failure to correct pricing assumptions that contradict express agency directives can lead to disqualification and loss of the right to protest, regardless of the proposal's technical merit.
