GSA (General Services Administration) issued an RFP (Request for Proposal) for IT (Information Technology) Services anticipating the award of 25 to 30 contracts under a multiple-award, ID/IQ (indefinite-delivery/indefinite-quantity) with a NTE (not-to-exceed) price of $50 billion (how's that for using a bunch of acronyms in a single sentence?). Obviously that's a lot of money even though its unlikely the Government will really spend $50 billion. Nevertheless, there was tremendous potential and many contractors submitted bids to vie for a piece of the action.
Awards were to be made on a "best value" basis, with proposals evaluated under two equally important technical factors; past performance and contract planning. These factors, when combined, were significantly more important than price. Prior to the evaluation, proposals were to be reviewed for acceptability on a pass/fail basis. Those failing this review would not be considered further.
Proposals were required to include the Defense Contract Audit Agency's (DCAA), or other federal audit agency's verification that its accounting system had been audited and determined adequate for determining costs under cost-reimbursable contracts. Any offeror that did not have audit verification but was certain that its accounting system has been determined adequate could provide contact information from a cognizant auditing representative office. Offerors were warned that their proposals would be rejected if the agency was unable to obtain audit verification.
One of the bidders was A-TEK, Inc. A-TEK had a number of cost-reimbursable contracts and had submitted provisional billing rates to DCAA. However, when GSA contacted DCAA, it could not verify that DCAA had ever reviewed and/or approved A-TEK's accounting system. When GSA requested additional contact information, A-TEK argued that the requirement was arbitrary, and asked GSA to come in and perform its own audit of the accounting system. Instead, GSA rejected A-TEK's bid. A-TEK protested GSA's action to the GAO.
GAO upheld the GSA rejection. GAO stated that GSA's evaluation was reasonable. The RFP unequivocally required offerors to have DCAA or other federal audit agency verification that the firm's accounting system had been audited and determined adequate for determining costs under cost-reimbursable contracts. The GAO found that A-TEK did not have any cost-reimbursement contracts in place; had never been audited by DCAA; and had never been subject to a pre-award survey of its accounting system. Furthermore, A-TEK's submission of provisional rates was not relevant because it lacked any existing cost-type contracts. The GAO decision cited a number of other factors but in short, A-TEK failed to provide any information that satisfied the RFP requirement. Based on A-TEK's failure to provide the required information, GSA reasonably concluded that the firm lacked a properly audited accounting system, and thus reasonably rejected the firm's proposal.
A-TEK asserted that since only the government can request and perform the required audit, meeting the requirement is beyond the firm's control, and it should not be penalized as a result. GAO, in a back-handed way, agreed with A-TEK's assertion that the requirement may not have been reasonable. However, GAO also stated that this requirement should have been protested prior to the closing for accepting proposals, not after. Since the protest was received after the closing date, the appeal was untimely and not sustained.
In this solicitation, any contractor that had not had its accounting system audited by DCAA or another federal audit agency and declared adequate for cost-reimbursable contracts were effectively eliminated from the bidding process. We agree with A-TEK that the requirement is not reasonable. However, the lesson to take home from this case is that contractors must immediately protest any such unreasonable solicitation requirements. Do not wait until after bids are due and do not try to finesse your way through with "alternative" methods of satisfying specific requirements.