Monday, February 23, 2015

A "Catch 22" in Contracting

Suppose that you've identified a solicitation that your company is capable of performing but it contains a requirement that would be costly to implement. Your company would be happy to make the investment if it was awarded the contact, but if unsuccessful, the investment would be essentially worthless.

That was the dilemma faced by CompTech as it was considering a proposal to provide technical support services for various DoD agencies. The solicitation required that offerors have a "top secret" facility by a certain date. CompTech did not have one and so it did not win the award. CompTech appealed to the GAO, claiming that the top secret facility requirement was unduly restrictive as the Government had no need of the top secret facility until several months after contract award, by which time CompTech, had it been awarded the contract, could have gone out and secured the facility.

GAO did not sustain the protest. The procurement itself took a long time to complete as there were previous disputes including a size challenge. In total, it took nearly 13 months from the date of the initial RFP (Request for Proposal) until the ultimate date for proposal submission. Meanwhile, the Government had extended the its current contract several times and it was jeopardizing its ability to obtain the services it needed. The GAO ruled that the fact that CompTech disagrees with the Agency's judgment concerning those needs does not show that the Agency's judgment is unreasonable.

The GAO also ruled that the fact that a requirement may be burdensome or even impossible for a particular firm to meet does not make it objectionable if the requirement properly reflects the Agency's needs. In fact, the record showed that five firms that did respond to the solicitation, had top secret facilities, undercutting CompTech's argument that the requirement was unduly restrictive.

Companies seeking Government work need to take into consideration the cost of entering the market. Sometimes a significant investment is required and that investment needs to have reasonable return projections. If it is too costly, perhaps that solicitation is not for you.

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