CHANGE IN ORDERING STRATEGY AFTER FINAL PROPOSAL REVISIONSREQUIRES THAT THE SOLICITATION BE AMENDED

By Dick Lieberman, Consultant and Retired Attorney There are two fundamental reasons for conducting discussions in negotiated procurements and allowing contractors to modify their initial proposals: (1) To permit contractors to respond to government-determined deficiencies and weaknesses in their offer and revise it so as to make it a better value to the government; and (2) To allow the Government to modify the solicitation when specifications or needs have changed since the original proposals were submitted, and to permit contractors to revise proposals to meet the changed needs . The Government Accountability Office (“GAO”) has frequently sustained bid protests where there were flaws in the discussion or final proposal revision (“FPR”) process. In evaluating the proposals of seven contractors submitted in response to a Navy solicitation for network systems on ships in support of the Consolidated Afloat Networks and Enterprise Services (“CANES”) Program, the agency failed to amend its solicitation when it changed the solicitation’s price evaluation scheme so much that it no longer reasonably reflected the ordering strategy to be used in the execution of the final contract. CGI Federal, Inc., B-410330.2, Dec. 10, 2014. The CANES RFP provided for award of up to three indefinite delivery/indefinite quantity contracts. During the evaluation of the seven offers, the Navy changed its mind and decided to make award to the five top-ranked offerors. At the same time, the Navy changed its strategy for placing delivery orders with the selected contractors. Instead of placing 3-4 orders of large quantities of CANES units annually as planned in the Request for Proposals (“RFP”), the Navy decided to issue more orders for smaller quantities of CANES units in order to achieve more competition on a per order basis. The Navy believed that this would reduce risk. However, the Navy’s price evaluation of the proposals was based solely on an ordering level of 15 units-which no longer matched the Navy’s actual plans for the contract. The GAO pointed to two fundamental principles that had been violated in the Navy’s source selection decision: (1) although an agency must decide on an appropriate and reasonable method for evaluating offerors’ prices, the agency may not use an evaluation method that produces a misleading result; and (2) where an agency’s requirements materially change after a solicitation has been issued, it must issue an amendment to notify offerors of the changed requirements and afford them an opportunity to respond (with an FPR, for example). GAO sustained CGI’s protest, holding that where “the agency’s ordering intended ordering strategy does not anticipate placing orders at the 15 unit per order level, we fail to see how comparing prices at this level, and using such prices as the basis for a [best value] tradeoff decision [is] reasonable.” The GAO recommended that the solicitation’s price evaluation methodology be amended to reflect the actual ordering needs, that the Navy obtain revised prices, and then make a new source selection decision. CGI points out how important it is that agencies be transparent in their solicitation—especially if their needs are revised after proposals are received. Any change in a strategy that materially affects the source selection must be communicated to all offerors, and they must be allowed to respond. Multiple BAFOs or FPRs Although CGI does not involve multiple BAFOs or FPRs, that topic is a matter of historical interest concerning FAR Part 15. FPR is the new name for BAFOs, and it is worth examining an important change made 17 years ago in the FAR dealing with negotiated procurements. Prior to 1997, the FAR provided that while the contracting officers generally should not reopen discussions after the receipt of Best and Final Offers (“BAFOs”), they could do so when it was clearly in the government's interest, such as where it is clear that information available at the time was inadequate to reasonably justify contractor selection and award. FAR § 15.611(c). Consequently, GAO decisions recognized that there was nothing wrong with requesting more than one round of BAFOs where a valid reason existed to do so and where they were reasonably required.. Kisco Co., Inc., B–216646, Jan. 18, 1985, 85–1 CPD ¶ 56; Crown Point Coachworks and R & D Composite Structures et al., B–208694, et al., Sept. 29, 1983, 83–2 CPD ¶ 386. Prior to 1997, FAR 15.611, Best and Final Offers, stated: Upon completion of discussions, the contracting officer shall issue to all offerors still within the competitive range a request for best and final offers[] After receipt of best and final offers [BAFO], the contracting officer should not reopen discussions unless it is clearly in the Government’s interest to do so [and if] discussions are reopened, the contracting officer shall issue an additional request for best and final offers to all offerors still within the competitive range. [] When Part 15 of the FAR was rewritten in 1997, the writers noted that one of the greatest challenges was in the treatment of “discussions.” The writers believed that the requirement in the Competition in Contracting Act that discussions be held with all offerors in the competitive range should not require that such discussions be held an equal number of times with all offerors. In promulgating the new FAR part 15, the FAR Committee noted that in the past, “discussions were conducted as ‘rounds of discussions,' with submissions of revised proposals signaling the end of each round. Under that approach, the Government was compelled to reopen discussions with all offerors in the competitive range, even when discussions were only needed with some of those offerors. That process is burdensome, expensive, and time consuming for both the Government and industry. The [writers] abandoned the concept of rounds of discussion and eliminated that portion of the current definition which provided for best and final offers, so that both industry and Government could rely more on agreements reached during discussions without requiring offerors to develop revised proposals. However, the contracting officer may request proposal revisions as often as needed, during discussions.” 61 Fed. Reg. Copyright 2015 Dick Lieberman, Permission Granted to PTAP This article does not provide legal advice as to any particular transaction 3 48380 (September 12, 1996)(Proposed FAR Part 15 rewrite). As a result of this determination, the FAR was revised on September 30, 1997, 62 Fed. Reg. 51224, to state as follows in FAR 15.307, Proposal revisions: [] The contracting officer may request or allow proposal revisions to clarify and document understandings reached during negotiations. At the conclusion of discussions, each offeror still in the competitive range shall be given an opportunity to submit a final proposal revision. The contracting officer is required to establish a common cut-off date only for receipt of final proposal revisions. Requests for final proposal revisions shall advise offerors that the final proposal revisions shall be in writing and that the Government intends to make award without obtaining further revisions. FAR Some government contracting skeptics believed that the 1997 change in the FAR was included to make it easier for agencies to conduct multiple rounds of discussion with only one contractor until that particular contractor “got it right” and became “best value” for the government. Notwithstanding this skepticism, it is still true that the Government may conduct multiple Final Proposal Revisions when it deems them necessary. Today, however, the FAR permits multiple FPRs with only one offeror, when that is deemed by the Contracting Officer to be in the government’s best interest.


-Reprinted by permission from Dick Lieberman

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