The following is an installment in Crowell & Moring’s Bid Protest Sustain of the Month Series. In this series, Crowell’s Government Contracts Practice will keep you up to date with a summary of the most notable bid protest sustain decision each month. Below, Crowell Consultant Cherie Owen discusses DecisionPoint Corporation- fka Emesec Inc., in which GAO sustained a protest where the agency failed to consider the impact of a recent corporate transaction on an offeror’s pending proposal.
In DecisionPoint, the solicitation required offerors to submit with their proposals proof of a level III Capability Maturity Model Integration (CMMI) certification for the prime contractor. The procurement was conducted as a task order competition under GSA’s Veterans Technology Services 2 (VETS II contract), governmentwide acquisition contract. EmeSec Inc. submitted a proposal that included proof that its parent company (DecisionPoint) held the requisite CMMI certification. The agency made an initial award, the award was protested, and the agency took corrective action. Around the time of the original awarad, EmeSec notified the agency that it had merged into its parent company; the merger had occurred at some point prior to EmeSec’s submission of its proposal. In addition, EmeSec’s VETS II contract was novated to DecisionPoint. Although the novation was executed during the pendency of the agency’s corrective action, it was retroactive with an effective date prior to the initial proposal submission date.
After completing its corrective action, the agency made award to another offeror, concluding that, because EmeSec was the prime offeror and it did not hold its own CMMI certification, it was ineligible for award. EmeSec’s successor in interest, DecisionPoint, protested. GAO sustained the protest, pointing out that, pursuant to the effective date of the novation agreement, DecisionPoint was the prime contractor at the time it submitted its initial proposal, and the CMMI certification demonstrated that DecisionPoint (the prime contractor) possessed the required CMMI certification. In sustaining the protest, GAO noted that, “[w]hile the agency did not know that DecisionPoint was the prime contractor at the time of its initial evaluation, the agency was aware of this fact when it conducted its post-corrective action evaluation.” Therefore, the agency’s decision to reject the DecisionPoint proposal was improper.
GAO’s commonsense approach in DecisionPoint highlights the importance of effective dates in novation agreements. Contractors undergoing a corporate transaction should coordinate closely with their counsel to strategize regarding the impact on pending proposals and ongoing procurements.
We would like to thank Cherie J. Owen, Consultant, for her contribution to this blog post.