Protest lessons on responsiveness, responsibility, and standing

In the matter of Thalle/Nicholson Joint Venture v United States, COFC No. 22-755, the Army Corps of Engineers sought work on a spillway at the Lewisville Dam in Denton County, Texas, but never mind the contract scope or type; the case provides a good review of standing and responsibility in federal contract protests and awards.

Thalle-Nicholson, a joint venture, bid the work but was disqualified for not registering in the System for Award Management (SAM.gov). This is their protest.

On standing

To bring a protest, one must have standing; that is, be eligible. Here, USACE argued that Thalle-Nicholson was ineligible to protest because it failed “the standing requirement that it demonstrate ‘that it was prejudiced by a significant error in the procurement process, meaning, that, but for the error, it would have had a substantial chance of securing the contract.’”

The government contends that, as Thalle/Nicholson’s proposal failed to comply with the FAR requirement that a joint venture be registered in SAM prior to proposal submission, it would have been unlawful for USACE to award the contract to Thalle/Nicholson. As USACE cannot make an unlawful contract award, the government argues that Thalle/Nicholson cannot show that it would have had “a substantial chance of securing the contract[,]” but for the alleged error by USACE.

In other words, the Army argued Thalle-Nicholson could not protest, because its proposal was “incurably deficient,” thus making it ineligible for award. That ineligibility for award negated the JV’s so-called standing, its right to protest.

Not so fast, said the court. The record showed Thalle-Nicholson had a “substantial chance” of securing the contract but for the SAM issue—its technical proposal was most highly rated with only marginally higher pricing. In fact, the record suggested USACE only spiked the award to the JV on discovering the SAM issue. The court determined Thalle-Nicholson was “an actual bidder with a direct economic interest in the procurement and that it was prejudiced by the alleged procurement errors,” and therefore had standing to protest.

Responsibility vs. responsiveness

Thalle-Nicholson argued the failure to register in SAM should not have prevented contract award to the JV, because SAM registration is a matter of responsibility. Because the government can only execute contracts with “responsible” contractors (FAR §9.103), it must assess an offeror’s acceptability before contract award separate from (and after) any technical or price evaluation. Thalle-Nicholson argued its failure to register in SAM prevented it from satisfying a definitive responsibility criterion and that “agencies are not required to make a responsibility determination until the time of award and an offeror is entitled to the opportunity to provide missing responsibility information up until that time.”

The court found, however, that the SAM registration was a matter of proposal responsiveness, not offeror responsibility. The solicitation expressly stated that proposals had to “meet all solicitation requirements, including terms and conditions, representations and certifications, and technical requirements . . . [and] [f]ailure to meet a requirement may result in an offer being ineligible for award.” The solicitation also incorporated FAR 52.204-7, requiring JVs to register in SAM. Thalle-Nicholson’s proposal was nonresponsive, because the JV did not comply with the FAR clause and was therefore ineligible for award.

The path to contract award runs through responsibility and responsiveness

While the JV was ultimately allowed to argue its case, it didn’t persuade the court, which found Thalle-Nicholson submitted an unresponsive offer that rendered it ineligible for contract award.

The lesson here is proposal compliance matters; not on every nit, as many proposal managers like to imagine as they argue anything against their edicts is “noncompliance,” but all proposal requirements should be checked and cross-checked, including walking the proposal signer through both the proposal and the RFP.