Practice Areas
GAO REJECTS ALLEGATION OF PRICE COLLUSION
Although two competitors’ technical proposals were prepared by the same large business subcontractor, the GAO did not believe the proposals should be rejected as being collusive. Alutiiq Global Solutions, B-299088.2.
In this protest, the agency sought proposals for guard services at Army installations in three geographic regions: the Northeast, the West, and the Pacific Coast. Two of the offerors, Sante Fe and Doyon proposed using the same subcontractor, namely Coastal International Security (CIS). Upon receiving proposals, the contracting officer noticed that Sante Fe’s and Doyon’s technical proposals were nearly identical. The contracting officer raised questions about this, and both offerors acknowledged working closely with CIS and acknowledged that they relied on CIS for the preparation of their technical proposals. Yet, both offerors denied sharing any pricing information each other. Both denied any interrelationship. Based on these representations, the contracting officer concluded that nothing improper had taken place.
The agency awarded Doyon a contract for one of the three geographic regions. Thereupon, one of the unsuccessful offerors protested the contract award to the Government Accountability Office (GAO). The protest challenged the contracting officer’s decision that Doyon was “responsible,” because the protester felt there must have been collusion between Doyon and Sante Fe if both companies shared the same subcontractor that played such a significant role in their technical proposals.
The GAO noted that the GAO generally does not involve itself with “affirmative responsibility determinations.” Here, the contracting officer found Doyon “responsible,” so the GAO was faced with an affirmative responsibility determination by the contracting officer. However, there are exceptions where the GAO will review responsibility issues. One of those exceptions occurs upon showing evidence that the contracting officer unreasonably failed to consider relevant information when the affirmative responsibility determination was issued.
Based on the facts of this case, the GAO found that the contracting officer had considered the close relationship of Doyon and Sante Fe to the subcontractor they shared. Furthermore, the GAO found the contracting officer acted appropriately in concluding that nothing improper had occurred between these two offerors.
The requirement that competitors prepare their offers independently and without consultation with each other does not preclude competitors from using common subcontractors. Apparently, this is true even when the common subcontractor has a major influence in the preparation of the technical proposal. In the GAO’s mind, the protester offered only speculation that Doyon’s and Sante Fe’s heavy reliance on a common subcontractor meant that they must have exchanged pricing information also. The GAO noted that there was no evidence of pricing collusion by the mere fact that both offerors shared a common subcontractor.
On similar reasoning, the GAO also rejected other arguments by the protester that another successful offeror acted improperly by using a subcontractor who also was bidding as a prime contractor in the procurement. In fact, this allegation was not entirely true. Instead, one offeror’s subcontractor was related to another offeror by common ownership, but they were different companies. Here, the GAO reasoned:
The fact that two offerors, or an offeror and a second offeror’s subcontractor, have common corporate ownership is not by itself sufficient to establish that the offerors failed to price their proposals independently, and where, as here, a protester presents no other evidence, beyond mere speculation, showing that competitors did not arrive at their prices independently, we will not assume otherwise.
This decision recognizes that parties can play several roles in the same procurement but that, as long as each competitor arrives at its price independently of other competitors, the GAO likely will not have a problem with the contract award. At the same time, the limitations of this decision should be noted. Issues related to collusive bidding involve antitrust issues, and the ultimate decision whether to pursue prosecution for an antitrust violation rests with the Department of Justice, not the GAO.