When a procuring agency accidentally hands one offeror its competitors’ pricing, the instinctive fix is to give everyone the same information. In Fluor Federal Solutions, LLC, the Government Accountability Office (GAO) held that this approach does not cure the problem, and that an agency cannot rely on an awardee’s own statements to conclude that a disclosure had no effect when those statements say the effect cannot be measured. The decision is a useful roadmap for contractors on both sides of a pricing disclosure.

Background

The Air Force sought operation and maintenance services at Eglin Air Force Base under a FAR Part 15, cost-plus-award-fee solicitation (the EOMS II procurement) with up to 10 years of performance. Award would be made based on a best-value tradeoff of technical and cost/price factors, with technical more important. Three offerors were in the competitive range: Fluor, Strategic Test Solutions, LLC (STS), and Reliance Test & Technology (Reliance).

When the agency requested final proposal revisions (FPRs), it sent each offeror a briefing slide deck summarizing its evaluation. The deck sent to Reliance inadvertently included a pricing overview slide showing agency-calculated total evaluated prices for all three offerors. Reliance reported the error the next day.

The contracting officer decided the best mitigation option was to send the same price slide to all three offerors and told them they “may consider this disclosure” in their FPRs. Fluor objected that the agency had violated the Procurement Integrity Act (PIA) and did not change its price. STS cut its price by roughly $72 million. It had been the highest-priced offeror in its initial proposal. After the FPRs, it was lower than Fluor.

STS received the award. After a series of protests and corrective action, the agency reinvestigated the price disclosure. In response to the agency’s inquiry, STS said that:

  • It had decided before the disclosure to reduce its fee, escalation rate, and other controllable costs, but had not settled on the amounts.
  • It had, in fact, considered the price slide, which was “but one of multiple factors,” in preparing its final price.
  • “[I]t is impossible to quantify what impact the slide had.”

The contracting officer nonetheless concluded there was no “prejudicial violation” of the PIA. He reasoned that STS’s price reductions in its FPR were a “deliberate, pre-planned business strategy,” that the price slide contained only agency-calculated roll-ups, and that disclosing the slide to everyone restored a level playing field. The senior contracting official disagreed in part with the contracting officer’s conclusion, noting that each offeror “likely made business decisions that were, at least in part, based upon information contained in the TEP slide.” Nevertheless, although he agreed a PIA violation occurred, the senior contracting official did not conclude that the integrity of the procurement had been compromised. The agency made a new award to STS, and Fluor protested at the GAO.

GAO’s Analysis

The GAO started from the standard framework: an agency’s disclosure of proprietary or source selection information may create an unfair advantage affecting the integrity of a competition. If the agency does not cancel the procurement, the GAO will sustain a protest where the protester shows that the recipient received an unfair advantage or that the protester was otherwise competitively prejudiced. Here, the GAO found the agency’s conclusion that the disclosure had no adverse impact on the procurement to be unsupported by the record, for four reasons.

First, the agency ignored when the price reductions were finalized. STS had identified which cost elements to cut before the disclosure, but it had not set the amounts. The agency focused on the former and gave “no meaningful consideration” to the latter. The GAO called this lack of consideration of price reduction timing unreasonable because “the amount of the adjustments was what determined STS’s proposed cost/price.” The GAO also pointed out that the senior contracting official had reached the opposite conclusion about the likely negative influence on the competition resulting from the disclosure of the price slide.

Second, the awardee’s own statement undercut the agency’s conclusion. STS said it was “impossible to quantify” the slide’s effect on its FPR pricing decision. The GAO found that the agency’s conclusion of “no impact” thus “strains credulity.” The agency “had no way to determine that the disclosure had no impact.”

Third, the adjustments were discretionary. The GAO observed that STS’s reductions, which included a lower escalation rate based on Federal Open Market Committee data and a lower award fee, were matters of business judgment. They were not mandated by outside forces such as a wage determination or a Defense Contract Audit Agency finding. STS offered no explanation for those choices that could be “divorced from the disclosure.”

Fourth, giving all three offerors the price slide did not level the field. The GAO rejected the agency’s argument that sharing the slide with all offerors eliminated any advantage. Relying on one disclosure (to all offerors) to mitigate an earlier disclosure (to one offeror) was “unavailing and superseded by its commitment to reinvestigating the ultimate impact on the procurement.” The GAO also noted that the disclosure came mid-procurement, after initial proposals were submitted, so the offerors “were not similarly situated” when they received it. The agency never explained how the disclosure leveled the playing field.

The GAO also rejected the argument that the slide was not competitively useful. The agency’s own statisticians had been able to reverse-engineer various cost elements from it. In addition, every offeror learned its relative standing, and the GAO found “implausible” the assertion that pricing information was not competitively useful where price was an evaluation factor.

The GAO’s bottom line was that the agency first disclosed pricing to one offeror, then to all, and then committed to investigating the effect. On the “totality of the circumstances,” it could not conclude that the procurement’s integrity was preserved.

GAO also gave the cost-type structure of the contract little weight. The agency had argued that the solicitation’s fixed labor hours, minimum rates, and plug values limited price variability. The GAO noted in a footnote that this made it unsurprising STS had already identified the elements to cut, and that proposed costs are not controlling in a cost-reimbursement procurement. That did not help the agency show the disclosure was harmless.

The Recommendation

Takeaways for Government Contractors

  • Equal disclosure is not necessarily a cure. If an agency improperly discloses pricing mid-procurement, expect the offeror whose price was disclosed to argue that sharing the information with all offerors would not restore integrity. Offerors who already submitted proposals are not similarly situated to those in a fresh competition, and the GAO will ask how the agency’s fix actually levels the field.
  • Document the timeline of your pricing decisions. The awardee’s best defense would have been contemporaneous evidence that the specific reductions, not just the general strategy, were fixed before the disclosure. STS had no written documentation of specific reductions, and its representative’s later declaration was not enough. Contractors should keep dated pricing models, approval records, and meeting notes throughout the proposal process. Those records may matter if an improper disclosure occurs.
  • Be careful what you say in a PIA inquiry. STS’s candid statement that the impact was “impossible to quantify” was fatal to the agency’s no-impact finding. Responses to agency inquiries about disclosed information will be read closely at the GAO. They should be accurate, specific, and consistent with the contemporaneous record.
  • Protesters can win on the agency’s own record. Fluor succeeded largely by exposing gaps and tensions in the agency’s reinvestigation: the senior contracting official’s contrary view to that of the contracting officer regarding impact to the procurement, the statisticians’ reverse-engineering of prices, and the awardee’s own admissions about its price development. A protester challenging a price disclosure determination should look closely at whether the agency actually analyzed the specific facts, not just the general plausibility of its conclusion.
  • Offerors that did not act on the information still have a stake. Fluor did not change its price. It responded to the disclosure by trying to avoid any suggestion that it relied on improperly disclosed information. The GAO’s analysis focused on whether the agency could reasonably conclude that the recipients’ decisions were unaffected, not on whether the protester itself used the data.
  • Agency findings do not end the analysis. Here the agency found a PIA violation but concluded that the procurement’s integrity was intact. The GAO then can review whether that conclusion is reasonable and supported. An agency’s finding of no prejudice will not hold if the record does not support it.

Bottom Line

This decision reinforces that the GAO will look past an agency’s conclusions to the record behind those conclusions. After a pricing disclosure, an agency must show with evidence, not mere assertion, that the integrity of the competition was preserved. Contractors should assume that anything they submit in a PIA inquiry will be read closely and should maintain the records that would support their position.

If you have any questions about this noteworthy case or require assistance, please do not hesitate to contact Aron Beezley or Patrick Quigley.