Bait and Switch

[Orion]

My company is a second tier subcontractor and successfully completed a DoD IDIQ TORP project last year for a large Prime and their first tier subcontractor. A new TORP was out this year and the same Prime won the FFP bid using my company's name, past performance, etc. in the proposal. There is a first tier subcontractor to whom we submitted our costs, subcontracting plan, past performance, personnel, etc and they turn submitted to the Prime. Now that the contract has been awarded to the Prime contractor the first tier subcontractor decided to shop our bid to others. My emails to the Prime regarding this go unanswered. Are there FAR rules that prohibit this bait and switch game? I thought about sending the KO a letter. Your thoughts please.

[Guest Vern Edwards]

FAR is silent on bait and switch; however, bait and switch is grounds for protest to the Government Accountability Office or the U.S. Court of Federal Claims.

Bait and switch is: "the submission of a misstatement ... which materially influences consideration of a proposal should disqualify the proposal." See GTA Containers, Inc. v. U.S., 103 Fed. Cl. 47 (2012). In order to be bait and switch, the misstatement would have to be knowingly or negligently made to the government by the company competing for the prime contract with the intent of doing something different if it wins the contract. See R&D Maintenance Services, Inc., GAO Dec. B-292342, 2003 CPD para. 162. In your case you do not allege that the prime contractor misrepresented its intentions to the government, so there are no grounds for protest.

Even if there were making that allegation you are not eligible to submit a protest, because you did not compete for the prime contract and would not be in line for award if the protest were sustained. You don't have a remedy for your complaint in the government acquisition system.

[joel hoffman]

My company is a second tier subcontractor and successfully completed a DoD IDIQ TORP project last year for a large Prime and their first tier subcontractor. A new TORP was out this year and the same Prime won the FFP bid using my company's name, past performance, etc. in the proposal. There is a first tier subcontractor to whom we submitted our costs, subcontracting plan, past performance, personnel, etc and they turn submitted to the Prime. Now that the contract has been awarded to the Prime contractor the first tier subcontractor decided to shop our bid to others. My emails to the Prime regarding this go unanswered. Are there FAR rules that prohibit this bait and switch game? I thought about sending the KO a letter. Your thoughts please.

Please advise what is a "TORP" ? Thanks. There is a clause that may be used in Architect-Engineer contracts at FAR 52.244-4, "Subcontracts and Outside Associates and Consultants (Architect-Engineer Services"). The prescription for use is at FAR 44.204 (b ). If it is in the prime contract, you could mention the situation to the KO. However, as Vern mentioned, you don't have a direct remedy for your complaint in the government acquisition system. The clause or other similar wording could provide some enforcement force for the government if included in the contract. I have occasionally seen some prime contracts that did include anti-bid shopping language for protection of the government.

[Guest Vern Edwards]

Task Order Request [for] Proposal.

[jwomack]

You may want to discuss your scenario with whoever would be in line for award if a protest were filed and sustained. Or at least you could tell the prime and/or KO that's what you’re going to do if they don’t reconsider.

[Orion]

Vern/Joel thanks much for your prompt response.

Joel, TORP is a Task Order Proposal coming from [deleted].

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I deleted the identifying information provided by the poster. One of the benefits of having a private forum is your anonymity while posting from the government and non-government entities. If you discuss the TO and the contracting activity, there is a good chance the person you are discussing will hear about it.

In addition, all posts are supposed to be theoretical accoring to the terms of use. That too is to protect your identity.

[Guest Vern Edwards]

You may want to discuss your scenario with whoever would be in line for award if a protest were filed and sustained. Or at least you could tell the prime and/or KO that's what you’re going to do if they don’t reconsider.

I wouldn't do that.

[jwomack]

Understandably you may end up burning a couple of bridges, but what if there was a significant amount of money at stake for the sub?

[Orion]

I sent an email to the Prime and they said the issue is between their subcontractor (first tier) and my company (second tier). One would think the Prime would be somewhat concerned since they used my company's name in the proposal....but I guess not. The USG awarded the contract to the Prime a couple weeks ago and issued a PO to the first tier sub, this sub is now bid shopping my price and there is a significant amount of money at stake. Interestingly the Prime just emailed me back today and said there was nothing they could do and that their sub can modify the lower tiers as they see fit, also not to get the USG involved. I sound like a sore loser but at least I try to play fair. Email goes out to the USG in the morning. Thanks everyone for your comments.

[Guest Vern Edwards]

Just curious, if you are still there. What do you want the USG to do?

1. Terminate the prime contract?

2. Order the prime to terminate the first tier subcontract?

3. Order the prime to order the first tier subcontractor to terminate the second tier subcontract and give the subcontract to you?

4, Something else?

[joel hoffman]

So this appears to be a task order resulting from competition in which the Government requested that the proposing contractors identify their team' and their capabilities. Why would the government ask for and evaluate such information if the contract or task order doesnt somehow require the firm to use the team it identified to help it win the task order?

That makes little sense to me.

Orion hasn't identified anything in the task order or base contract that require such, although he/she may not have access to the base contract or full task order documents.

My question to the government would be - does the task order require the winning contractor to utililize the team that it proposed to win the task order competition and/or justify substitutions to it?

[Guest Vern Edwards]

That would be a reasonable question. Does the task order say that the contractor's first tier sub must use the second tier sub identified in the prime's proposal? The next question would be: If it does, is that enforceable? Could the CO force the prime to require its first tier sub to use the second tier sub it proposed to the prime? What if the first tier sub could not or would not do it?

Just like key personnel clauses, such a clause might be difficult to enforce. But we could argue that until doomsday.

Orion's company did not get the subcontract because its prospective customer decided not to do business with it. I doubt that the government would take action against the prime on that basis, but have at it. My opinion is that Orion's company would do well to move on. But I am not surprised that some here think he should pursue the matter further.

[here_2_help]

This is a legal question that requires input from attorneys. The (legal) questions involve whether or not the prime may have induced the government to award the contract based on a false statement regarding the participation of the 2nd tier subK (i.e., the OP asserted that the competencies/technical skills, and perhaps past performance references for the 2nd tier subK were significant to the source selection decision). There may also be a question regarding whether the 1st tier subK breached a contract with the 2nd tier subK. (See, for example, Northrop Corp. v. AIL Systems, Inc., 959 F.2d 1424 (7th Cir. 1992)--though that case involved breach of a teaming agreement.) Currently, in the CA District Court (Central Region). L'Garde is suing Raytheon for allegedly breaching a Letter Subcontract; L'Garde is alleging that Raytheon (a 1st tier subK to Lockheed Martin) used L'Garde (a small business) to win the subcontract, but thereafter failed to definitize the Letter Subcontract.

My point is some subcontractors have successfully litigated similar issues. But this is no place to go for legal advice on such complex, fact-intensive, matters. If you've got a beef, get a lawyer. If you think the government has been defrauded, call the Inspector General. Or file your own qui tam suit under the False Claims Act. But don't expect Joel or Vern or Here_2_Help to be of any substantive assistance to you, because resolution will need to come from a Court.

Hope this helps.

[dimichk]

Orion,

Did you have a teaming agreement or NDA in place with the first-tier sub? Are you concerned that your confidential information (i.e. price) is being shared with the compaines they are seeking proposals from? I agree with H2H that you need to involve your lawyers!

[Orion]

dimichk: the first tier sub requested a TA and NDA but I didn't want to be locked in since one other Prime was asking for pricing also. We happen to be the only company in the country (overseas) that had the past performance for the project. I'm not concerned about confidential pricing information. Any suggestion on how I locate a lawyer with the right background in these areas?

[Orion]

Vern: To answer your question on what I want the USG to do. Simply enforce the proposal that was submitted to the USG.

[Orion]

Joel: You are correct, I don't have access to the base contract or TO documents. And that's the $64k question "why would the government ask for and evaluate such information if the contract or task order doesn't somehow require the firm to use the team it identified to help it win the task order?" There may be wording in the base or TO documents that gives the Prime an easy out I'll never know . Vern's probably right time to suck it up and move on.

[dcarver]

Vern: To answer your question on what I want the USG to do. Simply enforce the proposal that was submitted to the USG.

Here is the problem, unless the RFP specifically had terms in it that said that the prime contractor must use the same subcontractors proposed (at all tiers), I'm not sure what ground the USG would have to stand on to enforce your issue. Generally issues with subcontractors are dealt with at the prime contractor level and the USG does not involve itself in it. (Note: I said generally, there are some instances in which they would). Just because the prime submitted your costs as a part of the subcontractor portion of the proposal does not lock them in to using you. As you said, you turned down the teaming agreement, so you kinda screwed yourself to having something that would lock you in with them.

[Orion]

Vern: Just to clarify your comment "Orion's company did not get the subcontract because its prospective customer decided not to do business with it." The Prime and first tier sub want to do business with us AND I want to do business with them; however, after the award when I'm given the "take it or leave it" ultimatum that's hard to swallow. My only hope is the KO seriously questions why we are not on the team presented.

[Guest Vern Edwards]

I wish you the best, but if I were the CO here are the things I would consider.

First, did the government's acceptance of the prime's offer constitute a mutual agreement that you and only you would be doing the work of the second tier sub? If not, then the government would have no legal course of action against the prime.

Second, if the answer to the above question is yes, does the contract document reflect that agreement? If it does not, there would be a serious question as to whether the "agreement" is enforceable in court, notwithstanding the contents of the prime's proposal.

Third, if the government has no legal course of action against the prime, does it have some kind of "moral" claim?

Fourth, if the government has a "moral" claim, what is the basis for it, and is the government's stance reasonable?

Fifth, if there is no legal course of action, but there is a reasonable "moral" claim, what, if anything, can the government do to get the prime to come around? Is it worth the effort? If the first tier sub tells the prime that you wanted too much money, what can the prime do?

Your feelings are entirely understandable, but as CO I would have no concern for your interests. My only concern would be the interests of the government. No matter what I felt for you personally, as agent for the government I would express no sympathy for you. I would know that once I started getting involved in private matters between primes and subs, and between first tier subs and disappointed second tier bidders, there would be no end to it.

[joel hoffman]

We really dont know all the specific facts of this situation. If the government included a requirement in the base contract or task order to use firms or key personnel identified in the prime's proposal for the task order (or to obtain government approval of substitutes?) , then the KO has the responsibility to enforce the contract to the extent practicable. In the case of a second tier subcontractor, that becomes somewhat more problematic, due to lack of privity between the government and the first tier sub.

You certainly may ask the goverrnment whether or not such a requirement is expressed in the contract. Vern's discussion concerning "moral" or good faith behavior is also compelling. However, the government shouldn't competitively evaluate the experience, past performance or other organization of the proposed teaming members if it is meaningless after award.

I've seen at least two situations in the past few years where protests were upheld in competitivele best value trade-offs after the government gave additional consideration in the trade-off decision to select the winning proposal for proposal features that were non-binding on the contractor. The winning firms for construction contracts proposed preliminary project schedules indicating intended completion earlier than the required contract duration, which were non-binding.

[Orion]

Vern: I wouldn't blame the KO for not getting involved unless there was something in the RFP stating they must use the "team" proposed. Many thanks to you, Joel, here_2_help and dcarver for your interesting comments.