Protester Wins Substance Of Protest; Still Loses

In Lockheed Propulsion Company; Thiokol Corporation, B-173677, June 24, 1974, GAO issued its bid protest decision on the Solid Rocket Motor (SRM) Project for the Space Shuttle Program. This decision was issued before the National Aeronautics and Space Administration (NASA) had its first SRM and before it had its first Space Shuttle.

One part of the Lockheed protest dealt with the proposed costs for ammonium perchlorate (AP), a major part of the propellant in the SRM. Two offerors, Lockheed and Thiokol, had proposed different costs for the AP even though they would be getting the AP from the same suppliers. GAO concluded that the offerors' evaluated costs should be the same for the AP because of this. As a result, GAO proposed a $68 million dollar adjustment to the evaluated costs of Lockheed and Thiokol. Since NASA had concluded that Lockheed and Thiokol were technically equal and that their evaluated costs were both in the $800 million range, a proposed adjustment of this size could affect the outcome of the selection.

GAO recommended that

In view of our findings in the ammonium perchlorate area, we believe that [NASA] should determine whether the validity of [its] selection is materially affected by the substantial reduction in the cost difference.

NASA promptly considered GAO's recommendation and continued with its original selection of Thiokol for the SRM award.

Nearly 39 years later, I was reminded of this decision by GAO's decision in BC Peabody Construction Services, Inc., B-408023, May 10, 2013. In this procurement, the Corps of Engineers rated the same subcontractor as acceptable for Edens Construction Company but unacceptable for BC Peabody Construction Services.

GAO explained

Where multiple proposals propose the same subcontractor, once the agency becomes aware of that subcontractor's experience, including from another firm's proposal, it cannot reasonably assign one proposal a higher score than another based on that experience.

Although GAO concluded that the two offerors had been treated unequally by the Corps, GAO further explained that it

will not sustain a protest unless the protester demonstrates a reasonable possibility that it was prejudiced by the agency's actions; that is, unless the protester demonstrates that, but for the agency's actions, it would have had a substantial chance of receiving the award.

Unlike in the Lockheed decision, GAO decided that BC Peabody did not have a chance to win because it still would have received a "deficiency" for not having a letter of commitment from a subcontractor.

The moral of this story is that even after proving that a mistake was made, if the protester cannot win anyway, it still loses.