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Government Contracts & Investigations Blog
See IBM U.S. Federal, supra (“it does not appear that SAIC’s corporate restructuring is likely to have any significant cost or technical impact on performance of the requirements.”); Magneco Inc., B-235338, Sept. 1, 1989, 89-2 CPD ¶ 207 (denying a protest where all aspects of the division that submitted the proposal will be sold). In such cases, the offeror is still eligible for award. IBM U.S. Federal, supra; Magneco Inc., supra. A succinct articulation of the rule can be found in Consortium HSG Technischer Service GmbH and GeBe Gebäude-und Betriebstechnik GmbH Südwest Co., Management KG, B-292699.6, June 24, 2004, 2004 CPD ¶ 134 (upholding award to a joint venture even though the ownership of one member of the joint venture changed):
[T]he record shows only that the corporate shares of SGM changed hands. In addition, the new owners have indicated that the entity formerly known as SGM remains intact, has the same location and offices, and intends to honor its prior commitments . . . . Put simply, there is nothing in this record that suggests that the licenses and permits, the specialized personnel, the information conveyed during the oral presentation, or the administrative resources offered by SGM have been rendered unavailable, or in any way changed by this transaction.
(citations omitted). By contrast, where, as a result of the corporate transaction, the initial offeror no longer has access to the resources mentioned in the proposal, or will no longer be able to perform as described in the proposal, the award is unlikely to withstand scrutiny. FCi Federal, Inc., B-408558.7, B-408558.8, Aug. 5, 2015, 2015 CPD ¶ 245 (sustaining a protest where “as a result of the sale . . . the original proposal, upon which the award decision was based, no longer reflects the intended approach to performance.”); see also Wyle Labs., Inc., B-408112.2, Dec. 27, 2013, 2014 CPD ¶ 16 (sustaining a protest where, as the result of a spin-off, the new prime contractor will have fewer resources than the original offeror) (reconsideration denied in NASA-Reconsideration, B-408112.3, May 14, 2014, 2014 CPD ¶ 155); AIU North America, Inc., B-283743.2, Feb. 16, 2000, 2000 CPD ¶ 39 (sustaining a protest where corporate resources mentioned in proposal were not transferred in the sale).
Although there are no FAR provisions instructing offerors in this situation, the GAO has held that an offeror, which undergoes a corporate transaction while its proposal is pending, should inform the contracting officer of the transfer to ensure that all pre-award evaluations – particularly responsibility determinations – are conducted appropriately and based on accurate information regarding the offeror. Ionics Inc., B-211180, March 13, 1984, 84-1 CPD ¶ 290; see also FCi Federal, Inc., supra.
Thus far, our focus has been on the substance of the transaction in which the bid or proposal was transferred. But, apart from the “substantiality” of the assets transferred and the consistency or inconsistency of the assets transferred with the representations made in the bid or proposal, there are other factors that an enterprising bid protest lawyer may look for to upset an award to the transferee. For example, if the offer’s Past Performance submissions are based in part on work performed by a unit that will no longer be affiliated with the contractor after award, the reasonableness of the Past Performance evaluation will be called into question. Similarly, if the solicitation requires a facility security clearance as of the date of the award, and the transfer results in the lapse of the clearance, questions may arise with respect to the offeror’s compliance with a minimum mandatory requirement of the solicitation. Perhaps an otherwise “clean” organizational conflict of interest certification will be compromised by the transfer, or the transfer may introduce a level of foreign, ownership, control or influence over the offeror that compromises its eligibility. These are the types of collateral issues that deal counsel and consultants should be addressing when evaluating the value of the transferee’s pending bids and proposals.
12 | What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers Volume III — What Happens to Pending Proposals?