Two Wrongs Don’t Make a Right: GAO Sustains Protest Where Agency Tried to Fix PIA Violation with a Second PIA Violation

Recent sustain decisions by the U.S. Government Accountability Office (GAO) in Fluor Federal Solutions, LLC and Reliance Test & Technology send a clear message: when an agency tries to fix a Procurement Integrity Act (PIA) violation by committing a second one, the cure can be just as fatal as the disease. The cases involved the U.S. Air Force’s $1.8 billion procurement for O&M services at Elgin Air Force Base. During discussions, the Air Force inadvertently released a pricing overview slide with all offerors’ bottom-line evaluated costs to Reliance Test & Technology, which immediately notified the agency of the error. In response, the Air Force decided to level the playing field by providing the same information to all the other offerors in the procurement, stating, “[o]fferors may consider this disclosure in their [final proposal revision].”

As a result, Strategic Test Solutions, LLC (STS) lowered its cost/price proposal by $72 million. Reliance decreased its proposed cost/price by $9 million. Fluor, another offeror in the procurement, did not make any changes to its cost/price proposal, later revealing that it did not believe the agency had the authority to release the cost/price information and, therefore, “decided not to revise its proposal in order to eliminate any question as to whether it relied on the improperly disclosed information for its [final proposal revision].” Ultimately, the Fluor, STS, and Reliance proposals were $1.89 billion, $1.87 billion, and $1.86 billion, respectively. The Air Force selected STS for award and Fluor and Reliance protested to GAO. 

The Air Force did not dispute that its release of cost/price information to the offerors constituted a PIA violation. Instead, the agency asserted that its disclosure of the pricing overview slide did not impair the integrity of the procurement. GAO disagreed. 

First, while the agency had concluded that the disclosure of cost/price information had no impact on STS’s final proposed cost/price, this conclusion was contradicted by the record: STS admitted during the agency’s PIA investigation that “it was impossible to quantify what impact the slide had,” since STS received the slide before it had finalized its proposed cost/price. 

Second, GAO was not persuaded by the Air Force’s argument that the release caused no unfair competitive advantage because the intentional disclosure resulted in all offerors having the same information. In apparent reference to Fluor’s decision not to revise its cost/price proposal, GAO concluded that “[t]he offerors were not similarly situated when the information was disclosed, and the agency has not explained how providing the pricing information mid‑procurement leveled the playing field as the Air Force suggests it did.” 

Finally, GAO rejected the Air Force’s position that bottom-line cost/price information was not competitively useful because there was no disclosure of direct labor rates, indirect rate structures, fee breakdowns, cost element detail, or proprietary methodologies. GAO noted that this argument was contradicted by the record, which showed that the agency’s statisticians were able to reverse engineer various cost elements from the disclosed information. Moreover, GAO stressed that the disclosure resulted in each offeror knowing its relative position in the competition. 

In sustaining the protest, GAO recommended that the agency “reasonably reconsider the impact of the pricing information disclosure and implement effective mitigation measures, for example, including but not limited to: reevaluating the offerors’ pre-disclosure initial proposals and making a new award decision on the basis of those proposals; or canceling the solicitation and resoliciting the agency’s requirement in a manner that restores the integrity of the procurement.” While the recommendation left the agency with options, GAO’s reasoning left little doubt about the seriousness of the violations.

GAO’s decision in the Fluor and Reliance cases underscores the importance of analyzing PIA violations — and how to effectively address them — on a case-by-case basis. While the U.S. Court of Appeals for the Federal Circuit previously found that the “Army’s release of all offerors’ pricing” was a “reasonable action in light of a defective procurement” under the circumstances of the case in Dell Fed. Sys., L.P. v. United States, 906 F.3d 982, 997 (Fed. Cir. 2018), the facts in the Fluor and Reliance cases persuaded GAO that the agency’s attempt to cure one PIA violation by committing a second one endangered the integrity of the procurement. The lesson is clear: two wrongs do not automatically make a right. While equal disclosure may be appropriate in some circumstances, agencies cannot assume that further disseminating sensitive information will fix a prior PIA problem — they must carefully assess whether the remedy truly restores the integrity of the procurement.

Key Takeaways

1. If your company receives competitively sensitive information, such as competitors’ pricing, proceed with caution. In the Fluor and Reliance cases, GAO scrutinized how each offeror responded to the disclosure. One offeror that declined to revise its cost/price proposal was able to demonstrate that it did not exploit the improperly disclosed information, while another offeror that significantly reduced its costs/prices faced questions about the impact of the disclosure on its proposal. Contractors who receive such information should promptly consult with counsel regarding next steps. 
   
   
2. Do not assume that an agency’s decision to share the same information with all offerors cures a PIA violation. In the Fluor and Reliance decisions, GAO rejected the Air Force’s argument that disclosing all offerors’ bottom-line costs/prices to every competitor “leveled the playing field.” GAO found that the offerors were not similarly situated at the time of disclosure and that the agency failed to explain how further dissemination of competitively sensitive information mid-procurement restored the integrity of the competition. If your company is disadvantaged by such a disclosure, or if an agency attempts to “equalize” one PIA violation by committing a second one, the procurement may be vulnerable to a protest.