Timeliness Crucial When e-Bidding for Federal Contracts, Recent Bid Protests Show


October 27, 2003

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By Paul W. Berning
Howrey LLP

Three recent bid protest decisions by the U.S. General Accounting Office illustrate the importance of not waiting until the last minute when submitting electronic bids to the federal government. Two protests were denied because the bids were deemed to be untimely even though the bidders experienced problems or delays with government electronic bidding systems. The third protest was sustained because the electronic version of a bid was timely even though a duplicate paper bid was late.

Timely Start Not Enough; Deadline Applies to Entire Bid

The Department of Energy's Office of Classified and Controlled Information Review, using its Web-based Industry Interactive Procurement System (IIPS), issued a request for proposals for technical support services. The RFP required that responses be submitted electronically and gave detailed instructions for their submission. Responses were to be submitted in three volumes by noon (Eastern Standard Time) on July 25, 2002, in Word, WordPerfect, Excel, Lotus 1-2-3 or PDF formats.

PMTech, Inc. began trying to submit its proposal at 11:46:38 a.m. on July 25, according to a computer log from the IIPS system. At 11:47:27, PMTech attempted to submit something, but an error occurred. A message, "SSL Handshake failed," was generated on the log. By noon, PMTech had managed to submit only the cover sheet for its proposal. Its complete bid was not successfully submitted until July 26. PMTech's bid was rejected as untimely, and it protested to the Comptroller General of the United States, head of the GAO. The protest was denied. In re PMTech, Inc., B-291082 (2002).

PMTech asserted that it took "all reasonable steps" necessary to submit its bid timely and that it in fact timely uploaded material to the IIPS system. It submitted a supporting statement from an "information technology scientist." He reviewed IIPS' computer logs and concluded that errors within the IIPS system prevented timely submission of the bid.

The GAO rejected PMTech's arguments. It began by reviewing basic Federal Acquisition Regulation provisions and decisions governing timely submission of proposals: Bidders are responsible for delivering their proposals to the proper place by the proper time. Proposals received after the exact specified time are late. Proposals are considered late even if some portions are submitted timely but if material portions are received after the deadline. Late proposals generally may be considered only if received before award of the contract and only if the circumstances satisfy specific requirements set out in FAR. Acknowledging that the rule may "seem harsh," the GAO noted that the rule alleviates confusion and prevents one offeror from obtaining a competitive advantage. Regarding electronic bidding, the GAO wrote:

We view it as an offeror's responsibility, when transmitting its proposal electronically, to ensure the proposal's timely delivery by transmitting the proposal sufficiently in advance of the time set for receipt of proposals to allow for timely receipt by the agency.

The GAO held that the primary cause of late delivery of PMTech's bid "was that PMT delayed attempting to transmit its proposal until only 13 minutes" before the deadline.

The GAO noted that PMTech based its protest on claims of computer errors in the IIPS system. But, the GAO cited evidence that the system operated throughout July 25 and received a number of other bids for the RFP at issue and bids for other RFPs. It noted that even PMTech did not claim the IIPS system was inadequate.

Citing prior decisions involving faxes, the GAO concluded that a bidder's obligation to submit its bid timely included "allowing a reasonable amount of time for the delivery of the proposal." Waiting until only 13 minutes before the deadline was not reasonable, the GAO found. Noting that "[o]ccasional errors in computer systems are a fact of life," the GAO concluded:

We think an offeror accepts the risk of late receipt and rejection of a proposal where it delays transmitting its proposal until the last few minutes before the time set for receipt of proposals.

Bid Must Reach Final Destination Timely, Not Just Initial Point of Entry

The GAO held that another bid - although received by the federal government's e-mail system before the deadline - was untimely because it had not reached the specified e-mailbox by the deadline. In re Sea Box, Inc., No. B-291056 (2002).

The RFP from the Army Material Command for equipment required that bids be received by 1 p.m. in electronic format. They could be delivered by hand (on floppy disk or CD-ROM, for example) or electronically (by e-mail or "datafax"). A particular e-mail address was specified in the RFP. The RFP also referenced FAR §52-215-1. It makes bidders responsible for timely submissions and defines as "late" any bid received after the specified time. It provides that late bids can be considered only if received before the award is made; if the contracting officers determines that considering them will not unduly delay the acquisition; and:

The GAO found that 11 minutes before the deadline, the bidder began sending the seven e-mails that constituted its bid. All seven were received by the agency's initial point of entry for e-mail, a mail relay host server, 8 to 10 minutes before the deadline. However, the e-mails were held at the point of entry for 17 to 33 minutes, then were sent to a virus scanning server, then were sent to a mail distribution server and then, finally, were sent to the specified e-mailbox. The emails arrived 7 to 24 minutes late at the e-mailbox, and the agency rejected the bid as late.

The bidder conceded that it did not qualify for the first exception because its bid was not electronically received by 5 p.m. the preceding day. But, it argued that its bid should be accepted under the second exception because its entire bid had arrived at the government's initial point of entry - and was out of the bidder's control and was in the government's control -- before the deadline. That the government's system then took time to process and relay the message to the designated e-mailbox should not disqualify the proposal, the bidder argued.

The GAO rejected the argument. It held that the second exception for late bids applied only to those delivered by non-electronic means. It held that the first exception was the only one that applied to electronically delivered bids. To rule otherwise would render the first exception a nullity, the GAO concluded.

Late Paper Bid Saved By Timely Electronic Bid

A third protest was allowed when the bidder timely submitted its bid electronically but was late submitting the paper version. In re Tishman Construction Corp., No. B-292097 (2003).

The RFP for construction management services from the Department of Health and Human Services required bidders to submit their bids on paper and electronically. The bids were to be identical. The RFP specified that the "paper copy is the official copy for recording timely receipt of proposals." The electronic version could be submitted online through the agency's CRON (Contracts Review Online) system using PDF images or by CD-ROM or ZipDisk delivered by an express service.

The protester's electronic bid was received in the required format through CRON 50 minutes before the 4 p.m. (Eastern Standard Time) deadline. But, the paper version was delivered 73 minutes late. The agency rejected the bid as untimely.

The bidder argued that late delivery of the paper version of its bid was a minor informality that should be disregarded because its electronic bid was timely and because it was identical to the paper bid.

The GAO noted that FAR §15.208 provides that late bids generally should not be considered and that the reason is to alleviate confusion, ensure equal treatment of bidders and prevent the late bidder from obtaining a competitive disadvantage.

But, the GAO also noted a prior decision in which a bidder was required to submit its bid at two locations but did so timely at only one location. The GAO held that was only a minor informality because the agency had a complete copy of the bid timely and no competitive advantage was obtained. In re Abt Associates, Inc., No. B-2276063 (1987).

HHS opposed the protest, citing another case in which the late bid was rejected. In re Inland Service Corp., No. B-252947.4 (1993). But, the GAO pointed out that in Inland Service, the bidder had failed to timely provide a complete copy of its bid at any location.

The GAO sustained Tishman's protest because a complete copy of the bid was received timely in a manner specified, no competitive advantage was obtained and no confusion ensued. 1/

The GAO never addressed the RFP's express provision that the paper version of the bid rather than the electronic version was "the official copy for recording timely receipt of proposals."

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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-848-4996 or at paulberning@howrey.com or contact your Howrey attorney. For more information about Howrey's Construction Practice Group, click here.

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ENDNOTE

1/ The agencies seeking bids are part of the Executive Branch of the federal government, and the GAO and Comptroller General are part of the Legislative Branch. Accordingly, the GAO cannot directly compel a federal agency to accept or reject a bid. If a bid protest is sustained by GAO, it generally will recommend a corrective action, which can include reimbursement of attorney fees. When GAO recommends a corrective action, the Competition in Contracting Act of 1984 (P.L. 98-369) requires the affected agency to report to the Comptroller General if the agency has not fully implemented the recommendation within 60 days. The Comptroller General, in turn, reports to Congress if a recommendation is not fully implemented. For more information on bid protests and procedures, click here.


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