GAO Sustain: Security Clearance Denial Made Key Person Unavailable, Awardee Failed to Notify Agency
Recently, the Government Accountability Office ("GAO") sustained a protest where the awardee had actual knowledge––prior to award––that a key person was unavailable and failed to notify the agency of that material change.
The protest of M.C. Dean, Inc., B-418553; B-418553.2, June 15, 2020 involved a National Security Agency contract to "provide maintenance, installation, and distribution services for the agency’s comprehensive enterprise class physical security system."
Relevant here, the RFP identified seven key personnel labor categories, including the program manager ("PM"), who "will be the program management lead and the primary point of contact . . . and serve as the manager of the application of this contract." (cleaned up). The RFP further provided that the PM was required to have a TS/SCI FS Poly security clearance at the time of award.
The agency awarded the contract to PTSI Managed Services, Inc. ("PTSI"), and following a debriefing, M.C. Dean filed a protest.
The protester argued, among other things, that a PTSI key PM was unavailable prior to award and PTSI’s proposal was therefore unacceptable. Specifically, the protester argued that PTSI's PM was denied a required security clearance which put the company on notice (actual knowledge) that the PM would not be available at award. As a result, PTSI was "required to notify the agency of this change in its proposal" but failed to do so. 
The agency argued that PTSI was not required to provide a notification because the PM could still appeal the security clearance denial (i.e., the PM had not exhausted legal remedies).  On that basis, the agency argued that PTSI “could [not] be charged with actual knowledge of the [PM's] unavailability, as additional avenues of recourse remained available to him at the time of award to appeal his initial access denial.” 
Ultimately, GAO ruled in favor of the protester and concluded that PTSI had actual knowledge prior to award that its PM would not be able to perform on the contract because of the security clearance denial. Because PTSI was required to inform the agency of the unavailability of its PM and failed to do so, GAO sustained.
Key personnel issues can be a thorny subject for many government contractors. After all, people change jobs or otherwise become unavailable for a procurement effort for any number of reasons. Regardless, where a contractor learns––has actual knowledge––that a proposed key personnel has become unavailable prior to contract award, you are obligated to notify the agency of that material change.
 As set forth in the decision, GAO's rule concerning the unavailability of key personnel is as follows:
Our Office has explained that offerors are obligated to advise agencies of material changes in proposed staffing, even after submission of proposals. [CITE] While an offeror generally is required to advise an agency where it knows that one or more key employees have become unavailable after the submission of proposals, there is no such obligation where the offeror does not have actual knowledge of the employee’s unavailability. [CITE] This premise is grounded in the notion that a firm may not properly receive award of a contract based on a knowing material misrepresentation in its proposal. [CITE] When the agency is notified of the withdrawal of a key person, it has two options: either evaluate the proposal as submitted without considering the resume of the unavailable employee (where the proposal will likely be rejected as technically unacceptable for failing to meet a material requirement); or open discussions to permit the offeror to amend its proposal. [CITE]
 Interestingly, GAO determined that there was no record support addressing why PTSI believed that the clearance appeal would be successful, "much less that an appeal would be successfully adjudicated prior to contract award." Moreover, GAO also determined that the PM never actually appealed its security clearance denial.
 Additionally, the agency also argued that the unavailability of PTSI's PM was inconsequential because the agency's reliance on the PM's resume was not material to its evaluation. GAO also found this argument unpersuasive, noting that the "agency’s argument conflates the standard for assessing whether a 'bait and switch' occurred with the requirement for offerors to notify the agency when proposed key personnel become unavailable prior to award."
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