The pitfalls of changing a pending proposal.

• Author: Carey, Jay
• Position: Ethics Corner

As acquisition timelines become increasingly protracted, contractors face the thorny question of if, when and how to advise a procuring agency of changes affecting an already submitted proposal.

In a series of decisions, the Government Accountability Office has held that contractors must inform the procuring agency of any "material change" to a proposal that occurs after submission but before award: "Where an offeror's proposal represents that it will perform the contract in a manner materially different from the offeror's actual intent, an award based on such proposal cannot stand, since both the offeror's representations and the agency's reliance on such have an adverse impact on the integrity of the procurement process." FCi Fed., Inc., B-408558.7, Aug. 5, 2015, 2015 CPD 245.

A contract bidder who fails to advise a procuring agency of a material change to a proposal, and then wins the contract, thus risks a protest and loss of the award. It could also endanger a valuable customer relationship and, depending on the facts, might even trigger a termination, False Claims Act allegations or both.

An obligation to advise the procuring agency of a material change can arise when, for example, a key person named in the proposal becomes unavailable, or it undergoes a corporate transaction after proposal submission but before award.

GAO has found that the departure of named key personnel may constitute a material change requiring disclosure to the agency. Whether such a change is "material" depends on a number of factors, including whether the solicitation required the identification of the key personnel; whether the solicitation addressed the substitution of key personnel; how heavily it relied on the key personnel in its proposal; and whether it has a replacement with equal or better qualifications.

If a contractor fails to inform the agency of its substitution of key personnel with someone less qualified, that is prime protest fodder. See Paradigm Techs., Inc., B-409221.2, Aug. 1, 2014, 2014 CPD [paragraph] 257; Greenleaf Constr. Co., B-293105.18, Jan. 17, 2006, 2006 CPD [paragraph] 19. GAO has also closely scrutinized awardees where a merger, spin-off or other corporate transaction occurs during the pendency of a proposal. See FCi Fed., Inc., 2015 CPD [paragraph] 245; Wyle Labs., Inc., B-408112.2, Dec. 27, 2013, 2014 CPD [paragraph] 16, recons. denied sub nom. NASA--Recons., B-408112.3, May 14, 2014, 2014 CPD [paragraph] 155.

In FCi, the...