United States Government Accountability Office 

Washington, DC 20548 

Comptroller General

of the United States

 

Decision 

Matter of: Laducer & Associates, Inc. 

File: B-401735.3 

Date: February 23, 2010 

Wayne A. Keup, Esq., for the protester. 

David A. Ingold, Esq., Internal Revenue Service, for the agency. 

Glenn G. Wolcott, Esq., and Ralph O. White, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision. 

DIGEST 

Agency’s determination that it needed to provide all offerors with updated volume 

estimates, as well as to ensure that offerors properly understand the relative value of 

both proposing innovations and obtaining reliable, accurate, and timely results, 

constitutes a reasonable basis for reopening the competition. 

DECISION 

Laducer & Associates, Inc., of Mandan, North Dakota, protests the Internal Revenue 

Service’s (IRS or agency) issuance of amendment No. 5 to request for quotations 

(RFQ) No. TIRNO-08-Q-00124 for the conversion of paper-based documents to digital 

format. The agency issued the RFQ amendment in response to a prior protest filed 

by another offeror, Mandaree Enterprise Corporation; that prior protest challenged 

the agency’s award of a contract to Laducer. The RFQ amendment at issue makes 

various changes to the terms of the solicitation, and seeks revised proposals from 

the offerors.1

 Laducer maintains that the agency should be precluded from seeking 

revised proposals, and argues that the agency’s actions should be limited to 

reevaluating the previously submitted proposals. 

 

1

 Although the solicitation identified itself as an “RFQ,” the term “proposal” as 

opposed to “quotation,” appears repeatedly throughout the solicitation, and the 

solicitation contemplated an evaluation and source selection scheme similar to those 

used in negotiated procurements. For the sake of consistency, our decision adopts 

the terminology used by the solicitation. 
We deny the protest. 

BACKGROUND 

The agency initially issued this solicitation in December 2008, seeking proposals to 

convert sensitive but unclassified information from paper-based documents to digital 

format for a 1-year base period and four 1-year option periods.2

 The solicitation 

provided that proposals would be evaluated on the basis of price and non-price 

factors, establishing technical capability as the most important non-price factor. 

With regard to evaluation of the technical capability factor, offerors were advised 

that: 

[The technical capability] factor will be used to determine how 

thoroughly the offeror understands the needs and objectives of the 

general requirements and the overall technical approach. The 

Performance Work Statement[3] will be evaluated for the offeror[’s] 

overall understanding of the requirement, industry standards and best 

business practices. The offeror will be evaluated on the understanding 

of overall planning and controlling of resources needed for meeting 

contract requirements; understanding of the requirements for 

operational support and for processing of scheduled work; 

understanding the requirement for the development, testing, and 

implementation of new or modified forms; the ability to implement 

new or modified forms on a strict schedule; understanding in 

identifying the root causes of processing problems and the ability to 

resolve them; understanding of the requirement based on the proposed 

skill mix and labor hours; ability to meet or exceed accuracy levels in 

work performance; and ability to meet sensitive time schedules. Any 

technical innovations relevant to carrying out the scope of work that 

are proposed by the offeror will be evaluated for their technical merit 

and cost effectiveness. Where such innovations and any associated 

efficiencies or cost savings are proposed, their applicability and 

appropriateness to the scope of work will be evaluated. 

RFQ at 58. 

Early in 2009, proposals were submitted by Laducer and Mandaree. In September 

2009, the agency awarded a contract to Laducer; thereafter, Mandaree protested 

various aspects of that source selection decision. In November 2009, the agency 

 

2

 Laducer is currently the incumbent contractor for these requirements. 

3

 Offerors were required to develop a performance work statement as part of their 

proposed technical approach. 

Page 2 B-401735.3 
advised our Office that it intended to cancel Laducer’s contract, reevaluate 

proposals, and make a new source selection decision; thereafter, we dismissed 

Mandaree’s protest. 

The agency subsequently concluded that various solicitation requirements needed to 

be revised, updated, and/or clarified. Accordingly, in December 2009, the agency 

issued RFQ amendment No. 5, advising offerors as follows: 

The IRS has cancelled the award and is amending the RFQ to clarify 

and revise its requirements and to extend the date and time for 

submission of proposals. Offerors are required to submit entirely new 

Technical and Price Proposals if they wish to be considered for the 

new award. 

Letter from IRS to Laducer, Dec. 18, 2009. 

Among other things, amendment No. 5 updated the estimated quantities of the 

various forms that the contractor will be responsible for converting to digital 

format;4

 provided an updated schedule for the release/revision of certain forms;5 and 

added the following information regarding evaluation of proposals under the 

technical capability factor: 

Although technological innovation is encouraged to be included in 

proposals, the production outcome must achieve an accuracy level of 

99.0% and must meet all delivery dates 98.0% of the time. Reliable, 

accurate, and timely performance results are more important than 

innovations. Innovative technological solutions are less important 

than meeting the accuracy and timeliness performance requirements of 

this RFQ. 

The offeror(s) will be evaluated on the proposed technological 

approach, which can include complete keying of data; incremental use 

of Optical Character Reader (OCR) technology combined with keying; 

 

4

 The initial solicitation contained estimated annual quantities for each of 12 different 

paper-based forms that the contractor will be required to convert to digital format; 

these estimates were based on data experienced during 2006. Amendment No. 5 

updates the estimated quantities to reflect the more recent volume that was 

experienced in 2008 (a volume decrease of approximately 6%)--information that the 

incumbent, Laducer, knew, but which was unknown to any other offeror. 

5

 For example, contractors were advised that paper-based form FinCEN 101, 

“Suspicious Activity Report by Securities and Futures Industries,” which was 

originally scheduled for revision in March 2009, will not be revised until April 2012. 

Page 3 B-401735.3 
full OCR data conversion; and any other proposed approach. The 

offeror(s) will be evaluated on the proposed timeline; data and number 

of employees and hours allocated for document preparation and 

reassembly; keying of data; scanning of data; quality review; error 

resolution; and the specific rates in each area the offeror(s) expect to 

achieve. The offeror(s) will be evaluated on historical 

data/information provided on keying accuracy level and projected data 

on scanning accuracy level. The offeror(s) will be evaluated on 

historical or projected data on the time required to conduct the 

proposed quality reviews and to correct errors. 

The variety and complexity of paper forms that are required to be 

converted are illustrated by, but not restricted to, the forms currently 

available for inspection at http://www.fincen.gov and IRS.gov websites. 

See RFQ 2.3.1. Offerors(s) are reminded that they are also expected to 

develop the capability to process new and revised forms as might be 

scheduled in the future, with appropriate acceptance testing as a 

requirement before the conversion of the new form goes into 

production, see RFQ subsection 2.4.1. 

RFQ amend. 5, at 9. 

DISCUSSION 

Laducer protests the agency’s issuance of amendment No. 5 and the request for 

revised proposals, maintaining that, since its price has been disclosed, re-opening of 

the procurement is inappropriate. Laducer further maintains that the amendment’s 

additional information regarding evaluation of the technical capability factor 

effectively “reveals Laducer’s technical approach.” Protest at 9. We reject Laducer’s 

assertions. 

Contracting agencies have broad discretion to take corrective action where they 

determine that such action is necessary to ensure fair and impartial competition. 

RS Info. Sys., Inc., B-297185.2, B-287185.3, May 16, 2001, 2001 CPD ¶ 98 at 4. Where 

the corrective action taken by an agency is otherwise unobjectionable, a request for 

revised proposals is not improper merely because the awardee’s price has been 

exposed. Strand Hunt Constr., Inc., B-292415, Sept. 9, 2003, 2003 CPD ¶ 167 at 6. 

We have recognized a limited exception to that rule where the record establishes 

that there was no impropriety in the original evaluation and award, or that an actual 

impropriety did not result in any prejudice to offerors and that reopening the 

competition does not provide meaningful benefit to the procurement system. Hawaii 

Int’l Movers, Inc., B-248131, Aug. 3, 1992, 92-2 CPD ¶ 67 at 6, recon. denied, Gunn 

Van Lines; Dept. of the Navy--Recon., B-248131.2, B-248131.4, Nov. 10, 1992, 92-2 CPD 

¶ 336. 

Page 4 B-401735.3 
Page 5 B-401735.3 

Here, the agency explains that, following review of Mandaree’s protest, the agency 

became concerned that the terms of the initial solicitation were insufficiently clear 

to the offerors. The agency states that, although it is not certain that Mandaree’s 

protest would have been sustained if it only reevaluated the previously submitted 

proposals, it concluded that it would be prudent to provide updated volume 

estimates (data previously known only to Laducer) and clarify the agency’s 

evaluation of the technical capability factor with regard to “the relative value of 

proposing innovations vs. guaranteeing results that must be reliable, accurate, and 

timely.” Agency Motion to Dismiss at 4. Further, the agency maintains that the 

solicitation amendment does not disclose any proprietary information regarding 

Laducer’s proposed approach. We agree.6 

As noted above, this is a matter in which the agency has considerable discretion. 

RS Info. Sys., Inc., supra. Based on our review of the parties’ submissions, we reject 

Laducer’s arguments. Specifically, the need to provide all offerors with updated 

volume estimates as well as ensuring that offerors properly understand the relative 

value of both proposing innovations and obtaining reliable, accurate, and timely 

results, constitutes a reasonable basis for reopening the competition. Further, we 

have reviewed the information contained in the amendment and find no basis to 

conclude that it discloses information that is proprietary to Laducer. 

The protest is denied. 

Lynn H. Gibson 

Acting General Counsel 

 

6

 The agency responded to Laducer’s protest by submitting a request for dismissal of 

the protest. While we did not agree that the protest could be dismissed, we did agree 

that it should be denied. In keeping with the statutory mandate that our bid protest 

forum provide for “the inexpensive and expeditious resolution of protests,” 31 U.S.C. 

§ 3554(a)(1) (2006), along with our review of Laducer’s protest and the amended 

solicitation, we did not require the agency to submit any further response to 

Laducer’s protest.