Reports of New Balance's "Bribe" Claim Are Off Balance

As government contractors are well aware, media efforts to accurately report government procurement issues are often unsuccessful. A Washington Post article inaccurately reported in 2013 that “Fewer than 15” GAO  protests, about 1% of the roughly 1600 GAO protests filed in 2010, resulted in the protester winning the contract. However, detailed studies by government contract experts put the number much higher at approximately 20-29%.

This week, several media reports have suggested that shoe manufacturer New Balance decided to publicly oppose the U.S. government’s proposed trade deal, the Trans-Pacific Partnership (TPP), because the Department of Defense (DoD) has so far refused to award New Balance a contract for military shoe business. One story led with “The Obama administration offered the American shoe company New Balance government contracts so that they wouldn’t call foul on the Trans-Pacific Partnership.” Another referred to the Obama Administration “bribing” New Balance with the promise of a DoD contract in exchange for New Balance not opposing TPP.

In reality, New Balance had specifically denied that there had ever been any bribe. The reported stories grew out of a press conference New Balance CEO Rob DeMartini held on April 12th at which he discussed New Balance’s recent opposition to TPP. However, unreported is his statement denying any bribe: “There was no quid pro quo deal. We didn’t want an earmark contract,” DeMartini said at the press conference. “We wanted to compete for a piece of business we’re very confident we can win.”

So the “bribe” part of these reports is fiction.

Other outlets added helpful context. Although DeMartini expressed an interest in competing for the work, Fox News reported that New Balance has in fact competed – unsuccessfully so far. Fox quoted an Obama administration trade official saying that New Balance “has not yet been able to provide a model that meets DoD’s requirements for our servicemembers.” Another outlet reported that “none of the three New Balance shoes offered for consideration met the agency’s cost requirements and one did not meet durability standards.”

In sum, New Balance has had the opportunity to compete but few media outlets discussed the procurement concepts of best value to the government and war fighter. The complexity of the procurement process makes our profession an easy target for sensational claims. Where are the fact-checkers when we need them?

Terrence O'Connor is the Director of Government Contracts for Berenzweig Leonard, LLP, a business law firm in the D.C. region. Terry can be reached at toconnor@berenzweiglaw.com.

If an Agency Does Not Answer Your Questions, Keep Asking

If used wisely and persistently, the Q & A part of the solicitation process can mitigate numerous contractor risks. One of those risks is the risk of winning a contract with a vague statement of work that exposes a contractor to overruns; another is the risk of losing a contract because a bidder misinterpreted ambiguous solicitation instructions to bidders.

As a recent GAO decision shows, it pays for a bidder to keep asking the agency to clarify a vague solicitation if the Q&A fails to do so and even, as another decision holds, if the government has said it will take no more questions.

In a solicitation that limited offerors to giving past performance references on no more than 3 projects, the RFP’s instructions were unclear about whether the offeror’s involvement in the 3 projects had to be as a prime or as a subcontractor. During the Q&A, several offerors asked for clarifications, but the government’s answers only confused things more. One offeror wanted a clear answer so, six days before the offer due date, it asked the government to further clarify its previous answer. After the government failed to do, the offeror submitted its offer but lost to a company that, under the vague instructions to offerors, the agency concluded had better past performance references and a slightly lower price.

The offeror protested to GAO and won in two ways. First, GAO recommended that the agency clear up the ambiguous past performance requirements via an amendment and get new offers, giving the protester a second chance to win the work. Second, GAO said the protester – a small business – was entitled to get protest costs and attorneys’ fees from the agency.

GAO’s decision is consistent with other protest decisions, one of which held that an offeror should keep asking the government questions even if the government has said it would not accept any more.

This persistence the case law demands seems to run against the business instincts of many offerors; they are reluctant to challenge the agency in the middle of a solicitation because it seems like a bad business strategy and may cause offense.

It is not. Keeping after the government for a clear answer can benefit a government contractor, win or lose. If it wins the work, its pre-award attempt to clear up an ambiguity generally entitles it to an equitable adjustment to pay for the work the government had only vaguely described in the solicitation. On the other hand, if it loses the work, it can argue that its continued questioning protects its right to protest.

In addition, bidders sometimes must take bidding risks because the risk of not bidding seems unacceptable. Especially in these cases, persistent questioning is a must and can help protect the company in an already challenging environment.  

Terrence O'Connor is the Director of Government Contracts for Berenzweig Leonard, LLP, a business law firm in the D.C. region. Terry can be reached at toconnor@berenzweiglaw.com.