Background of the Protest
Northstar Location Services LLC contested the Department of Education’s decision to reject their proposal submitted under Request for Proposals (RFP) No. ED-FSA-13-R-0010. This RFP was for student loan debt collection and administrative resolution services. The core issue was the agency’s rejection of Northstar’s proposal as late, leading to a formal protest.
The Department of Education’s Office of Federal Student Aid utilizes private collection agencies to manage debts from unpaid student loans across various federal programs. The solicitation was structured in two phases, aiming to award multiple indefinite-delivery/indefinite-quantity contracts for a base period of five years, with an option for an additional five years.
Initially, in Phase I, Northstar Location Services was among 42 firms selected in April 2014 to proceed to Phase II and submit proposals. The original deadline for Phase II proposals was July 23, 2014, and Northstar met this deadline. However, Amendment No. 17, issued on December 19, brought substantial changes to the evaluation criteria and extended the deadline for revised proposals to 5 p.m. on January 16, 2015.
Further clarification was provided through Amendment No. 20 on January 13, in response to offeror questions. Crucially, the agency stated that initial Phase II proposals would not be considered due to the significant revisions introduced by Amendment 17. Offerors were explicitly warned that late proposals would not be accepted. Therefore, all participants were required to submit new Phase II proposals based on the amended terms by the January 16 deadline. Thirty-seven firms reportedly submitted proposals on time. Northstar Location Services’ proposal, however, was received at 5:27 p.m. on January 16 and subsequently rejected as late, prompting the company to file a protest.
Grounds for Protest and Regulatory Framework
Northstar Location Services challenged the Department of Education’s decision, arguing that their submission should have been considered despite being late. The protester based their argument on the premise that their late proposal offered more favorable terms to the government than their initial, timely submission. They cited Federal Acquisition Regulation (FAR) § 15.208(b)(2) as justification for their claim.
FAR § 15.208 clearly outlines the responsibilities of offerors in government contracting, stating that it is the offeror’s duty to ensure proposals, revisions, and modifications are submitted to the correct place and at the correct time. Generally, late submissions are not considered. However, there are exceptions. One exception, relevant to Northstar’s argument, is when a late submission is received before contract award and is a modification of an “otherwise successful proposal” that improves the government’s terms.
For a late modification to be considered under FAR § 15.208(b)(2), it must be a modification to a proposal already deemed “otherwise successful.” An “otherwise successful proposal” is defined as one that is already positioned for contract award before the late modification is submitted.
GAO’s Decision: Why Northstar’s Protest Was Denied
In this case, the General Accountability Office (GAO) determined that Northstar Location Services’ second Phase II proposal submission could not be classified as a modification to an “otherwise successful proposal.” This determination was based on the fact that the Department of Education had explicitly nullified all initial Phase II proposals due to the substantial changes introduced by Amendment 17.
The agency had communicated clearly through Amendment No. 20 that the competition was effectively being restarted for Phase II. Specifically, Question and Answer No. 26 from Amendment No. 20 clarified that “[p]reviously submitted proposals will not influence the evaluation process.” This indicated that all offerors were on equal footing, and no proposals had yet been evaluated or deemed successful at the time of the revised submission deadline.
Given that no “otherwise successful proposal” had been identified by the agency due to the reset of the evaluation process, Northstar’s late submission did not qualify as a modification to such a proposal as defined by FAR § 15.208(b)(2). The GAO cited precedents such as Team Systems Int’l, LLC, B‑410420, and LATG, Inc., B‑409679.2, to support the agency’s right to reject late proposals under these circumstances.
Consequently, the GAO concluded that the Department of Education acted reasonably in rejecting Northstar Location Services’ Phase II proposal as late. The protest was therefore denied.
Conclusion: Adherence to Proposal Deadlines in Government Procurement
The decision in the Northstar Location Services case underscores the critical importance of adhering to proposal deadlines in government contracting. The GAO’s decision reinforces the principle that agencies are not obligated to consider late proposals unless they meet the specific exception criteria outlined in FAR § 15.208, such as being a beneficial modification to an already successful proposal. When agencies clearly communicate changes to solicitations and reset proposal evaluations, offerors must ensure timely submissions to remain in consideration for contract awards. This case serves as a reminder for all companies engaged in government procurement to meticulously manage proposal submissions and strictly comply with all stipulated deadlines.
