Court of Federal Claims rules agency had to seek clarification of obvious typo

On May 30, 2023, the Court of Federal Claims ruled for Aspire Therapy Services & Consultants, Inc., that despite the discretion afforded to the agency, it was arbitrary for the Defense Commissary Agency (DeCA) to eliminate Aspire’s proposal for an obvious typo rather than seek clarification.

The court ordered DeCA to restore Aspire’s proposal to the competition and evaluate it consistent with the court’s opinion.

(Full disclosure: Schoonover & Moriarty represented Aspire in the protest.)

Though we do not normally blog about our own cases, with Aspire’s permission we’re writing about this victory because we believe this decision will be welcome news to the industry. The Court provided insight into when clarifications are appropriate and when an agency’s failure to seek clarification is arbitrary and capricious.

Aspire’s bid protest challenged its elimination from competition due to conflicting labor hours identified in its proposal. The inconsistent labor hours resulted from of a typographical error contained in a spreadsheet formula. The error in question was inputting of “51” in to a formula that called for “81”. This 30-hour difference ultimately changed the total labor hours for one of the requirements from 2,366 to 2,336. This meant that the price spreadsheet said 2,336 while the labor hours summary said 2,366.

DeCA’s rationale for elimination was that the solicitation required those figures to match. Because the solicitation required the figures to match exactly and changing one or the other would have altered the proposal, DeCA determined the error was not minor or clerical nor ripe for clarification.

The court’s decision analyzed two issues: (1) did DeCA rationally determine that a 30-hour difference in labor hours reflected on two spreadsheets in Aspire’s proposal was not a minor clerical error that could be clarified pursuant to FAR 15.306, and (2) did DeCA abuse its discretion by declining to seek clarification.

To prevail, Aspire first needed to convince the court that its error was minor and/or clerical. Under FAR 15.306(a)(2), the government may seek clarification of limited proposal terms, including resolution of “minor or clerical errors.”

In reaching the conclusion that Aspire’s typo was minor and clerical, the court emphasized that the figures “2,336” and “2,366” were “off by one digit and appear so similar that the error is easily overlooked by the naked eye, a strong indicator that Aspire made a typographical error.” Additionally, the court understood Aspire’s dilemma, where instead of typing “81” (the intended labor hour) in the spreadsheet formula, Aspire typed “51”. The number “81” was also apparent on the face of Aspire’s proposal in a separate spreadsheet and was located among the relevant labor hours used in the formula that contained the typo.

The court next had to decide whether DeCA abused its discretion by not seeking clarification. Review of such an argument employs a highly fact-intensive and case-specific analysis with no bright line rule or legal test to guide the court as to whether the agency abused its discretion by not engaging in clarifications.

The nature of Aspire’s typo helped in that regard. It was both obvious and unintentional. Resolution of the error would not require Aspire to materially alter its proposal; it would merely result in a negligible 0.063% price increase over the span of five years. The court also emphasized that the price increase would place Aspire at a competitive disadvantage–skiving off a common argument that alterations to proposals that give an offeror a competitive advantage may only be accomplished through discussions, not clarifications. Lastly, Aspire’s proposal was highly competitive, offering the second lowest price among all offerors.

Based on all of these facts, the court concluded that DeCA abused its discretion. The agency materially failed to seek clarification of what the court deemed was “an obviously minor clerical error that could easily be corrected, where the information needed to understand and correct the error was contained in Aspire’s proposal and where Aspire submitted a highly competitive price.”

Importantly, this case indicates that an error can be corrected through clarifications in certain circumstances even if it requires a change in the proposal and that change alters the price. In other words, a non-material change to a proposal does not result in discussions. This case also may provide a roadmap for future contractors to challenge similar decisions by the government.

If you have questions about potential bid protests or otherwise, give us a call or shoot us an email.