## Facts

- The Air Force issued an RFP for professional support services for its Space Warfare Center, contemplating award to a lead contractor for program management, integration, and related services.
- Information Technology & Applications Corp. (ITAC), the incumbent, and RS Information Systems, Inc. (RSIS) submitted proposals that relied in part on subcontractors.
- The Air Force evaluated proposals on factors including project management, past performance/experience, cost/price, and proposal risk.
- During evaluation, the Air Force sent RSIS three evaluation notices seeking additional information about the past performance and experience of RSIS’s proposed subcontractors; RSIS provided substantive responses.
- The Air Force performed a most probable cost (cost realism) analysis for RSIS and increased RSIS’s evaluated labor hours after concluding RSIS’s proposed hours were insufficient for the work.
- The agency concluded ITAC and RSIS were essentially equivalent on project management and past performance/experience, but that RSIS was superior on cost/price and proposal risk, and it awarded the contract to RSIS.
- ITAC filed a post-award bid protest, arguing the RSIS communications were “discussions” that required equal discussions with ITAC and that ITAC would have revised its proposal if given the same opportunity.
- The Court of Federal Claims denied relief on the administrative record; ITAC appealed.

## Issues

1. Whether the Air Force’s evaluation notices and related exchanges with RSIS were permissible “clarifications” or impermissible “discussions” under FAR Subpart 15.3.
2. Whether the agency’s most probable cost adjustment to RSIS’s evaluated hours constituted “discussions” or otherwise rendered the procurement unlawful.
3. Whether ITAC showed prejudice—i.e., a substantial chance of award but for the alleged procurement errors—sufficient to obtain relief in a bid protest.

## Decision

- The Federal Circuit affirmed the judgment for the United States and upheld the award to RSIS.
- The court held the Air Force’s contacts with RSIS were allowable “clarifications” and did not constitute “discussions.”
- The court held the agency’s most probable cost adjustment was an internal evaluation step and did not trigger a duty to conduct discussions.
- The court rejected ITAC’s remaining challenges and found no prejudicial procurement error warranting relief.

## Legal Principles

- Under FAR 15.3, “clarifications” are limited exchanges that do not permit an offeror to revise or modify its proposal; “discussions” are negotiations meant to identify significant proposal issues and allow proposal revision after establishing a competitive range.
- Requests for supplemental or explanatory information to evaluate what was already proposed—without reopening material terms or permitting proposal revision—may be treated as clarifications.
- An agency may perform a cost realism/most probable cost analysis and adjust evaluated costs or hours for evaluation purposes without converting the procurement into discussions.
- In bid protests under the APA standard of review, a court sustains an award if the agency acted with a rational basis and in accordance with law; relief requires a showing of prejudicial error, commonly framed as loss of a “substantial chance” of award.

## Conclusion

The Federal Circuit upheld the Air Force’s award because the agency’s information requests to RSIS were clarifications rather than discussions, the cost realism adjustment was a permissible evaluative action, and ITAC failed to show that any asserted error deprived it of a substantial chance to win the contract.


Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312 (Fed. Cir. 2003)