In a recent decision, the U.S. Government Accountability Office (GAO) sustained a protest challenging the U.S. Air Force’s determination that the protester, DecisionPoint Corporation (DecisionPoint), a service-disabled veteran-owned small business, was ineligible for award of a contract for defensive cybersecurity services. The solicitation, issued under the General Services Administration’s (GSA) Veterans Technology Services 2 (VETS II) contract, required offerors to submit proof of a level III Capability Maturity Model Integration (CMMI) certification for the prime contractor that would provide the services. Before the proposal submission deadline, EmeSec Inc. (EmeSec) merged with DecisionPoint and, in turn, became a wholly owned subsidiary of DecisionPoint. Although DecisionPoint held the required level III CMMI certification at all relevant times, EmeSec—identified as the prime contractor in the protester’s proposal—did not. After proposal submission but before award, DecisionPoint entered a novation agreement with GSA that recognized DecisionPoint as EmeSec’s successor in interest. Although the agency initially made the award to DecisionPoint/EmeSec, following a protest by Centuria Corporation (Centuria) that led to corrective action, the agency later determined that EmeSec’s lack of CMMI certification rendered DecisionPoint ineligible for award and selected Centuria instead. GAO disagreed with the agency’s determination, however, and found that the merger made DecisionPoint the prime contractor. As a result, GAO found that the agency failed to consider the merger’s impact on DecisionPoint’s proposal and unreasonably determined that DecisionPoint was ineligible for award.

POV: Unsuccessful offerors may successfully challenge an award decision if an agency fails to evaluate the impact of a merger on an offeror’s proposal, leading to an improper determination of ineligibility. Critical here, when an agency becomes aware of an impending or completed transaction, it must thoroughly assess how the transaction might affect the offeror’s proposal and overall eligibility. An agency’s failure to do so may result in flawed award decisions, opening the door for successful protests and potentially halting the award process.