GAO Grants Protest Costs to Delphinus Due to Navy’s Flawed Best-Value Tradeoff
In a recent decision dated July 14, 2025, the U.S. Government Accountability Office (GAO) granted Delphinus Engineering, Inc.’s request for reimbursement of protest costs in connection with the Department of the Navy’s procurement for alteration installation team (AIT) services and in-service engineering agent support. The case—Delphinus Engineering, Inc.--Costs, B-423203.3—offers an important reminder to federal contractors that agencies must conduct source selections based on accurate evaluations and well-supported best-value determinations.
The Navy initially awarded the contract to Prism Maritime, LLC, based on what it described as Prism’s technically superior proposal. Delphinus, a competing small business offeror, protested the award, arguing that the Navy had mischaracterized and misweighed the relative strengths of the competing proposals. In particular, Delphinus challenged the Navy’s best-value tradeoff decision, which relied heavily on Prism’s experience with industrial installation efforts and warehousing capabilities. Delphinus maintained that it had been credited with similar experience but was nonetheless disadvantaged by a source selection decision that treated these qualifications as exclusive to Prism.
GAO agreed with Delphinus that this portion of the protest was “clearly meritorious.” The record showed that both Prism and Delphinus were credited with essentially the same strength for relevant experience, yet the Navy identified that strength as a discriminator only for Prism’s proposal. The agency’s documentation failed to explain how Prism’s experience was superior or distinguishable. This omission undermined the rationality of the best-value decision.
Compounding the issue was the Navy’s delay in taking corrective action. Rather than acting promptly after receiving the initial protest, the Navy defended its decision through its agency report and only took corrective action after Delphinus filed comments and a supplemental protest. GAO found that this delay caused Delphinus to expend unnecessary resources and warranted the reimbursement of protest costs related to the best-value tradeoff challenge.
However, GAO declined to recommend reimbursement for several other protest issues raised by Delphinus. These included challenges to the Navy’s technical evaluation, cost evaluation, and allegations of misleading discussions. GAO found that these issues were not clearly meritorious and involved distinct factual and legal theories, making them severable from the successful best-value argument. For instance, while Delphinus claimed that its favorable technical features were improperly consolidated into a single strength and that the Navy wrongly escalated its proposed labor rates, GAO concluded that the agency had defensible legal positions and that resolution of these issues would have required further factual development.
Despite these partial denials, the decision is a noteworthy victory for Delphinus. It reinforces GAO’s expectation that agencies conduct careful, well-documented best-value tradeoffs and act promptly when faced with substantiated protest allegations. For federal contractors, the ruling underscores the importance of scrutinizing not just technical and cost evaluations but the rationale behind award decisions—especially when evaluators assign similar strengths to multiple offerors yet rely on them selectively to justify award outcomes.
Contractors should also take note of GAO’s reaffirmation that protest costs may be recoverable when an agency delays corrective action in response to a protest that is clearly meritorious. As in this case, even if the protester does not prevail on all grounds, GAO may still grant reimbursement for the specific issues that were well-founded and central to the agency’s flawed decision-making.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. While the summary is based on a publicly released GAO decision, readers are encouraged to consult official sources and legal counsel for guidance on specific procurement matters.