Law Offices of Clinton D. Hubbard

2008

 

 

Federal Procurement:  An Expanded Right To Protest Task Orders Under Indefinite-Delivery Contracts

 

 

The National Defense Authorization Act for 2008 greatly expands the ability to protest the award of task and delivery orders for both civilian and military agencies.  (See Sec. 843, ‘‘Enhanced Competition Requirements For Task And Delivery Order Contracts.’’)  The new authority came into effect mid-year and a key FAR regulation was revised effective September 17, 2008.  (FAR 16.505, Ordering)

 

As discussed in an earlier article posted on this site, under a single multiple award contract (MAC) there may be several contractors who are in effect competing among themselves to be awarded various task orders issued under that contract throughout its duration.  This kind of contract assures the individual contractors of only, typically, a nominal amount of contract business, and there is no guarantee of any work above this nominal amount.  This method of contracting became possible under the Federal Acquisition Streamlining Act of 1994 (‘‘FASA’’) and is now an extremely popular procedure.  FASA prohibits the protest of any task order ‘‘except for a protest on the ground that the order increases the scope, period or maximum value of the contract under which the order is issued.’’ 10 U.S.C. 2304c(d); 41 U.S.C.  253j(d).  Following the enactment of FASA, and especially recently, these ID/IQ contracts (indefinite-delivery/indefinite-quantity) have become quite common.

 

However, many have criticized lax contracting practices in connection with the award of orders under ID/IQs, and especially the lack of effective competition.  (See, e.g., U.S. GAO, Guidance Needed to Promote Competition for Defense Task Orders, GAO-04-874 (July 2004).)   In response, the “‘Enhanced Competition Requirements” law was enacted in 2008 as a step toward allowing the MAC contractors, and even non-parties, to provide some oversight.  

 

 

Key Elements of the Enhanced Competition Requirements Law

 

This law is inapplicable to the vast majority of ID/IQ task order activity because of the high dollar threshold limit:  it applies only to orders of at least $5 million and protest rights with teeth come into effect only at the $10 million task order size.  But the new changes could be significant to even the smaller task order contracts in that they may well establish a sort of “best practices” standard for government procurement procedures which may be influential in many instances.  Furthermore, depending on how well the new system works with the large task orders, it may be introduced in the future at lower dollar thresholds.

 

By statute and regulation, none of the normal grounds for protest of a government award may be asserted by one MAC contractor against a fellow MAC contractor regarding a particular task order award.  Typical grounds for a normal GAO (or court) “bid protest” are unequal treatment of offerors, unsupported or improper source selection deliberations, misreading of proposals, irregularities in discussions, &etc.  The new act as implemented in the FAR reads in part as follows:

 

FAR 16.505 Ordering


(a) General.

...(9)  (i) No protest under Subpart 33.1 is authorized in connection with the issuance or proposed issuance of an order under a task-order contract or delivery-order contract, except for—


(A) A protest on the grounds that the order increases the scope, period, or maximum value of the contract; or


(B) A protest of an order valued in excess of $ 10 million. Protests of orders in excess of $ 10 million may only be filed with the Government Accountability Office, in accordance with the procedures at 33.104.


(ii) The authority to protest the placement of an order under this subpart expires on May 27, 2011. (10 U.S.C. 2304a(d) and 2304c(d), and 41 U.S.C. 253h(d) and 253j(d)).

 

[effective Sept. 17, 2008]

 

 

The new law now allows protests for task and delivery orders that are valued at over $10 million; orders below that amount are still subject to the FASA ban on most protests.  (An advisory panel had earlier proposed a lower ($5 million) threshold for protests but that recommendation was not accepted.)

 

Another noteworthy feature is that exclusive jurisdiction over these protests has been granted to the Comptroller General; therefore they can be filed only with the GAO.  Normal bid protests can be also filed in federal court.  And consistent with the experimental nature of this act, it expires in three years if not renewed.

 

An unusual feature of this act is that it imposes new "enhanced competition requirements" on the government for task orders in excess of $5 million but enforcement rights apply only to larger orders.  If the order is for $10 million or more than one of the MAC contractors will have standing to protest the violation of these guidelines; but if it is valued between $5 and $10 million then the only remedy available is to file a complaint with the agency's ombudsman, who cannot compel relief.

 

 

Five Substantive Rules Governing The Task Order Decision

 

As set forth in the FAR regulation implementing the new act, the are five substantive rules that govern the decision by the contracting officer to award a task order to one particular MAC contractor rather than another --   16.505(b)(1)(iii):

 

(iii) Orders exceeding $ 5 million. For task or delivery orders in excess of $5 million, the requirement to provide all awardees a fair opportunity to be considered for each order shall include, at a minimum—


(A) A notice of the task or delivery order that includes a clear statement of the agency's requirements;


(B) A reasonable response period;


(C) Disclosure of the significant factors and subfactors, including cost or price, that the agency expects to consider in evaluating proposals, and their relative importance;

(D) Where award is made on a best value basis, a written statement documenting the basis for award and the relative importance of quality and price or cost factors; and


(E) An opportunity for a postaward debriefing in accordance with paragraph (b)(4) of this section.

 

If the agency fails to document a best-value award decision adequately, a contractor could file a protest. Such a protest might allege that the agency departed from the stated award criteria, or it failed to accurately assess the differences between proposals, or that it did not explain the basis for award. Similarly, a protest might allege that the agency did not provide an adequate period to prepare a proposal, or that the notice did not have a clear statement of requirements. 

 

 

How Is GAO Likely To Evaluate These Protests?

 

The GAO has already been overseeing a similar type of procedure in a different procurement area, the General Services Administration's FSS program.  In adjudicating task and delivery order protests it has developed a specialized body of common law.  Presumably many of these principles will transfer over to the valuation of protests for government-wide procurement as well.  The ordering process then will become  more regular and transparent.  If the existing “common law" for FSS ordering is in fact the guide, the GAO is likely to enforce in detail the ground rules set forth in these task order solicitation-like documents. The GAO typically reviews the valuation award to ensure that it was both (a) fair and equitable and (b) consistent with the terms of the solicitation.

 

GAO will also sustain a protest where the agency fails to evaluate the offerors on an equal basis. Simplicity  Corp., B-291902, April 29, 2003, 2003 CPD P.89 (GAO sustained a protest where costs required by the solicitation were included in protester’s proposal but were not fully included in the awardee’s proposal, and thus the agency’s evaluation was an improper ‘‘apples to oranges’’ comparison).

 

In the FSS arena, GAO ‘‘will review the agency’s actions to ensure that the evaluation was fair and reasonable and consistent with the solicitation.’’  KMR, LLC, B-292860, Dec. 22, 2003, 2003 CPD P.233 (the solicitation promised to evaluate ‘‘relevant’’ past experience,  defined as the same or similar work, but the record did not show why past experience evaluated for the awardee met this definition).  GAO will also entertain protests of FSS orders alleging that the proposed items were unreasonably disqualified as unacceptable.

 

Other protest decisions involving substantive evaluation  issues in the context of FSS orders have addressed flaws in areas such as the identification and mitigation of organizational conflicts of interest.  Alion Science & Technology Corp., B-297342, Jan. 9, 2006, 2006 CPD P.1 ( the agency’s conclusions, that potential organizational conflicts of interest were minimal and could be addressed by using a subcontractor, were not supported by the record).   And in Crestridge, Inc., B-295424, Feb. 23, 2005, 2005 CPD P.39, GAO reviewed the agency’s decision to penalize the protester’s proposal as ‘‘too general.’’ GAO’s own review showed it was more detailed than the awardee’s proposal in certain areas, and in other areas both proposals had the same degree of specificity.  The protest was sustained.  Thus, the evaluation of FSS orders must be reasonably supported by the record, and GAO will probably apply this same principle to task orders in the future.

 

GAO has sustained protests where the FSS award decision was inconsistent with the evaluation criteria set forth in the solicitation.  For instance, in GlassLock, Inc., B-299931, Oct. 10, 2007, 2007, WL 4200104, the solicitation announced that technical factors would be considered more important than price.  GAO ruled that the agency had improperly made its award decision on the  basis of the lowest-priced proposal so long as the technical factors were merely “acceptable.”  Under the new act GAO is likely to carefully enforce the requirement for the disclosure of evaluation factors and subfactors, and their relative importance; and sustain protests where these requirements are not met.  Similarly, GAO will likely overturn an award where the agency’s conclusions are not reasonably based or are undocumented in the record.  In OSI Collection Services, Inc., B-286597, Jan. 17, 2001, 2001 CPD P.18, the agency relied on an overly mechanical mathematical analysis of past performance, which did not support the conclusions reached in the award documentation. That, and a lack of qualitative analysis, invalidated the source selection.

 

When putting FSS orders out for competition  agencies do not have to conduct discussions with offerors, and neither does the new act require this for task orders.  However, when an agency does conduct such discussions in the FSS context it becomes subject to certain ground rules and cannot engage in discussions that are not equitable as between competitors.   The agency must make an offeror aware of perceived weaknesses or deficiencies in its proposal if not doing so creates an unfair disadvantage.   E.g., TDS, Inc., B-292674, Nov. 12, 2003, 2003 CPD P.204 (sustained protest against an FSS order where other offerors received questions that were far more detailed than those received by the protester, and where those questions related far more specifically to the agency’s concerns about both of  their quotes); and ACS Government Solutions Group, Inc., B-282098, June 2, 1999, 99-1 CPD P.106 (in course of discussions the agency improperly failed to alert protester to the evaluation panel’s concern as to the size of the price increase after the first year).  Compare, Vion Corp., B-283804.2, Jan. 24, 2000, 2000 CPD P.22 (an agency is not required to engage in exactly equal discussions and may seek further information from only one vendor to clarify the terms of that vendor’s proposal).

 

 

Conclusion

 

GAO will undoubtedly step in and grant meritorious protests under the new act.  It is likely to apply the same rules to task and delivery ordering as it has been applying to FSS ordering.  GAO’s decisions in FSS protests show that as the competitive process for orders becomes more formal, it is subject to stricter scrutiny and firmer standards of fairness.  For instance, even though the regulations in FAR Part 15 do not apply to FSS protests, GAO applies to those protests the same Part 15 standards it uses for competitive proposals in general.  (TDS, Inc., supra, at n.3, citing Uniband, Inc., B-289305, Feb. 8, 2002, 2002 CPD P.51)   If GAO applies these principles to task and delivery orders,  the ordering process will become much more regular and transparent.

 

The new act may also have the effect of diffusing an informal “best practices” procurement standard with respect to the handling of the typical task orders, most of which fall below the $10 million threshold.  Furthermore, depending on how well the new system works with the large task orders, it may be expanded in the future to include lower dollar thresholds.