Bid Protest Law : Government Contracts Lawyer & Attorney : K & L Gates Law Firm : Contract Compliance, Bid Protests

GAO sustained a protest by a disappointed HUBZone bidder reiterating that under its reading of the plain language of the Historically Underutilized Business Zone (HUBZone) statute, a contracting agency must issue a solicitation as a HUBZone set-aside if it determines that the statutory conditions for a HUBZone set-aside exist. GAO contrasted this holding with the language in the 8(a) set-aside statute which gives the agency discretion to issue a solicitation as an 8(a) set-aside when the conditions of that statute are met.

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GAO sustained a trio of cases holding that awards to Federal Supply Schedule (FSS) contractors were improper where the awardee did not have all items on its FSS contract at the time of award. GAO noted that the only exception to this rule is for items that do not exceed the micro-purchase threshold, currently $3,000. FSS contract holders should take care to make sure that all bids for FSS task orders are within the scope of their contract offering, and that the actual value of non-schedule or “open market” items is not more than $3,000 in the aggregate.

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GAO determined that it had jurisdiction to hear a protest involving a task order issued under a Blanket Purchase Agreement (BPA) valued at less than $10 million. The Federal Acquisition Streamlining Act of 1994 (FASA) restricted GAO’s jurisdiction over task and delivery orders. That jurisdiction was modified by Section 843 of the National Defense Authorization Act of Fiscal Year 2008 which granted GAO jurisdiction over task or delivery valued over $10 million. The task order in this protest indisputably was valued at less than $10 million. However, GAO determined that because the delivery order here was issued under a BPA and not a contract, FASA’s jurisdictional restriction did not apply.

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GAO sustained a protest challenging the evaluation of protestor’s proposal where the agency failed to consider past performance information requested by the agency and provided by protestor’s references. Finding that past performance in the agency’s possession was “too close at hand” for the agency to ignore, GAO determined that the agency’s evaluation of protestor’s past performance was unreasonable. 

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GAO sustained a protest challenging the evaluation of awardee’s proposal which exceeded the page limitations permitted by the solicitation. Agreeing with protestor, GAO found that after elimination of the pages exceeding the limitation, there was no reasonable basis for the agency to conclude that awardee complied with solicitation requirements. 

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GAO denied a protest by Perot Systems Government Services, Inc. (Perot) finding that the contracting officer properly rejected Perot’s proposal that contained labor rates not yet approved by the General Services Administration (GSA). Rejecting several arguments from Perot as to why the rates in its proposal were fair and reasonable, GAO held: “vendors under FSS purchases must quote schedule prices that are published and that have been determined to be fair and reasonable by GSA.” GAO noted that the only exception to this rule was for additional discounts offered from approved GSA prices.

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After scoring protester’s proposal with 95.64 points out of a possible 100, the Department of Interior (“DOI”) determined that protestor’s proposal was unacceptable because it included the following qualification: “All materials will be cleared for education and museum presentation use for the life of the programs, up to twenty years.” DOI found, and GAO agreed, that this language took exception to the data rights provision in the solicitation which provided that DOI would have unlimited rights in all data delivered under the contract. Because the data rights provision was a “material term,” says GAO, DOI properly found protester’s proposal unacceptable.

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GAO dismissed a protest filed by a fellow ID/IQ contractor holding that it lacked jurisdiction because the task order at issue was valued at less than $10 million. Citing the general rule that GAO does not have jurisdiction over task orders valued at under $10 million unless the protestor alleges that the order increases the scope, period, or maximum value of the underlying contract (the so-called “Cardinal Change” doctrine), it then went on to exempt fellow ID/IQ holders from those eligible for that exemption.

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The United States Court of Appeals for the Federal Circuit affirmed a ruling from the Court of Federal Claims that an ID/IQ contract is an appropriate vehicle for construction of military housing. Rejecting assertions that ID/IQ contracts apply only to acquisition of supplies and services, which excludes construction, and that using an ID/IQ contract for construction constituted improper bundling in violation of the Small Business Act, the court held that use of ID/IQ contracts for new construction projects does not violate any procurement regulations.

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GAO recently clarified the scope of its newly acquired jurisdiction over task and delivery orders in excess of $10 million under indefinite-delivery/indefinite quantity (IDIQ) contracts. GAO rejected the agency's jurisdictional challenge holding that it was authorized to consider the protest under section 843 of the National Defense Authorization Act of Fiscal Year 2008 (NDAA), Pub. L. 110-181, 122 Stat. 3, 236-39 (2008), which modified the Federal Acquisition Streamlining Act of 1994's (FASA) prior limitations on task and delivery order protests. GAO further clarified that its newly acquired jurisdiction under the NDAA was not limited in scope, and instead conferred "the same substantive protest jurisdiction conferred by [the Competition in Contract Act of 1984 (CICA) and FASA]."

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GAO sustained the protest of an excluded potential bidder finding that solicitation from three sources may not be enough to meet the requirement that agencies "promote competition to the maximum extent practicable" under simplified acquisition procedures. GAO found that the acquisition specialist "clearly knew" protester was interested in providing the required products and she did not have a reasonable basis to exclude them. GAO sustained the protest on this basis even though the agency solicited bids from three sources as required by FAR 13.104(b).

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In its May 2, 2009 decision, GAO sustained the latest in a series of protests by American K-9 Detection Services, Inc. (AK-9) on the grounds that the Army improperly limited discussions and in doing so, failed to give AK-9 the opportunity to submit an improved final proposal revision addressing the significant weaknesses or deficiencies in its proposal that were noted in the Army’s award decision. The protest was the sixth of AK-9’s protests against the award of a fixed-price indefinite-delivery, indefinite-quantity contract for contractor working dog services in Afghanistan. Award of the one-year contract with four option years was made to EOD Technology, Inc. (EODT) at a price of $38,350,935.

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GAO's report to congress outlining bid protest activity at GAO for fiscal years 2004-2008 reveals that while bid protest filings were up 17% in 2008, GAO's sustain rate was only 21%, the lowest seen since 2004. Of the 1,652 cases filed at GAO in 2008, 87 were attributable to its expanded bid protest jurisdiction for task orders, A-76 protests and TSA protests. However, even without this expanded jurisdiction, filings were still up by 10.9%. GAO also saw its lowest percentage of hearings in 2008, with hearings held in only 6% of cases.

IMPACT: Contrary to some recent published comments, this report demonstrates that the GAO sustain rate in fact is down. Nonetheless, we believe that the coming year will see a continued increase in protest activity given the economic climate. Disappointed offerors in each instance should consider the pros and cons of filing protests at GAO, the agencies at issue or the United States Court of Federal Claims. 

www.gao.gov/special.pubs/bidpro08.pdf

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Citing 10 reasons in a 67-page opinion, GAO sustained a protest filed by The Boeing Company (“Boeing”) of the highly-publicized award by the Air Force to Northrop Grumman Systems Corporation (“Northrop”) for its new generation aerial refueling tankers.  Boeing prevailed on several garden variety protest grounds often seen, but usually unsuccessful in GAO protests.  Here, GAO found that the Air Force made “significant errors” in evaluating proposals, engaged in inadequate and unequal discussions, improperly evaluated costs, and therefore made an improper source selection decision.  GAO also addressed several other arguments, including those related to timeliness and document requests under GAO regulations.

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The Court of Federal Claims issued a permanent injunction prohibiting purchase by the Marine Corps System Command of up to 300 Large Field Refrigeration Systems (“LFRS”) from Sea Box, Inc. (“Sea Box”) finding that the agency’s determination that the LFRS’ were compliant with the Trade Agreements Act (“TAA”) was arbitrary and capricious.  After GAO denied its protest, Sea Box filed a motion in the Court of Federal Claims (“CFC”) to enjoin the agency from proceeding with the procurement.  The agency agreed to voluntarily stay the procurement pending the CFC protest.  The CFC entered a permanent injunction, finding that the award to Sea Box was “arbitrary, capricious, and not in accordance with the law.”

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Using its new authority to hear protests of task and delivery orders involving procurements over $10 million, GAO sustained the protest of Delex Systems, Inc. (“Delex”) of the Department of Navy, Naval Air Systems’ (“NAVAIR”) issuance of a delivery order under a multiple award contract as unrestricted.  Delex argued, and GSA agreed, that task and delivery orders issued under multiple-award schedule contracts are subject to the small business set-aside provisions of FAR § 19.502-2(b) and that the contracting officer’s determination that the agency had no reasonable expectation of receiving offers from two responsible small businesses was unreasonable.

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GAO sustained a protest by Fedcar Company, Ltd (“Fedcar”) of the General Services Administration’s (“GSA’s”) award to Duke Realty Limited Partnership (“Duke”) of a 15-year contract for the construction and lease of a “fully-serviced FBI campus facility.”  GAO held that GSA’s source selection decision was not reasonable because it used an incorrect calculation to determine Duke’s price.  GAO also held that the evaluation of the relative merits of the proposals was insufficiently documented.

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GAO sustained the protest of Native American Industrial Distributors, Inc. (“NAID”) of the Bureau of Indian Affair’s (“BIA’s”) award of a fixed-price contract to Chenega Federal Systems, LLP, for information technology infrastructure services.  BIA set aside the solicitation under the Buy Indian Act, which permits a preference in purchasing the products of Indian industry.  NAID challenged BIA’s determination that Chenega was eligible for awards of contracts set aside under the Buy Indian Act.  GAO disagreed, upholding BIA’s method for determining eligibility.  NAID added a supplemental protest after BIA provided the administrative record challenging Chenega’s failure to provide required letters of commitment from proposed key personnel.  GAO sustained on this basis, but as can be seen below, a sustained protest does not always yield the outcome a protester wants.

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