Go Beyond the FAR! The guidance contained in the almost 2000 pages of the Federal Acquisition Regulation and the various agency supplements are just a part of the resources government acquisition professionals need to do their jobs effectively. Accessing and understanding case law is equally important to a thorough understanding of government contracting. Legal decisions explain the Government Accountability Office’s and the courts’ views on how procurement statutes and regulations apply in a wide range of situations. Case law also gives potential bid protesters and agencies a way to gauge the likely outcome of a protest. Until now, it has been difficult to find and understand the legal decisions that could be relevant to a particular situation. Key Case Law Rules for Government Contract Formation changes that by organizing and explaining the most important protest grounds in a readily accessible and comprehensible way. With an emphasis on more recent cases, the book is organized around the key protest grounds, such as pricing issues, allegations that the government wrongfully prevented competition, or improper sealed-bidding procedures. Bridging the gap of understanding between the legal and the contracting communities, this book is a much-needed addition to the essential resources for acquisition professionals.
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About the Author
Patrick Butler is Chief of the Contract and Fiscal Law Division within the Office of the Chief Counsel for the National Guard Bureau in Arlington, Virginia. He is an Army Judge Advocate currently in the rank of Lieutenant Colonel (LTC). He has practiced government contract law for most of his military career, including serving as a contract law attorney in the Office of the Judge Advocate for U.S. Army Europe and a contract litigation attorney at the U.S. Army Litigation Division.
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Key Case Law Rules for Government Contract Formation
By Patrick Butler
Management Concepts PressCopyright © 2014 Management Concepts, Inc.
All rights reserved.
Protest Grounds Alleging That the Government Is Wrongfully Preventing Competition
1. LACK OF ADVANCE PLANNING
Overview of This Protest Ground: Protests often arise when a company wants to compete for a particular government requirement but the government has awarded a sole-source contract to a competitor or has otherwise failed to open the requirement up for competition. Sometimes these types of protests are filed against a modification to a contract that a protester believes is "outside the scope" of the awarded contract and, in its view, circumvents competition in violation of the Competition in Contracting Act (CICA).
Although there are legitimate and supportable reasons for the government to enter into sole-source (or limited-sources) contracts, the government is not allowed to circumvent competition because it failed to plan adequately for a competitive procurement. This statutory prohibition is set out at 41 U.S.C. § 3304(e)(5)(A)(i): "In no case may the head of an agency ... enter into a contract for property or services using procedures other than competitive procedures on the basis of the lack of advance planning...." For DOD this statutory prohibition is codified at 10 U.S.C. § 2304(f)(4)(A), which uses the same operative language.
COFC's Key Language
CICA provides that sole-source procurements may not be used when the circumstances justifying the award were due to the agency's own lack of advance planning. 10 U.S.C.A. § 2304(f)(4)(A); FAR 6.301(c)(1). To the extent that the [agency] justifies its sole-source award to [the awardee] on "the short time line" available to properly research responsible sources for [this] contract, this justification violates CICA. The time-frame for the award of this bridge contract was, on the record before the court, entirely the result of a lack of advance planning on the part of the [agency].
Innovation Development Enterprises of America, Inc. v. United States, 108 Fed. Cl. 711 (2013).
GAO's Key Language
An agency using the urgency exception may restrict competition to the firms it reasonably believes can perform the work in the available time so long as the agency did not create the need for the sole-source award from a lack of advanced planning. 10 U.S.C. sect. 2304(f) (5)(A).
Major Contracting Services, Inc., B-401472, Sep. 14, 2009.
Under CICA ... contracting officers have a duty to promote and provide for competition and to provide the most advantageous contract for the government. In their role of promoting and providing for competition, contracting officials must act affirmatively to obtain and safeguard competition; they cannot take a passive approach and remain in a noncompetitive position where they could reasonably take steps to enhance competition. ... CICA further provides that under no circumstance may noncompetitive procedures be used due to a lack of advance planning by contracting officials. ... Although the requirement for advance planning is not a requirement that such planning be successful or error-free, the advance planning must be reasonable.
eFedBudget Corporation, B-298627, Nov. 15, 2006.
Turning to the propriety of the sole-source bridge contract with [the awardee], we first find that the sole-source award was improper because it is not supported by a written J&A. In this regard, when an agency uses noncompetitive procedures, such as 41 U.S.C. § 253(c) (1) (2000), which authorizes the use of noncompetitive procedures when the property or services are available from only one responsible source, the contracting officer is required to execute a written justification with sufficient facts and rationale to support the use of the authority, certify its accuracy and completeness, and obtain approval of the action from the cognizant agency official prior to making an award. See 41 U.S.C. § 253(f)(1)(A), (B), (C); Federal Acquisition Regulation (FAR) §§ 6.303, 6.304. ... Here, the agency did not execute a J&A prior to awarding the letter contract, as required by the statute. ... Thus, the agency's letter contract award to [the awardee] constitutes an improper sole-source award.
VSE Corporation, B-290452.3, B-290452.4, B-290452.5, May 23, 2005.
FAR Crosswalk: Definition of "acquisition planning" at FAR § 2.101; FAR Part 6 generally and FAR § 6.301(c) in particular; FAR Part 7, Acquisition Planning; and FAR Part 10, Market Research.
Other Relevant Cases: See page 289 in the Index of Representative Cases.
Commentary: Overall, this is a risky area of protest for the government for the simple reason that sometimes the government fails to plan in advance for competition as required by the law. Furthermore, this is an area where the COFC and the GAO will closely examine the government's rationale in support of the noncompetitive contracting action. Often, the government has a justifiable reason for the noncompetitive contracting action but fails to adequately document that reasoning in the Justification and Approval (J&A) document for the noncompetitive acquisition or fails to publish one at all. (Failure to document procurement decisions adequately is a common problem that makes it difficult for the government to defend against several different protest grounds). Even when advance planning was lacking, however, the government's requirement for the goods or services usually remains and government officials often see little choice but to proceed with a sole-source contract or a potentially out-of-scope modification to an existing contract. If there are no legally sufficient contracting options available, the alternative is to simply stop the work — a decision that the government is often loathe to make. If a contracting action proceeds in these situations, the chances of a protest's being sustained are high.
The COFC and the GAO will take a close look at the government's reasons for circumventing competition. This is very much a case-by-case (fact-specific) analysis, but due in part to CICA's requirement for the government to execute a J&A in support of a sole-source (or limited-sources) procurement, the burden is on the government to show why it was not able to set up at least a limited competition for the goods or services it is seeking. Under CICA, the government has an affirmative obligation to make the effort to obtain competition, unless a valid exception to CICA applies. A recent review of DOD contracting by the GAO found that in FY2012, DOD cited "only one responsible source" for a significant majority of the dollars that were obligated under any CICA exception.
A review of the case law shows that the GAO and the COFC will examine the J&A to see if the proffered justifications are reasonable or if the government is taking a passive stance and improperly allowing the requirement to remain in a noncompetitive posture. In this regard, the GAO and the COFC will examine the length of time that the agency was aware of the fact that a particular requirement would need to be sole-sourced as well as any actions the government took to move toward competition.
The importance of a well-written J&A cannot be emphasized enough; the government cuts corners on the J&A at its own risk. The GAO and the courts expect the J&A to be a stand-alone document that fully describes the contemporaneous reasons supporting the government's use of the specified CICA exception. The GAO and the courts find ex post facto explanations (usually asserted for the first time in heat of protest litigation) to be less persuasive. Furthermore, the GAO and the courts want to see the actual steps the government has taken to move the challenged procurement into a competitive posture. These forums pay little attention to government "lip service" regarding competition unless the agency can point to concrete steps it has taken to move the requirement into a competitive posture. In other words, the GAO and the courts are seldom persuaded by the fact that the government is "assessing" the possibility of competition or "considering" moving the requirement toward a competitive posture.
Agencies are wise to ensure that the J&A is well written and thoroughly documented. Agency contracting offices should have plenty of well-written J&A templates on hand to serve as models. (The Army, as an example, sets out a specific J&A template at Section 5153.9005 of the Army FAR Supplement.) This is an area where attorneys and supervisory contracting officers should be heavily involved in the quality control process for the J&A to ensure that it comports with CICA and addresses the concerns raised in the COFC and the GAO cases. Essentially, the J&A should clearly tell the story that led to the need for the noncompetitive contracting action.
2. IMPROPER OR UNSUPPORTED USE OF AN EXCEPTION TO COMPETITION
Overview of This Protest Ground: As a general rule, the Competition in Contracting Act requires the federal government's contracting officers to "promote and provide for full and open competition in soliciting offers and awarding Government contracts." CICA's requirement for full and open competition can be thought of as a broad general rule with an array of exceptions. Protests in this area are almost always triggered when a company believes that it is being unlawfully excluded from competing for a government contract. There is some overlap here with the prior protest ground because some of the protests in this area are based on the allegation that the government's use of a particular CICA exception is an attempt to legitimize a lack of advance planning.
The CICA competition requirements are primarily implemented in FAR Part 6, Competition Requirements. That part sets out three overarching levels of competition: (1) full and open competition, (2) full and open competition after the exclusion of sources, and (3) other than full and open competition. This protest topic focuses on the third category, "other than full and open competition." CICA, as implemented in FAR Subpart 6.3, sets out seven permissible grounds for other than full and open competition: (1) only one responsible source and no other supplies or services able to satisfy agency requirements, (2) unusual and compelling urgency, (3) industrial mobilization; engineering, developmental, or research capability; or expert services, (4) international agreement, (5) authorized or required by statute, (6) national security, and (7) public interest.
Of the seven permissible exceptions to full and open competition, the most commonly used are the first two: "only one responsible source" and "unusual and compelling urgency." Within DOD, the most commonly cited exception is "only one responsible source." This exception can get complicated, particularly when the reason for using it is based on intellectual property concerns arising from the items (e.g., patents, copyrights, other proprietary data) being developed at private expense. This is an area where the agency's procurement attorneys may seek guidance from the agency's intellectual property attorneys to ensure that the government's actions comport with the laws in this area. Contracting personnel are well-advised to raise any such issues with their agency's attorneys, as such issues are often factually and legally complex.
The GAO and the courts will closely examine the reason that the government has decided to limit competition. They will first look to the particular exception the government is citing as authorization for the "other than full and open competition" contracting action. Once that exception is identified, the GAO and the courts will examine the factual record to determine whether the agency's decision is reasonable and is supported by the facts. The GAO and the courts closely scrutinize the agency's J&A document in making their determination regarding the reasonableness of the agency's action.
For the sake of organization and clarity, the following key case law excerpts are categorized by the particular exception cited by the agency. Emphasis is added with bold text to highlight key language.
A. Exception 1: Only One Responsible Source
COFC's Key Language
The two types of authority for sole-source procurements at issue in this protest are "only one responsible source" authority, FAR 6.302-1, and "unusual and compelling urgency" authority, FAR 6.302-2. Although the FedBizOpps notice Confirmation identifies only FAR 6.302-1 as authority, the text of the J&A relies on both FAR 6.302-1 and FAR 6.302-2 for authority. The court notes that reliance on both of these provisions as authority for a sole-source procurement J&A is extremely rare, at least in procurements protested to GAO or this court. In fact, the court is not aware of another J&A which has attempted to rely on both of these statutory authorities for the same sole-source award.
The simple reason that this is such a rare circumstance is that the FAR forbids reliance on FAR 6.302-1 when FAR 6.302-2 is applicable. See FAR 6.302-1(b) ("This authority ... shall not be used when any of the other circumstances [in FAR sections 6.302-2, 6.302-3, 6.302-4, 6.302-5, 6.302-6] is applicable." In other words, if a contracting officer is faced with a situation which can be addressed by applying the "unusual and compelling urgency" provisions of FAR 6.302-2, he or she may not rely on the "only one responsible source" provisions of FAR 6.302-1 to justify a sole-source award. One logical reason for this prohibition is that under FAR 6.302-2, the government is permitted in appropriate circumstances to "limit [but not automatically reduce to one] the number of sources from which it solicits bids or proposals." FAR 6.302-2(a)(2); see also FAR 6.302-2(c)(2) ("This statutory authority requires that agencies shall request offers from as many potential sources as is practicable under the circumstances.") Under FAR 6.302-1, however, the government is permitted in appropriate circumstances to solicit an offer from one source only. See FAR 6.302-1(b)(1). In essence, the prohibition in FAR 6.302-1(b) forces the agency to solicit offers from as many sources as is practicable, in situations of unusual and compelling urgency, before resorting to soliciting offers from only a single source, in circumstances which may also present unusual and compelling urgency.
* * *
The specific provisions in FAR Part 10 that have been violated here, in the court's view, include FAR 10.001(a)(2)(ii), FAR 10.001(3)(i), and FAR 10.002(b). These provisions require market research if the contract is valued to exceed a threshold amount, require market research that identifies potential sources for the contract requirement, and require market research into the availability of commercial items. The record before the court does not show that the [agency] satisfied the market research requirements of FAR Part 10. The failure to conduct adequate market research also implicates FAR 6.302-1(b)(1), which requires a "reasonable basis" for the determination that only one responsible source exists to fulfill a contract requirement. The violation of FAR Part 10 in this procurement was a significant and serious violation of procurement regulations.
Innovation Development Enterprises of Am., Inc. v. United States, 108 Fed. Cl. 711 (2013).
Excerpted from Key Case Law Rules for Government Contract Formation by Patrick Butler. Copyright © 2014 Management Concepts, Inc.. Excerpted by permission of Management Concepts Press.
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Table of Contents
THE KEY CASE LAW RULES BROKEN DOWN BY PROTEST GROUND,
Chapter 1. Protest Grounds Alleging That the Government Is Wrongfully Preventing Competition,
Chapter 2. Protest Grounds Based on the Government's Description of the Requirement,
Chapter 3. Protest Grounds Challenging the Government's Exercise of Discretion or the Government's Conduct of the Competition,
Chapter 4. Protest Grounds Based on the Communications Between the Government and Offerors,
Chapter 5. Protest Grounds Based on Pricing Issues,
Chapter 6. Protest Grounds Based on Small Business Issues,
Chapter 7. Protest Grounds Alleging Unfair Government Conduct,
Chapter 8. Protest Grounds Based on Sealed Bidding Procedures,
Chapter 9. Protest Grounds Based on the Unique Type of Contract or Contracting Procedures,
Chapter 10. Protest Grounds Based on Alleged Statutory Violations (Besides CICA),
Index of Representative Cases,