February 6, 2008

New Law Reforms Task Order Procedures and Allows GAO Protests of Task Order Procurements Above $10 Million

Holland & Knight Alert
David S. Black | Joseph Hornyak, former Holland & Knight partner

On January 28, 2008, President Bush signed the 2008 Defense Authorization Act (NDA). Section 843 of the NDA authorizes bid protests to the Government Accountability Office (GAO) of task or delivery order awards valued in excess of $10 million. For task or delivery order awards covered by this provision, the NDA repeals the existing prohibition on bid protests of such awards imposed by the Federal Acquisition Streamlining Act of 1994 (FASA).1 This provision of the NDA becomes effective 120 days after it is signed by the President, but expires three years thereafter (i.e., a “sunset” provision).
In the wake of FASA, federal agencies increasingly used task or delivery orders under indefinite delivery, indefinite quantity (IDIQ) contracts to fill high-dollar requirements, all insulated from the bid protest process. In passing section 843 of the NDA, Congress sought to address the perception that agencies were exploiting FASA’s ban on protests of task and delivery order awards to avoid meaningful competition under both single-award and multiple-award IDIQ contracts; hence the need for “enhanced competition requirements” such as the GAO bid protest process.2

The provision authorizing GAO protests is only one of several provisions in the NDA intended to enhance competition for task and delivery orders. Under existing law, all multiple-award IDIQ contract holders must be given “a fair opportunity to be considered” for each order in excess of $2,500 (unless certain exceptions apply).3 The NDA provides that, for task or delivery orders in excess of $5 million, the contracting agency’s obligation to provide “a fair opportunity to be considered” is not met unless “all contractors” are provided the following (at a minimum):

1) a notice of the task or delivery order that includes a clear statement of the agency’s requirements

2) a reasonable period of time to provide a proposal in response to the notice

3) disclosure of the significant factors and subfactors, including cost or price, that the agency expects to consider in evaluating such proposals, and their relative importance

4) in the case of an award that is to be made on a best-value basis, a written statement documenting the basis for the award and the relative importance of quality and price or cost factors

5) an opportunity for a post-award debriefing … .4

These requirements likely will be the subject of many bid protest decisions issued by the GAO under the new protest jurisdiction granted by the NDA.

New Requirements for Contracts Over $100 Million

Section 843 of the NDA also imposes new requirements upon an agency seeking to award an IDIQ contract exceeding $100 million including all options to a single source (as opposed to multiple awardees). Specifically, the head of the agency must make a written determination that (i) all task orders under the contract are so integrally related that only a single contractor can reasonably perform the work; (ii) the contract provides only for firm, fixed-price task or delivery orders at specified unit prices; (iii) only one source is qualified and capable of performing the work at a reasonable price; or (iv) it is necessary in the public interest to award the contract to a single source. The agency must also notify Congress within 30 days of the determination to make a single-award IDIQ contract.5 In short, before awarding a single-award IDIQ contract, the agency will now be required to follow procedures similar to those required in Federal Acquisition Regulation (FAR) part 6 to justify award of a contract on a sole source basis.

The NDA’s provision authorizing task or delivery order protests is the most controversial of the enhanced competition requirements in section 843 of the NDA. A similar provision was proposed by the “SARA panel” in its draft report in December of 2006.6 Many interest groups expressed opposition to this aspect of the proposed legislation, in part due to fears that more bid protests could delay the procurement process and possibly result in higher costs for federal contracts. As an apparent compromise, the final legislation grants GAO “exclusive jurisdiction” over protests of task or delivery order awards, implying that such protests remain unauthorized at the U.S. Court of Federal Claims (COFC).7 Presently, for non-task order federal contract awards, both the GAO and COFC are authorized to hear bid protests. In fact, a protester dissatisfied with the outcome of a GAO protest can obtain de novo review of that same protest at the COFC. Under the NDA, that “second bite at the apple” will not be available for task or delivery order protests.

Some Procedures Not Addressed
Certain procedural matters with regard to task or delivery order protests are not addressed in the NDA. For example, the NDA does not expressly state whether the contracting agency is required to stay the award or suspend performance of the protested task or delivery order upon a timely protest to GAO. In other words, does the “automatic stay” required under the Competition in Contracting Act (CICA) apply? Logically, the answer would be “yes,” given the context of the new legislation within the existing CICA framework.
Assuming the automatic CICA stay applies, another issue is whether the COFC would have jurisdiction to review the contracting agency’s attempt to “override” the automatic stay when a task or delivery order protest is filed at GAO. The COFC has repeatedly held that it has jurisdiction over “naked” challenges to the agency’s decision to override the automatic CICA stay, that is, a request for an injunction by the COFC where the underlying protest is pending at the GAO. Significantly, override cases at the COFC do not involve the substantive merits of the underlying protest. Instead, they are limited to whether the agency had valid grounds to override the stay, as provided by CICA. Thus, notwithstanding the NDA’s grant of “exclusive jurisdiction” to GAO for task or delivery order protests, the COFC should have jurisdiction to review an override determination when the underlying award is a task or delivery order.

Another open question is the time limitations for filing a task or delivery order protest at GAO. Because the NDA requires a post-award debriefing of unsuccessful offerors for task or delivery order awards, logically, GAO’s timeliness rules for “procurements conducted on the basis of competitive proposals under which a debriefing is requested and, when requested, is required” would seem to apply.8 If so, the deadline for filing a task or delivery order protest would be 10 days from the date of the debriefing (five days to obtain the automatic CICA stay in post-award protests), regardless of when the protester learned the basis of the protest.

By granting “exclusive jurisdiction” to the GAO for task or delivery order award protests, Congress has precluded agency-level protests for such awards. Whether or not it was a conscious decision by Congress, this aspect of the NDA conflicts with existing federal acquisition policy, which encourages parties to resolve procurement-related controversies at the agency level whenever possible.9 The NDA, however, did not alter the existing statutory requirement, first implemented in the FASA, that each federal agency appoint a “task and delivery order ombudsman” to review complaints from contractors claiming they were not afforded a fair opportunity to be considered for task or delivery orders.10 For task or delivery orders above $10 million, this ombudsman procedure is presumably still available to disappointed offerors in lieu of or in addition to GAO review.

The task and delivery order ombudsman remains the only reviewing authority for contractor complaints regarding task orders valued below $10 million. Thus, while task order procurements between $5 million and $10 million are subject to the new procedural requirements but still exempt from GAO’s protest jurisdiction, contractors can still seek to enforce compliance with the new procedures for procurements in this dollar range by submitting a complaint to the ombudsman.

Existing Exceptions

Even without the new protest jurisdiction authorized by the NDA, it is worth remembering that the GAO and the COFC have previously carved out exceptions to the existing statutory bar on task or delivery order protests. First, both GAO and the COFC will decide protests alleging that the proposed task or delivery order is outside of the scope of the underlying IDIQ contracts. Second, the GAO will decide a protest of a task or delivery order award that is essentially a “down selection” in that, after award of the initial order, only the awardee will continue to receive orders under the IDIQ contracts. Finally, the GAO has recently clarified that the statutory bar on task and delivery order protests does not apply to task and delivery orders under a Multiple Award Schedule (MAS) (i.e., Federal Supply Schedule) contracts (which are by definition multiple-award IDIQ contracts).11 The COFC has issued conflicting decisions with regard to its jurisdiction to decide protests of task or delivery orders under MAS contracts.12

1 10 U.S.C. 2304c(d); 41 U.S.C. 253j(d). The existing prohibition on task or delivery order protests does not apply to protests on the grounds that the order increases the scope, period, or maximum value of the contract. 

2 See Senate Report 110-77, sec. 821. 

3 10 U.S.C. 2304c(b); 41 U.S.C. 253j(b); FAR 16.505(b)(1). 

4 Sec. 843(a)(2)(B), (b)(2)(B). 

5 Sec. 843(a)(1), (b)(1). 

6 Report of the Acquisition Advisory Panel dated Dec. 2006, p.1-77 (recommendation 7). In 2003, the Services Acquisition Reform Act (SARA) authorized the Acquisition Advisory Panel (a/k/a the “SARA Panel”) to review and recommend any necessary changes to acquisition laws and regulations and governmentwide acquisition policies. 

7 Sec. 843(a)(2), (b)(2). 

8 See 4 C.F.R. § 21.2(a)(2); 31 U.S.C. § 2553(d)(4)(B). 

9 See Executive Order 12979, Agency Procurement Protests (Oct. 30, 1995). 

10 10 U.S.C. 2304c(e); 41 U.S.C. 253j(e). 

11 Allmond & Co., B-298946, 2007 WL 92844 (Comp. Gen. Jan. 9, 2007). 

12 Idea Int’l v. United States, 74 Fed. Cl. 129, 136-137 (2006); Sys. Plus, Inc. v. United States, 68 Fed. Cl. 206 (2005).

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