December 2006

As we have mentioned previously, the growing use of multiple award task order contracts in federal construction contracting, as can be seen in much of the disaster recovery work in New Orleans, is limiting the competitive opportunities for small and mid-sized construction contractors.  Unless a contractor is the recipient of one of the major task order contract awards, there is no opportunity for a contractor to compete for upcoming individual task orders and the contractor is effectively precluded from competing for potentially millions of dollars of work to be awarded over a period of years. In the past, when there were more single award contracts, if a contractor lost out to a competitor, there was always another solicitation on the horizon.  If a contractor fails to become one of those selected to compete under a multiple award task order contract, there may be no, or very little, work “waiting in the wings.”

It follows that it is important to monitor the decisions of the GAO and the courts to see what is being done to protect the rights of contractors, and we will continue to do so.  In a newly issued GAO decision, Palmetto GBA, LLC, B-299154, December 19, 2006, the Comptroller General stated that according to the legislative history of the Federal Acquisition Streamlining Act (FASA), task and delivery-order contracts were intended to encourage the use of multiple-award, rather than single-award contracts, in order to promote an ongoing competitive environment in which each awardee would be fairly considered for each order issued.  H.R. Conf. Rep. No. 103-712, at 178 (1994), reprinted in 1994 U.S.C.C.A.N. 2607, 2608; S. Rep. No.103258, at 15-16 (1994), reprinted in 1994 U.S.C.C.A.N. 2561, 2575-76. In this regard, the Federal Acquisition Regulation (FAR) requires agencies to provide all awardees “fair opportunity to be considered for each order exceeding $3,000 issued under multiple delivery-order contracts or multiple task-order contracts.”  FAR sect. 16.505(b)(1)(i).

An interesting aspect of the Palmetto case is that the GAO reiterated that a task or delivery order that precludes competition for future task or delivery orders for the duration of the contract performance period may constitute a “downselection.”  The GAO has recognized downselections in circumstances not only where all work under a contract will be foreclosed from future competition, but also where specific categories of work will be similarly foreclosed for the duration of the contract.  While the GAO did not find that “downselection” occurred in the Palmetto case, it is important for contractors to recognize that a task order award that eliminates competition for future work can be successfully protested.
Continue Reading Task Order Contractors Must be Given a Fair Opportunity to Compete for Individual Task Orders

A recent Government Accountability Office decision, Tessa Structures, LLC, B-298835, highlights the difference between responsiveness and responsibility determinations and the obligation of an agency to refer responsibility determinations to the Small Business Administration (SBA).  The protestor, a small business, responded to a Federal Highway Administration solicitation seeking bids for bridge painting.  As part of its bid, each prospective contractor was required to state the number of days of performance, not to exceed 305 days.  The protestor, Tessa Structures, submitted the low bid and stated that it would perform in 120 days. 

The FHWA reviewed Tessa’s bid and requested that Tessa explain how it would perform in 120 days. Tessa advised the FHWA that it planned to begin at the end of August and complete before Christmas; significantly, as discussed below, Tessa did not include its assumption that it would receive notice to proceed by August 28 with its bid. The FHWA believed that Tessa’s plan to begin at the end of August was contrary to the solicitation because the agency reserved the right to issue a notice to proceed as late as October 24th.  The FHWA rejected Tessa’s bid as non-responsive, based upon Tessa’s 120 day performance period and its assumption regarding the notice to proceed, without seeking any input from the SBA. 

The GAO determined that Tessa’s bid with a 120 day planned performance period was improperly rejected by the FHWA because the issue of performing within a set period of time was a matter of responsibility, not responsiveness.   The GAO found that because the solicitation specified only a maximum performance period, (305 days) and no minimum period, Tessa could properly bid to perform in a shorter period.  Furthermore, Tessa did not insert anything in its bid that restricted or qualified its performance in contravention of the solicitation. Of particular importance to the GAO was the fact that Tessa did not insert its assumption about the issuance of the notice to proceed in its bid, and, therefore, did not contravene the solicitation’s notice to proceed requirements. Had Tessa provided these assumptions in its bid, it most likely would have been found non-responsive.    Continue Reading Agency Confuses Responsiveness with Responsibility

The cover story, “New Marching Orders,” in the most recent edition of Constructor, published by McGraw-Hill Construction, highlights a trend in military construction that should concern small to mid-size general contractors.  In the past, many projects for construction of military housing and other facilities were procured as individual contracts through sealed bid solicitations issued by the U.S. Army Corps of Engineers.  Small and mid-size contractors, familiar with the local market conditions, were well positioned to compete for, win, and perform these contracts.  E. Michael Powers reports that today, however, the Corps is focusing its procurement efforts on multiple-award construction contracts and indefinite delivery/indefinite quantity contracts with task orders.  These contracts tend to be for greater volumes of work, resulting in contracts that exceed the bonding capacity of many small to mid-size firms.

Powers also notes that a contract to build fifty buildings at a cost of $10 million per building, spread across a large geographic area, might not even appeal to firms that have the bonding capacity to bid on such a large contract.  In addition, where so much work is included in one contract, there is only one prime contractor, whereas before there could have been as many as fifty contractors performing fifty separate projects.

These large procurements are often the subject of negotiated procedures under FAR, Part 15, where price is no longer the controlling factor in determining who receives the contract.  In these “best value” procurements, the experience and past performance of a larger contractor may be decisive in the Corps’ award decision.Continue Reading Declining Opportunities for Small and Mid-Sized Federal Construction Contractors

In yet another example of one of my long-standing complaints about the GAO’s interpretation of the “Procurement by Negotiation” process specified in FAR, Part 15, the GAO has reiterated its long-standing policy that “there is generally no obligation that a contracting agency conduct discussions where the RFP specifically instructed offerors of the agency’s intent…

A recent Court of Federal Claims case, Diversified Maintenance Systems, Inc., December 4, 2006, reinforces the necessity for contracting officers to refer all protests regarding a company’s HUBZone status to the Small Business Administration (SBA). In Diversified, the agency set aside a procurement for HUBZone businesses only. All but two of the seven offerors were disqualified for various reasons. The agency awarded a contract to Cadence Contract Services and the other offeror, Diversified, immediately submitted a protest to the contracting officer, challenging the HUBZone status of the awardee. 

Diversified’s protest alleged that the awardee’s office in Utah was not located in a certified HUBZone and that Utah’s records did not list a HUBZone company by that name at that address.  The contracting officer denied the protest, stating that the awardee’s address in New York was in a HUBZone and that he had verified the HUBZone eligibility of the offeror at the New York address by checking the SBA’s website. Diversified then filed its protest with the Court of Federal Claims. After the litigation began, the government conceded to the Court that the contracting officer had failed to submit the offeror’s protest to the SBA, as required. Consequently, the government requested that the protest be submitted to the SBA. Continue Reading A HUBZone Protest Must Be Referred to the SBA

“Discussions” in a negotiated procurement between the government and an offeror are the exception, not the norm, as those of you who have submitted a response to a Request for Proposals know.  Too often the government awards a contract on the basis of the initial proposal, without any discussions or negotiations with the offerors.  The reason that the government refrains from formally opening up negotiations is that if discussions occur between the government and one offeror, then the government must hold discussions with all of the offerors in the competitive range.  (FAR 15.306(d)(1).  That can be time consuming.  (It can be argued that the term “Procurement by Negotiation,” as explained in FAR, Part 15, anticipates that discussions and negotiations will actually occur). 

            Of course, not all communications between the government and an offeror constitute “discussions.”   As the Government Accountability Office stated in a recent case, Overlook Systems Technologies, Inc., Nov 28, 2006, “the acid test is whether an offeror has been afforded an opportunity to revise or modify its proposal.” In Overlook, the contracting officer contacted the successful offeror regarding a perceived organizational conflict of interest because Overlook planned to use a subcontractor that had provided a system to the government that Overlook would now “troubleshoot.”  The GAO determined that the contracting officer’s communications with Overlook were similar to the sort of inquiries the government frequently makes to perform a responsibility determination.  The GAO relied heavily on the fact that the government was required to make such a responsibility determination, citing prior GAO decisions that have held that responsibility inquiries are not “discussions.”

           
Continue Reading RFP – There Can Be Communications Without "Discussions"

A disappointed bidder (on an Invitation for Bids), or an offeror (on a Request for Proposals), has the option to file a protest to the agency, to the General Accountability Office (GAO), or to the United States Court of Federal Claims. It is not always easy to decide where, and whether, to file a protest and contractors need to be aware of the pitfalls. One thing is certain, it is not easy to win a protest and a great deal of deference is given to contracting officers by the GAO and by the Court of Federal Claims.  It is incumbent upon a contractor to be certain that the issue raised is not frivolous, and that prior decisions of the courts or the GAO have not already established the correctness of the government’s position.

It has been my experience that if a protest involves agency policy, it is usually a good idea to file a protest with the agency to give the Contracting Officer the opportunity to take corrective action. (See FAR 33.103 for the rules on Protests to the Agency). If a protester is dissatisfied with the result of an agency protest, the protester is still permitted to take the protest to the GAO or to the United States Court of Federal Claims. As far as taking a protest directly to the GAO is concerned, unless prior GAO decisions have shown a likelihood that the GAO will agree with your position, a GAO protest is not usually a very satisfying experience. (See FAR 33.104 for the rules on Protests to the GAO, and also see the Bid Protest Regulations issued by the GAO).  (Another useful resource is the GAO’s Descriptive Guide on Bid Protests).

The statistics made available by the GAO demonstrate how difficult it is for a protester to win. In the period from 2001 through 2005, 6,543 protests were filed (an average of about 1,300 protests per year).  See the 2005 GAO report to Congress. Of these, only 1,528 resulted in a decision and in 303 of the decided cases the protester’s position was sustained. The way the GAO sees it, this means that protesters experience a 20% success rate. Of course, 20% is not very encouraging and, in reality, the way that the GAO calculates the percentage of sustained protests is misleading. By simply comparing the number of “sustains” to the number of decided cases during the period, the GAO ignores the 5,000 cases that were not decided for one reason or another. Some of those cases were probably dismissed summarily by the GAO, others were withdrawn only to be re-filed in the Court of Claims, and some of the protesters may have simply “thrown in the towel” as a result of frustration with the process. In any event, if you compare the number of “sustains” to the number of cases filed (303 out of 6,543), the protester prevailed in less than 5% of the protests. Take your pick, 20% or 5%, neither one is very good. (In 2006, there have been 1,327 protests filed to date, and 72 have been sustained).  See the 2006 GAO report to Congress.
Continue Reading Where and Whether to File a Bid Protest

Effective January 6, 2007, the Boards of Contract Appeals for the General Services Administration, the Departments of Agriculture, Energy, Housing and Urban Development, Interior, Labor, Transportation, and Veterans Affairs will cease to exist and will become part of the new Civilian Board of Contract Appeals.  All of the judges of these boards and their pending cases…