Federal Construction Contracting Blog : Federal Construction Contracting Law Firm : Cohen Seglias Pallas Greenhall & Furman PC : Construction Law, Dredging and Claims

Prior to 2008, dating back to 1994, it was not permissible to protest a task order. The 1994 enactment of the Federal Acquisition Streamlining Act ("FASA") provided that protests over task or delivery orders were barred unless the protest alleged that the order increased the scope, period, or maximum value of the underlying contract through which the order was issued. That changed with the passage of the Defense Authorization Act of 2008 ("NDAA"), which contained an amendment that expanded the jurisdiction of the GAO to include protests of task or delivery orders valued in excess of $10 million. 41 U.S.C., Section 253j(e)(2). The NDAA also contained a sunset provision, which stated that the "subsection shall be in effect for three years." Section 253j(e)(3). The three year period expired on May 27, 2011. The question then arose as to whether the GAO could lawfully consider task and delivery order protests after May 27, 2011. That question was recently answered in the affirmative by the GAO.

In a protest filed by Technatomy Corporation, of Fairfax, Virginia, the protester argued that the agency unreasonably evaluated vendors' technical and cost quotations. The government argued that the protest should be dismissed because the GAO's jurisdiction had expired. In a decision issued on June 14, 2011, the GAO disagreed with the government and ruled that it now has jurisdiction to rule on all task and delivery order protests, regardless of their dollar value. The reasoning of the GAO was that the sunset provision which gave the GAO the authority to consider task and delivery protests in excess of $10 million (for three years) replaced the former statutory provision (1994 - “FASA”) that provided for only very limited task order review. The GAO concluded that when the three year period expired, its authority to consider task and delivery order protests did not simply revert to the pre-2008 jurisdictional level, but actually reverted back to the pre-1994 level.

In other words since the pre-2008 limitations were eliminated by the sunset provision in 2008, the only thing left is the pre-1994 jurisdiction under the Competition in Contracting Act which places no limitation on the GAO's authority to consider task and delivery order protests. The GAO will therefore accept jurisdiction of all protests involving task and delivery orders regardless of the dollar value. This also raises the interesting question of whether, based on the GAO’s decision in Technatomy Corporation, the Court of Federal Claims will now accept jurisdiction of task and delivery order protests, as well.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including teaming arrangements, negotiated procurements, bid protests, claims, and appeals.

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By: Edward T. DeLisle

As part of the National Defense Authorization Act of 2008 (the 2008 Act), Congress provided the General Accounting Office (GAO) with the authority to hear protests involving certain task and delivery order contracts emanating from both defense and civilian agencies. At the time, this authority was limited to a period of three years, meaning that it was set to expire later this year. A few months ago, President Obama signed the National Defense Authorization Act of 2011 (the 2011 Act). As part of that Act, Congress partially extended the GAO’s authority. It permitted the GAO to continue hearing task and delivery order protests for contracts in excess of $10 million, but only for those contracts issued by Department of Defense agencies. For a reason not readily apparent, Congress failed to extend the GAO’s authority over civilian agencies. A bill has emerged in the Senate to address this omission.

As reported by Law360, Senate Bill 498, entitled the “Independent Task and Delivery Order Review Extension Act of 2011,” was recently introduced by Senate Homeland Security and Governmental Affairs Committee Chairman Joseph Lieberman, I-Conn. If passed, it would extend the GAO’s jurisdiction over task and delivery order protests relating to civilian agencies for an additional five and a half years, equaling the extension provided on DOD protests under the 2011 Act. This is an important development for government contractors. Many questions arose following passage of the 2011 Act. Why would Congress only extend the GAO’s authority over task and delivery orders on DOD work? It is possible that this was simply an oversight, though no one is quite sure. The legislative history is devoid of any discussion on the issue. Whatever the reason, if passed, S. 498 would maintain the status quo for five more years. We will continue to track this bill and report on its progress.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

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By: Michael H. Payne

There is an old saying that "you win some, and you lose some." Well, if you are a construction contractor who competes in the world of Multiple Award Task Order Contracting ("MATOC"), you usually lose. Under sealed bidding, which dominated the procurement of federal construction for many years, a contractor who was not the low bidder could always compete for the next project. In the MATOC arena, a contractor who is not selected to be one of the chosen few to compete for task orders over what is often a three to five year period may not be able to compete for the "next project" for a long time. What this means is that there are a few winners, but there are many more losers.

Even if a contractor is fortunate enough to be selected as one of the MATOC master contract holders, there is no guarantee of being selected for future task orders. Every construction MATOC features a "seed" project that serves as the basis of the price competition for the evaluation of the offers on the master contracts. If a contractor does not win the seed project, there may not be another task order for a long time, and the award of the ensuing task orders may go to someone other than the low bidder. The reason for this is that most construction MATOCs are negotiated, best value, procurements ("RFPs"), and past performance, experience, technical merit, quality of personnel, small business subcontracting, and other evaluation factors may come into play. Although it can be argued that the award of a master MATOC should pre-qualify all of the MATOC holders, we have heard complaints from a number of contractors who lose out in the competition for task orders because they do not score well on past performance, or one of the other evaluation factors. This has never made sense to me because if a contractor has won the fierce competition for one of the master MATOCs, price should be the discriminator for the task order awards. If the contractor is not technically qualified to receive a task award on a lowest price proposal, why was the contractor selected as one of the MATOC holders in the first place?

Those who are really left out in the cold, however, are the construction contractors who fail to win one of the master MATOC awards. Simply because a contractor may not have scored particularly well technically, or simply because the contractor's price on a seed project may have been too high, does not mean that it will always be that way. A contractor can do a much better job of putting together a competitive proposal the next week, but if all of the upcoming projects are tied up in MATOCs, the door is closed. Simply because a contractor submits the lowest price on a seed project does not mean that the contractor will be similarly competitive on future projects. It is for this reason that I have been a frequent critic of indefinite delivery/indefinite quantity ("IDIQ/MATOC") contracting for construction. I do not believe that FAR 16.5, dealing with various indefinite delivery contracts, was ever meant to be applied to construction, and I believe that the system unfairly penalizes a lot of very qualified contractors who simply are not adept at proposal writing. Construction was successfully procured using sealed bidding for many years, and that system was more open and fair. The new system simply results in too many losers and not enough winners. (See the earlier article "Has the Corps of Engineers Gone MATOC Crazy?").

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters. He also serves as the Executive Director of FedCon Consulting, an ancillary business of the firm that involves former contracting officers, procurement and technical personnel, as well as lawyers, in providing assistance to federal construction contractors in the preparation of proposals.

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An important decision, Serco, Inc. v. United States was issued by the United States Court of Claims last week in a case involving a government-wide acquisition contract (“GWAC”) awarded by the General Services Administration (GSA) to provide technology products and services to the entire federal government.  Sixty-two offerors competed for a chance to perform task orders under this GWAC.  In ranking the technical proposals of these offerors, GSA teams assigned adjectival ratings to various subfactors and then converted them into whole numbers ( e.g., 3, 4, 5). Combining, averaging and weighting these figures, the agency ended up with technical scores that were carried out to three decimal points ( e.g., 3.817), and it made critical distinctions among the sixty-two offerors based upon the thousandths of a point.  Based upon these technical scores, twenty-eight contractors were designated by the agency as “presumptive awardees.”  GSA then purported to conduct price reasonableness and tradeoff analyses to take into account price-but, conspicuously, none of these comparisons resulted in any of the “presumptive awardees” being displaced by a lower-priced offeror.  Indeed, GSA ultimately made awards to offerors whose prices were 59th, 60th and 61st out of the sixty-two offers-prices that the agency claims were “fair and reasonable” despite being twice as high as the lowest winning offer, as much as thirty percent higher than the independent government cost estimate, and more than two standard deviations to the mean of the evaluated prices for all the offerors.

The so-called “Alliant” GWAC is to be administered by GSA pursuant to section 5112(e) of the Clinger-Cohen Act.  Alliant is designed to provide federal agencies with a broad range of information technology (IT) products and services, including computers, ancillary equipment, software, firmware and similar applications, network design, support services, and related resources such as telecommunication and security.  Alliant contemplates the multiple-award of indefinite delivery, indefinite quantity (MA/IDIQ) contracts, with a ceiling of $50 billion, to be performed, on a task order basis, during a five-year base period and one, five-year option period.  Under the Alliant Solicitation No. TQ2006MCB0001 (the Solicitation), individual task orders could range as high as $1 billion in value; successful offerors, however, are guaranteed a minimum take of only $2,500.  Alliant offers a wide range of contract types, including fixed-price, cost reimbursement, labor-hour and time and material.

On September 26, 2007, Serco, Inc. (Serco) filed a complaint in this court challenging the award decisions and seeking a variety of injunctive relief.  Subsequently eight other unsuccessful offerors filed protests and were joined in the Serco protest. GSA issued the Solicitation on September 29, 2006. The Solicitation advised that GSA “contemplate[d making] approximately 25 to 30 awards ... but reserves the right to place fewer or more awards, depending upon the quality of the proposals received.” Those receiving awards under the Solicitation are eligible to perform task orders under the contract. The Solicitation indicated that “[a]ward will be made to responsible Offerors whose proposals are determined to provide the ‘best value’ to the Government.”

In a scholarly opinion, by Judge Francis M. Allegra, the Court concluded that GSA, “in attaching ”talismanic significance to technical calculations that suffer from false precision, made distinctions that, in their own right, likely were arbitrary, capricious and contrary to law, but certainly became so when the agency failed adequately to account for price and to make appropriate tradeoff decisions. Those compounding errors prejudiced the plaintiffs and oblige this court to set aside the awards in question and order appropriate injunctive relief.”  The Court did not agree that there was a rational basis to make distinctions between offerors on the basis of thousandths of a point. Judge Allegra ruled that “Precision of thought is not always reflected in the number of digits found to the right of a decimal point – indeed, as with other constructs, there can be, to paraphrase Holmes, a “kind of precision that obscures.”  Ultimately, Court ruled that the agency made award decisions that were “arbitrary, capricious and otherwise contrary to law.”

The Government intimated that the court should afford the agency more slack than usual, on account of the size of this procurement and the number of offerors to be evaluated.  But, the Court found that “given the extraordinary breadth of discretion already afforded to agencies in government procurements, it is hard to fathom what form a still more relaxed rule of deference might take. Would such a rule permit the adoption of procedures that would allow the agency to rely on performance information that is unverified and unresponsive to its stated evaluation criteria?  Not, it would seem, without a wholesale revision of the fairness principle embodied in CICA and the FAR - ‘a cornerstone of effective competition.’  Cibinic & Nash, supra, at 899.  Would such a rule allow the agency to treat demonstrably imprecise statistics as being precise?  Not unless deference somehow magically makes insignificant digits significant. And would this heightened deference permit the agency to dispense with any reasonable consideration of price, leaving that question for a later day?  Certainly not, again, without some substantial modification of CICA and FASA-and with Congress heading the opposite direction in tending, in recent years, toward enhancing, rather than diminishing, the importance of price.  But whatever the reach or meaning of the salvific rule defendant would have this court apply, one thing is certain-it has no foundation in the Solicitation, the FAR or the governing procurement statutes.  Per contra. While an agency certainly may choose to pursue a GWAC pursuant to its mandate to ‘efficiently fulfill the Government's requirements,’ it may not obtain efficiencies in derogation of the FAR and other governing statutes.  Nor, as should be obvious, does the raw size of a procurement afford an agency the license to engage in what otherwise would be arbitrary and capricious conduct.”

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Effective May 23, 2008, there will be important changes that pertain to a contractor’s ability to protest task and delivery orders.  These changes are embodied in Section 843 of the 2008 Defense Authorization Act, "Enhanced Competition Requirements for Task and Delivery Order Contracts," and legislators expect the new provisions to increase competition for task and delivery order contracts.  Most notably, the new law allows a contractor to protest a task order in excess of $10 million to the GAO.  Previously, the Federal Acquisition Streamlining Act of 1994 (“FASA”) prohibited task order protests, except in very limited circumstances.  In addition, the new law requires that DOD task or delivery order contracts in excess of $100 million be awarded to multiple contractors, with certain exceptions, and the establishment of enhanced competition requirements, such as a requirement for debriefings on task or delivery orders in excess of $5 million under such multiple award contracts.  The GAO is currently revising its bid protest rules to address the newly acquired jurisdiction over task order protests. (The new rules will be posted on this blog as soon as they are issued).

At the April 19, 2007 hearing of the Senate Committee on Armed Services regarding the DOD’s management of costs under the Logistics Civil Augmentation Program (“LOGCAP”) contract in Iraq, Senator Carl Levin (D-MI) asked why ithe Army waited five years to split the contract among multiple contractors, allowing for competition of individual task orders.  The response from the Assistant Secretary of the Army for Acquisition, Technology, and Logistics was: "I don't have a good answer for you."  The provisions of Section 843 ensure that, absent compelling reasons not to, there will be competition in the award of task and delivery orders on future contracts of this type.  As far as we are concerned, however, there is an open question as to whether Multiple Award Task Order Contracts (‘MATOC”) are legally authorized under the Federal Acquisition Regulation for the procurement of construction. A protest raising that issue was filed by our firm and is pending before the United States Court of Federal Claims.

Section 843 of the Defense Authorization Act lifts the ban imposed by the Federal Acquisition Streamlining Act on protests to the Government Accountability Office (GAO) of task or delivery orders valued over $10 million.  This provision may be short-lived though: it contains a “sunset” provision and expires three years after it becomes effective. Congress enacted Section 843 in response to the need for enhanced competition requirements, and apparently believed that federal agencies had too little oversight when permitted to issue task order procurements that were not subject to protest.   After the FASA was enacted, federal agencies increasingly employed the indefinite delivery, indefinite quantity (“IDIQ”) contracts for expensive projects, purportedly to utilize “streamlining” but, in part, to circumvent the bid protest process.  It will be interesting to see whether the newly enacted right to file bid protests will have a “chilling” effect on agency plans to issue IDIQ contracts in the future.

The exclusive jurisdiction granted to the GAO means that the Court of Federal Claims (CFC) will not adjudicate these protests.  Under the current protest regime, both the GAO and the CFC are authorized to hear bid protests, and we would have preferred for that dual jurisdiction to have continued on task order protests, as well.  An advantage of the current system for contractors is that if they are unhappy with the outcome of a GAO protest, they can obtain de novo review of that same protest at the CFC.  Under Section 843, this second chance will not be available for task or delivery order protests. This has serious implications for contractors because only a small fraction of protests heard by the GAO are sustained.  

Additional means of enhancing competition are also set forth by Section 843. For task or delivery orders in excess of $5 million, the government agency is required to provide a fair opportunity to be considered.  This means that at the very least, the following must be provided to all contractors: 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; and 5) an opportunity for a post-award debriefing. Unless certain exceptions apply, the current law requires the agency to give all multiple-award IDIQ contract holders a fair opportunity to be considered for each order in excess of $2,500.

Section 843 targets sole source awards.  The new rules establish further requirements for agencies awarding IDIQ contracts valued over $100 million to a single awardee, as opposed to multiple sources. In order for this to happen, 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.  Additionally, Congress must be notified within 30 days of the determination to award an IDIQ contract to a single source.  These new requirements are similar to those of the Federal Acquisition Regulation (FAR) Part 6.3 which justify awarding a contract to a single source.

The most potentially controversial provision of the enhanced competition framework of Section 843 is the authorization of task or delivery order protests. In 2003, the Services Reform Act (SARA) authorized the Acquisition Advisory Panel (the "Panel") to review and recommend any necessary changes to acquisition laws and regulations and government-wide acquisition policies. Included in the Panel’s draft report of 2006, was a similar provision, which was met with opposition from interest groups who feared that an increased number of bid protests would raise costs for federal contracts and impede the procurement process.  The final legislation gives exclusive jurisdiction to the GAO over task or delivery award contract protests, and is likely a compromise between the recommendations of the Panel and the concerns of the interest groups.

Section 843 is silent on some procedural matters regarding task or delivery order protests. For instance, the automatic stay requirement of the Competition in Contracting Act is not mentioned. Under the CICA, the contracting agency is required to stay the award or suspend performance of a protested contract upon the commencement of a timely protest to the GAO. Further questions are raised by the silence of Section 843 regarding time limitations for filing task or delivery order protests at GAO.  It would seem that current rules for protests where debriefings were requested would stand. This means that the deadline for filing a task or delivery order protest will likely 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. However, the new GAO rules must be reviewed after they are issued to determine whether there are any new or unusual requirements that affect the filing of task order protests.

Congress’ grant of exclusive jurisdiction to the GAO for task and delivery award protests also precludes agency level protests. This seemingly creates a conflict with current federal acquisition policy, which encourages parties to resolve controversies over procurement at the agency level whenever possible. The NDA, however, does 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.  

For task orders valued below $10 million, the ombudsman remains the only reviewing authority for disappointed contractors. Under Section 843 task order procurements between $5 million and $10 million are subject to the new procedural requirements but still exempt from GAO’s protest jurisdiction. This implies that contractors can still seek to enforce compliance with the new procedures for procurements in this dollar range by submitting a complaint to the ombudsman.

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A protest was filed recently in the United Stated Court of Federal Claims by our firm on behalf of a small business construction contractor challenging a solicitation issued by the Fort Worth District of the U.S. Army Corps of Engineers. The solicitation, No. W9126G-07-R-0123, is one of four similar solicitations for the construction of military projects described as Advanced Individual Training (AIT), Basic Training (BT) Barracks, and Warrior in Transition (WIT) facilities. The construction is being solicited through the use of a negotiated Indefinite Delivery/Indefinite Quantity (“IDIQ”) procurement on a Single Award Task Order (“SATOC”) basis.  Under the terms of the solicitation a single contractor will be selected to perform task orders, without competition, amounting to as much as $330 million over the next three years in an eight state area. The other three similar solicitations contain similar dollar values and apply to similarly extensive geographic areas.

The protest seeks an injunction to prevent the Corps of Engineers from proceeding with the solicitation because of our contention that it is unduly restrictive of competition; it violates the laws prohibiting “bundling” by unlawfully consolidating smaller projects that would have been suitable for small business prime contracting; and, it illegally employs supplies and services indefinite delivery contracting methods under FAR 16.5 to procure large military complexes. There has been a growing outcry from both the small and large business construction communities in recent months regarding the expanded use by the Department of Defense of Indefinite Delivery/Indefinite Quantity solicitations to procure construction, seemingly ignoring the fact that indefinite delivery contracts are typically used to acquire supplies and services on a much smaller scale. It is our opinion that Single Award Task Order Contracts and Multiple Award Task Order Contracts are illegally limiting competition and that they may not be appropriately applied to the procurement of major construction projects. 

It is also disturbing that the amount of construction work that is available for sealed bidding is declining to the point that many construction contractors are being closed out of the federal market. (See our earlier article).  The use of sealed bidding provides the greatest opportunity for competition and ultimately results in the lowest prices to the government. This was confirmed by a recent decision of the Court of Federal Claims that held that sealed bidding was the preferred method for the procurement of maintenance dredging and shore protection work.

Although we cannot predict the outcome of the pending protest, we believe that it is important for the Court to review whether there is legal and rational basis for the use of the IDIQ format to procure major construction. The Corps of Engineers has indefinitely postponed the date for receipt of proposals while this matter is under consideration.

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