When an agency decides to set aside an acquisition for participation only by small businesses, certain subcontracting limitations apply to the small business awardee. For construction contracts, the small business contractor cannot pay subcontractors more than 85% of the amount they receive from the agency. For service and supply contracts, the small business contractor cannot pay more than 50% of the amount paid to it by the agency to other entities that are not similarly situated. Work performed by similarly situated entities is not considered in determining if the limitation on subcontracting is violated. A similarly situated entity is defined as a small business subcontractor that is a participant of the same small business program as the prime contractor and is small for the NAICS code assigned by the prime contractor to the subcontract.

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By law, a GAO protest must be filed by an interested party. An interested party is an actual or prospective bidder or offeror whose direct economic interest would be impacted by the award of a contract or by the failure to award a contract. Before bid opening or the closing date for receipt of proposals, a protestor must be a prospective bidder or offeror with a direct economic interest in the procurement. This generally means that a bidder or offeror has expressed an interest in competing and is capable of performing the type of work that the solicitation requires. After bid opening or the submission of proposals, a protestor must be an actual bidder or offeror with a direct economic interest in the procurement. This generally means a bidder or offeror who would be in line for award if the protest were sustained. A protestor who cannot receive an award if it prevails on the merits of its protest is not an interested party. In some cases, a high-priced bidder might be able to demonstrate that all lower-priced bidders are ineligible for award, thus becoming the next-in-line for award. In a “best value” negotiated procurement, the GAO determines whether a protestor is an interested party by examining the probable result if the protest is successful. This means that an actual offeror, who is not in line for award, is an interested party if it would regain the opportunity to compete if the protest is sustained.

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A bid protest must allege a violation of a procurement statute or regulation. Although most protests challenge the award or proposed award of a contract, the GAO will also consider protests involving defective solicitations and other unreasonable agency actions like the cancellation of a solicitation. In certain cases, the GAO will consider protests involving the termination of a contract where the protest alleges that the government’s termination was based upon improprieties associated with the contract award (this is sometimes called a “reverse protest”). Additionally, the GAO will consider protests concerning (1) awards of subcontracts by or for a Federal agency, (2) sales by a Federal agency, or (3) procurement actions by government entities that do not fall within the strict definition of Federal agencies, if the agency or entity involved has agreed in writing to allow the GAO to decide the dispute.

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As I mentioned in a recent post, the Department of Defense (DoD) is using its “other transaction” authority with increased frequency to attract non-traditional defense contractors and to capitalize on the cutting-edge technological advancements found in the commercial marketplace. Other Transaction Agreements (OTAs) are not procurement contracts, grants, or cooperative agreements and, as such, many procurement laws and regulations do not apply, including the Competition in Contracting Act (CICA) and the Federal Acquisition Regulation (FAR). 
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Last week, I had the opportunity to participate in the Office of the Director of National Intelligence’s 12th Annual Intelligence Community Legal Conference to discuss acquisition reform with some of the top government attorneys in the intelligence community. Much to my surprise, the majority of the conversation focused on bid protests and the impact that protests have on federal procurements. During my time as a government attorney defending against bid protests, I gained valuable insight into how the government works to defeat them and what contractors can to do improve their chance of success. Some of these lessons are shared below. 
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The Consolidated Appropriations Act for Fiscal Year 2014 required the U.S. Government Accountability Office (“GAO”) to establish an electronic docketing system for bid protests. Now, four years later, there are indications that the GAO might be moving to the Electronic Protest Docketing System (“EPDS”) sometime this year. Before going live with EPDS, the GAO is implementing a pilot program in which certain protests already filed at the GAO will be moved into EPDS. The pilot program will ensure that EPDS is fully operational before it goes live and becomes the sole means for filing a bid protest at the GAO. 
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Last month, we reported that the Government Accountability Office’s (“GAO”) statutory authority to hear bid protests on civilian task orders exceeding $10 million had expired, leading to a parade of dismissed protests and disappointed contractors left without legal recourse. As of last week, there is reason to be hopeful, as the House of Representatives and Senate agreed on legislation that promises to permanently restore the GAO’s authority to hear civilian bid protests. 
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The Government Accountability Office (“GAO”) issues statistics each year regarding the outcome of bid protests.  In 2015, there were 2,639 cases filed and there we 587 decisions on the merits.  Of those, only 68 protests were sustained.  According to the way the GAO presents its statistics, that would indicate that protestors prevailed approximately 12% of the time.  In reality, since many protests were withdrawn or summarily dismissed, the protesters only prevailed in 68 of the 2,639 protests filed and the true success rate was closer to 3%.  With those odds, why would anyone file a GAO bid protest?  The answer requires a little closer scrutiny since statistics can be misleading.


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On September 11, 2013, the American Legion filed an amicus curiae brief, asking the Federal Circuit to reverse the Court of Federal Claims’ November decision in Kingdomware Technologies, Inc. v. The United States. In Kingdomware, the COFC effectively overturned an important line of Government Accountability Office (“GAO”) decisions affecting VOSBs and SDVOSBs.