Government Contracts Monitor

Incumbent Left Behind

February 2, 2015

The Government Accountability Office (GAO) recently held that procuring agencies are not required to solicit the incumbent for follow-on Federal Supply Schedule (FSS) work, notwithstanding statutory and regulatory changes designed to enhance competition and provide notice “to as many contractors as practicable.” Technical Professional Services, Inc., B-410640, decided Jan. 20, 2015. GAO found “troubling” the agency’s “deliberate” decision to exclude the incumbent in this case, but declined to find “bad faith” where the agency and incumbent were involved in an ongoing dispute regarding the incumbent’s use of fewer personnel than required under the current contract.

As noted in the decision, GAO has long held that agencies are not required to solicit the incumbent FSS contractor. However, in the interim Congress passed Section 863 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (NDAA-09), mandating “enhanced competition in the purchase of property and services by all executive agencies pursuant to multiple award contracts.” As noted by GAO, while this statute permits notice to less than all contract holders under multiple award contracts (MACs), it requires notice “to as many contractors as practicable.”

This statutory mandate is implemented in FAR 8.405-2(c)(iii), which requires the contracting officer either to post the RFQ on e-Buy to afford all schedule contractors offering the required services under the appropriate MACs an opportunity to compete, or to “[p]rovide the RFQ to as many schedule contractors as practicable, consistent with market research appropriate to the circumstances, to reasonably ensure that quotes will be received from at least three contractors that can fulfill the requirements.”

The protestor argued that, given the Act’s emphasis on enhancing competition, the agency had “an affirmative duty . . . to solicit an offer from [the incumbent] unless the agency could establish that doing so was somehow not practicable.” GAO flatly rejected this argument since nothing in the statute, legislative history or implementing regulations “specifically mandates soliciting the incumbent FSS contractor.”

GAO further rejected protestor’s argument that the FAR requirement to “[p]rovide the RFQ to as many schedule contract contractors as practicable” effectively mandated soliciting the incumbent. GAO stated that this argument ignored the explanatory language in the FAR following the cited phrase. referring to appropriate market research and “reasonably ensur[ing] that quotes will be received from at least three contractors that can fulfill the requirements.” Here, the record showed that the agency solicited 14 vendors and received six quotations. GAO held that this satisfied the competition requirement.

The protestor also challenged the agency’s exclusion of protestor as “bad faith.” Interestingly, while the agency advised GAO that it had ‘randomly selected” the fourteen solicited vendors holding contracts under the applicable FSS schedule, GAO found, “consistent with the record, that the VA’s failure to solicit [the incumbent] was deliberate, based on performance issues on the incumbent contract.” GAO nevertheless declined to find “bad faith”, citing the presumption of good faith on the part of procurement officials and the corresponding high burden on protestors to establish bias or bad faith by “convincing proof.” GAO noted, however, that, had the incumbent become aware of, and requested, a copy of the RFQ, the agency would have been required to provide it under FAR 8.405-2(c)(4).

The facts of this case are, in the GAO’s words, “troubling,” particularly given the agency’s “deliberate” efforts to exclude the incumbent and mischaracterization that the 14 solicited vendors were “randomly selected.” However, the decision provides an important reminder to incumbent FSS contractors that they have no right, and should have no expectation that they will be notified of or solicited in connection with follow-on work. They therefore need to monitor e-Buy for any posting of the follow-on work and stay in touch with the procuring office to ensure they know about and get a copy of any unposted RFQ that might be issued. This is particularly true if the incumbent has any reason to suspect the agency is not be fully satisfied with the incumbent’s performance. If the agency refuses to provide a requested RFQ, or affirmatively conceals the existence of a new RFQ, then, assuming proper documentation, a subsequent protest likely would have better prospects for success.