Government Contracts Monitor

“Interested Party” – GAO May Not Think It Means What You Think It Means

April 3, 2016

Just because you’re interested in the result of an agency award decision does not mean the Government Accountability Office (GAO) will consider you an interested party that can protest the decision. That’s an easy rule to remember and apply when the “interested” party in question is a subcontractor who was relying on work from the prime contractor that didn’t win the award. But what if the protester is one of several awardees in a multiple-award IDIQ procurement that believes its interests will be adversely impacted because one of the other awardees (its future competitor for contract tasks) should not have received a contract?

The GAO answers that question in the recent decision in Aegis Defense Services, LLC, B-412755 (March 25, 2016). The procurement in question involved the award of an indefinite-delivery, indefinite-quantity (IDIQ) contract to Chenega-Patriot Group, LLC (CPG) by the Department of State (DoS) for protective security services to support the agency’s global protective and security mission. The solicitation contemplated the award of multiple IDIQ contracts, referred to as the Worldwide Protective Services (WPS) 2 contracts. Protester, Aegis Defense Services, LLC (Aegis), and CPG were both among the seven offerors to which DoS awarded a WPS 2 IDIQ contract.

Believing that CPG improperly used Aegis’s confidential, proprietary and trade secret information to secure an award, Aegis notified the DoS contracting officer of CPG’s potential violation of the Procurement Integrity Act (PIA) and asked that the agency investigate the matter and take necessary remedial action. More particularly, Aegis alleged that one of its former employees used information misappropriated from Aegis to help CPG develop its proposal in response to the WPS 2 RFP. After the contracting officer represented that he conducted an investigation into Aegis’s allegations and concluded that “there is no basis [to] determine a PIA violation has occurred”, Aegis protested, arguing among other things that the agency had unreasonably awarded the contract to CPG after inadequately or incompletely investigating the alleged PIA violations.

Almost immediately, GAO raised the question of whether Aegis, as an awardee under a multiple-award IDIQ contract, “possesses the requisite direct economic interest to pursue a protest against an award to another contractor” that would make it an “interested party” with standing to protest. Before Aegis had a chance to respond to GAO, CPG filed a request for dismissal, asserting that Aegis was not an interested party.

GAO’s began its analysis of the issue with the Competition in Contracting Act of 1984 (CICA), which defines an interested party as “an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract[.]” 31 U.S.C. § 3551(2)(A). After noting that its Bid Protest Regulations use the same definition, see 4 C.F.R. § 21.0(a)(1), GAO reiterated the two requirements for interested party status: “a protester must (a) be an actual or prospective bidder or offeror, and (b) demonstrate that it possesses a direct economic interest in the contract award.”

According to GAO, Aegis failed on both counts.

First, GAO explained that Aegis’ awardee status “precludes its interested party status irrespective of any alleged economic interest” and found that “the statutory definition of an interested party expressly bars protests where the protester is the awardee of the challenged contract.”

Even if that were not the case, however, Aegis had not established that it possesses a direct economic interest in the contract award. This was because, under the WPS 2 RFP’s terms, IDIQ contract holders like Aegis are guaranteed a minimum quantity of orders valued at no less than $10,000 and a fair opportunity to compete for future task orders issued under the IDIQ contract. The Government is not bound to provide more. And Aegis did not allege that the award to CPG would cause Aegis to receive a volume of orders valued less than that guaranteed minimum. (Of course, noted GAO, an agency’s failure to comply with that minimum would be a matter of contract administration, which GAO does not review.) According to GAO, because Aegis was awarded a WPS 2 IDIQ contract, it could not demonstrate a direct economic interest in the contract award to CPG: even if it won this protest, it would still not be entitled to anything more than the guaranteed minimum.

In other words, if you are one of a number of multiple-award IDIQ contract awardees, you’re not an interested party in the eyes of the GAO. You don’t meet the statutory definition. And the mere fact that you may be forced to compete against an additional awardee – and may win fewer task orders as a result – doesn’t give you the requisite “direct economic interest” to protest the agency’s award to that offeror.