Government Contracts Monitor

New Rule to Limit Length of Noncompetitive Contracts Awarded with “Unusual and Compelling Urgency”

November 2, 2009

In an update to our recent post relating to GAO’s treatment of the “unusual and compelling urgency” exception to the competition requirements, the government has implemented a new rule further limiting the use of this exception.[1]

Under a new provision of the Federal Acquisition Regulation (FAR), effective October 14^th, agencies may award noncompetitive contracts under the “unusual and compelling urgency” exception only for a limited period of time, not to exceed the time necessary to:

Meet the “unusual and compelling” requirements of the procurement, AND
Enter into another contract for the required goods or services through the use of competitive procedures.

In no event may agencies use this exception for more than one year unless the head of the agency determines that “exceptional circumstances” apply. The new rule applies to all acquisitions above the simplified acquisition threshold (currently $100,000). The rule adds a new provision to FAR 6.302-2, “Unusual and Compelling Urgency,” as required by § 862 of the National Defense Authorization Act (NDAA) for fiscal year 2009.[2]

The new rule is intended to insure that federal agencies use full and open competition whenever possible, even when unusual and compelling circumstances exist. As we reported previously, the General Accountability Office (GAO) has recently cracked down on agencies’ excessive use of this exception. In one recent case, GAO sustained a protest where the agency continued to make sole source awards under the exception for ten years. In another case, GAO required the agency to seek limited competition even where “unusual and compelling” circumstances existed.

Written by: Chip Slaven

[1] Federal Register Vol. 74 No. 197, Wednesday, October 14, 2009.

[2] Pub. L. 110-417; amending 10 U.S.C. 2304(c)(2) or 41 U.S.C. 253(c)(2).