Finessing CICA Redux: Another Attempt by Government IT Offices to Avoid Competition

January 11, 2011

A bit over a year ago, I wrote about an interesting government agency strategy to avoid having to deal with the messiness of “full and open competition.” (See https://vanhornelaw.wordpress.com/2008/09/05/finessing-cica-the-open-ended-support-contract-ploy/) Now it is time to discuss another ploy to avoid the annoyance of competition, the purported standardization determination.

On January 3, 2011, the Court of Federal Claims issued a preliminary injunction against the Department of the Interior’s attempt to standardize on Microsoft’s email system without conducting a competition. After attempting unsuccessfully to interest the Department in its ability to provide an email system for the Department, Google protested various actions of the Department to implement its sole source decision to use the Microsoft product. You can see a copy of the opinion at http://tinyurl.com/4956j5g.

From the opinion, it is pretty clear that Interior had made the decision to standardize on Microsoft some time ago, perhaps as early as 2007. For months, in 2009 and 2010, Google corresponded with and met with Interior officials to pitch its competing product. Up until late 2010, Interior essentially led Google on, claiming that a competition would be held for the Department’s email system. When solicitation documents became public in late 2010, it was finally clear that there was to be no competition and that Interior had made a final, internal decision to go with Microsoft. The actual solicitation was issued only to selected Microsoft resellers to implement the standardization decision.

This is not a new tactic among government IT offices. In 2007, the Department of Homeland Security tried to do the same thing with the acquisition of financial systems software. (See Savantage v. US, http://tinyurl.com/24vj2rg.) Both DHS and Interior set up the actual solicitation so that the real party in interest, the software developer, could not bid on the procurement by making the procured services only for implementation of a sole source designation of the software to be used. This appears to be an effort to simply avoid having to have a competition for the software since IT personal have developed their own preferences for a particular company’s software and choose not to subject that preference to the competitive market place. Obviously, the strategy becomes problematic when the sole source determination fails to meet statutory and regulatory requirements. Secondarily, the strategy also makes it more difficult for the software developer to challenge the procurement.

It would appear that GAO simply will not address this type of procurement law violation because the protester is not, and cannot be, a bidder. The Court of Federal Claims, on the other hand, has repeatedly shown a willingness to address CICA finessing ploys of various types. I assume this is because the two bid protest forums work under quite different jurisdictional mandates. The statutory mandate to GAO in ruling on bid protests is to “determine whether the solicitation, proposed award, or award complies with statute and regulation.” 31 U.S. Code 3554(b)(1). The Court, however, is under a mandate “to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S. Code 1491(b)(1). What the Court has that GAO does not is jurisdiction over “any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” The Court interprets this third leg of its jurisdictional statute quite broadly, relying on the very broad definition of “procurement” from the Office of Federal Procurement Policy Act, 41 U.S. Code 403(2)(which is mirrored in the FAR at 2.101). See Ramcor Services Group, Inc. v. United States, 185 F.3d 1286, 1289 (Fed. Cir. 1999).

So what is going on here? Why the tendency for this type of ploy to show up in the government IT arena? I would suggest that defining requirements, as would be necessary for a competitive procurement, is really not an easy task. By just getting comfortable and familiar with and then specifying one software product, the requiring office can avoid the unpleasant task of actually articulating what the agency needs. It would appear that procurement officials, perhaps because of a lack of technical expertise, can get snowed by inadequate sole source justifications. This is then compounded with use of all of the IDIQ type contracts available to the contracting officer (e.g., GSA schedule contracts, GWACS, various agency BPAs) which also help disguise the real sole source selection. Since the Savantage decision, and now certainly after the Google decision, it hopefully will be obvious that this particular CICA finessing ploy isn’t all that likely to succeed.

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Protesting in the Nation’s Capital

September 6, 2010

It’s not what you’re thinking. Public protests and rallies, political or otherwise, are a time honored and cherished democratic tradition here in Washington DC, but that’s not the kind of protest I’m talking about.  My interest is the procurement process of the District of Columbia Government and its pre-award dispute process, the bid protest.  I recently had occasion to review this bid protest remedy and here for your education (as opposed to legal advice – since it’s free) is a summary of what I found.

The federal bid protest remedies (at the Government Accountability Office (“GAO”) and the U.S. Court of Federal Claims (“COFC”)) are reasonably well known.  Not as well know is that many state and local public procurement systems also have bid protest remedies of varying degrees of independence and professionalism.  For contractors doing business with the District of Columbia government there is a bid protest remedy at the DC Contract Appeals Board (“CAB”).  The CAB bid protest has many similarities to GAO and COFC bid protests, but some important differences as well.

Here’s what you need to know: Protests are possible against most but not all DC Government entities.

Only “aggrieved parties” can protest.  “Aggrieved parties” are essentially the same as “interested parties” under GAO and COFC bid protests.  An aggrieved party is defined as “an actual or prospective bidder or offeror (i) whose direct economic interest would be affected by the award of a contract or by the failure to award a contract, or (ii) who is aggrieved in connection with the solicitation of a contract.”

Timeliness rules are very strict, similar but not exactly the same as GAO.  A protest based on problems with a solicitation must be filed prior to bid opening or the time set for receipt of proposals.  Other protests (essentially post-award protests) must be filed no later than ten (10) business days after the basis of the protest is “known or should have been known.”

There are provisions for an automatic stay of contract performance which can be over-ridden by the agency.  Similar to GAO protests, the agency must file a report and the protestor must file comments.  However, the time frames are 20 days for the report and 7 days for the comments.   The CAB’s decision must be issued within 60 business days from the date the protest is filed

As with GAO, a protester can be represented by a non-attorney officer.  Of course, that can result in the protester not having access to confidential agency information. The CAB has a protective order process that allows attorneys and consultants to have access to the confidential information.

Here are some technical details: The DC Contract Appeals Board is the designated forum for hearing and deciding both contractual disputes and bid protests involving the DC government pursuant to the DC Procurement Practices Act of 1985, effective February 21, 1986 (D.C. Law 6-85) (D.C. Code Ann. §§ 2-301.01 to 2-311.02).  The Act applies to all contracts and intergovernmental and interagency agreements for the procurement or disposal of goods and services by executive agencies and employees subordinate to the Mayor.

The Board is composed of Administrative Judges who hear and decide the cases. DC Code § 2-309.08 (“Protest procedures”) and Chapter 3 of the Board Rules provide detailed requirements and rules governing protests of solicitations and awards.

The Board issues written decisions, which are published in the District of Columbia Register (DC Reg).  Full text searches of the Board’s published decisions are possible at the published decisions search page of the CAB website (http://cab.dc.gov).  The CAB has provided for comprehensive electronic filing in bid protest (and other) cases through the LexisNexis File & Serve.

While no bidder should protest frivolously, you may want to think twice about doing so before the DC CAB.  If the Board decides a protest has been frivolous, it can order the protester to pay the agency’s attorney fees (fortunately limited to $100 per hour) and damages for delay of an awarded contract.

Notwithstanding that interesting fillip in the rules, it is good to see that the DC procurement process has a judicial remedy for problems in the award of contracts.


Court of Federal Claims Jurisdiction Over Non-Procurement Protests

January 16, 2010

In a recent Court of Federal Claims decision (Ozdemir v. United States, 19 November 2009), Judge Damich clarified the Court’s jurisdiction over protests of solicitations and awards of contracts other than procurement contracts. In a time when the government is pumping out vast sums for economic recovery through a number of formal vehicles (grants, etc.), this remedy could become increasingly important to those frustrated in their dealings with the federal government.

The Ozdemir case arises from the very first solicitation issued by the Department of Energy’s Advanced Research Projects Agency (“ARPA-E”). This solicitation requested concept papers so ARPA-E could select promising energy-related technologies for research and development funding. To provide this funding, the solicitation identified grants, cooperative agreements and technology investment agreements as the anticipated legal vehicles. Interested parties were required to request an “application control number” by a given deadline. Mr. Ozdemir failed to make a timely request for this number and the agency refused to consider his concept paper when he submitted it.

The government chose to defend against Mr. Osdemir’s protest by moving to dismiss on the theory that the Court did not have jurisdiction because the solicitation did not relate to a procurement. Although the parties argued over whether or not the solicitation related to a procurement (the solicitation included one reference to a procurement instrument), the Court sidestepped this issue to deal with a more fundamental issue, whether the Court had jurisdiction over non-procurement protests.

After concluding that the precedents offered by the government did not support their position that the Court’s bid protest jurisdiction did not extend beyond procurement matters, the Court proceeded to set out two bases for its conclusion that its bid protest jurisdiction extends beyond procurement matters. (Senior Judge Merrow applied similar reasoning in Red River Holdings, LLC, v. United States, July 17, 2009, however, in that case the protest involved a maritime contract, which was clearly a procurement matter, and the parties agreed that the Court had jurisdiction; the jurisdiction issue was raised sua sponte by the Court.)

First, the Court found support in something cleverly called the Last Antecedent Rule (which, it turns out, is rather like the Pirate Code, more of a suggestion than a rule). The Last Antecedent Rule is a rule of statutory interpretation that was explained by the Federal Circuit in Anydrides & Chems. Inc. v. United States, 130 Fed.3d 1481, 1483 (Fed. Cir. 1997) (quoting 2A Sutherland Statutory Construction, 4th ed., § 47.33):

The rules of grammar apply in statutory construction:

Referential and qualifying words and phrases, where no contrary intention appears, refer solely to the last antecedent, which consists of “the last word, phrase, or clause that can be made an antecedent without impairing the meaning of the sentence.”

The government focused on the last phrase of the jurisdictional statute (28 USC § 1491(B)(1)), “in connection with a procurement or proposed procurement,” claiming that this phrase modified the entire sentence. Because there is no comma immediately before this phrase, the Court, applying the Last Antecedent Rule, determined that the phrase modified only the immediately preceding phrase (“any alleged violation of statute or regulation”), not the entire sentence. Thus, the rest of the sentence provides several independent bases of jurisdiction, including a protest against a solicitation for proposals for a proposed contract and a protest against a proposed award. The Court found its jurisdiction in these phrases since ARPA-E had clearly issued a solicitation which contemplated an award.

Also the government argued that “contract” in this context meant procurement contract, relying on the definitions in the Federal Grant and Cooperative Agreement Act (31 USC 6301-08), the Court found this assertion unsupported and held that “contract” in § 1491(b)(1) encompasses a wide range of formal agreements, including grants and cooperative agreements.

The Court also noted that the ARPA-E solicitation clearly contemplated an “award,” giving the Court a second basis for jurisdiction as a protest against a proposed award. This does not seem to me to be as strong a basis for jurisdiction, since at best, Mr. Ozdemir was complaining about a refusal to consider an award to him, not a proposed award to a third party. However, given the Court’s expansive reading of 1491(b)(1) (including the noted “hexadic” use of the conjunction “or”), the idea that one could protest an “award,” without reference to a contract (however defined) and without reference to a solicitation raises some interesting possibilities. Might it cover a financially significant endorsement of a commercial product by a federal agency or federal official that prejudiced a competitor (prejudice being a required element of the Court’s jurisdiction)?

The Court found further support for its reading of § 1491(b)(1) in its analysis of the history of the Court’s bid protest jurisdiction. Specifically, the Court noted that prior to enactment of the current language in § 1491(b)(1) in the Administrative Dispute Resolution Act of 1996 (“ADRA”), the Court had jurisdiction over protests involving award of non-procurement contracts, such as timber sales, and that there is no indication that ADRA in any way was intended to restrict the Court’s bid protest jurisdiction, only to expand it.

Although this decision was not the first since 1996 to recognize the Court’s jurisdiction over non-procurement protests, it certainly is unique in its thorough discussion of the issue, all the more intriguing for having occurred in a pro se case.

My personal perspective is that federal agencies have for some time been looking for creative ways to avoid exposure to bid protests, mostly by using highly complex, multi-agency IDIQ procurement vehicles or by having support contractors doing what would normally be agency procurements. It will be interesting to see, in this environment, how the agencies react to this clear assertion of the Court’s jurisdiction over non-procurement bid protests.


CPR For Government Contractors; What To Do Until The Government Contracts Lawyer Shows Up.

April 26, 2007

It Looks So Good: Because the U.S. Government buys more than $370 billion of goods and services each year, it is an enticing market for many businesses that have done little or no selling to government agencies. The market for state and local government purchases is of the same order of magnitude. Selling to the federal government is lauded (by the government) as being much easier than it used to be (which is true), so many businesses think that government contracts can’t be all that much different than commercial sales. Like many messages from the feds, this one should be taken with a grain of salt. It is true that selling to the government is much easier than it was even a decade ago; however, the differences are still significant and they can trip up and frustrate a business that is not prepared for those differences. So the odds are that sooner or later a client will call you either with a question about getting a government contract or because it is in trouble with a government contract. This commentary addresses what can be done and what should not be done while waiting for the government contracts expert to arrive at the scene of the crisis.

There are two situations that require an immediate response. Although the details are different, these situations arise in state and local government contracting also.

The Dark Side of Government Contracting. The following situations and their implications will come as no surprise to you, but as you know, they will come as a big shock to the client: The government customer has uttered one of those “fighting words” such as “fraud” or “bribery.” Or the client has gotten a call from the FBI or an agency Inspector General or an auditor. Or equally likely, the client has discovered a situation that may be a serious violation of the rules. This may not happen as often as it did when there were so many more ways for a government contractor to screw up, but the government customer is still the one customer that has its own cadre of policemen and is quite willing to send them after vendors whom they find annoying. Government customers are not like commercial customers who resolve disputes mostly by civil litigation (although the government can do that too).

There are still a plethora of federal crimes intended to prevent vendors from taking unfair advantage of a government customer, so it behooves a government contractor to know the rules and follow them. But that is a topic for future commentary. Beyond that, government contractors are often encouraged to make self-disclosures. This is not necessarily advisable, certainly not before a careful investigation of the facts and analysis of the legal implications of those facts. Because of the multitude of potential investigative agencies, government contractors may also be confronted by investigators who can be less than professional with their methods and allegations. Government contracting is still subject to technical and convoluted regulations; the existence of a regulatory violation, let alone a criminal violation, can be determined only after a careful review of the facts and analysis of the applicable rules. Guilty or not, any businessman must take seriously any assertion by a government customer that an illegal act has occurred or any indication that an investigative agency has developed an interest in the businessman’s activities or any internal disclosure of a potential violation.

Such situations need to be treated like any potential white collar matter, with appropriate limitations on the client’s statements and preservation of evidence and prompt and careful internal investigation covered by privilege. Like other potential white collar situations, the client needs the advice of your white collar expert and your subject matter expert. Prompt but not precipitate action by counsel and the client are the order of the day.

And Even More Possibilities for Litigation: The other situation requiring rapid response is the pre-award dispute. Government contracting is unique in that the failure of the government buyer to follow applicable procurement rules gives rise to judicial and administrative remedies. Clients can find themselves on either side of these pre-award disputes, referred to as bid protests, either protesting an award to a competitor or defending an award to themselves. With these disputes, rapid action is vital to protect the client’s remedies. If a protest is filed within 10 calendar days, contract awards can be withheld or contract performance suspended. Protests may be taken to the procuring agency, the General Accountability Office (formerly known as the General Accounting Office) or the U.S. Court of Federal Claims. Agency and GAO protests must be filed in 10 working days of actual or constructive knowledge of the basis for the protest. We all know that it usually takes a client a week to decide whether to talk to a lawyer. You can do the math. D efending against a protest can also be time critical because the administrative and judicial protest processes move quickly. Deciding whether to protest is not a simple decision. There are both marketing and legal considerations to consider carefully. For large defense contractors dealing with bet-your-company bids, there may be no meaningful choice but to protest. For the typical client dabbling in government contracts, the issue can be difficult and confusing and decisions must be reached under considerable time pressure.

Although bureaucrats are not immune from typical customer emotions, it is important to understand that the government buyer’s motivations are not necessarily those of the usual commercial buyer. When and how to start an adversarial process with a government customer, either during the bidding process or during contract performance, is another topic for future commentary, as are the differences in the marketing and bidding processes in government contracting. Until then, be aware of the two situations that really need a quick response to protect the client’s interests, the threat (or even a hint) of a criminal investigation and the pre-award bid protest process.