When a bidder in a government real estate property auction feels in some way the victim of unfair or improper treatment by the government is there a remedy available? And by remedy, I mean some formal process that will subject the government agency’s action to an independent review. If you ask the General Services Administration (the seller of most surplus federal property), they will say there is no remedy. But in my view, that is not quite the case. Read the rest of this entry »
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.
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.