With the enactment of the Federal Acquisition Streamlining Act (FASA) in 1994, Multiple Award task and delivery order contracts were given a significant boost. As part of that legislation came an almost ironclad bar to bid protests against the award of individual task or delivery orders. Disappointed offerors were prohibited from protesting the award of task or delivery orders except if such orders increased the scope, period, or maximum value of the underlying contract. Several exceptions subsequently were carved-out from the general prohibition, including protests of “down-selections” as well as task and delivery orders awarded under the GSA FSS program. Otherwise, however, disappointed offerors could either air their grievances with the agency ombudsman (an individual who possesses no binding authority) or could take the road seldom traveled and file a CDA claim with the contracting officer alleging a breach of the "fair opportunity to compete" required by FASA, implementing regulations, and contract clauses. Only recently was there any indication that damages could be awarded under the latter approach and, as expected, the standard for recovery is a difficult one for any contractor to meet. The circumscribed recourse available to disappointed task or delivery order offerors did not occur by happenstance – it was the result of deliberate efforts by reformers to streamline the acquisition process and to avoid the delays and increased costs they attributed to the numerous, routine and purportedly needless protests encumbering the procurement system.  

Multiple award contracts, as redefined by FASA, gained popularity because they afforded government agencies flexibility to rapidly procure goods and services as their needs materialized or changed. By insulating the Multiple Award IDIQ procurement process from bid protests, the reformers established an environment that further facilitated the use of such contract vehicles. Unconstrained by the prospect of threatened litigation, some procurement officials took advantage of the minimal competition rules applicable to the award of orders under Multiple Award contracts. Not surprisingly, the increased use of IDIQ contracts, coupled with limited oversight, led inevitably to abuse. Protests of awards of Multiple Award contracts could be reduced or eliminated by making numerous awards. Task and delivery orders for "real work" could then be made to favored sources with little or no threat of challenge.

Criticism began to surface that the bar to bid protests stifled competition, obscured transparency, and shielded government agencies from accountability. At the same time, the awards of extremely large IDIQ contracts during the Iraq war brought further scrutiny to the IDIQ procurement process in general. As a result, a counter-reform movement took root. Arguments were raised that the bar against bid protests should be scaled-back to allow for some form of bid protest and that additional rules or guidelines should be enacted to interject uniform competitive rights into the IDIQ acquisition process. Proponents of such reform, however, encountered opposition as they attempted to alter the regulatory landscape. Fears remained that the speed and flexibility needed in modern procurements would be jeopardized.

Section 843 of the National Defense Authorization Act of 2008 (the Act), entitled “Enhanced Competition Requirements for Task and Delivery Order Contracts,” constituted a compromise of these competing viewpoints. The provisions contained therein went into effect on May 27, 2008. Subsequently, on September 17, 2008, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council issued an interim rule with request for comments that essentially mirrored Section 843 of the Act and revised three provisions of the Federal Acquisition Regulation (FAR 16.503 – 16.505) to incorporate the Act’s enhanced competition requirements. See 73 Fed. Reg. 54008 (Sept. 17, 2008). The interim rules target three primary areas:

  • Authorization of protests at the GAO on any ground in connection with the award of Multiple Award contract task and delivery orders valued at over $10 million;
  • Enhanced competition requirements for the award of Multiple Award contract task and delivery orders valued at over $5 million; and
  • Prohibition against single award task or delivery order contract valued at over $100 million (including options) unless the agency head determines in writing that certain criteria are present.  

Protests Authorized In Connection With TOs and DOs Valued Over $10 Million

The interim rules allow for the filing of a protest in connection with the award of a Multiple Award contract task or delivery order valued in excess of $10 million. The interim rules do not circumscribe the universe of grounds for protest and, thus, protesters would not only be able to challenge agency action based on the enhanced competition requirements (discussed below), but also on the vast variety of protest grounds commonly associated with FAR Part 15 procurements. GAO has been granted exclusive jurisdiction to entertain these protests. Congress was not convinced apparently that these changes would cure the ailments afflicting IDIQ contracts or that they had struck the proper balance between competing and divergent interests in fashioning its grant of bid protest jurisdiction because the new law contains a sunset provision that extinguishes a contractor’s ability to file protests in connection with task or delivery orders valued at over $10 million in three years (i.e., May 27, 2011). Congress adopted the three year test period to allow time to consider the implementation and impact of the new law. See House Conference Report 110-477.

While GAO has concluded that changes to its regulations are not necessary to implement this new grant of jurisdiction, several issues nevertheless warrant attention. By way of example, it is unclear whether a CICA stay will automatically stay contract performance of a newly awarded task or delivery order. It also is uncertain whether the debriefing referenced in the interim rules qualifies as a "requested and required debriefing" as that term is used in the award of contracts – although the interim rules’ specific reference to FAR 15.506, when read in conjunction with FAR 33.104(c)(1), lends support for this proposition. Moreover, the interim rules do not establish how GAO should value task and delivery orders for purposes of jurisdiction, which could impact whether a particular procurement meets the $10 million threshold. It remains to be seen whether GAO will use the Government's estimate or the protester's or awardee's proposed price in making its determination. Lastly, it is unclear if GAO’s exclusive grant of jurisdiction forecloses completely agency level protests. In this regard, the interim rules’ grant of exclusive jurisdiction to GAO does not appear to apply to protests of scope, period, or maximum value and these protests potentially could still be brought at the agency level or the Court of Federal Claims.

In sum, these and other issues certainly will be ventilated as cases invoking Section 843 of the Act and the interim FAR rules make their way through the GAO bid protest process.

Enhanced Competition Requirements For TOs and DOs Valued in Excess of $5 Million

The interim rules also impose specific procedures that an agency must implement to satisfy its obligation to provide contractors under a Multiple Award contract with a fair opportunity to compete. Specifically, with respect to task and delivery orders valued at over $5 million, an agency must provide (a) notice to contract holders of the proposed task or delivery order that includes a clear statement of requirements; (b) a reasonable proposal response period; (c) the significant evaluation factors and subfactors as well as their relative importance; (d) where award is made on a best value basis, a written statement documenting the basis for award; and (e) an opportunity for a post-award debriefing.

Notably, while these requirements, particularly the post-task or delivery order award debriefing, may alert a contractor to evidence of prejudicial agency error tainting a procurement, a contractor still would not be permitted to protest the award under the new law and interim FAR rules. In addition, since FAR 16.505(b)(5), which contains the provision referencing agency ombudsmen, remains substantively unchanged under the interim FAR rules, it does not appear that the agency ombudsman would be able to take any binding action, even in the face of clear agency error.

What contractors in this predicament should not overlook is the availability of seeking redress by filing a CDA claim for breach of the statutorily based "fair opportunity to compete." Prior to the enactment of Section 843 and the interim FAR rules, a contractor would simply allege, in a more general fashion, that the agency breached the "fair opportunity to compete" clause in the contract. Now, however, a contractor can point to an enhanced list of specific statutory and regulatory requirements that the Agency failed to follow. Therefore, although offerors seeking to challenge agency action in connection with the issuance of task or delivery orders valued between $5 million and $9.99 million may not be able to protest the award decision, they may nevertheless have an enhanced opportunity to recover damages – whether it be B&P costs or, far less likely, lost profits – by filing a CDA claim based on a breach of the enhanced competition requirements.

Limitations On Single Award Task Or Delivery Order Contracts

The interim rules prohibit single award task or delivery order contracts valued at over $100 million (including options) unless the head of the agency authorizes the award. The agency head may only do so upon a determination in writing that: (a) the expected task or delivery orders are so integrally related that only a single contractor can perform the work; (b) the contract provides only for firm-fixed price task or delivery orders; (c) only one source is qualified and capable of performing the work at a reasonable price; or (d) exceptional circumstances justify the public’s interest in awarding the contract to a single source. In the event the agency head relies on the “public interest” exception, Congress must be notified within 30 days. As evident, this prohibition against single award contracts valued in excess of $100 million is designed to encourage the use of Multiple Award contracts and to foster further competition at the task and delivery order level.

Conclusion

The enhanced competition requirements of Section 843 of the National Defense Authorization Act of 2008 are designed to increase oversight, transparency and accountability in the award of task and delivery orders and, in particular, the Multiple Award IDIQ acquisition process. What made Multiple Award IDIQ contracts so popular in the first place was the flexibility and relative ease through which government agencies could issue task or delivery orders as they defined their actual requirements. Now, government agencies will be required to implement additional competitive procedures in connection with the issuance of task and delivery orders valued at over $5 million and also will be vulnerable to bid protests when issuing task and delivery orders valued at over $10 million. The government’s additional responsibilities and its increased exposure, however, must be balanced against the fact that contractors will be afforded with a meaningful “fair opportunity to be considered,” which should also provide the government with a broader range of high quality products and services at a lower cost. Nevertheless, the FAR Councils will be placed on notice shortly about whether the interim rules implementing Section 843 properly balance the government’s and industry’s competing interests. Comments on the interim rules are due November 17, 2008.