In Distributed Solutions, Inc. v. United States, the Court of Federal Claims reaffirmed its position that, absent proof that the prime contractor is acting as the “purchasing agent” for the federal government, subcontractors do not have a right to protest procurement decisions on federal government subcontracts. In this matter, the General Services Administration (“GSA”) awarded indefinite delivery/ indefinite quantity Millennia Government Wide Acquisition Contracts (“GWAC”) to nine prime contractors, under which they would provide various IT technical services and support. Government agencies could obtain these services by issuing task orders.

In November 2003, the United States Agency for International Development (“USAID”), issued a task order to SRA International, Inc., (“SRA”) under this GWAC contract. The task order required SRA to “[s]upport USAID’s acquisition and assistance function used for contracts and grants worldwide,” among other things.

With the assistance of SRA, pursuant to the task order USAID issued an RFP “to research possible commercial off-the-shelf (“COTS”) Acquisition and Assistance (“A&A”) solutions for JAAMS” for development of a comprehensive acquisition and assistance management system. The RFP specifically noted that the solicitation was “for market research only” and that the RFP would “not result in a contract award.”

USAID received several proposals from interested vendors, but announced that the government had “decided to pursue [are] alternative course of action.” USAID determined that “based on the complex business and technical environment, SRA…would be used to integrate the four primary Acquisition and Assistance functions….” As a result, SRA, in turn, issued an RFP soliciting vendors to serve as subcontractors to it to “provide software product(s) and services to support the integration effort as requested and funded under the direction and management of SRA.”

After receiving several proposals from vendors who had responded to USAID’s RFP, SRA executed two subcontracts with two third-party vendors. The statements of work both indicated that, “the cooperative team of USAID, SRA, and the subcontractor will integrate the software. However, only SRA is authorized to direct the subcontractor with respect to the obligations, responsibilities, terms, and conditions the subcontract awarded.”

STR, L.L.C., which had submitted its response to the SRA RFP, but was not selected, protested the SRA subcontract awards to the Government Accountability Office (“GAO”). GAO dismissed the protest concluding that the “procurement here was not ‘by the government’ and that the procurement at issue was not conducted by a federal agency or a contractor acting as a procurement agent for a federal agency and thus not subject to our jurisdiction.”

STR appealed GAO’s decision to the United States Court of Federal Claims (“COFC”) . The government sought to dismiss the action for lack of jurisdiction under 28 U.S.C. § 1491(b), which grants the COFC jurisdiction to decide protests arising from procurement decisions made by federal agencies. The COFC affirmed GAO’s decision, concluding that although USAID and Department of State (“DoS”) officials participated in the evaluation of the vendors, SRA was not operating as a purchasing agent for the government in these transactions such that a “Federal agency procurement actually occurred” because, as the court reasoned, there was “no direct USAID or DoS liability to the vendors. SRA retained the sole responsibility to direct the vendors in their work under their subcontracts and payments to the subcontractors were to be made by SRA.”

As such, the court concluded that since the “subcontracts at issue were not awarded by, or on behalf of, a Federal agency,” the court has no jurisdiction to hear this matter. [No. 06-466C (May 21, 2007)]