• Comments Submitted On Interim Rules for Enhanced Competition for Task and Delivery Order Contracts
  • February 2, 2009 | Authors: John W. Chierichella; Marko W. Kipa
  • Law Firm: Sheppard, Mullin, Richter & Hampton LLP - Washington Office
  • On September 17, 2008, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council issued interim rules providing for enhanced competition for task and delivery order contracts.  The interim rules essentially mirrored Section 843 of the National Defense Authorization Act of 2008 (the Act), which went into effect on May 27, 2008, 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).  As was discussed in an earlier blog article with respect to the interim rules when they were initially proposed, the rules targeted 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.

    Comments on the interim rules were submitted by industry and government representatives on November 17, 2008.  Although there was apparent agreement that the interim rules were a step in the right direction, the commentators also expressed some concern and suggested ways in which the rules could be improved or revised.

    First, the commentators appeared generally satisfied with GAO’s exclusive jurisdiction over protests on any ground of task and delivery orders valued at over $10 million.  The commentators requested, however, that certain aspects of the rule be clarified.  The commentators asked that the final rules (1) explicitly state that a protest of a task or delivery order would trigger CICA’s automatic stay of contract performance; and (2) explain how the monetary jurisdictional threshold would be calculated.  With respect to the latter, one commentator recommended that GAO jurisdiction be predicated on the offerors’ prices to prevent agencies from circumventing the jurisdiction threshold and “so that protest jurisdiction is not affected by adjustments made to offers during the course of the evaluation.”  Lastly, one commentator requested that the interim rules be revised to state that the Court of Federal Claims lacks jurisdiction over agency override decisions in protests brought under the new rules.

    Second, the commentators did not take exception to the enhanced competition requirements for task and delivery orders valued at over $5 million.  The primary concerns centered on whether the new “mini-CICA process” would decrease efficiency and increase transaction costs – causing a reduction in the use of multiple award contract vehicles.  Seeking to avoid GAO’s wholesale application of FAR Part 15 standards to multiple award contracts (as occurred in connection with the Federal Supply Schedule program), one commentator also recommended that the final rules state specifically that multiple award contracts are governed by FAR Part 16 and not by the explicit or inherent “standards” in FAR Part 15.  In addition, in light of GAO's recent decision in Delex Systems, Inc., B-400403, Oct. 8, 2008, 2008 CPD ¶ 181, commentators requested that the final rules clarify whether the “Rule of Two” is a "mandatory requirement" for task and delivery order contracts.

    Third, in contrast to the seemingly mild comments aimed at the enhanced competition and bid protest provisions, the commentators directed their primary thrust toward the prohibition against single award task and delivery order contracts valued at over $100 million unless the agency head makes certain findings in writing.  The scope of the commentators’ attack was broad and the commentators requested that the prohibition either should be eliminated, “dramatically modified,” or subject to a sunset provision similar to the one contained in the new bid protest rules.  In particular, the commentators advanced the following arguments, inter alia, in support of their positions:

    • Not all acquisitions or contract-types are suitable for multiple awards and certain exceptions should be carved-out to the general prohibition.
    • Agency head approval is too onerous, especially with no explicit provision for the delegation of this authority.
    • The regulations pertaining to agency head approval should be revised to clarify (a) the point in time during the acquisition process when approval should be obtained; (b) whether single award task or delivery orders valued at over $100 million may be issued for a contract-type other than firm, fixed price; (c) whether the factors the agency head is to consider in granting approval are aligned with the factors the contracting officer is to consider in planning the acquisition; and (d) whether all of the factors the agency head considers in making the determination are conjunctive or disjunctive.
    • The prohibition did not account for the situation where competitive procedures are used but only one offer is received ultimately (i.e., the rule’s language should be changed from no task or delivery order valued at over $100 million "may be awarded" to "may be solicited for single award").
    • The current acquisition planning rules for determining whether a single award or multiple awards should be made are adequate and the new rules would deprive the contracting officer of any meaningful discretion or flexibility in making this determination and vest it solely in an individual who may not be in the best position to make the decision – the agency head.  At a minimum, the final rules should be revised to allow for increased flexibility and the Government to make a single award when it is in its "best interest" to do so.
    • The prohibition against single award requirements contracts should be deleted because the concept is inconsistent with the definition of requirements contracts and is not required by Section 843 of the Act.
    • The reference to FAR 6.3 (Sole Source Procurements) should be eliminated because (a) it is not mandated by Section 843 of the Act, (b) the provisions would be inapplicable to a situation where competitive procedures were used but only one offer was received, and (c) agency head approval standing alone should be sufficient.

    In sum, the FAR Council will take these comments and others under consideration when formulating the final rules.  Although the FAR Council will ultimately accept or reject certain comments, it must reach conclusions that are consistent with Section 843’s statutory mandate.  It may also decide, however, that certain comments will more appropriately be addressed through case law and that the provisions at which those comments were directed do not need to be changed.  Either way, it is clear that, while, for the most part, the interim enhanced competition rules are not viewed negatively by industry or government representatives, the single award prohibition has encountered resistance at this stage of the rulemaking process.  The commentators are discontent with the blanket single award prohibition, which is accompanied by a limited “waiver” provision, and, to the extent it is possible, would like to see the FAR Council provide clarification and increased flexibility in this area.