Large task order contracts now open to protest

Federal contractors who feel they have been shut out of task order competitions on large contract vehicles now can take their case to an independent arbiter.

A provision in the 2008 defense authorization, which went into effect on May 26, gives contractors for the first time the ability to protest individual task orders with the Government Accountability Office. Protests can be filed on any grounds as long as the task order is at least $10 million.

The law also prohibits agencies from issuing task orders in excess of $100 million to a single source unless justified in writing by the agency chief. Possible exceptions can include task orders that are so integrally related that only a single source can perform them, or for cases in which only one contractor is capable of handling the work.

Until recently, contractor protests were limited to individual contract decisions, including competitions in which a select number of firms vie to win a coveted spot on a task order vehicle. Colloquially known as a "license to hunt," gaining a position on these contracts does not guarantee work for a company. The contracting agency has the authority to pick and choose among selected firms for each order.

But, the new law will allow contractors to dig deeper for reconsideration of their product or service, putting the pressure on agencies to choose carefully for each large task order, or risk major delays associated with protests.

"Companies spend a lot of money to get onto these contract vehicles, and if they are not seeing a lot of return on their investments in terms of task orders this could be an avenue that is open to them," said Deniece Peterson, senior analyst with INPUT, an industry consulting firm.

In the nearly four weeks since the law has been in effect, three protests already have been filed, according to Michael Golden, GAO's managing associate general counsel.

While it is unclear how many task order contracts above the $10 million threshold are issued governmentwide, recent data indicate there could be ample opportunities for protests.

For example, since the Homeland Security Department issued its IT-focused Enterprise Acquisition Gateway for Leading Edge Solutions (EAGLE) contract in June 2006, 34 of the 157 task orders -- 21.6 percent -- were above the $10 million mark, according to INPUT.

Less encouraging for contractors is the Air Force's Network Centric Solution contract, which covers a range of information technology, networking equipment and services. Less than 2 percent of the 6,000 orders issued on the 2004 NETCENTS contract have exceeded the protest threshold, INPUT found.

While the new rules likely will boost the number of protests -- some companies include the costs associated with filing a protest in their overall business strategy -- winning a favorable ruling from GAO could prove more difficult.

In the defense bill, Congress spelled out and revised existing guidelines that agencies should follow to keep contractors in the loop about when and why certain task orders are awarded. The rule requires agencies to afford contractors a "fair opportunity to be considered" for orders of more than $5 million.

The fair opportunity rule, which has been on the books -- although rarely enforced -- since the mid-1990s, mandates that agencies provide contractors with a clear statement of needs; a "reasonable" period of time to respond; the disclosure of significant factors and subfactors, including cost or price, along and with their relative importance; a written statement documenting the basis for a best value award; and an opportunity for a post-award debriefing.

If agencies follow these guidelines, they likely will be safe from most, if not all, sustained protests, said Ray Bjorklund, chief knowledge officer for Federal Sources Inc., a market research firm in McLean, Va.

"I don't think the protest rules will have that big of an impact because any task order or [indefinite-delivery, indefinite-quantity] delivery contract vehicle stands by itself as its own degree of competition," Bjorklund said. "If government does a good job of source selection … and if industry does a good job like they would in any other procurement, this won't be an issue. It can be an issue if the government insists on always passing the work back to the same contractor in follow-on modes."

Large, multimillion-dollar task order contract vehicles, such as the Navy's SeaPort or DHS' EAGLE, have grown in popularity in recent years as agencies have turned inward for major services rather than ceding control of the process to another agency's governmentwide acquisition contract.

Contracting offices that rely heavily on GWACs also have faced more scrutiny from Congress and agency watchdogs than those that manage contracts internally, according to Bjorklund. He doubts the fear of protests will stem that trend.

"I don't think [the new law] is going to slow the momentum that much," he said.

In fiscal 2007, task order vehicles accounted for 30 percent of all federal IT spending, a 10 percent increase from one year earlier, Peterson said.

While the use of task order vehicles has begun to grow, much of the decision-making on these contracts occurs away from the prying eyes of Congress or the general public, Peterson said.

"There's a lot of pressure from different points to open this thing up and make it more transparent because we can't stop the tide necessarily," she said. "There's going to be more of these vehicles, and we need to increase that transparency to make sure the competition is fair."