Link: GAO Opinion
Agency: Defense Logistics Agency
Disposition: Protests denied in part, dismissed in part, and sustained in part.
- Protester’s contentions that three agency procurements for brand-name filters improperly limit competition are denied where the record shows that the agency is procuring the brand-name items using simplified acquisition procedures and has adequately justified the use of its brand-name approach under the procedures applicable to simplified acquisitions.
- Protester’s contention that a fourth agency procurement for brand-name filters improperly limits competition is sustained where the procurement history information set forth in the solicitation shows that the value of the requirement is likely to exceed the applicable simplified acquisition threshold of $100,000; accordingly, the streamlined procedures applicable to simplified acquisitions cannot be used for this requirement.
General Counsel P.C. Highlight:
Although CPF filed separate protests challenging the terms of each of these RFQs, the protests all raise the same issue, in essentially identical arguments. CPF argues that FAR sect. 11.104(b), which governs use of brand-name-or-equal purchase descriptions, bars DLA from conducting a procurement for brand-name items without setting forth salient characteristics that would permit broader competition. More broadly, CPF argues that DLA has no basis to limit these procurements to the brand-name items. GAO states that in reviewing DLA’s obligations in this situation, GAO looks first to Part 13 of the FAR, which establishes the procedures for simplified acquisitions. These simplified procedures are designed to promote efficiency and economy in contracting, and to avoid unnecessary burdens for agencies and contractors, where, in cases like these, the value of the acquisition is less than $100,000. In simplified acquisitions, agencies are only required to obtain competition to the maximum extent practicable. In a simplified acquisition, an agency can limit a solicitation to a brand-name item where the contracting officer determines that the circumstances of the contract action deem only one source reasonably available (e.g., urgency, exclusive licensing agreements, brand name or industrial mobilization). In such cases, GAO reviews protests of sole-source determinations–and, as here, the decision to limit the procurement to a brand-name–for reasonableness.
For three of the RFQs, DLA has demonstrated a reasonable basis for using a brand-name specification for these filters. CPF asserts that DLA has no basis for limiting the solicitations to brand-name items, disputes the DLA’s reliance on its database to furnish a justification for a brand-name procurement, and contends that the database is merely descriptive of previous procurement experience; its arguments provide no basis to sustain the protests. A contracting officer may rely on prior procurement history in the conduct of market research. DLA has advised GAO, and the record supports its claim, that DLA does not have sufficient data to consider alternatives to the brand-name items. Under these circumstances, and particularly the fact that these procurements are properly valued at less than $100,000, the FAR permits a streamlined approach to procuring these items. Therefore, in GAO’s view, the protest record for the challenges to RFQs supports the agency’s brand-name only approach.
However, as noted above, RFQ SPM7L4-09-U-A006 provides an estimated quantity of 1,356 filters over the two-year term of the indefinite-delivery purchase order (IDPO). At the lowest historical price listed in the RFQ, the value of this requirement is more than double the simplified acquisition threshold. Since, in GAO’s view, neither CPF nor DLA had adequately addressed the implications of this aspect of the record, GAO asked both parties to address whether DLA’s explanation for its actions was consistent with the requirements of the FAR for requirements of this magnitude–that is, greater than $100,000. In response, DLA argues that the IDPO does not obligate the government to purchase the estimated quantity, and in fact limits purchases to $100,000. DLA argues that this approach is approved by the Defense Supply Center Columbus Acquisition Guide (DAG). In its submission, CPF continued its arguments that the record here shows that the agency has failed to conduct proper acquisition planning.
Although DLA argues that its actions are consistent with the statutes and regulations applicable to simplified acquisitions, the use of these procedures must be based on a reasonable expectation that the value of the requirement is at or below the simplified acquisition threshold. Where an agency uses simplified acquisition procedures to meet requirements that should reasonably be valued above the simplified acquisition threshold, our Office will sustain the protest. GAO sees no basis for DLA’s approach of using simplified acquisition procedures where its estimated requirement for these filters cannot reasonably be expected to fall within the applicable threshold ($100,000) for a simplified acquisition of this nature. Although DLA responds that the use of simplified acquisition procedures is appropriate here because it limits the purchase under each of these IDPOs to $100,000, regardless of the value of the estimated quantity, GAO think DLA is, in essence, splitting these orders to allow the use of simplified acquisition procedures, which is expressly barred by FAR sect.13.003(c)(2). Under this provision, agencies are advised: “Do not break down requirements aggregating more than the simplified acquisition threshold . . . into several purchases that are less than the applicable threshold merely to– (i) Permit use of simplified acquisition procedures.”
In GAO’s view, DLA is using the streamlined features of simplified acquisitions where the solicitation on its face demonstrates that the use of those procedures is improper. Indeed, DLA’s experience under the resulting IDPO demonstrates this point: less than one month after issuance of the IDPO (which the RFQ described as having a maximum term of two years), DLA had already reached the $100,000 ceiling. In addition, the procurement history for this part, and the estimated quantity identified in the solicitation, strongly suggest that DLA will make additional purchases to meet its continuing needs. GAO therefore sustains this protest. The protests challenging RFQs SPM7AX-08-X-0508 and SPM7MC-09-T-0468 are dismissed. The protests challenging RFQs SPM7M1-08-U-J179, SPM7MC-09-T-0151, and SPM7M3-08-T-K838 are denied. The protest of RFQ SPM7L4-09-U-A006 is sustained.