Link: GAO Opinion
Agency: Department of State
Disposition: Protest sustained.
Keywords: FSS contract; Contract line item; Micro-purchase threshold
General Counsel P.C. Highlight: Offeror cannot use a micro-purchase line item in a FSS buy where the actual cost of the line item is incorporated elsewhere and the amount appears to exceed the micro-purchase threshold.
The State Department issued a request for quotations (RFQ) to award a purchase order for gamma ray vehicle and cargo inspection systems. The terms of the RFQ limited potential vendors to those holding a GSA Federal Supply Schedule (FSS) contract for certain required items. In particular, the RFQ included eight contract line items (CLINs) that offerors were required to comply with in order to merit consideration for the purchase order. The initial purchase order was awarded to Rapiscan Systems, Inc., which had submitted the lowest priced, technically acceptable quote. This issuance to Rapiscan was protested by Science Applications International Corporation (SAIC), which alleged that Rapiscan’s FSS contract did not list all eight of the required items at the time the order was issued. This protest was sustained by the GAO, after which the State Department determined that all of the required items were included on SAIC’s FSS contract and issued the purchase order to SAIC. Rapiscan protested this award on the basis that SAIC’s FSS contract did not include three of the required items.
The FSS program, as overseen by GSA, provides agencies with a simplified process for obtaining commonly used commercial supplies and services, but one that satisfies all requirements for full and open competition. When an agency announces its intention to order from an existing FSS contractor, all items quoted and ordered are required to be within the scope of the vendor’s FSS contract. The sole exception to this requirement is for items that do not exceed the micro-purchase threshold of $3,000, because these items can be purchased outside the normal competition requirements in any case.
Rapiscan’s protest challenged SAIC’s compliance with CLIN 7 (freight), a requirement that the State Department conceded was not a part of SAIC’s FSS contract, but was nevertheless proper because the quoted price for this item did not exceed the $3,000 micro-purchase threshold. SAIC’s initial quote indicated that freight was an open market, rather than an FSS contract, item and showed a unit price of $6,832. It then submitted a revised quote that showed the same price, but indicated that the price would be discounted $6,832, resulting in a CLIN 7 price of $0. The quote also indicated that the price for CLIN 7 would be included in the unit price of Item #1, a shift of the initial quoted price from CLIN 7 to CLIN 1. GAO concluded that, while SAIC’s quote showed a price of $0 for freight, that this was deceptive, and that the actual $6,832 price for freight would be folded into the price for CLIN1 and therefore would exceed the $3,000 micro-purchase threshold. Once it was determined that freight was not included on SAIC’s FSS contract, the purchase order could not be properly issued to SAIC.
Based on this determination, GAO sustained Rapiscan’s protest. It then recommended that the State Department cancel the purchase order and, if possible, issue a new order to the vendor next in line under the terms of the solicitation. If there are no acceptable quotations, the State Department is to cancel the RFQ and re-solicit its requirements.