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bob7947

National Government Services and Full and Open Competition

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Last night, I read a Crowell & Moring LLP entry entitled:  Federal Circuit Clarifies Meaning of “Full and Open,” Limits on Government Ability to Manipulate the Competitive Marketplace, and Contours of FAR Part 6.  Because of the title, I searched and found the 3 decision of the Court of Appeals for the Federal Circuit, the Court of Federal Claims, and GAO.  I copied a highlight from each decision and placed it in a quote box.

I thought this might be of some value to you.

In the Court of Appeals for the Federal Circuit.

National Government Services, Inc. (“NGS”) v. United States (Reversed and Remanded to the Court of Federal Claims)  (5/2/19) (p, 24)

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In sum, the Award Limitations Policy precludes full and open competition by effectively excluding an offeror from winning an award, even if that offeror represents the best value to the government. And while agencies may consider market concerns and exclude a particular source for such reasons, the agency did not follow the congressionally designed procedure for doing so in this case.

As noted above, while we cannot uphold the procedure CMS used to address its concerns regarding overreliance and maintaining a competitive marketplace, we do not suggest that those concerns are improper or that they lacked a rational basis. Moreover, we do not suggest that the general methodology used by CMS, such as the particular market percentages employed, lacked a rational basis. Indeed, CMS may be able to rely in part on the same methodology to explain its rationale for excluding a particular offeror source under 41 U.S.C. § 3303(a) and FAR 6.202. Thus, although NGS has challenged the details of how the workload caps are structured as lacking a rational basis, we leave those issues to be addressed in a case in which CMS has followed the proper procedures to address its overarching market concerns.

For the foregoing reasons, we reverse the decision of the Court of Federal Claims and remand for further proceedings.

National Government Services, Inc. at Court Of Federal Claims  (pps. 27, 29, 35)  Denied  (5/8/18)

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In short, the Contract Award Limitations policy contained within the Jurisdiction 8 and Jurisdiction H solicitations does not restrict “full and open competition.” Any responsible offeror, including MACs that would exceed the workload cap, may submit a proposal in response to either solicitation and receive good-faith consideration for the award.

* * * *

In short, CMS has ample statutory authority for including the Contract Award Limitations policy in the Jurisdiction 8 and Jurisdiction H solicitations.

* * * *

The Contract Award Limitations policy does not restrict full and open competition. In any event, even if the policy restricted full and open competition, CMS had the statutory authority to implement the policy. Further, CMS had a rational basis for treating entire sets of affiliates differently than single entities, imposing a 26% cap on single entities, and imposing a 40% cap on sets of affiliated entities. In other words, CMS’s decision to implement the Contract Award Limitations policy was neither contrary to law nor lacking a rational basis. Therefore, NGS has not prevailed on the merits of its protest.

National Government Services, Inc. at GAO Denied  (1/29/18)

Quote

The above considerations support the reasonableness of the contract award limitation provision.  The record reflects that the requirement is reasonably related to business continuity concerns and maintaining a competitive, dynamic marketplace.  The record is replete with evidence that the agency considered these concerns, including the agency’s issuance of numerous RFIs, dating back to 2010, in which CMS sought and incorporated industry input on the workload limitation and the agency’s concerns.  See, e.g., AR, Tab 2A, RFI (July 22, 2010); Tab 2B, RFI (Aug. 24, 2010); Tab 3A, July 22, 2010 RFI Summarized Responses; Tab 3B, Aug. 24, 2010 RFI Summarized Responses; Tab 2C, RFI (Mar. 19, 2014); Tab 2D, RFI (Dec. 18, 2015); Tab 2E, RFI (Aug. 5, 2016).  While the protester argues that the workload caps “effectively create a partial set-aside for less-qualified offerors,” Comments at 19, it has not shown that the requirements here lack a rational basis or that the agency’s justifications are otherwise unreasonable.  Moreover, as noted above, that certain entities, including NGS, may be precluded from receiving an additional award, does not mean that the contract award limitation provision is objectionable.  See JRS Staffing Servs., supra.  As a result, we find that CMS reasonably concluded that the contract award limitation restriction is necessary to meet the agency’s minimum needs, and is not unduly restrictive.

 

 

 

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Thanks Bob. This is really interesting.  So I suppose CMS is left with only a couple approaches.  Do an analysis and necessary justifications to exclude offerors prior to issuing a solicitation or make market share and associated impact to CMS’s needs part of the evaluation/selection process.

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My original idea for to look for a conflict between the MAC Statute and CICA that the Department of Justice could use in any appeal to the U. S. Supreme Court.  That was dashed by the following agreement--I guess.  No back-up plan.

I have a date with my dentist who is going to maul one of my teeth so I'm short of time.

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The parties in this case agree that CICA’s full and open competition requirement applies to MAC procurements. The parties rely on two provisions in the MAC Statute to show that the MAC Statute requires the use of competitive procedures and the application of the FAR to MAC contracting. See 42 U.S.C. § 1395kk-1(a)(6) (“Except to the extent inconsistent with a specific requirement of this section, the Federal Acquisition Regulation applies to contracts under this section.”); 42 U.S.C. § 1395kk-1(b)(1)(A) (“Except as provided in laws with general applicability to Federal acquisition and procurement or in subparagraph (B), the Secretary shall use competitive procedures when entering into contracts with [MACs] under this section, taking into account performance quality as well as price and other factors.”). In light of the parties’ agreement that full and open competition is required, we do not address this proposition further.

You have to read the Federal Circuit's opinion.  I think it may be saying that the CAPS policy's relative importance was not disclosed in the solicitation.

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At the outset, we have some doubts as to whether the Policy should even be viewed as an evaluation factor. See FAR 15.304. For example, although the Policy is included as part of Section M (titled “EVALUATION FACTORS FOR AWARD”), J.A. 15544, its relative importance in the award decision is undisclosed, see FAR 15.304(d) (requiring that “[a]ll factors and significant subfactors that will affect contract award and their relative importance shall be stated clearly in the solicitation” (emphasis added)). Instead, the solicitation states that “[a]s described in Section M, Evaluation Factors for Award, the Government will evaluate Offerors’ proposals based on cost and price and two (2) non-cost technical evaluation factors: Technical Approach and Past Performance.”  J.A. 15519.

Conspicuously absent from this list of considerations is any mention of the workload caps.

I think the Circuit is also concerned with the exception to full and open used and if one can be used.  Read pages 19 and 20.

The Claims Court is going to have a good time with this.  

Rarely does a plaintiff's argument force me to see its attorney.  This one did.  It's off to the dentist now and the cruel and unusual treatment I anticipate.

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I don’t completely agree with the decision but the Court does make compelling arguments.  I think it will be difficult to overturn.   The decision could be stated better but I think the crux is establishing CAPS at 26% across the board is arbitrary.  CMS didn’t show how it applies uniformly in all instances.  As an example if an offeror is at 27% and otherwise the most favorable, how can they be excluded, especially in some area where CMS data may not show harm?   That supports the notion that it may violate CICA.

Also, If CMS’s position is weakened by not being clear in the solicitation how CAPS applies in section M.  It seeks like the government may not have argued the right points.

A better approach is establishing a factor in section M on achieving that objective and allowing a trade off process to occur using all factors and the Policy’s relative importance disclosed.  I don’t see the Court having an issue with that.

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formerfed:

The case goes back to the COFC because

Quote

In sum, the Award Limitations Policy precludes full and open competition by effectively excluding an offeror from winning an award, even if that offeror represents the best value to the government.  (p. 24)

The COFC is stuck with that.  Then

Quote

As noted above, while we cannot uphold the procedure CMS used to address its concerns regarding overreliance and maintaining a competitive marketplace, we do not suggest that those concerns are improper or that they lacked a rational basis. Moreover, we do not suggest that the general methodology used by CMS, such as the particular market percentages employed, lacked a rational basis. Indeed, CMS may be able to rely in part on the same methodology to explain its rationale for excluding a particular offeror source under 41 U.S.C. § 3303(a) and FAR 6.202.  (emphasis added) (p. 24)

the Circuit Court added the above italicized words for CMS.  However, the Circuit Court noted 41 U.S.C. § 3303(a)(2) which reads 

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(2) Determination for class disallowed.—

A determination under paragraph (1) may not be made for a class of purchases or contracts.

After the COFC sustains the protest, CMS may try to exclude a source but will have to figure out how to exclude a source and comply with 41 U.S.C. § 3303(a)(2).  Then there is the D & F.  The Circuit Court talked about why CMS may not have gone that route saying

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Thus, even if CMS had intended to rely on § 3303(a), CMS violated the FAR in doing so by failing to supply a determination and findings. Indeed, there may have been a reason CMS chose to structure the Award Limitations Policy as a solicitation provision rather than relying on § 3303(a). As the government’s brief tellingly notes, during the time period when CMS used a case-bycase approach to analyze business continuity and competition concerns (prior to development of the Award Limitations Policy), “CMS had been unable to identify factors that would ‘tip the scales’ for an offeror to lose an award and found it difficult to justify a decision to deny an award based upon business continuity and competition concerns under those circumstances.” Government’s Br. 10 (quoting J.A. 12073). But regardless of how difficult it may or may not be to justify excluding a source from competition, this justification is what the FAR requires.  (emphasis added) (p. 23)

CMS will have to figure it out.  Let's assume CMS does figure it out and complies with CICA and the FAR, the Circuit Court added this little zinger

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Thus, although NGS has challenged the details of how the workload caps are structured as lacking a rational basis, we leave those issues to be addressed in a case in which CMS has followed the proper procedures to address its overarching market concerns.  (emphasis added) (p. 24)

After CMS follows the proper procuedures NGS can take on how the workload caps are structured in a future protest.  What's the moral of this story?

  1. Starting and doing something is hard,  
  2. Second-guessing is much easier, but 
  3. Measure your second-guessing by your rank in the hierarchy of second-guessers.

In the second-guessing hierarchy in which the Federal Circuit exists, they have only one higer-ranked second-guesser.  They took full advantage of their status among second-guessers and took this procurement apart.

 

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Bob,

i started out fresh this morning and read the entire GAO, COFC, and Circuit Court decisions.  I really made my prior posts without seeing the entire issues.  The part of the Circuit Court interpretation that might have wide spread implications is items like CAPS being considered as limiting competition rather than being part of the governments needs or requirements. 

This is a mess now for CMS to work out as you noted.  Any attempts for CMS to justify exclusion of sources via the D&F route likely will result in a protest once the notice is published.

The only possible out I can see is CMS making exclusion being part of their overall need similar to capability or experience rather than an evaluation criteria that was tried arguing before.  But it’s probably too late for that now.

 

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They could abandon the policy and see how it goes.  Even if the court were wrong, the source selection would be simpler. 

Stated concerns the policy was addressing were : 1.) business continuity disruption after a disaster, and 2.) less competition over the long term.  If the policy dies, how would ya'll mitigate those concerns?  My immediate response would be 1.) letter contracts or anything else in FAR 18, and 2.) waiting and seeing to see if the marketplace begins to dry up.

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