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Jacques

Is LBM, Inc. still good law?

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In LBM, Inc., B-290682, Sept. 18, 2002, 2002 CPD ¶ 157, the GAO heard a protest that a task order should have been set aside for small business despite 10 USC 2304c.  In ServeFed, Inc., B-417708, Sept. 18, 2019, the GAO dismissed a protest that a task order award was improper because the requirement should remain in the 8(a) program because of 10 USC 2304c.  Thoughts?

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Regarding the Rule-of-Two, the LBM decision is no longer good law.

The Rule-of-Two comes from FAR 19.502-2.  But orders (or BPAs) against schedule contracts are covered by FAR Subpart 8.4, and the Rule-of-Two in Part 19 doesn't reach to Subpart 8.4.  FAR 8.404(a) says Part 19 does not apply to orders against schedule contracts.  So therefore, the Rule-of-Two (from Part 19) does not apply to orders (or BPAs) against schedule contracts.

Not convinced?  Okay, how about FAR 8.405-5(a) which repeats that Part 19 does not apply to orders against schedule contracts?  FAR 8.405-5(a)(1) says a set-aside decision is at the contracting officer's discretion. 

Here's a very recent GAO bid protest decision that reinforces this principle: American Relocation Connections, LLC; B-416035; May 18, 2018:  "...we conclude that the contracting officer here has discretionary authority to set-aside an order against the FSS, but is not required to do so..."  For another opinion, see also http://smallgovcon.com/gaobidprotests/small-business-rule-of-two-doesnt-apply-to-gsa-schedule/ (citing Walker Development & Trading Group; B-411357; July 8, 2015).

The Rule-of-Two does not reach to fair opportunity considerations under FAR 16.505(b)(1) (fair opportunity).  FAR 16.505(b)(1)(ii) tells us that for orders under the simplified acquisition threshold (SAT), we have to consider all multiple-award contract holders but we don't need to contact them -- 16.505(b)(1)(iii) tells us that for orders over the SAT and up to $5.5 Million, we have to provide a notice (solicitation) to all contract holders offering the required supplies or services -- FAR 16.505(b)(1)(iv) tells us that for orders over $5.5 Million, we have to provide the notice to all contractors.  Under (b)(1), we cannot limit consideration to small business contract holders.

But under (b)(2) (exception to fair opportunity), we can limit consideration to small business contract holders -- see FAR 16.505(b)(2)(i)(F) -- there, we see the same words as in FAR Subpart 8.4 -- a set-aside decision is only at the contracting officer's discretion.  The Rule-of-Two is inapplicable and irrelevant.  Note that this matter of discretion is based on statute.  The Rule-of-Two applies to open market acquisitions under FAR Parts 13, 14, and 15, but it does not apply to task and delivery order acquisitions under schedule contracts under Part 8 or multiple-award IDIQ contracts under Part 16.

FAR 19.502-4 says the same thing.

You can read the GAO's opinion in Edmond Scientific Company; B-410179; November 12, 2014.  There. the GAO explains why the Rule-of-Two does not apply to acquisitions for orders against multiple-award IDIQ contracts, and explains that the statutory grant of discretion to the contracting officer supplants the Rule-of-Two.

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My bad.  I was hoping for thoughts on whether the rationale the GAO used in LBM, Inc. to get around limits on its jurisdiction are now in doubt (either as a result of as reflected in ServeFed).

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33 minutes ago, Jacques said:

My bad.  I was hoping for thoughts on whether the rationale the GAO used in LBM, Inc. to get around limits on its jurisdiction are now in doubt (either as a result of as reflected in ServeFed).

The FAR was changed in 2018 to revise the GAO protest jurisdiction regarding orders under IDQ contracts:

16.505 -- Ordering.

(a) General

(10)

(i) No protest under subpart 33.1 is authorized in connection with the issuance or proposed issuance of an order under a task-order contract or delivery-order contract, except for—

(A) A protest on the grounds that the order increases the scope, period, or maximum value of the contract; or

(B)

(1) For agencies other than DoD, NASA, and the Coast Guard, a protest of an order valued in excess of $10 million (41 U.S.C. 4106(f)); or

(2) For DoD, NASA, or the Coast Guard, a protest of an order valued in excess of $25 million (10 U.S.C. 2304c(e)).

(ii) Protests of orders in excess of the thresholds stated in 16.505(a)(10(i)(B) may only be filed with the Government Accountability Office, in accordance with the procedures at 33.104.

See also https://www.mcguirewoods.com/client-resources/Alerts/2018/5/New-GAO-Protest-Rules-Take-Effect-May-31

 

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As I read B-417708, the GAO simply avoided the 8(a) question, because it dismissed on a procedural ground.  It neither upheld nor overturned the once-8(a)-always-8(a) question.

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59 minutes ago, ji20874 said:

As I read B-417708, the GAO simply avoided the 8(a) question, because it dismissed on a procedural ground.  It neither upheld nor overturned the once-8(a)-always-8(a) question.

Exactly, The GAO avoided getting to the merits on ServeFed because it claimed it didn't have jurisdiction to hear the protest.  However, in decisions like LBM, Inc., which was decided when an earlier version of 10 USC 2304c was in place, the GAO said it HAD jurisdiction (even though the value of the task order was under the jurisdictional threshold at the time).  @napolik seems to be suggesting I should look to changes in the statute to explain the difference between the two decisions as to the issue of jurisdiction, but I haven't had a chance to do that yet.

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Right, the GAO's protest jurisdiction is very narrow for orders against multiple-award IDIQ contracts under the $10 or $25 Million threshold -- only "on the grounds that the order increases the scope, period, or maximum value of the contract."

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15 hours ago, Jacques said:

 @napolik seems to be suggesting I should look to changes in the statute to explain the difference between the two decisions as to the issue of jurisdiction, but I haven't had a chance to do that yet.

Quote

Where, as here, the specific procurement involved in a protest is the issuance of a task order, and the requested remedy would involve termination of the task order, the protest is necessarily “in connection” with that task order. See e.g., Arch Systems, LLC, supra; Adams and Assocs., Inc., supra (where the remedy would have involved cancellation of a task order solicitation); Mission Essential Personnel, LLC v. United States, 104 Fed. Cl. 170, 179 (Fed. Cl. 2012) (in ordering dismissal due to the Court of Federal Claim’s lack of jurisdiction to hear bid protests “in connection with” the issuance of a task order, the Court found it “[p]articularly telling” that the relief sought by the protester would bear directly on the task orders issued by the agency); SRA Int’l, Inc. v. United States, 766 F.3d 1409, 1414 (Fed. Cir. 2014) (citing Mission Essential in noting that the relief sought--rescission of the issued task order--further demonstrated the connection between the agency action challenged by the protester and the issuance of the task order). Accordingly, where the issued task order does not exceed $25 million nor does ServeFed allege that the order exceeds the scope of the underlying IDIQ contract, our Office lacks jurisdiction to consider the protester’s allegations that the agency has violated applicable regulations related to procurements conducted through the SBA’s 8(a) program in connection with the issuance of the order.

ServeFed, Inc., B-417708, Sept. 18, 2019

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3 hours ago, Jacques said:

Exactly, The GAO avoided getting to the merits on ServeFed because it claimed it didn't have jurisdiction to hear the protest.  However, in decisions like LBM, Inc., which was decided when an earlier version of 10 USC 2304c was in place, the GAO said it HAD jurisdiction (even though the value of the task order was under the jurisdictional threshold at the time).  @napolik seems to be suggesting I should look to changes in the statute to explain the difference between the two decisions as to the issue of jurisdiction, but I haven't had a chance to do that yet.

I think you should take a closer look at LBM. The issue was that the requirement was subject to the rule-of-two analysis because it wasn't within the scope of the competition of the IDIQ contract it was being transferred to. That's still good law. We discussed LBM here (you participated):

Delex was the case where the GAO said the rule-of-two applied to task and delivery orders. That's no longer good law due to subsequent statutory and regulatory changes @ji20874  discussed in his post.

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