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Requirement of Active GSA Contract - HP Enterprise Protest


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#1 Pennybeth

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Posted 10 April 2012 - 12:30 PM

I have read with interest the GAO denial on 12/14/2011 of the protest filed by HP Enterprise Services and the subsequent action by the Court of Federal Claims to essentially reverse that GAO decision (granting the plaintiff a judgment on the record and enjoining the Air Force from proceeding with the award of a TO under a GSA schedule contract). At issue was the statement by the Air Force, in response to a contractor's question, that "In order to be eligible for award the Contractor's GSA Schedule contract has to still be in an active period by the time the option to extend the term of the proposed contract Task Order will be exercised." [can we all agree this quote is a great sample of how not write an answer to a contractor question? I especially love the invention of the new term "an active period" by the person who answered the question - clear as mud]

Two questions keep rolling around in my mind and would love to hear views from the forum members:

(1) The Court of Federal Claims found there were several reasonable interpretations of the murky language quoted in the first paragraph of this post - one reasonable interpretation by the government, one reasonable interpretation by the contractor and one unreasonable interpretation by the contractor. I am pretty sure I understand the reasonable interpretation proposed by the government (if the GSA contract was scheduled to expire, and the contractor didn't have a signed mod in hand from the GSA exercising the option to extend the contract, then the contractor didn't meet the requirement to show before award it would have an "active" contract as of the date that the option was likely to be exercised). What I am not getting is the distinction the court is making between the plaintiff's two possible interpretations of the language, one of which the court finds unreasonable and one which the courts finds reasonable. The unreasonable interpretation appears to be the view that all the language requires is for the contractor to show that its GSA FSS contract has an option that, if exercised by GSA, would extend its contract's period of performance to cover the expected date of option exercise. The court states that interpretation is too lenient to be reasonable. The plaintiff's reasonable interpretation appears to be that, consistent with a cite by the court to the decision in Knoll, Inc. (B294986.3), "FSS contracts are valid for purposes of award of a contract utilizing a GSA Schedule as long as there are option periods that can be exercised that would cover the contract award period, and there is no indication that the FSS contract option will not be exercised." Is the distinction between these two different interpretations that, in the second case, there is a requirement that there be no indication that the option period of the offeror's GSA Schedule would not be exercised? How do you prove there is no indication that the option period of the offeror's GSA Schedule would not be exercised? Would the government need to show positive evidence that the GSA had made a determination not to exercise the option? Would a statement from GSA that it might or might not exercise the option be sufficient? Or is there more to the second interpretation than I am seeing? Is this interpretation really that much less lenient that the so-called "lenient interpretation" presented by the plaintiff?

(2) GAO took the view that there was nothing wrong with the Air Force requiring that the contractor have an "active" GSA contract at the time that the option would be exercised. And, although GAO agrees that the language used was awkwardly drafted, the GAO found the RFQ required the the contractor demonstrate, before award, that it would have such an "active" contract at the time of option exercise [proving a future event???]. The COFC doesn't address this issue, having made its decision based on the fact that the defendant had a reasonable interpretation of the language that wouldn't require affirmatively demonstrating that the contract would be "active". SO, HERE IS MY QUESTION - what legitimate purpose is served by excluding from the competition contractors whose contracts have an expiration date after the award date of the TO, but before the expected date of exercise of a TO option? Is there still a defensible argument that the expiration of a GSA FSS Contract will prevent exercise of options included in Task Orders that were issued under that GSA FSS Contract?

#2 Vern Edwards

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Posted 11 April 2012 - 08:50 AM

Two questions keep rolling around in my mind and would love to hear views from the forum members:

(1) What I am not getting is the distinction the court is making between the plaintiff's two possible interpretations of the language, one of which the court finds unreasonable and one which the courts finds reasonable... Is the distinction between these two different interpretations that, in the second case, there is a requirement that there be no indication that the option period of the offeror's GSA Schedule would not be exercised?


Yes. The distinction is the absence of any reasonable indication that the option will not be exercised.

How do you prove there is no indication that the option period of the offeror's GSA Schedule would not be exercised?


You don't have to "prove" it. You only have to show a reasonable likelihood. You do that by asking GSA whether there is any reason to believe that the option will not be exercised. In this case it is clear from GSA responses to questions that it planned to exercise the option when the parties concluded negotiations. In light of that response, what indication would there be that the option would not be exercised?

Would the government need to show positive evidence that the GSA had made a determination not to exercise the option?


No. Read the decision again. A statement that it was not likely to exercise the option would have been enough.

Would a statement from GSA that it might or might not exercise the option be sufficient?


"Might" is a little iffy. However, a statement from GSA that it planned to exercise the option, or that it saw no reason why it wouldn't, ought to be enough.

Or is there more to the second interpretation than I am seeing? Is this interpretation really that much less lenient that the so-called "lenient interpretation" presented by the plaintiff?


As far as the COFC is concerned, the second interpretation is less lenient. That's clear from the decision, don't you think?

(2) GAO took the view that there was nothing wrong with the Air Force requiring that the contractor have an "active" GSA contract at the time that the option would be exercised. And, although GAO agrees that the language used was awkwardly drafted, the GAO found the RFQ required the the contractor demonstrate, before award, that it would have such an "active" contract at the time of option exercise [proving a future event???]. The COFC doesn't address this issue, having made its decision based on the fact that the defendant had a reasonable interpretation of the language that wouldn't require affirmatively demonstrating that the contract would be "active". SO, HERE IS MY QUESTION - what legitimate purpose is served by excluding from the competition contractors whose contracts have an expiration date after the award date of the TO, but before the expected date of exercise of a TO option? Is there still a defensible argument that the expiration of a GSA FSS Contract will prevent exercise of options included in Task Orders that were issued under that GSA FSS Contract?


The Air Force's requirement clearly arose from its attempt to understand GSA's rules. It imposed that requirement because it thought ti had to and wanted to make that clear. As for "proving" a future event, it is clear from both decisions that demonstration or proof was not required, just a showing of a reasonable likelihood.

I have three observations. First, the Air Force acted incompetently in this case. "Active period" was stupid terminology. All IDIQ contracts have two periods: (1) the ordering period and (2) the period during which the contractor can be required to perform. The ordering period is usually stated in FAR 52.216-18, paragraph (a), and the performance period is stated in 52.216-22, paragraph (d). Common sense dictates that the performance period should continue beyond the ordering period. Which period was the Air Force talking about? GSA has obtained deviations to both clauses and I think it uses the term "sales period" instead of ordering period and it has revised the wording of 52.216-22, paragraph (d).

Second, this case demonstrates the folly of calling or emailing people you don't know seeking answers to important questions. I detest so-called "professionals" who ask strangers important questions about rules without first researching the rules on their own. Reagan said, "Trust, but verify." I say to hell with trust. Go directly to verify. The best way that I know to get a wrong answer to an acquisition question is to ask the average contracting officer. As far as I am concerned, a contract specialist or contracting officer who asks others about the rules instead of doing their own research and then talking to people who are known to be reliable has no professional self respect. Looking it up, reading it, and then asking for help in interpreting and applying is one thing, and entirely respectable. Asking for the rule without doing the groundwork is another thing entirely, and is professionally disgusting.

Third, GSA provides a good, even essential service, but its rules, procedures, and contracts have become too damned complicated, which is why I usually don't answer questions about GSA schedule contracts. I won't answer a question about rules without checking first and I just don't have time to wade through all the rules, instructions, and FAR deviations that GSA has created in its effort to be all things to all buyers. Look at the questions posted here at Wifcon Forum -- clear evidence that GSA's rules, procedures, and contract terms are too complicated. The GSA Administrator ought to have a simplification platoon, whose mission is to run patrols looking for complexity and destroying it wherever it is found. Unfortunately, the new Administrator is going to spend too much time worrying about conferences, award programs, and travel rules.




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