FAR 13.0:  Scope of part

Comptroller General - Key Excerpts

AeroSage argues that the agency acted improperly in awarding to another vendor after AeroSage submitted the lowest-priced quotation, and committed to meeting all the RFQ requirements, including delivery time. In addition, AeroSage notes that it confirmed its quotation, including its commitment to the delivery terms, within the timeframe established by FedBid in its Bid Validation request. AeroSage argues that the agency acted improperly when it imposed a shorter requirement on AeroSage’s response time after the solicitation closed, and contends that the need for a “short notice” response to a voicemail message was the result of “lack of planning” by the agency. Comments at 2.

The agency does not dispute that AeroSage submitted the lowest-priced quotation, or that the company timely responded to the FedBid Bid Validation request by the 5:00 p.m. deadline established in FedBid’s email to AeroSage. Instead, the agency argues that it “attempted to award” to AeroSage, but that AeroSage did not accept the agency’s offer. AR at 3.

Specifically, the agency notes that the FAR provides that “[w]hen appropriate, the Contracting Officer may ask the supplier to indicate acceptance of an order by notification to the Government, preferably in writing, as defined in 2.101.” AR at 3, citing FAR § 13.004(b). The agency explains:

Here, due to the extremely small time window during which the BOP required delivery, the CO determined it was in the BOP’s best interest to contact the prospective awardee, confirm their intent to deliver the next morning, and ask that they indicate acceptance by notification of the Government. [citation omitted]. [The CO] determined that, due to the urgency of the requirement, this was a better option than sending a purchase order and hoping the contractor would receive it and mobilize in time to render the fuel. [citation omitted].

AR at 4. The agency further maintains that when the CO was unable to contact a representative of the company by telephone, it reasonably interpreted AeroSage’s non-response as a rejection of the BOP’s offer, and issued the order to the next-lowest-priced vendor. Id. at 5.

As a preliminary matter, AeroSage and the agency disagree about both the type of procurement that is being conducted here, and how to characterize the two exchanges that took place on March 12--one between AeroSage and FedBid via an email, and the second between AeroSage and the agency via voicemail messages. The agency contends that, although it made use of the FedBid website, its procurement was a request for quotations, and that AeroSage provided a quote, not a bid. The agency, citing Federal Acquisition Regulation (FAR) § 13.004(a), notes in this regard that a quotation is not a submission for acceptance by the government and does not constitute an offer. See Computer Assocs. Int’l, Inc., B‑292077.3 et al., Jan. 22, 2004, 2004 CPD ¶163 at 3, aff’d., Computer Assocs. Int’l, Inc.--Recon., B-292077.6, May 5, 2004, 2004 CPD ¶ 110 (quotations submitted in response to an RFQ for issuance of order under Federal Supply Schedule are not offers that may be accepted to form a binding contract). Thus, in the agency’s view, it was appropriately seeking to expedite the vendor’s commitment to deliver, and complete the process of offer and acceptance.

While the record reflects that the agency was soliciting quotes and not bids, RFQ at 3; see Kingdomware Technologies, B-405242, Sept. 30, 2011, 2011 CPD ¶ 199 at 2, n.1, the resolution of this issue is immaterial to our analysis. Instead, we simply conclude that the agency unreasonably imposed an additional requirement on this procurement after the solicitation closed.

In hosting this reverse auction on its website, FedBid was acting as an agent for the BOP, and it conducted the auction as described in its Terms of Use. Under the FedBid Terms of Use, a request for “Bid Validation” occurs after a solicitation closes, and represents an attempt to seek affirmative confirmation from the vendor (or seller, or “bidder”) that it will honor its commitment. Terms of Use at 2-3. Of particular importance here, FedBid’s Validation request in this matter expressly sought a confirmation from AeroSage that the fuel delivery required by this solicitation would take place by 9:00 a.m. the next day, or March 13. AeroSage provided that commitment, and did so within the timeframe established by the FedBid Validation request.

While the process established by the BOP’s agent (FedBid) was underway, the CO here imposed a second requirement--in our view, an overlay to the actions underway by FedBid--in which the CO, via voicemail, sought to complete the steps of offer and acceptance (and confirmation of the delivery requirement) during the course of 45 minutes. Thus, the agency’s actions here are analogous to a decision to accelerate the closing time for final revised proposals on the date those proposals are due. This additional requirement for telephonic confirmation was not only unstated in the RFQ, but was inconsistent with the instructions set forth in FedBid’s previously-issued Bid Validation request. AeroSage responded to the Validation request as asked and confirmed its commitment to deliver the fuel the next day; the company had no reason to expect that, separate and apart from this inquiry, there was a later-sent voicemail message waiting that imposed a different requirement (a return telephone call) with a shorter response time.  (AeroSage LLC, B-409627: Jul 2, 2014)  (pdf)

These actions violate a fundamental premise of government procurements: that offerors must be advised of the bases upon which their proposals will be evaluated. H.J. Group Ventures, Inc., B-246139, Feb. 19, 1992, 92-1 CPD ¶ 203 at 4. Specifically, it was unreasonable for the CO to provide AeroSage approximately 45 minutes to respond to a voicemail message, when nothing in the RFQ alerted AeroSage that such a request would be forthcoming and, in fact, AeroSage received (and affirmatively replied to) FedBid’s emailed Bid Validation request with a later deadline. Further, there is nothing in the record suggesting that AeroSage would fail to deliver the fuel as promised: AeroSage submitted a quotation in which it certified that it would comply with all requirements of the RFQ, and the agency points to nothing to cast doubt on AeroSage’s ability or intention to perform.

In short, the agency here chose the method of, and its agent for, meeting this requirement, and FedBid sought confirmation of the very issue (ability to make timely delivery) that the CO sought to confirm via voicemail messages. Given that AeroSage responded as requested by FedBid, we think the CO’s actions improperly imposed an additional unstated requirement in this procurement.  (AeroSage LLC, B-409627: Jul 2, 2014  (pdf)

In reviewing DLA’s obligations in this situation, we look 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. See FAR sect. 2.101. In simplified acquisitions, agencies are only required to obtain competition to the “maximum extent practicable." 10 U.S.C. sect. 2304(g)(3); FAR sect. 13.104; Information Ventures, Inc., B‑293541, Apr. 9, 2004, 2004 CPD para. 81 at 3. 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)." FAR sect. 13.106-1(b)(1). In such cases, we review protests of sole-source determinations--and, as here, the decision to limit the procurement to a brand-name--for reasonableness. Europe Displays, Inc., B‑297099, Dec. 5, 2005, 2005 CPD para. 214 at 3-4.

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. International Filter Mfg., Inc., B-299407, Apr. 10, 2007, 2007 CPD para. 71 at 4. DLA has advised our Office, 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. See FAR sect. 10.001(a)(2)(iii). Therefore, in our view, the protest record for the challenges to RFQs SPM7M1‑08‑U‑J179, SPM7MC-09-T-0151, and SPM7M3‑08‑T-K838 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 2-year term of the 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 our view, neither CPF nor DLA had adequately addressed the implications of this aspect of the record, we 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. Fax from GAO to Parties, Jan. 9, 2009, at 1.

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). Letter from DLA to GAO, Jan. 13, 2009, at 2 (citing DAG sect. 13.9002).[11] In its submission, CPF continued its arguments that the record here shows that the agency has failed to conduct proper acquisition planning. Letter from CPF to GAO, Jan. 14, 2009, at 1‑2.

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. E.g., Global Commc’ns Solutions, Inc., B-299044, B-299044.2, Jan. 29, 2007, 2007 CPD para. 30 at 3 (protest sustained where agency used simplified acquisition procedures for commercial item acquisition that record demonstrated could only reasonably be valued above the applicable threshold).

We see 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, we 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). Cf. Mas‑Hamilton Group, Inc., B‑249049, Oct. 20, 1992, 92-2 CPD para. 259 at 5-6. 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.

FAR sect. 13.003(c)(2); see also 10 U.S.C. sect. 2304(g)(2) (“A proposed purchase or contract for an amount above the simplified acquisition threshold may not be divided into several purchases or contracts for lesser amounts in order to use the simplified procedures . . .").

In our 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 1 month after issuance of the IDPO (which the RFQ described as having a maximum term of 2 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. We therefore sustain this protest.  (Critical Process Filtration, Inc., B-400746, B-400747, B-400750, B-400751, B-400752, B-400785, January 22, 2009) (pdf)

MTB asserts that the reverse auction process established by HUD violates the Office of Federal Procurement Policy Act, 41 U.S.C. 423(a) (2000) (and the implementing provisions of the FAR, 3.104-3, 3.104-4), by disclosing or requiring vendors to disclose their quoted prices. Our Office has not previously considered the question of whether agencies properly may conduct procurements using reverse auction procedures under which participants' prices will be revealed during the auction. We find that the protester has not established--and that there is no other basis for concluding--that HUD's use of reverse auctions in conducting the procurements here is improper. First, as a general matter, while the FAR does not expressly recognize reverse auctions as a permissible procurement vehicle for goods and services, neither does it expressly prohibit the government from using auctions, and FAR 1.102(d) provides that a procurement procedure is permissible where not specifically prohibited. At the same time, HUD's use of reverse auctions is fully consistent with FAR part 13 and promotes the underlying purpose of that regulation. In this regard, FAR part 13, which is generally aimed at streamlining the procurement process, advises agencies to use simplified acquisition procedures where, as here, the value of the acquisition is below the simplified acquisition threshold, FAR 13.002; to make simplified purchases in the most suitable, efficient, and economical manner based on the circumstances of the acquisition, FAR 13.003(g); and to use innovative procedures to the maximum extent practicable. FAR 13.003(h). In addition, agencies are encouraged to use electronic purchasing techniques, FAR 13.003(d), and to maximize the use of electronic commerce when practicable and cost effective. FAR 3.003(f). We thus find no basis to object generally to the agency's utilizing reverse auction procurement procedures. Regarding MTB's specific objection--that the reverse auction here is impermissible because it will result in disclosure of its price--we find no basis for objecting to the agency's approach. MTB is correct that the Act prohibits government officials and those acting on behalf of the government from knowingly disclosing contractor quotation or proposal information before award. 41 U.S.C. 423(a). However, that prohibition is not absolute. Rather, the Act specifically provides that it does not "restrict the disclosure of information to, or its receipt by, any person or class of persons authorized in accordance with applicable agency regulations or procedures, to receive the information," 41 U.S.C. 423(h)(1), and does not "restrict a contractor from disclosing its own quote or proposal information or the recipient from receiving that information." 41 U.S.C. 423(h)(2). We think the price disclosure under HUD's reverse auction procedures falls within the exception language, although we are aware of no judicial or other authoritative interpretation of these provisions. First, under the procedure the agency has established, vendors actually will disclose their own prices--albeit, as a condition of competing--by entering the prices on the auction website; as noted, a vendor's disclosing its own price is not prohibited under the Act. Moreover, even if the price disclosure were considered to be by government officials due to its nature as a precondition to a vendor's competing, the disclosure is pursuant, and integral, to the reverse auction procurement procedures established by the agency; we thus would view the disclosure as being to persons authorized by agency procedures to receive the information, consistent with the exception language. See generally DGS Contract Serv., Inc. v. United States , 43 Ct. Cl. 227, 236 (1999); Ocean Servs., LLC. , B292511.2, Nov. 6, 2003, 2003CPD 206 at 5 (neither the Act nor the FAR establishes an absolute prohibition against disclosure of price information, and both make clear that prices can be disclosed under certain circumstances). (MTB Group, Inc., B-295463, February 23, 2005) (pdf)

Comptroller General - Listing of Decisions

For the Government For the Protester
MTB Group, Inc., B-295463, February 23, 2005 (pdf) AeroSage LLC, B-409627: Jul 2, 2014  (pdf)
Nordic Sensor Technologies, Inc., B-282942, July 23, 1999 Critical Process Filtration, Inc., B-400746, B-400747, B-400750, B-400751, B-400752, B-400785, January 22, 2009 (pdf)


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