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) |
