FAR 16.504 (c):  Indefinite Quantity Contracts - Multiple award preference

Comptroller General - Key Excerpts

New The RFP anticipated the award of approximately four indefinite‑delivery, indefinite-quantity (IDIQ) contracts based on a performance-price trade-off, under the commercial item and negotiated contracting procedures of Federal Acquisition Regulation (FAR) Parts 12 and 15. RFP amend. 2 at 6.

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In addition to the initial awards that were anticipated, the solicitation provided for the possibility that the agency could expand the existing pool of IDIQ contract holders. RFP at 52. In this regard, the RFP stated that [United States Transportation Command] TRANSCOM could reopen the solicitation if there was a shortfall in meeting the requirements among existing IDIQ contract holders, or if it was in the agency’s best interest to add new contractors to the original IDIQ contract pool.

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The agency received multiple proposals by the March 16 closing date, including those from National and United. Dismissal Request at 2. TRANSCOM made five contract awards on June 11, with National being among the awardees selected. Id. The agency awarded a sixth IDIQ contract to United on July 17. Id. On July 27, National filed a protest challenging TRANSCOM’s award to United, arguing that the terms of the RFP prevented the agency from making a sixth award

The substance of National’s instant protest generally repeats the challenges it raised in its prior protest to our Office. The protester again argues that award of a sixth contract to United is improper because the RFP terms anticipated approximately four contracts. National also asserts that because United’s initial contract was not awarded until July 17, 2015, which was after the initial five awards were made on June 11, the award to United is improper because TRANSCOM failed to follow the RFP’s reopening procedures. Finally, the protester argues that the agency’s evaluation of United’s past performance was unreasonable because National alleges that United has no prior relevant experience with the transportation requirement being acquired under the solicitation.

The agency argues that National’s protest should be dismissed because it is not an interested party to pursue the protest. National contends that it is an interested party to bring its protest. In this regard, National alleges that its direct economic interest will be adversely affected by the award of United’s contract because the addition of a sixth awardee will “reduce the total volume of work solicited under task orders available for National.” Protest at 2. We agree with the agency for the reasons explained below.

Under the bid protest provisions of the Competition in Contracting Act of 1984, 31 U.S.C. §§ 3551-3556, only an “interested party” may protest a federal procurement. That is, a protester must be an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of a contract or the failure to award a contract. Bid Protest Regulations, 4 C.F.R. § 21.0(a)(1). Determining whether a party is interested involves consideration of a variety of factors, including the nature of issues raised, the benefit or relief sought by the protester, and the party’s status in relation to the procurement. Four Winds Servs., Inc., B-280714, Aug. 28, 1998, 98-2 CPD ¶ 57. A protester is not an interested party where it would not be in line for contract award were its protest to be sustained. Id.

Under the RFP’s terms, IDIQ contract holders are guaranteed a minimum quantity of orders valued at no less than $2,500 and a fair opportunity to compete for future task orders issued by TRANSCOM. RFP at 3-4, 87; RFP, attach. No. 3, Fair Opportunity Process, at 1. National’s protest did not explain why it believes that the addition of United’s contract will result in National receiving a volume of orders valued less than its minimum guarantee or why a sixth award will prevent National from competing for future task orders. In this regard, the protester has not credibly alleged that its contract would be reduced, increased, or otherwise affected by the agency’s decision to award a sixth contract. Furthermore, National has already received an award here, and the RFP terms expressly prohibit existing IDIQ contract holders from being eligible for additional awards. RFP at 52. Under circumstances such as these, and where the solicitation contemplates multiple awards, an existing contract awardee is not an interested party to challenge the agency’s decision to award another contract. See Recon Optical, Inc.; Lockheed-Martin Corp., Fairchild Sys., B‑272239, B-272239.2, July 17, 1996, 96-2 CPD ¶ 21 at 3-4 (to constitute a cognizable protest when a solicitation contemplates multiple awards, an existing contract holder must credibly allege direct economic harm in order to challenge the award of another contract).  (National Air Cargo Group, Inc. B-411830.2: Mar 9, 2016)  (pdf)

Comptroller General - Listing of Decisions
For the Government For the Protester
New National Air Cargo Group, Inc. B-411830.2: Mar 9, 2016  (pdf)  

U. S. Court of Federal Claims

FAR 16.504(c)(1)(ii)(D)(1)(iii) No task or delivery order contract in an amount estimated to exceed $103 million (including all options) may be awarded to a single source unless the head of the agency determines in writing that—Only one source is qualified and capable of performing the work at a reasonable price to the Government.

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CWT contends that GSA’s decision to award only one contract violated FAR 16.504(c), which prohibits an agency from awarding a major IDIQ contract to a single source, because Concur is not the only source qualified and capable of performing the work at a reasonable price. CWT asserts that GSA misunderstood FAR 16.504(c)(1)(ii)(D) when it evaluated proposals and selected Concur for a single award because GSA mistakenly believed that a dual award was only a “preference.” For instance, CWT points to the acquisition plan in which GSA stated that there is a “strong preference for choice among providers . . . and for multiple awards.” Tab 118 at AR 6576. Further, CWT argues that GSA’s decision to follow FAR 16.504(c)(1)(ii)(A) was unlawful because FAR 16.504(c)(1)(ii)(D) clearly states that “[n]o task or delivery order contract in an amount estimated to exceed $103 million (excluding options) may be awarded to a single source unless the head of the agency determines in writing” that one of the specific narrow exceptions is present, including that there is only “one qualified and capable source.”

CWT argues that while its proposal contained weaknesses, its proposal did not fail to conform to the material terms and conditions of the RFP. It claims that the only issue that led to its Marginal rating was that its proposal did not adequately demonstrate that its system had finalized all of the outstanding items. CWT argues that none of the case law cited by GSA or Concur pertaining to “unacceptable” proposals is applicable to this protest because those cases do not involve FAR 16.504(c)(1)(ii)(D). CWT asserts that because the government admits that it did not make any finding that CWT was not qualified and capable of performing the work, this protest should be sustained because FAR 16.504(c)(1)(ii)(D) requires the government to issue a valid determination that “[o]nly one source is qualified and capable of performing the work” in order to legally authorize the award of only one master IDIQ contract.

The government argues in response that it did not make a finding of whether CWT, as a company, was qualified and capable of performing the work, but the government did find that CWT’s FPR did not meet government requirements. Further, defendant notes that CWT corrected some, but not all, of the significant weaknesses and chose not to correct its deficiency. As a result, defendant argues that CWT’s FPR did not meet the RFP requirements, “which was consistent with a rating of ‘Marginal’ and, therefore, was not technically acceptable.” Cross-Mot. at 40. Defendant contends that because CWT’s proposal was not technically acceptable, GSA could not award CWT an ETS2 contract as such an award would violate the procurement statutes and regulations and would place significant risk upon the government that the awardee may not be able to perform the contract. Moreover, defendant points out that the SSAC did conclude that CWT is not “currently qualified.” Tab 103 at AR 5301.

c) GSA Did Not Satisfy FAR 16.504(c)(1)(ii)(D)(1)(iii)

As discussed above, FAR 16.504(c)(1)(ii)(D) permitted GSA to award one IDIQ contract valued at greater than $103 million where there is only one source qualified and capable of performing the work. This bid protest appears to be a case of first impression since there are no reported decisions addressing this FAR exception.

Here, instead of discussing in the D&F whether CWT was qualified and capable of performing the ETS2 work, the government’s D&F arrives at the conclusion that Concur is the only qualified and capable source because CWT received an overall rating of Marginal. That is, the government essentially conducted a best value tradeoff, which was inappropriate for purposes of FAR 16.504(c)(1)(ii)(D)(1)(iii). In the D&F, the government compares the relative strengths and weaknesses in the offerors’ proposals under the RFP’s evaluation criteria and total prices, as well as the perceived general risks and benefits of a single versus dual award. Thus, GSA selected Concur on a best value basis, which was inconsistent with what FAR 16.504(c)(1)(ii)(D) required. Moreover, the assignment of a Marginal rating to CWT meant that its proposal did not “meet Government requirements necessary for acceptable contract performance, but issues are correctable.” Tab 2 at AR 767, 774 (emphasis added). The government points to the D&F, in which the contracting officer stated that CWT was found “not technically acceptable for contract award.” Tab 104 at AR 5405. Nonetheless, the government assigned CWT a Marginal rating, which was not consistent with a finding that CWT, either the company or its FPR, was not qualified and capable of performing the ETS2 work at a reasonable price, but rather was a finding that CWT’s proposal did not meet “[g]overnment requirements necessary for acceptable contract performance, but issues are correctable.” Tab 2 at AR 767, 774. A Marginal rating was different from an Unacceptable rating, which would be assigned where the proposal contained “numerous weaknesses and/or deficiencies, or contains weaknesses and/or deficiencies that are not correctable,” and the government determined that the offeror would be “unable to successfully complete the required tasking.” Id.

Moreover, the contemporaneous record appears to conflict with any alleged determination that CWT is not qualified and capable of performing the work. CWT was awarded a strength because “[t]he experience and capabilities of the E2 Solutions team, with CWTSatoTravel as the prime, and Northrop Grumman Corporation (NGC), . . . are unmatched by any other potential Offeror.” Tab 121 at AR 7240. While CWT received this strength under the past performance factor, the government did state that the CWT team’s “experience and capabilities” are unmatched by any other potential offeror. Therefore, the government was not speaking simply of CWT’s past capabilities. The government gave CWT an Acceptable rating under the past performance factor because CWT’s “proposal meets the performance and technical capability requirements defined in the [Statement of Work]. The SSEB is confident that the Offeror can successfully achieve the requirements in the [Statement of Work] if the technical approach proposed is followed.” Id. at AR 7419. CWT also received the following strength under the technical factor, Project Management Plan:

The Offeror states that “by combining CWTSatoTravel and NGC’s resources, the client agencies currently serviced under NGC will have the expertise of resources currently servicing their account.” The knowledge they have of their ETS1 clients will minimize the amount of time during the preparation phase and assist in the setup within the Offeror’s ETS2 solution. This shows potential for reducing migration tasks or shortening the time to perform RFP requirements to meet goals and to minimize the disruption, costs, and time required to integrate agency systems to ETS2.

Id. at AR 7411.

With respect to the allegation that CWT is not qualified and capable of performing the work at a “reasonable price,” the record here also is inconsistent. In the SSDD, the government states that CWT “was not competitive when compared” to Concur, and CWT’s “price proposal was the highest priced offer.” Tab 103 at AR 5295. Then, the SSDD reflects that the government performed a best value tradeoff analysis, stating “it is not reasonable to pay $231,326,712 more for a Marginal proposal with significant weaknesses and a security deficiency.”
Id. at AR 5296 (emphasis omitted). However, as stated above, it was improper to make a single award based on a best value tradeoff approach. The government additionally states that “some of CWTSatoTravel’s price assumptions [were] reasonable, representing minimal risk to the Government,” but “11 of 31 price assumptions represented cost and/or performance risk to a degree that was considered unreasonable as these assumptions could result in either a refusal to perform or delay in performance.” Id. at AR 5297. However, the D&F reflects that the government only selected Concur for award because it had a higher rating and lower relative price, not because CWT’s price was “unreasonable.” See Tab 104 at AR 5406 (“The Government determines that Concur Technologies, Proposal B, is superior to CWTSatoTravel’s proposal in overall technical merit and is lowest in evaluated price, representing less risk of performance issues at a more favorable price.”). Finally, the SSDD reflects that the government believed that “[a]ll proposals had both reasonably and unreasonably priced CLINs, and “[w]hile a few of the prices for individual CLINs were determined to be unreasonable, the overall price offered was determined to be fair and reasonable for all three offers, despite the presence of these unreasonably priced CLINs.” Tab 103 at AR 5288.

On the one hand, the RFP did require the agency to make a best value determination. On the other hand, the FAR nonetheless allowed the agency to award to a single offeror only upon determining that there is a single source that is qualified and capable of performing the work at a reasonable price. Here, the record demonstrates that the agency used a best value determination when it decided to award the contract to a single offeror. That is, the agency selected Concur because it was technically superior and priced lower than CWT. Such determination is inconsistent with FAR 16.504(c)(1)(ii)(D).

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For the reasons set forth above, it is hereby ORDERED:

1. The court DENIES defendant’s motion to dismiss.

2. CWT’s Motion for Judgment on the Administrative Record is GRANTED. The General Services Administration, its officers, agents, servants, employees and representatives, and all persons acting in concert and participating with them respecting the subject procurement, are ordered to conduct a reevaluation consistent with FAR 16.504(c), and in particular FAR 16.504(c)(1)(ii)(D)(1)(iii), and this court’s decision. In the interim, the contract award to Concur shall remain in full force and effect.

3. The court DENIES defendant’s and defendant-intervenor’s cross-motions for judgment upon the administrative record.

(CW Government Travel, Inc., d/b/a CWTSatoTravel v. U. S. and Concur Technologies, Inc., No. 12-708C, April 11, 2013)  (pdf)

Under FAR sect. 16.504(c)(1)(i), a contracting officer must, to the maximum extent practicable, "give preference to making multiple awards of indefinite quantity contracts under a single solicitation for the same or similar supplies or services to two or more sources." The FAR also sets out a number of conditions under which the multiple award approach is not to be used, two of which are relevant to the protest here: where the expected cost of administration of multiple contracts outweighs the expected benefits of making multiple awards, or where multiple awards would not be in the best interests of the government. FAR sect. 16.504(c)(1)(ii)(B)(3), (6). The contracting officer is required to document the basis for the decision to use (or not use) multiple awards, FAR sect. 16.504(c)(1)(ii)(C), and we will review the contracting officer's determination for reasonableness. One Source Mechanical Servs., Inc.; Kane Constr., B-293692, B‑293802, June 1, 2004, 2004 CPD para. 112 at 5. Where we conclude that the rationale advanced by the contracting officer is not sufficient to overcome the preference for multiple awards, we will sustain the protest. Id.

Here, the contracting officer, in reliance on the two exceptions to the use of multiple contracts referenced above, determined that award of multiple contracts was not appropriate because (1) the cost of administering multiple contracts outweighed the expected benefits of making multiple awards, and (2) multiple awards would not be in the government's best interest. Contracting Officer's Determination, June 26, 2010, AR, Tab 5.4. We do not think that the record supports these conclusions.

The agency explains that the current solicitation is a follow-on to four predecessor contracts that spanned approximately 20 years, first issued in response to the 1986 enactment of legislation requiring the preparation of toxicological profiles of hazardous substances. According to the agency, it awarded a total of five contracts under the first solicitation in 1988, and many of the toxicological profiles produced under the contracts were unacceptable. The agency attributed the unacceptable quality of the profiles to problems stemming from the use of multiple contractors, specifically, inaccurate scientific evaluations, differing interpretations of the specifications by the different contractors, and inconsistency in the levels of experience and sophistication among the individuals performing similar tasks for different contractors. Agency Memorandum of Law at 3-4. The agency noted that the performance quality issues had resulted in significant delay and had required significant additional efforts by the agency to correct problems. Specifically, the agency's Division of Toxicology had found it necessary to create a separate quality assurance branch, consisting of approximately 12 employees and four contract staffers, to review and evaluate the profiles for accuracy and consistency. During this first 5-year procurement cycle, the agency concluded that the award of multiple contracts was not an appropriate acquisition vehicle for the requirement; as a result, in the second 5-year cycle, the agency awarded only a single contract and disbanded its internal quality assurance branch. Thereafter, the agency awarded single contracts for the third and fourth procurement cycles as well.

The agency's argument in support of the decision to make a single award under the RFP here, as we understand it, is that the award of multiple contracts will require it to reestablish a quality assurance branch to ensure the consistency and accuracy of the profiles submitted by the various contractors; thus, in the agency's view, the expected costs of administering multiple contracts will outweigh the expected benefits. We are not persuaded by the agency's argument.

First, it simply is not clear from the record that the problems that the agency encountered during the first procurement cycle (and which it has relied on as its basis for awarding only a single contract during every subsequent 5-year procurement cycle) were a result of its decision to award multiple contracts, as opposed to problems attributable to the novelty and complexity of the requirement when the first awards were made--that is, problems that it might well have encountered even if only a single contract had been awarded. Second, we see no basis to conclude that, as result of its experience in administering contracts for preparation of the profiles over the course of the past 20 years, the agency is not now in a position to define the technical requirements for the profiles with sufficient precision to eliminate the issues of inconsistency stemming from differing interpretations of the specifications by different contractors that it encountered under the 1988 procurement.

While the agency cites inaccurate scientific evaluations and differing levels of training and experience among staffers performing similar tasks for different contractors as two of the three factors contributing to the submission of unacceptable profiles during the first procurement cycle, it has failed to establish a correlation between the number of contractors and the likelihood of an inaccurate scientific evaluation. Moreover, we see no reason to think that there could not be as much variability in terms of training and experience among staffers working for a particular contractor as among staffers working for different contractors--and to the extent that contractor reliance upon underqualified staffers is a matter of concern to the agency, this is a matter that can be addressed by including personnel qualification requirements in the RFP.

In sum, we conclude that the rationale advanced by the agency lacks adequate support to overcome the preference for multiple awards. Accordingly, we sustain the protest. We recommend that the agency reconsider whether, in accordance with FAR sect. 16.504(c)(1)(ii)(B), the RFP here should be competed on a multiple-award basis, and that the agency document a well-supported rationale for its conclusion. We also recommend that the protester be reimbursed the reasonable costs of filing and pursuing the protest, including reasonable attorneys' fees. 4 C.F.R. sect. 21.8(d)(1) (2010). The protester's certified claim for costs, detailing the time spent and the costs incurred, must be submitted to the agency within 60 days after receipt of this decision.  (Information Ventures, Inc.,  B-403321, September 27, 2010)  (pdf)

In summary, we conclude that the contracting officer’s rationale for employing the exceptions under FAR § 16.504(c)(1)(B) is not adequately supported. Therefore, our Office concludes that the Corps failed to comply with the FAR in determining whether these solicitations should have been issued on a multiple-award basis.  (One Source Mechanical Services, Inc.; Kane Construction, B-293692; B-293802, June 1, 2004)  (pdf)

Finally, even if the CO's failure to consider the benefits of multiple awards does not contravene the applicable provisions of FAR 16.504(c)(1), it renders the analysis unreasonable, especially in light of the dubious findings regarding the supposed benefits of a single award. According to the CO, multiple awards are not in the government's best interests because a single award will: 1) ensure that the contractor receives a substantial line commitment and revenue guarantee which is necessary to offset investment risks and attract competitors; 2) reduce usage charges; 3) bring greater economies of scale; and 4) reduce coordination difficulties and administration costs associated with multiple awards. In summary, by failing to consider the benefits of multiple awards, the CO's analysis violates applicable provisions of FAR 16.504(c)(1). The government's contention that the single-award structure of the New York MAA will achieve the same benefits as multiple awards without the costs is unreasonable and does not excuse the CO's violation. Finally, the CO's conclusion that a single award is in the best interests of the government is also unreasonable, irrespective of the non-compliance with FAR 16.504(c)(1).  (Winstar Communications, Inc., v. U.S., No. 98-480C, September 9, 1998)

U. S. Court of Federal Claims - Listing of Decisions
For the Government For the Protester
  CW Government Travel, Inc., d/b/a CWTSatoTravel v. U. S. and Concur Technologies, Inc., No. 12-708C, April 11, 2013  (pdf)
  Information Ventures, Inc.,  B-403321, September 27, 2010  (pdf)
  One Source Mechanical Services, Inc.; Kane Construction, B-293692; B-293802, June 1, 2004)  (pdf)
  Winstar Communications, Inc., v. U.S., No. 98-480C, September 9, 1998


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