GAO reveals new authority over protests

The Government Accountability Office has ruled that agencies must set aside task orders if small businesses could submit reasonable bids for the work. Some experts say the decision reveals a broad new authority for GAO.

In a bid protest decision released Oct. 8, GAO officials sustained a complaint by Delex Systems that said the Navy should have set aside a delivery order for aviation training products because at least two small businesses could have offered bids. The Navy contended the situation was exempt from the set-aside requirements under the so-called Rule of Two because it involved a delivery order and not a contract.

The Federal Acquisition Regulation requires a contracting officer to set aside any order of more than $100,000 if the agency can expect at least two responsible small businesses to bid on the work.

Experts say GAO’s decision is the first significant ruling under a new authority that went into effect earlier this year. The fiscal 2008 National Defense Authorization Act gave the agency the power to take up companies’ protests of task and delivery orders that are more than $10 million.

Previously, those orders were off limits for GAO. Robert Burton, a partner at the law firm Venable and former deputy administrator at the Office of Federal Procurement Policy, said GAO had no jurisdiction in the past because the government viewed task orders as distinct from traditional contracts. Now, experts say those orders are increasingly becoming as complex and large as contracts. Also, agencies are using orders for more than 50 percent of their procurements, compared with 14 percent in 1990, he said.

“Congress is basically saying, ‘We’ve changed our minds,’” Burton said today during a panel discussion about the new authority hosted by the Industry Advisory Council.

However, Congress' reversal has agencies concerned, several government officials said.

“Frustration sums up our feelings,” said Lee Harvey, deputy program executive officer for the Army’s enterprise information systems.

He and other experts said the new protest authority will likely slow the procurement process and prompt contracting officers to look for other avenues for purchases. He said contracting officers might choose to award only large contracts.

Karen Kopf, director of operations at the General Services Administration’s Federal Systems Integration and Management Center, said she feared an outbreak of protests under GAO’s new authority.

Congress gave GAO the authority for three years with the expectation that legislators would have an opportunity to review the authority and make the necessary changes during that time, according to the conference report accompanying the law.

Ralph White, assistant general counsel at GAO, said his agency will track the details related to the protests, such as the total number, and submit an annual report similar to the reports GAO files about other protests.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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