No GAO Jurisdiction Where Government Receives “De Minimis” Value

GAO lacks jurisdiction to decide a protest relating to a solicitation under which the government will receive de minimis value.

De minimis is a fancy Latin term meaning, essentially, “not much.” In one recent bid protest decision, GAO held that it lacked jurisdiction to consider a protester’s challenge to the terms of a solicitation because the solicitation called for the contractor to purchase scrap metal from the government, not the other way around.

Previous posts on SmallGovCon have addressed different aspects of GAO’s ability to hear a protester’s protest (e.g., relating to a protest filing deadline, relating to an agency’s rejection of an unsolicited proposal, and relating to insufficiently restrictive solicitations). GAO’s decision in Santa Rita, LLC, B-411647, B-411647.2 (July 20, 2015) demonstrates that GAO also lacks jurisdiction where the government will receive de minimis value from the solicitation.

Under the Competition in Contracting Act, a “protest” is a written objection by an interested party to a “solicitation or other request by a Federal agency for offers for a contract for the procurement of property or services.” Stated differently, CICA gives GAO jurisdiction over solicitations in which the government seeks to procure property (including a good) or a service from a contractor.

This sounds pretty straightforward. And under most solicitations, it probably is. But not always.

The Santa Rita case involved an Army Material Command solicitation for the sale of scrap metal and other recyclable materials. Under the solicitation, the contractor was required to provide containers to hold the scrap metals it purchases and pick up the materials at regular intervals. The agency, on the other hand, was required to gather and sort the materials and to organize and prepare them for the contractor’s pickup. Further, it was the agency, not the contractor, that was to provide maintenance and upkeep of the associated facilities.

Santa Rita, LLC filed a pre-award GAO bid protest challenging the terms of the solicitation. Santa Rita argued that certain terms in the solicitation were ambiguous and that the solicitation failed to adequately inform offerors of the evaluation factors upon which the solicitation would be based.

The Army filed a motion to dismiss the protest. The Army argued that the protest dud not pertain to a “contract for the procurement of property or services,” and thus was outside GAO’s jurisdiction.

GAO wrote that it has jurisdiction over at least two types of solicitations that exist in the grey area between seeking a “contract for the procurement of property or services,” or some other type of contract.

The first category includes solicitations under which the agency receives a “direct, but arguably intangible, benefit that aids the agency in the discharge of its mission.” For example, GAO has taken jurisdiction over concession contracts where the contractor provides a service that the government would have otherwise would have had to provide—like for initial haircuts given to new Air Force recruits (paid for by the recruits), or for photocopying services at a federal courthouse. In each of these situations, the government received a benefit from the contract.

The second category is those cases where “a more concrete or tangible benefit is conferred on the agency as part of a mixed transaction.” These cases have included instances where, for example, a concessionaire was required to provide millions of dollars of related services, such as snow removal, litter removal, maintenance, paving, and painting.

In this case, GAO wrote that the goods and services that Santa Rita would provide “are directly connected with its purchase of the scrap metal and recyclable materials.”  GAO held that “the provision of these goods and services is properly viewed as de minimis, given that the benefit conferred upon the government is minimal and is directly related to the sale of the scrap metal.” GAO found that it lacked jurisdiction, and dismissed the protest.

GAO’s ability to hear bid protests is limited by the Competition in Contracting Act. As Santa Rita demonstrates, not all solicitations involve a “contract for the procurement of property or services” that GAO may consider.

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