GAO Clarifies Competition Standards for Simplified Acquisitions

A recent GAO decision has shed light on the question of what an agency must do to adequately promote competition during a simplified acquisition.

There is still no bright line for determining which agency actions meet this threshold.  However, the recent decision in Bluehorse Corp., B-415641 et al. (Feb. 6, 2018), established that merely inquiring about a solicitation, without taking further action as recommended by the procuring agency, is not enough to force an agency to include a company in a limited competition.

To promote contracting efficiency, the FAR allows for special simplified acquisition procedures to be applied to certain procurements that do not exceed the regulatory threshold. An agency is not required to use the ordinary full and open competition standards to conduct these simplified acquisition procurements. However, what exactly is required of a federal agency under a simplified acquisition procedure has yet to be clearly defined by the applicable provisions of the FAR and the relevant GAO case law. The FAR requires the agency to “promote competition to the maximum extent practicable” and establishes that this standard can generally be met through the solicitation of at least three sources. See FAR § 13.104.

GAO’s decision in Bluehorse involved two requirements for clear diesel fuel issued by the Department of the Interior, Bureau of Indian Affairs. Bluehorse Corporation, an Indian Small Business Economic Enterprise, attempted to protest the oral solicitation and award of these contracts to a competitor based on several grounds, all of which were denied by GAO.

The procurement was conducted under simplified acquisition procedures, because the dollar value for the requirements was below $25,000, as required by FAR § 13.003. These contracts required the supply of clear diesel fuel to two San Carlos Irrigation Project (“SCIP”) locations in Coolidge, Arizona, and Sacaton, Arizona.

The BIA conducted market research via an ISBEE search in SBA’s Dynamic Small Business Search database to identify ISBEE petroleum refineries capable of performing the two requirements. The search yielded thirty-eight ISBEE sources, including the protester, Bluehorse. An SCIP representative then contacted four potential ISBEE suppliers from this list regarding each procurement. These suppliers all purported capability to meet the contract requirements. After orally soliciting quotes from three of these suppliers, BIA awarded the contracts to the vendor with the lowest quoted price for each contract.

Bluehorse argued that the agency improperly denied it the opportunity to compete by failing to solicit Bluehorse’s oral quotations for these contracts. To support its challenges, Bluehorse relied on its history of work at the Coolidge site and the geographic proximity of the two SCIP contract sites. Bluehorse explained that it delivered clear diesel fuel to the same SCIP site in Coolidge, Arizona, in February of 2016, and the following September, it requested the delivery schedule for an upcoming solicitation that the agency had posted for fuel to the Coolidge site.

In response to this inquiry, the agency requested that Bluehorse include its best delivery schedule “if” it provided a quote; but Bluehorse did not respond or provide such information. Nonetheless, Bluehorse argued that the agency’s failure to request a quotation for the Coolidge site was improper given Bluehorse’s past fuel delivery to the site. Further, Bluehorse relied on the geographic proximity of the two Arizona SCIP sites to argue that the agency should have solicited a quotation from Bluehorse for the Sacaton SCIP site as well.

The agency responded that its actions were proper in accordance with the FAR because it contacted at least three vendors, and it was not aware of Bluehorse’s interest in competing for these specific requirements. Relying on the FAR and the relevant sections of the United States Code, GAO explained the legal standard for simplified acquisition procedures as follows:

Where an agency is using simplified acquisition procedures, it is not required to use full and open competition to conduct the procurement. Instead, the agency is required to promote competition to the maximum extent practicable. While this standard generally may be met through the solicitation of at least three sources . . an agency does not satisfy its requirement to obtain competition to the maximum extent practicable where it fails to solicit other responsible sources who request the opportunity to compete-in those circumstances, those sources should be afforded a reasonable opportunity to do so.

GAO further explained that, “[t]he determinative issue in such cases is whether the agency made a deliberative or conscious attempt to preclude the protester from competing, knowing the firm’s interest in competing, and, if it did so, whether that action was reasonable.”

In applying this standard to the procurement at hand, GAO found nothing improper with the agency’s decision not to obtain oral quotations from Bluehorse for either of the locations under the solicitations.  GAO did not dispute the fact that Bluehorse provided diesel fuel to the agency in February of 2016 for the same Coolidge, Arizona location or the fact that Bluehorse was aware of a September 2016 solicitation for fuel at the Coolidge location.

Nonetheless, GAO found that it was Bluehorse’s responsibility to respond to the agency’s statement that it needed the fuel immediately and the agency’s request that Bluehorse provide its best delivery schedule if it submitted a quote. Regarding these facts, GAO explained:

Bluehorse provided no response, and there is nothing in the record to indicate that Bluehorse was in contact with the agency regarding fuel deliveries to this location after this. Given this, there is no evidence that the agency was aware of Bluehorse’s interest in competing for this work.

In conclusion, GAO held, “while it was within the agency’s discretion to obtain an oral quotation from Bluehorse for either location, we find that under the facts here the agency was not required to do so.”

GAO denied Bluehorse’s protest.

Bluehorse highlights the minimal standards placed upon agency actions under an oral solicitation conducted under simplified acquisition procedures. While the agency is required to afford fair competition opportunities to responsible sources that have explicitly expressed their interest in submitting a quotation, the agency is not required to orally solicit quotations from sources whose interest in the solicitation the agency has not been made aware of.  This holding makes it clear that a firm may not rely on general inquisitions, contract history, or the ordinary full and open competition requirements to support a protest under these procedures.  The firm must clearly establish and actively pursue its interest in competing for the contract(s).

Once an agency is made aware of a firm’s interest in a solicitation, it is not permitted to make a deliberate or conscious attempt to prevent that firm from competing under that solicitation. However, when there is no evidence on the record that the agency has been informed of a firm’s clear intention to compete under the solicitation, the agency acts properly by fulfilling the minimal search requirements of FAR § 13.104. The BIA acted properly here, according to GAO, by orally soliciting quotations from at least three capable and responsible sources and subsequently awarding the contracts to one of those sources.