GAO Confirms: No Protests of Most Subcontract Awards

Despite older case law to the contrary, the GAO ordinarily lacks jurisdiction to decide a protest challenging the award of a subcontract, even where the subcontract is alleged to have been made “for” the government, as in the case of some subcontracts awarded by DOE Management and Operation prime contractors.

In a recent decision, the GAO confirmed that, except in very narrow circumstances, it won’t decide protests challenging subcontract awards.

The GAO’s decision in Peter Vander Werff Construction, Inc., B-415676 (Feb. 6, 2018) involved the award of a subcontract by Lawrence Livermore National Security, LLC.  LLNS is a M&O prime contractor to the DOE, responsible for the management and operation of the Lawrence Livermore National Laboratory in California.  LLNS’s prime contract included FAR 52.244-5 (Competition in Subcontracting) which specifies that a prime contract shall select subcontractors “on a competitive basis to the maximum extent practicable with the objectives and requirements of the contract.”

In March 2017, LLNS issued a competitive solicitation for the award of multiple master task agreements for general construction and design services.  LLNS received 32 offers.  After evaluating those offers, LLNS made 16 awards.  LLNS informed the remaining offerors, including Peter Vander Werff Construction, Inc., that their offers were unsuccessful.

PVWC filed a GAO bid protest challenging the evaluation.  The DOE moved to dismiss the protest, arguing that the GAO lacked jurisdiction.

The GAO wrote that, for several years, it “took jurisdiction over subcontract awards by prime contractors to the federal government where, as a result of the government’s involvement in the award process, or the contractual relationship between the prime contractor and the government, the subcontract, in effect, was awarded on behalf of–i.e., ‘by or for’–the government, and federal procurement laws and regulations otherwise would apply.”

But in 1991, the U.S. Court of Appeals for the Federal Circuit issued a decision interpreting jurisdictional language similar to that governing the GAO.  In that case, the Federal Circuit held that the General Service Administration’s Board of Contract Appeals lacked jurisdiction over subcontract procurements conducted “for” a federal agency, unless the prime contractor was a “procurement agent” as narrowly defined in other authority.

After the Federal Circuit issued its decision, the GAO narrowed its jurisdiction over subcontract protests.  Since the 1991 decision, the GAO will only take jurisdiction over a subcontract protest in two instances: first, “upon the written request of the federal agency that awarded the prime contract,” and second, “where we find that a subcontract essentially was awarded ‘by’ the government.”

With respect to the second instance, GAO has “considered a subcontract procurement to be ‘by’ the government where the agency handled substantially all of the substantive aspects of the procurement and, in effect, took over the procurement, leaving to the prime contractor only the procedural aspects of the procurement, i.e., issuing the subcontract solicitation and receiving proposals.”  In contrast, unlike its pre-1991 cases, the GAO will no longer take jurisdiction of a subcontract that was awarded “for” the government.

In this case, there apparently was no written request by DOE that the GAO decide this matter.  Additionally, the GAO found that this was not a subcontract issued “by” the Government.  In that regard, the GAO wrote that “the record does not establish that the agency controlled essentially every meaningful aspect of the procurement.”  Instead, “the evaluation and ultimate decision was made by LLNS,” the prime contractor.

The GAO dismissed the protest.

As the Peter Vander Werff Construction case demonstrates, the GAO’s jurisdiction over subcontract protests is very narrow.  Contrary to older case law, the GAO no longer accepts jurisdiction based on the allegation that a subcontract was awarded “for” the government.