GAO: Out-Of-Scope Delivery Order Modification Was Improper

An agency may not procure new services under an existing GSA Schedule delivery order if the new services exceed scope of the original delivery order.

In a recent decision, Onix Networking Corp., B-411841 (Nov. 9, 2015), the GAO sustained a protest where the agency acquired a new type of software by modifying an existing delivery order for software license extensions because the acquisition exceeded the scope of the initial delivery order. According to the GAO, the out-of-scope modification amounted to an improper sole source contract.

The Onyx Networking decision involved a modification to a GSA Schedule delivery order held by En Pointe Gov, Inc. The delivery order, which was awarded in 2013, called for En Pointe (a licensed Microsoft reseller) to provide software licenses, software maintenance services, and technical support services to the Peace Corps’s existing suite of Microsoft products.

After En Pointe’s award, the Peace Corps conducted market research into available cloud based email services. From September 2014 to May 2015, the Peace Corps evaluated services from both Microsoft and Google. Following the test period, the Peace Corps concluded that the Google product was slightly preferred among its pilot program participants, though both products met the agency’s technical requirements.

After the test period, the Peace Corps issued a Request for Information (“RFI”) to FSS vendors with blanket purchase agreements for cloud based email services. The RFI included information on desirable features and configurations.

The Peace Corps received RFI responses from Microsoft and Onix Networking Corp., a Google reseller.  After evaluating these two responses, the agency determined that only the Microsoft product met its needs. The Peace Corps then modified En Pointe’s existing delivery order to include Microsoft’s cloud based email services.

Onix Networking protested, arguing that the modification of En Pointe’s delivery order was outside the scope of the original purchasing requirements and amounted to an impermissible sole-source acquisitions. The GAO agreed.

The GAO wrote that the Competition in Contracting Act generally requires full and open competition for government requirements. While contracts may be modified during the period of performance, the modification cannot be outside the scope of the contract originally awarded. Per the GAO, “because the work covered by the modification would otherwise be subject to the statutory requirement for competition, absent a valid determination that the work is appropriate for procurement on a sole source basis.” With respect to whether a modification is outside the scope of the original contract, “[t]he overall inquiry is whether the modification is of a nature that potential offerors reasonably would have anticipated competing for the goods or services being acquired through issuance of the modification.”

In this case, the GAO determined that “neither the original competition for the delivery order, nor the delivery order as issued, ever contemplated the acquisition of a cloud-based EaaS product or service.”  The GAO noted that En Pointe’s initial delivery order was for Microsoft software licenses and the associated technical support. In fact, En Pointe’s delivery order specified that the Peace Corps only required services for its existing inventory. No additional services were contemplated under the delivery order.

The GAO concluded that “the modification of the En Pointe delivery order is an improper, out-of-scope, sole source modification.” Accordingly, the GAO sustained the protest.

As Onix Networking demonstrates, while an agency may modify an existing contract, the modification may not exceed the scope of the underlying contract. An out-of-scope modification is improper, as it amounts to an unjustified sole source contract.

 

Ian Patterson, a law clerk with Koprince Law LLC, was the primary author of this post.

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