Generally, agencies are required to maximize competition for procurements. But there are exceptions to this rule, such as for simplified acquisitions. Another exception is for sole source bridge contracts awarded between the end of an incumbent contract and the start of a new contract.
A recent GAO case explains the rationale for why a sole-source award is usually acceptable in that situation.
In Trailboss Enterprises, Inc., B-415970.2, (Comp. Gen. May 7, 2018), Trailboss protested the terms of a solicitation for Air Force flight training services. Trailboss also protested the award of a sole-source contract to PKL Services, Inc. for training services during the time between the expiration of the incumbent contract and the award of the new contract.
Trailboss had filed an earlier protest for the same procurement, in response to which the Air Force took corrective action. During the corrective action, the Air Force indicated via synopsis it would award a sole-source contract to PKL for 3 months with a 2-month option to ensure continuity of services when the incumbent contract expired. Trailboss protested this sole-source bridge contract.
Trailboss argued that the bridge contract was “improper because it was based on a lack of advanced planning.” GAO denied this protest ground.
GAO noted that the Competition in Contracting Act requires use of full and open competition. But there is an exception when the supplies or services required by an agency are available from only one responsible source, and no other type of supplies or services will satisfy agency requirements. Note that, with respect to DoD, NASA, and the Coast Guard, this exception can apply if the the supplies or services are available “from only one or a limited number of responsible sources.” In other words, these listed agencies have more latitude than civilian agencies have in determining when sources are limited .
For follow-on (or “bridge”) contracts,
For DoD, NASA, and the Coast Guard [not civilian agencies], services may be deemed to be available only from the original source in the case of follow-on contracts for the continued provision of highly specialized services when it is likely that award to any other source would result in: (1) substantial duplication of costs to the United States which is not expected to be recovered through competition; or (2) unacceptable delays in fulfilling the agency’s needs.
In order to make use of this exception, the agency must provide a reasonable justification and approval with facts and rationale to support the sole-source procurement. Here, the Air Force noted that the flight training services were needed after expiration of the incumbent contract. The Air Force contacted three other potential offerors to see if they could meet the sole-source requirement.
The results of this survey were that it would take 30-45 days to transition over, with an additional 14 days for employee clearance and badging requirements. There would also be heightened costs for transition to the new contractor. Based on the transition time and added costs, the Air Force determined that only the incumbent PKL could meet the requirements for the bridge contracts, stating that “[d]ue to the highly specialized services required under this contract, discontinued use would result in substantial duplication of cost to the government that is not expected to be recovered through competition and will result in unacceptable delays in fulfilling the agency’s requirements.”
Trailboss argued that the sole-source was the result of failure in advance planning, which is not a proper justification for a sole-source award. But GAO held that “an agency’s procurement planning need not be error-free or successful” and “an immediate need for services that arises as a result of an agency’s implementation of corrective action in response to a protest does not constitute a lack of advance planning.” Because the corrective action created the need for a sole-source contract, it was not a result of bad planning.
After a corrective action, a short-term sole-source bridge contract to the incumbent will very likely be acceptable and difficult to successfully challenge at GAO.
Note: This post was updated to highlight the distinction between the treatment of DoD, NASA, and the Coast Guard versus other agencies in the case of justifying sole-source contracts, as pointed out by an astute reader.