An agency’s decision to award a contract as an 8(a) sole source is a “business decision” for which the agency has broad discretion–and a potential protester challenging the agency’s use of that discretion will have an uphill battle.

In a recent bid protest decision, the GAO confirmed that government officials are presumed to act in good faith, and that the presumption extends to the decision to award an 8(a) sole source contract instead of competing the work in question.

The GAO’s decision in NTELX, Inc., B-413837 (Dec. 28, 2016) involved a Consumer Product Safety Commission procurement for the operation and maintenance of CPSC’s international trade data system risk assessment methodology (“RAM”) software system.

In 2010, the CPSC awarded an 8(a) sole source contract for the development of the initial RAM system.  NTELX, Inc. was a subcontractor under the original contract, and developed the system using its proprietary software.  The CPSC subsequently awarded a second contract, also as an 8(a) sole source, for the development of a “RAM 2.0” system.  The second contract was awarded to TTW Solutions, Inc., an 8(a) Program participant.  Unlike the first contract, the RAM 2.0 contract used open source software.  NTELX served as a subcontractor to TTW.

In 2016, the CPSC awarded a new 8(a) sole source contract to TTW, this time for the continued operation and maintenance of the RAM 2.0 contract.  Apparently the relationship between TTW and NTELX had soured, and NTELX was not offered a subcontract.

NTELX filed a GAO bid protest challenging the new 8(a) sole source award to TTW.  NTELX argued that the CPSC acted in bad faith and violated the FAR’s competition requirements by making an 8(a) sole source award to TTW.  NTELX argued that it was the only contractor that could successfully perform the work, and that an award to TTW was irrational.

The GAO noted that 8(a) contracts may be awarded “on either a sole source or competitive basis.”  Further, “because of the broad discretion afforded the SBA and the contracting agencies under the applicable statute and regulations, our review of actions under the 8(a) program generally is limited to determining whether government officials have violated regulations or acted in fraud or bad faith.”  Government officials “are presumed to act in good faith and a protester’s claim that contracting officials were motivated by bias or bad faith must be supported by convincing proof; our Office will not attribute unfair or prejudicial motives to procurement officials on the basis of inference or supposition.”

In this case, the CPSC stated that TTW was capable of performing the contract; the GAO declined to second-guess the CPSC’s determination in that regard.  “Therefore,” the GAO wrote, “although NTELX may disagree with the agency’s business decision to award TTW an 8(a) sole source contract for RAM 2.0, it has failed to demonstrate that the agency has engaged in any fraud or bad faith.”

The GAO denied NTELX’s protest.

So long as a procuring agency abides by the inherent limitations of the 8(a) sole source program–most notably, the dollar limitations–the agency (with the SBA’s approval) has broad discretion to choose to award an 8(a) sole source contract.  As the NTELX, Inc. decision demonstrates, a protester trying to make the case that the agency abused its discretion will face a difficult challenge.