8(a) Sole Source Contracts: Little Explanation Necessary

Agencies have broad discretion when it comes to issuing 8(a) sole source contract awards.  Although a procuring agency must provide the SBA with some justification as to why it selected a particular 8(a) company for a sole source contract, that justification can be very brief.  And, as the GAO held in a recent bid protest decision, an 8(a) sole source contract justification need not explain why the 8(a) awardee was superior to another 8(a) company interested in the same contract.

The GAO’s decision in MCB Lighting & Electrical, B-406703 (July 13, 2012), involved an Air Force requirement for LED lighting for various Air Force installations.  The Air Force issued a sources sought notice, and received responses from two 8(a) companies: Utility Systems Solutions (or US2), and MCB Lighting & Electrical.

Although both companies apparently provided similar responses to the sources sought, there were two differences.  First, in its response to the source sought, US2 indicated that it could provide exterior lighting fixtures with UV coating, whereas MCB stated that it could not provide UV coating.  Second, US2 stated that it would provide a warranty even if its lighting fixtures were installed by a third party.  In contrast, MCB indicated that it would only provide a warranty if its own technicians performed the installation.

After receiving the responses to the sources sought, the Air Force decided to set the requirement aside for 8(a) contractors and make a sole source award to US2.  The Air Force issued an offering letter to the SBA, stating that it was nominating US2 to receive the 8(a) sole source contract “based on their positive response to all requirements in the source sought notice . . . and their capabilities history.”  The SBA accepted the offering letter.

MCB filed a GAO bid protest challenging the sole source award to US2.  MCB complained, in part, that in its offering letter, the Air Force should have explained that it was nominating US2 rather than MCB based on an informal assessment of the technical capabilities of the vendors, which led the agency to question MCB’s ability to comply with certain agency requirements.

The GAO noted that SBA regulations require a nominating agency to include a brief justification of the reasons for nominating a particular 8(a) program participant to receive an 8(a) sole source contract.  However, the GAO held that the Air Force had satisfied this requirement by mentioning US2’s positive response to the sources sought and capabilities history.  The GAO concluded, “[w]e do not agree with the protester that the Air Force was required to further justify its nomination or furnish an explanation as why other firms, such as MCB, were not nominated.”  The GAO denied MCB’s bid protest.

The MCB Lighting & Electrical GAO bid protest decision illustrates the broad discretion afforded procuring agencies when it comes to 8(a) sole source contract awards.  Although the agency must briefly explain why it selected a particular 8(a) company, it need not inform the SBA why the agency believed that 8(a) company was superior to other 8(a) companies interested in the same procurement.

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