Agency’s Discretion Over Solicitation’s Technical Specifications Isn’t Unlimited

A major tenet in government contracting is that agencies enjoy broad discretion in identifying their needs and developing the most appropriate solicitation to satisfy them. Though broad, this discretion is not unlimited. If challenged, an agency must demonstrate that its specifications are reasonably necessary to meet its needs and are not unduly restrictive of competition.

GAO recently affirmed this principle in Pitney Bowes, Inc., B-413876.2 (Feb. 13, 2017), when it sustained a protest challenging a solicitation’s requirements as being unduly restrictive of competition.

The Pitney Bowes bid protest involved a solicitation issued by the Internal Revenue Service, seeking quotations for document processing and mailing equipment for its National Distribution Center in Bloomington, Illinois. Specifically, the solicitation called for four PS200 folder/inserters and four PS200 high capacity feeders. The Statement of Work then modified the requirements for the folder/inserters to include, among other things, a “high capacity sheet feeder with a capacity of up to 1000 [sheets] per feeder with the capability of loading on the fly.”

Pitney Bowes filed a protest challenging this modification, claiming it was unduly restrictive of competition. Pitney’s sheet feeders did not have the capability of being loaded “on the fly.” But Pitney argued that the same continuous operation would be achieved by its plan to use two high capacity sheet feeders (each holding 1000 sheets). This approach, Pitney argued, would allow the machine to alternate between feeders to provide a continuous operation and avoid system interruption.

GAO reiterated that “the determination of an agency’s needs and the best method to accommodate them is primarily the responsibility of the procuring agency, since its contracting officials are most familiar with the conditions under which supplies, equipment and services have been employed in the past and will be utilized in the future.” But if a protester challenges a solicitation specification as being unduly restrictive of competition (either by challenging the nature of the requirement itself or the agency’s need for the restriction), “the procuring agency has the responsibility of establishing that the specification is reasonably necessary to meet its needs.” GAO will evaluate the agency’s purported justification for reasonableness—“that is, whether it can withstand logical scrutiny.”

The IRS sought to justify its requirement for 1000 sheet feeders capable of on-the-fly loading by focusing on their ability to provide continuous operation. GAO did not find these arguments convincing. To the contrary, it found that the IRS had not established that Pitney’s proposed solution would require any more employee time or attention than the restrictive specification requirement. GAO also noted some possible benefits from Pitney’s proposed solution—for example, one sheet feeder could run the machine if the other needed to be turned off for repair, thus helping to meet the IRS’s goal of continuous operation. In short, GAO held, the IRS failed to justfy “why a requirement for load-on-the-fly capability is necessary, when a different approach may be able to achieve the same results.”

GAO sustained Pitney’s protest and recommended the IRS amend the solicitation’s requirements.

Pitney Bowes highlights the intersection of two key tenets in government contracts: that an agency has broad discretion to identify its needs and how to best meet them, and that, ordinarily, agencies must procure goods and services using full and open competition. These two tenets, however, don’t always line up; where they conflict, GAO will review a solicitation’s requirements to make sure that they are reasonable and not unduly restrictive of competition.