An agency’s attempt to order under a Federal Supply Schedule blanket purchase agreement was improper because the order exceeded the scope of the underlying BPA.

In a recent bid protest decision, GAO held that the agency had erred by attempting to issue a sole-source delivery order for cloud-based email service when the underlying BPA did not envision cloud services.

The bid protest, Tempus Nova, Inc., B-412821, 2016 CPD ¶ 161 (Comp. Gen. June 14, 2016), pitted a Microsoft-authorized dealer against a Google-authorized dealer regarding the IRS’s email service.

In 2013, the IRS issued a BPA to Softchoice Corporation under Softchoice’s FSS contract for maintenance and software updates to the IRS’s existing inventory of Microsoft products and services. The BPA gave the IRS perpetual licenses for some specific listed Microsoft products and included “the right to install on, use, or access . . . the latest version of each product[.]” GAO described the BPA as a vehicle for the IRS to “keep its existing portfolio of software licenses up-to-date with the latest versions of Microsoft products.”

In the summer of 2014, the IRS issued a delivery order against the BPA to acquire an “Office Pro Plus” license, which GAO found included an Office 365 Cloud-based email service. Tempus Nova, Inc., an authorized seller of Google products and services, learned about the delivery order through an email exchange with the IRS and filed a GAO bid protest, complaining that the order was an improper sole-source acquisition of e-mail-as-a-service (EaaS). EaaS is a cloud-based subscription service or product that does not involve installing software. Tempus Nova therefore argued that it was outside of the scope of the BPA.

GAO noted that “FSS delivery orders that are outside the scope of the underlying BPA” are improper because they have not been appropriately competed. In determining whether a delivery order is outside the scope of an underlying contract or BPA, the GAO “considers whether there is a material difference between the delivery order and the underlying BPA.” GAO further explained:

Evidence of a material difference is found by reviewing the BPA as awarded, and the terms of the delivery order issued, and considering whether the original solicitation adequately advised offerors of the potential for the type of work contemplated by the delivery order. The overall inquiry is whether the delivery order is of such a nature that potential offerors reasonably would have anticipated competing for the goods or services being acquired through issuance of the delivery order.

In this case, the IRS argued that Office 365 is merely the “latest and greatest” version of Office Pro Plus (which was specifically identified in the BPA).  GAO disagreed. It wrote that Office Pro Plus “is, in fact, an Office 365 cloud-based product, which is distinct from the ‘Office Professional Plus’ licenses owned by the agency.” Therefore, GAO concluded, “[t]he record demonstrates that under the delivery order, the agency acquired ‘Office Pro Plus’ subscriptions–a cloud-based Microsoft Office 365 product–even though the portfolio of software assets identified in the BPA did not include any cloud-based products.”

GAO found that “the delivery order at issue in the protest amounts to an improper, out-of-scope, sole source award.” GAO sustained the protest.

Agencies have rather broad flexibility to use vehicles like BPAs to obtain goods and services. But as the Tempus Nova case demonstrates, that flexibility is not unlimited: an order that exceeds the scope of an underlying BPA is improper.