GAO: IDIQ Awardee Could Not Protest Selection of Fellow Awardee

The GAO ruled recently that an awardee under a multiple-award IDIQ contract did not have standing the protest the agency’s selection of another awardee.

The decision highlights one of the main tenets of government contracting law: competition is in the government’s interest, and a protest that seeks to reduce competition to the benefit of the protestor could, in a case like this, be thrown out.

The GAO’s decision in National Air Cargo Group, Inc., B-411830.2 (Mar. 9, 2016) involved a solicitation for international commercial transportation services, under which the successful offerors would be responsible for moving cargo for the Department of Defense, United States Transportation Command (USTRANSCOM).

The solicitation, issued February 12, 2015, stated that the agency anticipated the award of approximately four IDIQ contracts with one base year and two option years. Each awardee was guaranteed a certain amount of work and the right to compete for the remaining task orders. Although the solicitation stated that USTRANSCOM anticipated four awardees, it also provided that the agency could reopen the solicitation in the event that the awardees were not meeting the agency’s needs, or if it was in the agency’s best interest to add new awardees.

Although the solicitation envisioned four awards, after reviewing proposals, USTRANSCOM selected five awardees on June 11. Six days later, it selected a sixth awardee. One of the original five awardees, National Air Cargo Group, Inc., filed a GAO bid protest challenging this sixth award. National argued that the sixth awardee, United Airlines, Inc., should not have been awarded an IDIQ contract because the solicitation had only envisioned four awards and the agency did not follow the proper procedure for reopening the solicitation.

USTRANSCOM contended that National was not an interested party to pursue a GAO bid protest, because National’s direct economic interest was not affected by the award to United. National replied that, by increasing the pool of contract holders, USTRANSCOM had reduced National’s overall chances of receiving task orders.

Although National’s argument certainly had some common-sense appeal, GAO flatly rejected it.  GAO wrote that nothing about adding an additional awardee would reduce the guaranteed quantity of orders, nor prevent National from competing for future task orders. GAO stated: “Under circumstances such as these, and where the solicitation contemplates multiple awards, an existing contract awardee is not an interested party to challenge the agency’s decision to award another contract.”

GAO gave a hint as to the policy motivating this decision in a footnote discussing the dismissal of a previous iteration of the same protest, stating: “We generally will not review a protest that has the purpose or effect of reducing competition to the benefit of the protestor and do not consider such an argument as stating a valid basis for protest.”

It is not difficult to see why National was concerned about the sixth award. National, which according to Wikipedia has a fleet of four, was expecting to be one of four companies with the opportunity to haul cargo for USTRANSCOM for several years. Not only was National suddenly no longer one of four companies in the competition, it was now one of six, with the sixth being United Airlines–one of the world’s largest air carriers. It was not unreasonable for National to worry that its opportunities under the IDIQ contract could be significantly diminished with United in the pool.

Unfortunately for National, this argument didn’t sway the GAO. Instead, as GAO held, an awardee under a multiple-award IDIQ ordinarily lacks standing to challenge another award under the same IDIQ.

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