GSA Schedule: “Brand Name Only” Restriction Not Justified

A GSA Schedule solicitation restricted to a particular brand item was improper because the procuring agency failed to properly justify the restriction, according to a recent GAO bid protest decision.

The GAO’s decision is an important reminder that “brand name only” restrictions are disfavored and that procuring agencies bear the burden of reasonably justifying such restrictions–even when they buy off the GSA Schedule.

The GAO’s decision in Desktop Alert, Inc., B-408196 (July 22, 2013) involved a Defense Contract Management Agency solicitation for an emergency mass notification system.  A similar contract had been awarded in 2009 to Reliable Government Solutions, Inc., which provided a product known as the AtHoc Mass Notification System.

In March 2013, DCMA issued a solicitation under the GSA Schedule.  The solicitation called for AtHoc products and services, and restricted the competition to GSA Schedule holders which were authorized AtHoc resellers.

Prior to issuing the solicitation, the contracting officer signed a limited source justification.  The justification stated that AtHoc “is already installed in the DCMA infrastructure” and that there would be “cost, time and human resource savings” by continuing to use the existing AtHoc brand software.

With respect to market research, the justification stated that the AtHoc brand “exceeds the technical specifications,” “reduces training, as this system is already widely utilized,” provides “quick alerts and operability,” and offers a “high level ease-of-use for the customers at a very competitive price.”  The justification also cited AtHoc’s favorable past performance.

Desktop Alert, Inc. filed a pre-award GAO bid protest, arguing that the solicitation’s limitation of sources to AtHoc brand name items was unduly restrictive of competition.  Desktop Alert contended that the DCMA failed to consider mass notification systems offered by other vendors.

The GAO first noted that “to limit sources in FSS orders–such as a brand name requirement–ordering activities are required to justify the restriction . . ..”  The GAO pointed out that the FAR’s GSA Schedule regulations specifically require that brand name specifications shall not be used unless the particular brand “is essential to the Government’s requirements, and market research indicates that other companies’ similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agency’s needs.”

In this case, the GAO found that the DCMA had not appropriately justified the restriction.  For instance, although the DCMA’s justification addressed cost and time savings, the FAR “does not cite cost or time savings as a basis for restricting sources.”  Indeed, Desktop Alert had argued that since the original contract was awarded in 2009, “mass notification systems have improved significantly, and generally, the cost has been decreasing,” something not discussed in the agency’s justification.

Additionally, the GAO held that the DCMA’s market research was lacking. in that “the justification fails to show whether DCMA conducted market research concerning other companies’ products.”  Instead, the DCMA’s market research appeared to focus solely on the AtHoc system, without considering whether other systems might meet the same needs.  The GAO noted that Desktop Alert “is currently providing its mass notification system to other DOD agencies,” including an agency “located in the same building where DCMA’s headquarters are located” and that the contracting officer was aware of this fact.

The GAO sustained Desktop Alert’s protest, but Desktop Alert’s victory was bittersweet.  While the protest was ongoing, the DCMA had overriden the automatic stay of performance and made award to Reliable–the only vendor submitting a proposal for the AtHoc brand.  The GAO did not recommend the termination of Reliable’s contract, but instead recommended that the DCMA not exercise the options under Reliable’s contract and thereafter “either properly justify its need to limit competition to a single brand system, or recompete its requirement beyond the base year.”

I often hear from contractors who tell me that a procuring agency has restricted a solicitation to a particular brand name.  The Desktop Alert GAO bid protest decision is a good reminder that such restrictions are disfavored under the FAR and must be appropriately justified–even when the agency buys off the GSA Schedule.

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