GAO Finds Authority to Use Noncompetitive Procedures Is Not Carte Blanche

Most protests involve competitive procurements and the many rules governing how agencies are to conduct such procurements. In certain circumstances, agencies are permitted to bypass some of these rules and limit competition. But, as GAO noted in a recently issued sustain decision, the authority to use noncompetitive procedures does not provide the agency carte blanche.

In E.K.K. Investments, LLC, the Defense Commissary Agency (DeCA) sought to procure fresh fruits and vegetables for resale at commissary stores in Korea. After issuing a Request for Information (RFI) and reviewing responses from four potential vendors, DeCA established a blanket purchase agreement (BPA) with one of the vendors. EKK protested, arguing that the award was improper because DeCA failed to execute a Justification and Approval (J&A) supporting its sole-source decision and because DeCA failed to obtain offers from as many sources as practicable as required by the FAR. GAO agreed with EKK on both issues.

With respect to the requirement to execute a J&A, GAO noted that, while the law allows the government to use noncompetitive procedures, agencies must support such procurements with a J&A. The law does provide an exception to the J&A requirement when “brand-name” commercial products are acquired, but there is no exception for non-brand-name items like the fruits and vegetables at issue here. Therefore, DeCA erred in failing the prepare a J&A justifying its use of noncompetitive procedures.

Similarly, GAO found that there was no justification for DeCA’s failure to obtain as many offers as practicable before awarding the contract. In this regard, GAO noted that when an agency uses other than full and open competitive procedures, the FAR generally requires the agency to solicit offers from as many potential sources as practicable under the circumstances. DeCA was unable to identify any applicable statutory or regulatory exemption to this rule. Moreover, the agency’s issuance of an RFI failed to satisfy the requirement to obtain as many “offers” as practicable, since the FAR itself specifically states that RFI responses are not offers.

Finally, GAO rejected the agency’s arguments that the protest was untimely because EKK should have known earlier that DeCA would bypass the J&A and solicitation requirements. DeCA had argued that EKK was on notice that DeCA was planning to establish a single-source BPA using other than competitive procedures based on the agency’s issuance of the RFI, draft BPA, the agency’s responses to questions concerning the draft BPA, the agency’s establishment of a BPA for similar services in Guam using noncompetitive procedures, and modifications that extended the period of performance for the protester’s incumbent contract. GAO rejected this argument, concluding that DeCA failed to show that EKK knew or should have known the agency would establish a sole-source BPA without executing a J&A or soliciting offers from as many sources as practicable.

In sustaining the protest, GAO recommended that DeCA cancel the awarded BPA and conduct its procurement of fruits and vegetables in a manner consistent with applicable procurement law.

Key Takeaways

• Although noncompetitive procurements are subject to fewer requirements than competitive procurements, agencies are nevertheless required to comply with applicable procedures governing the use of such procurements. Authority to conduct a procurement on an other-than-full-and-open basis is not carte blanche.
• In filing GAO protests, companies generally have ten days from when they know or should have known of their basis of protest to challenge the awarded contract. Therefore, potential protesters should be alert to information that may trigger their “protest clock.”