United States: GAO Clarifies Task Order Protest Jurisdictional Issues

Last Updated: February 23 2015
Article by Aron C. Beezley

At first blush, the U.S. Government Accountability Office's recent decision in Goldbelt Glacier Health Services LLC (Feb. 6. 2015) appears to be a run-of-the-mill denial of a protester's request for reconsideration. But, a closer examination reveals a well-reasoned decision that irons out a series of wrinkles pertaining to the GAO's jurisdiction over protests challenging task or delivery order awards. This article examines the GAO's discussion of the various jurisdictional issues presented in the Goldbelt case.

The Underlying GAO Bid Protest

The Department of the Army awarded a task order to National Sourcing Inc. ("NSI") in the amount of $9.6 million, inclusive of three fixed-price contract line item numbers ("CLINs") and a maximum amount of $500,000 in travel costs under the single cost-type CLIN. Goldbelt Glacier Health Services LLC, the incumbent contractor, protested the Army's award to NSI, arguing, among other things, that the Army failed to conduct a proper price realism evaluation of NSI's proposed price. The Army requested that the GAO dismiss the protest because, under the Federal Acquisition Streamlining Act, as amended by the National Defense Authorization Act of Fiscal Year 2012 ("FASA"), a bid protest is not authorized in connection with the issuance (or proposed issuance) of a task or delivery order, except when the protest challenges an order valued in excess of $10 million, or where the protest alleges that the order exceeds the scope, term, or maximum value of the underlying task or delivery order contract.

In response to the Army's request for dismissal, Goldbelt argued that, although the total amount of the task order as awarded by the Army to NSI was $9.6 million, FASA's jurisdictional threshold of $10 million nonetheless was met because Goldbelt challenged the Army's price realism evaluation of NSI's proposal. More specifically, Goldbelt argued that, based on its proposed price of $11.4 million and its prior experience as the incumbent, the Army should have considered the actual value of the task order to have been in excess of $10 million. Goldbelt argued further that the GAO should adjudicate the merits of its price realism challenge before determining the "value" of the task order for jurisdictional purposes.

After considering the parties' arguments in this regard, the GAO dismissed Goldbelt's protest, finding that "where an order has in fact been issued by the government," the GAO views "the jurisdictional limit to turn on the value of the disputed order, which is reflected in the terms of the order itself since the order defines the scope and terms of the contractual commitment between the selected contractor and the government."1 The GAO further explained that the focus of its inquiry is:

[O]n the total anticipated funds (or other economic value) to be received [by the contractor] as compensation for the goods and services to be provided under the order as reflected in the contractual agreement between the government and contractor, not the value of the work separate and apart from the terms of the underlying contractual agreement, or the value of a different order issued to a different firm.

Request For Reconsideration

Subsequent to the GAO's dismissal of the protest, Goldbelt filed a request for reconsideration. In its request for reconsideration, Goldbelt contended, among other things, that the GAO's prior decision contained two material errors of law. First, Goldbelt argued that the GAO's earlier decision did not consider Golbelt's argument that, had the Army conducted a proper price realism analysis, NSI's proposal would have been rejected as unrealistically low and, thus, "the true value of the task order was the $11.[4] million price as proposed by [Goldbelt]."2

Goldbelt argued further in its reconsideration request that the "GAO cannot properly reach the question of whether it has jurisdiction until it resolves the disputed question of the real value of the task order in question."3 In support of this argument, Goldbelt cited to the GAO's decision in Assisted Housing Servs. Corp., et al., B-406738, et al., 2012 CPD ¶ 236, a case "in which [the GAO] answered a mixed question of jurisdiction and merits."

The GAO, however, found that Goldbelt's arguments in this respect are "misplaced," and that the GAO's decision in Assisted Housing is "clearly distinguishable from the circumstances here." Specifically, the GAO elaborated:

As we discussed in Assisted Housing, although our Office does not have jurisdiction to review protests of the award, or protests of solicitations for award, of non-procurement instruments, we do have jurisdiction over a protest challenging whether an agency is improperly using a non-procurement instrument in lieu of a required procurement contract. Assisted Housing Servs. Corp. et al., supra, at 9. Thus, the question as to whether our Office could proceed to the second inquiry regarding the terms of the NOFA [notice of funding availability], and whether they were in accordance with applicable procurement laws, was dependent on the resolution of the predicate issue of whether the proposed use of non-procurement instruments was appropriate. As we explained, if HUD had appropriately proposed to use non-procurement instruments, our Office would lack jurisdiction over the protesters' challenges to the terms of the NOFA; if, however, the use of a procurement instrument was required, our Office would have jurisdiction over the protests of the terms of the NOFA. Id. at 8-9. Thus, in Assisted Housing, our Office concluded that the predicate issue of whether HUD had properly proposed to utilize non-procurement instruments--a matter over which we unquestionably had jurisdiction--had to be developed and resolved before we could determine whether we had jurisdiction over the protesters' substantive challenges to the terms of the NOFA.

The GAO stated further that, in contrast to the situation in Assisted Housing, "there is no predicate matter" that must be resolved before determining whether the GAO has jurisdiction over Goldbelt's substantive challenges to the Army's evaluation. Instead, GAO reiterated, its inquiry regarding jurisdiction was "complete" based on its finding that the value of the task order did not exceed $10 million.

Second, Goldbelt argued that the GAO's earlier decision dismissing the protest is in conflict with the GAO's decision in ICI Services Inc., B-409231.2, 2014 CPD ¶ 132. In particular, Goldbelt argued that the GAO's earlier decision is in conflict with ICI because that decision supposedly stands for the proposition that the GAO will consider the "value" of a task order based on "the existence of proposals (not awards) in excess of $10 million to establish jurisdiction."4 In addition, Goldbelt asserted that, in ICI, the GAO found that it had jurisdiction over a protest "from a party who, but for the protested action, would be awarded a task order below the $10 million jurisdictional threshold," but here improperly dismissed a protest filed by a party "who, but for the protested action, would have been awarded [an order] above the $10 million threshold."5

The GAO concluded, however, that its jurisdictional holding in ICI applies to pre-award bid protests, and does not apply in post-award bid protests, such as Goldbelt's protest. More specifically, the GAO explained that, in ICI, it viewed the pre-award and post-award challenges at issue to require different analyses of the value of the task order. In the pre-award context, ICI challenged the elimination of its proposal from a competition in which the procuring agency had not yet issued a task order, and in which each of the proposals remaining in the competition were valued at more than $10 million. Thus, any task order that would have been awarded in the absence of the protest would have been valued over $10 million.

The GAO also explained that, in the post-award context, on the other hand, it will look to the terms of the contract award to determine the total anticipated funds to be received by the contractor in order to determine the value of the award. In this case, the Army already made a contract award in an amount less than $10 million. Accordingly, the GAO found that, even in the absence of Goldbelt's protest, the award amount is below the $10 million jurisdictional threshold.

In a Nutshell

The GAO's "under the radar" decision in Goldbelt Glacier Health Services LLC is noteworthy because it addresses multiple obscure issues pertaining to the GAO's jurisdiction over challenges to task or delivery orders. The GAO's decision also is noteworthy because it provides further clarity regarding the contours of the GAO's jurisdiction over challenges to such orders. Bid protest attorneys would be well advised to familiarize themselves with the GAO's conclusions regarding the various jurisdictional issues raised in the Goldbelt case.

Footnotes

[1] See Goldbelt Glacier Health Services LLC, B-410378, B-410378.2, 2014 CPD ¶ 281 at 2.

[2] See Goldbelt Glacier Health Services LLC—Recon., B-410378.3, 2015 WL 509720 at 3 (Feb. 6, 2015) (citing Goldbelt's Request for Reconsideration at 1-2).

[3] Id.

[4] Id. at 4 (citing Goldbelt's Request for Reconsideration at 3).

[5] Id.

This article first appeared in Law360's Expert Analysis on February 17, 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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