Government Contracts Monitor

Shield of Discretion Can’t Be Penetrated without Evidence of Unreasonableness

April 7, 2015

The government’s “discretion” can act as an impenetrable shield, protecting awards from challenge. When the applicable legal standard grants discretion to the government and the subject agency provides at least minimal reasoning for its actions, it can be virtually impossible to prevail on an appeal absent clear evidence the agency acted unreasonably. The recent decision in In re Crosstown Courier Services, Inc., B-410936 (Mar. 12, 2015), underscores the importance of considering this fundamental reality when protesting a solicitation, award or other agency decisionmaking.

The protest in this case arose from the Veterans Administration’s (VA’s) decision to not set-aside for Service-Disabled Veteran-Owned Small Businesses (SDVOSB) a procurement for the transport of laboratory specimens and other materials. The protester, Crosstown Courier Services, Inc. (Crosstown), a Massachusetts based courier service, asserted that the decision not to set-aside the for SDVOSB’s violated applicable law and VA’s implementing regulations which require the VA “to set-aside acquisitions for SDVOSBs whenever it determines that there is a reasonable expectation that offers will be received from at least two SDVOSB concerns and that award can be made at a fair and reasonable price.”

The Contracting Officer (CO) chose to limit its market research to Minnesota-based companies because of the solicitation’s requirements. The research revealed that if the VA set-aside the acquisition for SDVOSBs it only would receive one offer from a concern that could perform the services for a fair and reasonable price. In other words, limiting the geographical area also limited the potential offerors to one. On the basis of this outcome, the VA concluded it was not required to set-aside the requirement for SDVOSBs.

Crosstown protested the decision not to set aside the procurement, arguing the CO’s market research relied on unreasonable restrictions, without which (i) the CO would have concluded there was a reasonable expectation of receiving an offer from more than one SDVOSB concern and, thus, (ii) the regulations would have required the VA to conduct the procurement as a set-aside for SDVOSBs. But GAO deferred to the CO’s broad discretion to make a rational business judgment about whether there was a reasonable expectation of receiving an offer from more than one SDVOSB and rejected Crosstown’s arguments. According to GAO, the scope of the CO’s discretion included deciding how to conduct the market-based research – that is, the CO’s decision to limit the geographic scope of the research was based on legitimate concerns, including that an offeror located outside Minnesota would have to rely too heavily on local subcontractors.

The GAO also noted that nothing requires the CO to align the competition to the geographic region used for the market research to identify concerns likely to compete. Said another way, the fact that the solicitation was open to firms outside of Minnesota did not impact the GAO’s finding that the decision to limit the market research to these regions was reasonable.

Crosstown Couriers re-emphasizes that where a decision allows for the use of discretion -- whether that decision relates to setting aside a solicitation or awarding a contract -- the CO has wide latitude in the exercise of that discretion. Contractors considering a challenge to a CO decision must weigh the likelihood of demonstrating the decision is unreasonable against the likelihood the protest will be deflected by the “shield” of agency discretion.