Government Contracts Monitor

Agencies Must Justify Sole Source Awards – And Not Based on a Lack of Planning

July 14, 2014

We are all familiar with agency authority, under 10 U.S.C. §2304, to use other than competitive procedures (i.e., sole or limited source procurement) when (i) the property or services needed are available from only one or a limited number of responsible sources (and there is no adequate substitute) or (ii) an agency’s need for a property or service is of such an unusual and compelling urgency that the government will be injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals. But this authority is not unbridled, as the Court of Federal Claims (COFC) recently reminded us in Cherokee Nation Technologies, LLC v. United States and Chenega Federal Systems LLC, No. 14-371C (Fed. Cl. June 23, 2014).

Here the incumbent, Chenega, lost in a competition for a follow-on award to Cherokee, and protested. The agency decided to take corrective action in the form of termination of Cherokee’s award, cancellation of the solicitation, and issuance of a new solicitation. In order to fill its needs during the corrective action period, the agency awarded a sole source bridge contract to the incumbent, Chenega. Cherokee then filed for and was granted injunctive relief by the COFC.

The Court enjoined the agency from proceeding with the bridge contract because, in the Court’s view, the corrective action and resulting sole source bridge award – dictated by “a lack of planning” – were arbitrary, capricious and abuse of discretion and otherwise contrary to law.

As in other bid protests, a sole source procurement decision may be set aside if it lacks a rational basis or involves a violation of statute, regulation or procedure. In this case, the Court found that the agency failed to plan adequately for transition of the procurement – it simply waited “until the last minute” and then determined, in connection with its announced corrective action, to have the incumbent perform the work under a sole source bridge contract. But, according to the Court, “waiting until the last minute does not absolve the [agency] of its obligations in this regard – a different view would turn the sole-source rules on their head.” And, not only was the sole source award due to the agency’s lack of advance planning, the agency acknowledged it had alternatives that could have been used to avoid employing a sole-source contract.

Thus, the paramount, “long-term interests” of “ensuring that contracts are awarded on a competitive basis, and that exceptions to that rule are only as necessary,” were found to be best served by enjoining performance of the sole source award.

Lindsay Simmons is the attorney responsible for the content of this article.

Attorneys

Lindsay Simmons