Can I Protest Additional IDIQ Awards? Depends Who You Ask

Most seasoned bid protest attorneys have been asked by a client, “Can my company protest the addition of other contractors to the indefinite-delivery, indefinite-quantity pool?” As the Government Accountability Office’s recent decision in AAR Airlift Group Inc., B-414690, et al. (2017) illustrates, the answer to this question is “yes and no.” According to GAO, the answer is “no.” According to the U.S. Court of Federal Claims, however, the answer is “yes.”

GAO’s View: No!

In AAR Airlift Group Inc., the protester challenged the award of indefinite-delivery, indefinite-quantity contracts to two competitors, alleging that the firms did not meet the solicitation’s eligibility requirements. Consistent with its earlier decisions in this area, however, the GAO held that the protester lacked standing to bring this protest ground “because, as an IDIQ awardee, it is not an interested party to challenge the award of IDIQ contracts to other offerors.” The GAO explained:

Under the Competition in Contracting Act of 1984 (CICA), which governs the bid protest jurisdiction of our Office, only an “interested party” may protest a federal procurement. 31 U.S.C. § 3551(1). CICA defines an interested party as “an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract[.]” 31 U.S.C. § 3551(2)(A). Our Bid Protest Regulations employ the same definition. 4 C.F.R. § 21.0(a)(1). Accordingly, to meet the interested party standard under CICA and our Regulations, a protester must (a) be an actual or prospective bidder or offeror, and (b) demonstrate that it possesses a direct economic interest in the contract award.

Here, we find that because [the protester] is an IDIQ contract awardee, it is not an actual or prospective offeror. As we have noted in our prior decisions, even if a protester has a direct economic interest in the contract award, the protester is not an interested party if it is not an “actual or prospective bidder or offeror.” Aegis Def. Servs., LLC, B-412755, Mar. 25, 2016, 2016 CPD ¶ 98 at 3; Pacific Allied Prods., Ltd., B-220181, B-220182, Oct. 18, 1985, 85-2 CPD ¶ 424 at 2. By definition, an IDIQ contract awardee, such as [the protester], cannot be an actual or prospective offeror with respect to another IDIQ contract awarded under the same solicitation. Aegis Def. Services, LLC, supra, at 3-4. This conclusion stems from the simple fact that a contractor that has already been awarded an IDIQ contract cannot be awarded additional IDIQ contracts, even if it could show flaws in the agency’s award of those contracts. Indeed, if [the protester] were to successfully challenge the IDIQ awards to [the other two companies], it would not result in further IDIQ contract awards to [the protester].

The protester argues, in response to this point, that the principle stated in Aegis, which found that an IDIQ awardee did not qualify as an actual or prospective offeror, relied on Court of Federal Claims case law that “has now been brought into question.” Second Response to Dismissal Req. at 3 (citing National Air Cargo Grp., Inc. v. United States, 126 Fed. Cl. 281, 295 (2016)). While we recognize that the court, in the National Air Cargo Grp., Inc. decision, reached a different conclusion than our Office reached in Aegis, we do not find that this inconsistency necessitates reconsideration of our interested party standard. In this regard, while we respect the decisions of the Court of Federal Claims with regard to its own jurisdiction, our Office is not bound by such decisions.

Court of Federal Claims’ View: Yes!

As the GAO noted in AAR Airlift Group Inc., the U.S. Court of Federal Claims examined this issue in National Air Cargo Group Inc. v. United States, 126 Fed Cl. (2016). In that case, the agency, as part of its corrective action in response to an earlier protest, included in the IDIQ pool an additional company. National Air Cargo challenged the agency’s decision in this respect, and the government then moved to dismiss, alleging lack of standing and jurisdiction.

The court, in turn, explained that, to have jurisdiction under the Tucker Act, 28 U.S.C. § 1491(b)(1), it had to first find that the protest is “in connection with a procurement” and that the protester also has standing as an “interested party.” After holding that the protest was “in connection with a procurement” because the protest involved the award process, the court found that the protester was an “interested party” because it had “a direct economic interest.” In particular, the court stated:

[T]he court will analyze National’s complaint to determine whether it demonstrates a “non-trivial competitive injury which can be redressed by judicial relief.” Weeks Marine, [Inc. v. United States,] 575 F.3d [1352,] 1362 [(Fed. Cir. 2009)].

Turning to the factual context of this case, National is an “actual” bidder because, as a matter of fact, it bid on this IDIQ solicitation. As discussed supra, National’s status as a contract awardee does not by itself deprive this court of bid protest jurisdiction. See Systems Application [& Tech., Inc. v. United States], 691 F.3d [1374] at 1381-82 [(Fed. Cir. 2012)] (concluding that a proper protest was not subject to [the Contract Disputes Act]).

National also has a direct economic interest, because it has shown a “non-trivial competitive injury which can be redressed by judicial relief.” Weeks Marine, 575 F.3d at 1362. National alleges that the RFP imposed conditions on reopening the competition and that [the agency] violated these RFP provisions. ... If plaintiff is correct, the competition for roughly $296 million of task orders available to the IDIQ pool will be affected to National’s detriment. Plaintiff’s complaint avers that it seeks more than just $2,500; it seeks to compete for roughly $296 million in task orders. And because of the government’s allegedly illegal conduct in adding further awardees, that competition will be “significant[ly]” increased, as the parties agree. ... That is a non-trivial competitive injury, prejudicial to National. ...

Despite this, the government has argued, and GAO agrees, that a multiple-award IDIQ contract holder has no interest in the size of the IDIQ task order pool because that holder has only a right to some nominal minimum amount (in this case, $2,500) of task orders. That view is not realistic because potential contractors bid on IDIQ contracts to compete for task orders, which can amount to much more than the minimum. See, e.g., Serco Inc. v. United States, 81 Fed. Cl. 463, 466 (2008) (considering an IDIQ solicitation for up to $50 billion in task orders over five years, with a minimum guarantee of $2,500 for each awardee). The $2,500 task order minimum is only a “peppercorn”—a nominal amount to satisfy the contract law doctrine of consideration. See, e.g., Coyle’s Pest Control, Inc. v. Cuomo, 154 F.3d 1302, 1304 (Fed. Cir. 1998) (“The contract at issue in this appeal ... does not contain the necessary elements of an enforceable indefinite quantity contract, nor an enforceable requirements contract. The enforcement of such a contract would fail for lack of consideration in the absence of a clause stating a minimum quantity.”) (quoting and affirming a decision by a board of contract appeals). The minimum satisfies the law of consideration, but it does not mean that IDIQ contractors lack a “direct economic interest” in the competition for task orders.

Analysis and Conclusion

In short, the answer to the question, “Can my company protest the addition of another contractor to the IDIQ pool?” depends on whether you ask the GAO or the Court of Federal Claims. According to the GAO, the answer is “no.” According to the court, the answer is “yes.” Thus, as things currently stand, companies seeking to challenge the addition of other contractors to an IDIQ pool should do so at the Court of Federal Claims, rather than at the GAO.

Republished with permission. The Expert Analysis article first appeared on Law360 on September 14, 2017.