Recently, Oracle protested to the Government Accountability Office a decision to award a follow-on other transaction contract--rather than a procurement contract--to REAN Cloud LLC for a cloud migration program. Many government procurement professionals view GAO protest decisions as law. GAO does not make law and their decisions are not law or jurisprudence. They are opinions of government bureaucrats filtered through levels of bureaucracy and encrusted with "business as usual" thinking, as the opinion in this case demonstrates.
Before criticizing GAO, I will mention that it correctly observed that the dollar approval levels applicable to prototype OTs do not apply to production OTs. Its timeline of the REAN transaction shows it was much more expeditious than an equivalent Federal Acquisition Regulation transaction.
In 2017, the contracting command engaged REAN through the DIUx commercial solutions opening (CSO) process to prototype cloud migration services related to legacy software systems. Funding for the project was provided by U.S. Transportation Command. The scope of the project was expanded by an amendment to the agreement.
While work was still in progress, DIUx determined that success had been demonstrated and a follow-on production other transaction agreement was awarded in the amount of $950 million with potential to make sub-awards beyond TRANSCOM to other government agencies. The amount and scope of the award was subsequently reduced to $65 million but not before Oracle protested.
This case is important because it is an early example of the follow-on production authority for OTs enacted by Congress when the former prototype authority "section 845" was repealed and new authority under 10 U.S.C. 2371b was enacted. GAO found several errors committed by the Defense Innovation Unit-Experimental and its contracting agent Army Contracting Command-New Jersey. GAO's decision is premised in large part on the theory of inadequate notice to Oracle that a large production OT might follow a successful prototype project. GAO also questioned the DIUx determination that the project was successful.
Other transactions do not generally fall within GAO's statutory bid protest jurisdiction. It has however carved out a limited role for itself in OT protests, namely to determine if a procurement contract rather than an OT was legally required under the circumstances involved. In addition, GAO requires that a protest be filed in a timely manner and that...