What happened to the Federal Acquisition Streamlining Act's protest restrictions on task and delivery orders? Recent developments in protests (and protests disguised as contract disputes) related to the issuance of task and delivery orders and proposals to improve an impaired system.

• Author: Sabin, Sean A.

1. INTRODUCTION

   The Federal Acquisition Streamlining Act ("FASA" or "the Act") expressly prohibits most indefinite-delivery, indefinite-quantity ("IDIQ") task or delivery order protests, stating, "A protest is not authorized in connection with the issuance or proposed issuance of a task or delivery order except for a protest on the ground that the order increases the scope, period, or maximum value of the contract under which the order is issued." (1) Instead of permitting a contractor to protest its failure to be selected for a task or delivery order, FASA provides for an agency ombudsman to hear issues ordinarily addressed in a protest.

   FASA seems clear in its restrictions of protests of task and delivery order decisions and its mandate that contractor concerns regarding the issuance of task or delivery order contracts be addressed to an agency's ombudsman. In the last few years, however, FASA's restrictions on task and delivery order protests have been somewhat undermined by a series of administrative and judicial opinions. In light of these recent opinions, this paper will examine FASA, its incorporation into the Federal Acquisition Regulation ("FAR"), important judicial and administrative opinions pertaining to IDIQ contracts both prior to and after FASA's enactment (including opinions that appear to expand the limited grounds under which a protest may be filed as defined by FASA), and Section 803 of the National Defense Authorization Act for Fiscal Year 2002, which expanded the competition requirements for task order contracts within the Department of Defense ("DoD").

   The paper will then address Congressional action that needs to occur in response to these recent opinions to better define the scope of FASA's protest restrictions. It also will advocate that Congress remove the requirement that an IDIQ contract must include the procedures that an agency will follow to ensure IDIQ contractors are given a fair opportunity to compete. While such a requirement was well intended, it has resulted in contractors alleging that the procedures were not followed and submitting multi-million dollar claims against the government under the Contract Disputes Act ("CDA"). Congress could not have envisioned such actions occurring when it defined the parameters of multiple-award IDIQ contracts via FASA. The paper will urge the Federal Acquisition Regulatory Council ("FAR Council") to take immediate action--even before any Congressional action on the matter--to prevent future large CDA claims by adding a FAR clause that addresses fair opportunity procedures. Finally, this paper will advocate that Congress strengthen and better define the role of the task and delivery order ombudsman position.

2. TASK AND DELIVERY ORDER CONTRACTS PRIOR TO FASA

   1. The State of the Law Prior to 1994

      Before addressing FASA and the impact it has had on IDIQ contracts, it is important to review cases that preceded its enactment and the state of the law prior to 1994 with regard to IDIQ contracts. In Torncello v. United States, (2) the Court of Claims established the legal characteristics of IDIQ contracts--they must state a minimum quantity amount to be purchased over a set period of time, each contractor is guaranteed that the stated minimum amount will be purchased, and the minimum amount must be more than a nominal amount in order to satisfy the requirement of consideration in the contract. (3) These legal characteristics formed the cornerstone of what was required in an IDIQ contract and what duties the government owes an IDIQ contractor, and they have continued to serve that function to the present time. (4)

      In Northeast Air Group, Inc., (5) the General Accounting Office ("GAO") (6) established a very narrow basis upon which a contractor could protest a multiple-award contract order decision--when the item being procured is materially different from the type of items contemplated by the contract:

      We generally will not consider protests against an agency's decision to modify a contract since modifications involve contract administration, which is the responsibility of the contracting agency, not our Office .... We will review, however, an allegation that a modification exceeds the scope of the existing contract and therefore should be the subject of a new procurement In determining whether a modification is beyond the scope of the contract, we look to whether the contract as modified is materially different from the contract for which the competition was held. (7) Thus, a standard was established that so long as an order did not fall outside the scope of those generally contemplated by the multiple-award contract at issue, a protest of a task or delivery order selection decision will not be heard.

   2. The Need for Legislative Action

      Since there was no statutory or regulatory guidance to regulate permissible behavior prior to FASA's enactment in 1994, all guidance on multiple-award contracts was judicially created or resulted from GAO opinions. As a result, the use of multiple-award contracts was not prevalent since agencies preferred the relative safety of large, single award IDIQ contracts. (8) They provided agencies the efficiency of not having to compete every contracting action necessary to meet their requirements while avoiding the unknown legal challenges of using multiple-award IDIQ contracts. (9) Without regulatory guidance, an agency simply was not assured that when it awarded an order under a multiple-award IDIQ contract, it was not going to be subjected to protests similar to those found in regular contract procurements. This uncertainty and the risk of not gaining any efficiency despite a significant investment of time and resources served as a disincentive for the use of multiple-award contracts. However, while a single award IDIQ contract eliminated the possibility of a protest, since only one contractor was involved, it made "... it difficult for the government to secure the same price reductions and contractor performance improvements that would occur if the contractor was competing against other qualified contractors throughout the contract." (10)

      From this desire to ensure that the government receives the best price possible through an efficient multiple-award IDIQ system, came the push to enact FASA. As the United States District Court for the District of Columbia stated in Corel Corp. v. United States, Congress passed FASA with the intent of "... streamlin[ing] and simplify[ing] federal acquisition procedures." (11)

3. THE FEDERAL STREAMLINING ACT OF 1994

   1. Congressional Intent

      In 1994, Congress passed the Federal Acquisition Streamlining Act, and it was signed into law. (12) As stated in the Senate Report from the Committee on Governmental Affairs ("Report"), the purpose of FASA was to "... revise and streamline the acquisition laws of the Federal government in order to reduce paperwork burdens, facilitate the acquisition of commercial products, enhance the use of simplified procedures for small purchases, clarify protest procedures, eliminate unnecessary statutory impediments to efficient and expeditious acquisition, achieve uniformity in the acquisition practices of federal agencies, and increase the efficiency and effectiveness of the laws governing the manner in which the government obtains goods and services." (13) Clearly, it was intended to simplify and streamline certain aspects of government acquisition.

      Multiple-award task and delivery order contracts were one such area that FASA hoped to reform by making that form of procurement simple, straightforward, and more efficient. In furtherance of this goal, the Report stated, "The Committee intends that all federal agencies should move to the use of multiple task order contracts, in lieu of single task order contracts, wherever it is practical to do so." (14) In addition, the Report described the changes FASA was implementing in the area of task and delivery order contracts in the following manner:

      The new provisions added to the procurement code by sections 1004 and 1054 of the bill are intended to given [sic] agencies broad discretion in establishing procedures for the evaluation and award of individual task orders under multiple award contracts. They do not establish any specific time frames or procedural requirements for the issuance of task orders, other than that there be a specific statement of work and that all contractors under multiple award contracts be afforded a reasonable opportunity to be considered in the award of each task order (with narrow exceptions). Accordingly, contracting officials will have wide latitude and will not be constrained by CICA [Competition In Contracting Act] requirements in defining the nature of the procedures that will be used in selecting the contractor to perform a particular task order. When contracting officials award task orders they will have broad discretion as to the circumstances and ways for considering factors such as past performance, quality of deliverables, cost control, as well as price or cost. In some cases, all that may be necessary is an oral discussion with each of the contractors, followed by the contracting officers [sic] decision. As far as the concept of multiple award contracts is concerned, the Administrator of OFPP [Office of Federal Procurement Policy] has assured the Committee that incentives would be created to encourage the use of such contracts and competition for orders under them where practicable. (15) Thus, Congress intended that IDIQ contracts be free from the requirements applicable to general procurements with regard to procedures to be followed, and, as a result, that contractors be very limited in their ability to protest task and delivery order decisionmaking. (16)

   2. The Act's Language

      FASA defines task order and delivery order contracts as contracts for services or property that do not procure or specify a firm quantity of services or property (other than a minimum or...