Litigating Federal Sole Source Justification Bid Protests Under 10 USC 2304
Sole source contract justification in government contracting can be a heated debate during bid protest litigation. Oftentimes, the agency may choose to place its notice on Federal Business Opportunities (“fbo“) with supporting rationale. However, it is the government’s supporting rationale that can be subject to filing a bid protest.
Although the agency’s mission is important, there must still be a balance against the public’s ability to bid in a fair manner.
Filing a bid protest that challenges the agency’s sole source justification decision takes some level of understanding about the congressional acts in place. Courts may sometimes focus on the agency’s needs without looking at congressional intent to balance the harms.
- Although the agency file may have documentation to support its sole source justification, government contractors may still have to inquire further.
What is the Sole Source Contract Justification Rule?
The Competition in Contracting Act’s overriding mandate is for agencies to conduct “full and open competition” in government procurements. Such competition is obtained by competitive procedures. See 41 USC 3301(a)(1).
- A government contracting agency can support a single source justification and approval only in specific limited circumstances.
- When an agency uses noncompetitive rules or sole source contract justification under 41 USC 3304(a), it must execute a written Justification and Approval (J&A) that has enough facts and rationale to support the use of the cited authority.
- A lack of advance planning by the requiring activity; or
- Concerns related to the amount of funds available (e.g., funds will expire) to the agency or activity for the acquisition of supplies or services.
Sole source justification decisions are governed by 10 USC 2304, which states in relevant part:
The head of an agency may use rules other than competitive procedures only when –
- The property or services needed by the agency are available from only one responsible source or only from a limited number of responsible sources and no other type of property or services will satisfy the needs of the agency;
- The agency’s need for the property or services is of such an unusual and compelling urgency that the United States would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals . . .
- When a sole source award is made, concern for maximizing competition is secondary.
Lack of Agency Planning Does Not Allow Purchasing from a Sole Supplier
If you are filing a bid protest that challenges the agency’s sole sourcing decision, you should be aware that the agency may not justify a sole sourcing because of its “lack of advance planning.” 10 USC 2304 (f)(4)(A). The Federal Acquisition Regulation (FAR) has incorporated these principles in FAR 6.302–1(c). 48 CFR 6.302-1(c).
- Cases where an agency buys from a sole supplier or single source are very fact specific.
A good example is when the agency knew that a contract period is ending but waits until two months before to issue the solicitation. Then, it initiates a single source procurement decision in favor of the incumbent contractor. Lack of agency planning will not support sole source decision in a bid protest.
Bid protests challenging an agency’s sole source justification can be very tricky. There is no doubt that the regulations allow for exceptions to the full and open competition rule. For example, awarding a sole source contract to the 8(a) BD Program is one of them. Learn more about getting 8(a) Sole-Source Contracts With the Government.
The Court’s Test Under 10 USC 2304
Sole Source Contract When Protesting Government Contract Awards: The Federal Circuit ruled in bid protest litigation that the government’s sole source contract decision may be set aside if:
- The award lacked a rational basis; or
- The procurement procedure involved a violation of a statute, regulation, or procedure. See Emery Worldwide Airlines, Inc. v. United States, 264 F.3d 1071, 1085 (Fed. Cir. 2001) (citing Impresa, 238 F.3d at 1332).
The court will first look to see whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion.
In addition, a court examines the agency’s sole source contract justification for violations of a law or regulation, in the absence of which the protestor would have had a substantial chance of receiving an award under either a competitive bidding process (where the sole source procedure was made irrational by the violations), the sole-source procedure, or in some other fashion. See KSD, Inc. v. United States, 72 Fed. Cl. 236, 255 (2006). See more information about buying from a single source.
In a GAO protest, the GAO reviews an agency’s decision to use the sole source justification and it will focus on the adequacy of the rationale and conclusions in the J&A.
You Still Have to Meet the Interested Party Requirement in a Bid Protest: As a side issue, when you decide to file a bid protest challenging the agency’s sole sourcing justification decision, you must still show that you are an interested party; that is, an actual or prospective offeror whose direct economic interest would be affected by the award or failure to award a contract.
- The Agency procurement planning does not have to be perfect when protesting government contract awards.
- However, when lack of planning is obvious, the justification stands a good chance of getting a protest sustained.
For additional questions or representation in a federal sole source contract bid protest and violations of 10 USC 2304, call a bid protest lawyer at 1-866-601-5518. FREE INITIAL CONSULTATION.