Competition On Task Orders - DFARS Final Rule Implementing Section 803

On Friday, October 25, 2002, the Department of Defense ("DoD") published a final rule amending the DoD Federal Acquisition Regulation Supplement ("DFARS") to implement Section 803 of the National Defense Authorization Act for Fiscal Year 2002. In an effort to further promote fair competition in the issuance of task orders, the rule provides new procedures for contracting officers placing orders exceeding $100,000 for three categories of services contracts: (1) Federal Supply Schedule ("FSS") contracts administered by the General Services Administration; (2) single-agency multiple award task order contracts; and (3) any other Government-wide indefinite delivery, indefinite quantity contracts awarded to two or more contractors pursuant to the same solicitation. The new procedures take immediate effect and will be applied to existing as well as future contracts.

For orders under FSS contracts, the new procedures now require that the contracting officer must receive offers from at least three qualified contractors or must otherwise adequately document that no additional contractors could fulfill the work requirements and that despite reasonable efforts to do so, additional contractors qualified to provide the services could not be identified. For orders from indefinite quantity contracts other than FSS contracts, the new procedures require contracting officers to provide all contractors qualified to perform the required services under such contracts with fair notice of the intent to make a purchase. All contractors responding to the notice of intent must be afforded a fair opportunity to submit a proposal and have that proposal fairly considered. These procedures apply not only to all DoD agencies, but to all civilian agencies placing orders on behalf of DoD.

The procedures can be waived when the contracting officer makes a written determination that a statute expressly authorizes that the purchase be made from a specified source. Other exceptions to these new procedures also applicable under the Federal Acquisition Regulation ("FAR") 16.505(b)(2) ordering procedures remain in effect. The contracting officer may waive the need for competitive procedures if any of the following circumstances apply:

• The agency need for the services is so unusually urgent that providing a fair opportunity to all qualified contractors would result in unacceptable delays;
• Only one contractor is capable of providing the required services because the ordered services are highly specialized or unique;
• The order should be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued on a competitive basis; or
• It is necessary to place the order with a particular contractor in order to satisfy a minimum guarantee.

The new procedures may significantly impact the utility of multiple award contracting, particularly in the case of orders issued under FSS contracts. As a function of FAR Subpart 8.4, FSS orders previously have been subject to protest in the same manner as new procurements. See, e.g., REEP, Inc., B-290665 (Sept. 17, 2002) (protest of agency award of order under FSS contract sustained where agency failed to consider all reasonably available information in attempting to meet the statutory and FAR 8.404(a) obligation to obtain the best value at the lowest overall cost to the government). Notwithstanding past bid protests of FSS orders, new FSS procurements likely will be subjected to more potential protest scrutiny because they now are subjected to prescribed notice and competition requirements. Moreover, because these new procedures are similar to procedures imposed on new procurements, it is now possible that task order awards under non-FSS contracts could be subjected to bid protest scrutiny if the contracting officer fails to follow these procedures; that issue likely will be decided by the General Accounting Office in the near future.