When Agencies Move Work to the Wrong Contract Vehicle: Ares Enterprise, LLC is a Treat for Government Contracting Nerds

Article by: Tyson Marx, Partner

If you follow GAO bid protest decisions the way some people follow sports (*ahem, Mary Pat Buckenmeyer*), you recently were treated to a good one. Ares Enterprise, LLC, B-424548 et al., is one of those decisions that manages to touch just about every hot-button issue in the federal procurement world right now:

• single-award vehicles that function like sole-source awards;
• the federal government’s emphasis on speedy and innovative procurements;
• agencies moving work from one tried and true contract vehicle to a different vehicle that doesn’t quite fit;
• a fight over standing; and,
• a timeliness argument the agency threw at the wall hoping it would stick.

Let’s walk through the GAO’s decision and highlight why it’s so important for contractors.

Background

At first glance, nothing stands out about the background of this case. As a subcontractor, Ares performed local IT support field services for the U.S. Space Force (“USSF”) at Los Angeles Air Force Base (“LAAFB”). USSF issued task orders for the work using the Army’s Responsive Strategic Sourcing for Services, an IDIQ contract well-suited to this type of work. On the current task order, USSF declined to pick up the first option year and instead issued a string of 1-month bridge contracts while it decided how it wanted to move forward.

And that’s when the story begins to follow the pattern we’ve been seeing all too often in the current federal procurement landscape— an agency moves work from a tried-and-true contract vehicle to a different (and often times ill-suited) contract vehicle. The move often makes it hard (or in this case impossible) for qualified contractors (often incumbents) to bid for the new work. In the best case, the motives for the move appear to be geared towards fast and efficient procurements. At worst case, the motives appear to be an avoidance of the protest process and a slowdown of the procurement.

Here, USSF moved all local IT support to a single-award Contractor Teaming Arrangement (“CTA”) Blanket Purchase Agreement (“BPA”), the Enterprise Information Technology as a Service (“EITaaS”) Wave 1. Wave 1 is a $5 billion vehicle held by a team of ten Federal Supply Schedule (“FSS”) contractors, led by CACI.

A CTA-based BPA like Wave 1 works like this: CACI, as team lead, receives the requirement and selects which one of its ten team members may submit a quote (and receive an award, if the agency agrees the contractor can perform the work). Contractors outside the CTA, like Ares, have no path to winning an award under Wave 1. Their only recourse is to challenge whether the requirement should have been issued under this vehicle in the first place, which is what Ares did here. CACI ultimately chose Vision Information Technology Consultants LLC (“Vision”) to receive the award.

Standing to Protest: Do You Have to Be on the Contract?

The agency submitted a request for dismissal, arguing Ares could not protest because it was not a CTA team member. GAO denied the request, reasoning that the interested-party standard under 4 C.F.R. § 21.0(a)(1) did not turn on whether Ares was on CACI’s CTA. That is because Ares challenged whether the LAAFB work was even within the scope of EITaaS (as well as Vision’s FSS eligibility). GAO has long held that protesters can challenge the propriety of an agency’s actions in establishing an FSS BPA and placing orders under it.

Timeliness: When Does the Protest Clock Start?

The agency also asked GAO to dismiss the protest as untimely, arguing that Ares had heard rumblings about the transition to EITaaS as much as three weeks prior to filing its protest, which would have placed it outside of the usual ten-day window to protest after the grounds of the protest become known. Indeed, Ares had heard that Vision was recruiting its incumbent employees three weeks before it filed.

GAO drew a clean line on this issue: the protest clock does not start running based on secondhand chatter about something that has not yet happened. Rumor is not a basis for protest.

In this case, 31 U.S.C. § 3551(1) sets forth two relevant jurisdictional bases for GAO: (1) whether a solicitation is flawed (including being unduly restrictive of competition); and (2) whether an agency’s award decision was reasonable and consistent with the terms of a solicitation. If an agency has not issued a solicitation or made an award, GAO lacks jurisdiction. The key question is whether there is an agency action related to issuing a solicitation or making an award. Here, Ares could only file its protest once the task order was actually issued; rumors of an impending award do not constitute agency action.

Some might ask: should Ares have filed a preaward protest? Isn’t that the proper avenue for challenging an improper procurement? Sometimes the answer is yes, but this is a highly fact-specific question. Factors to consider:

• Did the agency issue a solicitation?
  • In this instance, there was no solicitation, just an award to Vision. As such, there was no agency action to challenge preaward.
• What about Requests for Information (“RFI”s)? When an agency issues an RFI, is that an agency action that can be protested?
  • Usually, no. See AeroSage, LLC, B-415893, B-415894 “a sources sought notice [RFI] is a request for information by the agency and not a solicitation that anticipates the award of a contract.”
  • But sometimes yes! Sometimes an RFI is more than just an RFI. If an RFI is functioning as a de facto solicitation, e., asking for pricing, requiring a technical approach tied to an actual selection decision, or otherwise doing the real work a solicitation does, GAO can treat it as the functional equivalent of one, and the preaward clock can start.

So the test is not the document’s title, it’s whether the agency is actually using it to make an award decision.

The Merits

Once GAO got past the gatekeeping arguments, it turned to whether the order matched the scope of the BPA and Vision’s own FSS contract. The agency argued that cybersecurity work, network operations, records management, and intel support functions were all fair game under a BPA that was, on paper, about help desk support and end-user devices. But GAO went task by task and found that most of the task order’s requirements did not fit within the scope of work under Wave 1 or Vision’s FSS contract. In particular, Wave 1 was for IT work on end-user devices, not the entire base’s network.

Ultimately, GAO found it was unfair (and thus an avoidance of 10 U.S.C. § 3201(a)(1)’s competitive procedures) for USSF to use a contract vehicle that was not set up for the work being performed under it. In this way, what the agency did was fundamentally different from ordinary task order issuance under an IDIQ or BPA. Work that falls outside the scope of the IDIQ or BPA is work that no contractor ever had a chance to bid on. Exclusively steering that out-of-scope work to an IDIQ or BPA holder, simply to change vehicles, is akin to giving that contractor bonus work that was never contemplated and work that contractors outside the IDIQ or BPA have no ability to protest. It’s simply not fair.

One thing to note: the task order protest thresholds, $10M for civilian agencies and $35M for Department of Defense / Department of War task orders, do not apply to out-of-scope protests under 10 U.S.C. § 2304c(e).

The agency also argued that it did not need to verify whether Vision’s own FSS contract covered the work, because other CTA team members had broader labor categories on their FSS contracts. GAO rejected that argument outright. Every FSS contractor, team member or not, must stay within the scope of its own contract. CTA teaming does not create a shared labor category pool for the agency to draw from.

For these reasons, GAO sustained Ares’s protest and recommended USSF conduct a new solicitation that met the rules for fair and open competition.

Practical Takeaways

• Contractors need to be acutely aware of the tools available to them when the government shifts work from one contract vehicle to another.
• Contractors need to understand the timelines governing these decisions.
• Contractors also need to prepare for the reality that the government has the discretion to move to a different vehicle that does fit the scope of work being performed. They should go in with their eyes open that a protest win might turn out to be a pyrrhic victory.
• Talk to a bid protest attorney as soon as something does not seem right. We will be upfront with you about whether your protest has a legitimate chance of success. The only way to know is to ask. Reach out and find out where you stand.