ATA decision throws IT buying reforms into doubt
On June 27, 1997, the Court of Federal Claims struck down a purchase order contract
because it included items not covered in a vendor's General Services Administration
schedule contract. As a result, agencies may be required to change the way they use
purchase order contracts and blanket purchasing agreements.
The case is ATA Defense Industries Inc. vs. United States. It was the first successful
bid protest decided by the Court of Federal Claims since that court assumed its new
post-award bid protest jurisdiction on Jan. 1, and it is the first successful bid protest
of a Federal Supply Service purchase order contract.
The plaintiff, ATA, sought an injunction to terminate an Army purchase order contract
on the grounds that it violated the Competition in Contracting Act. The purpose of the
purchase order was to upgrade two target ranges. The dollar value was $673,376, of which
65 percent was for products covered in an FSS agreement between GSA and Caswell
International Inc., the awardee. So 35 percent of the value was for products not covered
in the FSS agreement.
With respect to these latter products, the Army argued that the procurement fell within
the exceptions to CICA that allow "other than competitive procedures" because
the items were available from only one source, "incidental" to the FSS items, or
filled an agency's "unusual and compelling" need.
The Court of Federal Claims rejected all the Army's arguments.
It held that the purchase could not be justified on a sole-source basis because the
items, which included computer monitors, laser printers and cables, were readily available
from numerous sources and could be purchased on the open market.
The court also rejected the Army's alternative argument that the purchase was proper
because the items were incidental to the items bought through Caswell's FSS contract. It
found that the contracting officer never made a determination that the competitively
available items were incidental to the 8FSS-covered items.
Moreover, the court held that it is "fundamentally inconsistent with Congress'
unambiguous statutory mandate in the CICA to ... include in a purchase order incidental
products that are competitively available, unless the prices charged for these incidental
products are the product of full-and-open competition."
The court emphasized that there is no exception that even arguably covers incidentals.
The product, it said, must be purchased on a competitive basis unless it can be classified
as de minimis--that is, having only a tiny value as part of the whole contract.
The court struck down the entire procurement, even the 65 percent purchase under the
Multiple-Award Schedule, holding that the Army was obligated to perform a comprehensive
analysis to decide whether it would be best to use a single nonschedule contractor for the
entire procurement, two contractors or some other arrangement.
This case is significant for four reasons:
The court, in the ATA case, granted an injunction after finding that ATA satisfied the
tough standard that the Army would not suffer significant harm by termination of the
contract. It said the Army had sufficient options for a new procurement, such as an
expedited competitive bid solicitation.
Are government users now prohibited from buying nonschedule cables with their
schedule-bought printers or nonschedule carrying cases with their MAS-bought laptops? What
if the nonschedule items are such a small percentage of the value of that particular order
that they are de minimis in those circumstances?
The ATA case will probably create more confusion than it clears up. Moreover, it may
establish that procurement reform has failed to achieve at least one goal it sought to
achieve: simplifying the process of purchasing related items through schedule buys.
Procurement reform seems to have been wholly irrelevant to this decision.
The court relied exclusively on CICA, a statute enacted in 1984. It considered no
procurement reform statute enacted since.
Laura K. Kennedy, a partner at Seyfarth, Shaw, Fairweather & Geraldson in
Washington, practices government contract law.