Federal Contract Law: Competition is required even for task orders

Joseph J. Petrillo

It's no secret in federal contracting that task and delivery order contracts are hot. Contracting and program officials like the convenience of placing orders instead of competing entire contracts.

A modicum of competition is possible when the government awards more than one contract. Indeed, the law prefers this and, when there are multiple contractors, promises all contractors a fair opportunity to be considered for orders.

But studies by the General Accounting Office and the Defense Department inspector general indicate that, even where there are multiple contractors, no competition takes place for many orders.

A contractor that isn't getting a fair opportunity has limited options. The Federal Acquisition Streamlining Act prohibits protests against the award of orders, with some very narrow exceptions. Even finding out about the orders is difficult, since they aren't published in FedBizOps. A disgruntled contractor can complain to agency ombudsmen, but they have no enforcement powers.

A new decision by the Armed Services Board of Contract Appeals, however, demonstrates another remedy. In Community Consulting International (ASBCA No. 53489, Aug. 2, 2002), the board held that failure to provide a fair opportunity was a breach of contract. I represented the contractor in that case.

Statute and regulations require that a multiple-award task and delivery order contract contain a clause describing how the agency will give contractors a fair opportunity to be considered for orders. When the government doesn't follow the terms of this clause, it has breached the contract.

In Community Consulting International, the government opposed the contractor's claim on multiple grounds. First, it argued that the claim was a disguised bid protest, barred by FASA. The board, however, took the claim on its face as charging a breach of contractual obligations, not an attempt to undo the award of a task order.

Next, the government said that the ombudsman was the contractor's exclusive remedy for the problem. But the board noted that the ombudsman had no remedial powers. And if FASA had meant to oust the board of jurisdiction, it would have said so explicitly.

Finally, the government pointed out that this was an indefinite-quantity contract, and the government was only obligated to order the guaranteed minimum quantity. Since it had done so, the contractor had no further rights. The board disagreed that ordering the minimum was the outer limit of the government's obligations under the contract. It was still obliged to abide by the fair-opportunity clause.

The decision does contain some bad news for small businesses. The solicitation had stated that the government 'anticipates awarding up to four contracts,' one of which would be set aside for small business. When the government actually awarded six contracts, including the set-aside, it did not breach any enforceable obligation, according to the board. Thus, the government could dilute the value of the set-aside without consequence. Different wording might produce a different result, but the language of this solicitation was fairly standard.

As policymakers consider how to enhance competition under task and delivery order contracts, this decision provides one mechanism. The government needs to take its obligation to provide a fair opportunity more seriously.

Joseph J. Petrillo is a lawyer with the Washington law firm of Petrillo & Powell. E-mail him at jp@petrillopowell.com.

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