The Government Accountability Office’s (GAO) recent decision in Blade Strategies, LLC, B-416752, 2018 WL 4584111 (Comp. Gen. Sept. 24, 2018), clarifies the GAO’s jurisdiction and standard of review for protests of other transaction agreements (OTAs), and also serves as a good reminder that all protests challenging an aspect of an agency’s solicitation — including the agency’s choice of an OTA over a procurement contract — must be filed prior to the time for receipt of initial proposals.
Generally, the GAO’s bid protest jurisdiction does not extend to the review of awards made under an agency’s “other transaction” authority; however, the GAO will review a timely protest that an agency is improperly using an OTA rather than a procurement contract. See 4 C.F.R. § 21.5(m).
As we have discussed on this blog, the GAO’s standard of review for this question seemingly has evolved over time. Traditionally, the GAO would evaluate whether an agency was attempting to “acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government,” in which case a procurement contract would be required in accordance with the Federal Grants and Cooperative Agreements Act (FGCAA). See Rocketplane Kistler, B-310741, Jan. 28, 2008, 2008 CPD P 22.
This was necessary “to ensure that an agency [was] not attempting to avoid the requirements of procurement statutes and regulations” by exploiting its other transaction authority. Id.
However, in two recent decisions, MorphoTrust and Oracle, the GAO disregarded whether the OTA was designed to purchase goods or services for the Government’s direct benefit or use, and instead looked only to “whether the agency’s use of its discretionary authority was proper, i.e., knowing and authorized.” Oracle America, Inc., B-416061, May 31, 2018, 2018 CPD P 180; MorphoTrust USA, LLC, B-412711, May 16, 2016, 2016 CPD P 133 (holding that “although the FGCAA provides applicable guidance to all federal agencies when the choices are limited to (1) procurement contracts, (2) grants, or (3) cooperative agreements, it provides no guidance when determining when an agency may properly use its other transaction authority”).
The difference between these standards is stark: one prevents an agency from issuing an OTA where it should issue a procurement contract instead, while the other simply looks to whether Congress has bestowed an agency with sufficiently broad other transaction authority.
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OTAs have become critical to rapid prototyping in the defense realm, in some cases cutting off years from the time warfighters wait for new systems and capabilities.
The Defense Information Systems Agency (DISA) hopes to grease the skids between ingenuity and warfighters by offering a streamlined method for carrying out prototype projects and transitioning successes into follow-on production.
GAO determined that the US Transportation Command (TRANSCOM) both: (a) failed to properly provide for a follow-on production contract in its initial “prototype OTA” instrument, and (b) issued its sole-source production order before the prototype was complete, in violation of the requirements of the statute that provides OTA.
