By: Paul Emanuelli
This article is an excerpt from the 2021 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its December 2019 decision in NCS Technologies, Inc., the U.S. Government Accountability Office (GAO) struck down a contract extension and determined that the government could not source its new requirements by splitting them between two existing contracts. The dispute dealt with the acquisition of laptops, workstations, related equipment, and installation. The complainant challenged the new acquisition, which the government attempted to divide between two separate blanket purchase agreements (BPAs). The GAO agreed that the new purchase was improper since one of the BPAs expired before the assignment could be completed and the remaining period of the assignment could not then be transferred to another BPA.
As the GAO concluded, new assignments that required delivery after the expiry of the original term of the agreement were permitted when the BPA included extension options covering that extended period. However, where there are no such extension options, the remainder of the assignment could not be transferred midstream from one BPA to a different BPA during the performance of the work:
In short, New Tech’s final revised quotation was based on an FSS contract that included an insufficient period of performance to cover the potential duration of the BPA, yet the BPA was established under that FSS contract. On this record, we find that New Tech was ineligible for award and that the agency’s establishment of the BPA with New Tech was improper. See FAR § 8.405-3(d)(3); GBK P’ship, LLC-Constant Assocs., Inc., supra, at 4 (finding that a vendor was ineligible for award where its FSS contract included an insufficient period of performance to cover the potential duration of the anticipated BPA); see also GSA Comments at 3 (“If a quote is submitted under an FSS contract for a BPA whose performance would extend beyond the expiration of the underlying FSS contract, the agency could properly reject that quote, and indeed could not make an award based on that quote.”).
Second, even were we to accept the SSA’s assertion that it established the BPA under New Tech’s two FSS contracts, we find that such an award was improper and inconsistent with applicable procurement law and regulation. As noted above, section 8.405-3(d)(3) of the FAR provides that “[c]ontractors may be awarded BPAs that extend beyond the current term of their GSA Schedule contract, so long as there are option periods in their GSA Schedule contract that, if exercised, will cover the BPA’s period of performance.” We note that this language plainly allows for a BPA to be established under a singular contract–not multiple contracts–held by a contractor. We also note GSA’s unequivocal assertion, in this regard, that “a vendor may not use two GSA FSS contracts to fulfill a period of performance requirement to compete for a BPA.” GSA Comments at 3.
The GAO therefore struck down the new acquisition and recommended that a new procurement process be initiated to properly procure the required goods and services.
As this case illustrates, the proper scoping of requirements includes the need to precisely define the duration of performance. Purchasing institutions should be careful to draft the scope of their contracts to ensure adequate extension options to address ongoing continuity of performance and should avoid relying on standing agreements that are set to expire before the end of a specific assignment.
