“Educating the Government Contracting Community”

GAO Has Jurisdiction in Protests of Subcontract Award Where Government Involvement in Procurement Pervasive

In a recent decision, the Government Accountability Office (GAO) confirmed its jurisdiction over protests of a subcontract award in limited circumstances. The protester, The Panther Brands, LLC, filed a protest of an award to its competitor by a subcontractor hired to find a driver and team that would ultimately be sponsored by the Army National Guard as a part of its advertising and marketing strategy. In its response, the Army National Guard argued that the “GAO [did] not have jurisdiction because protest involved the selection of a second-tier subcontractor.”

GAO, however, disagreed. In finding that it did, in fact, have jurisdiction, GAO noted that the Competition in Contracting Act of 1984, the nexus of GAO’s jurisdictional authority in bid protests, provides that GAO has such authority over “solicitations and contract awards that are issued ‘by a Federal agency.’” With respect to review of subcontractor procurements, GAO found that it has authority to review such protest decisions where, “as a result of the government’s involvement in the award process or the contractual relationship between the prime contractor and government, the subcontract is in effect awarded on behalf of the government, that is, where the subcontract is awarded ‘by or for the government.’” To GAO, a subcontractor procurement is “by” the government “where the agency handled substantially all of the substantive aspects of the procurement, and in effect, took over the procurement, leaving the prime contractor only the procedural aspects of the procurement.”

Applying its decisions in previous cases, GAO found that the agency had jurisdiction in this protest because as GAO noted, “the Army National Guard controlled essentially every meaningful aspect of the procurement”—the evaluation criteria was developed by the Army National Guard, the proposals were evaluated by the Army National Guard and the final selection decision was made by the Army National Guard. http://www.gao.gov/assets/670/660799.pdf

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