Is my widget on the Schedule or not? Labels matter, except when they don't.

Full and open competition is one of the core principles in the government contracts world. Nevertheless, rules and mechanisms exist that enable agencies to purchase goods and services on a simplified, sometimes even sole source basis - if they follow the rules. The Government Accountability Office (GAO) recently sustained a bid protest of the award of a task order because an agency got tripped by competition requirements that are unique to the Federal Supply Schedule.

Back in the 1950s, the GSA Federal Supply Schedule was established to enable federal agencies to buy commercial items in a simplified manner. After all, why should the Government have to run a full and open competition every time it wants to buy a mouse pad? Over the years, GSA has established a number of discrete schedules under which contractors can submit proposals and be awarded contracts to offer a negotiated list of items for sale to qualified purchasers (i.e., federal agencies, among others). For example, contractors that sell IT products and services can hold contracts under "Schedule 70."

As part of the process of awarding the contract, GSA vets the contractor's qualifications and negotiates a price for the items on the contractor's list on a "most favored customer" basis (a subject all unto itself). It's this vetting and negotiation function performed by GSA that serves as a stand-in for the full and open competitive process that agencies might have to go through in the absence of a simplified acquisition mechanism.

To buy a product or service, an agency identifies vendors on the schedule that sell the item and issues a Request for Quotation (RFQ) seeking offers for supplying the good or service or, as relevant here, the laundry list of items. A key to all this is that, unless it's a micro purchase, agencies can't buy something from a schedule contractor if it's not on their list. Otherwise, it's considered an "open market" purchase. The agency either has to prompt the vendor to add the "open market" item to its list or the vendor could choose to get the product or service from another schedule vendor that has it on their list. If no one offers the item under any schedule contract, the agency may be left with no option but to conduct a full and open procurement in the absence of some other contract vehicle.

Enter the Centers for Medicare and Medicaid Services. CMS issued an RFQ to Schedule 70 vendors "to provide information technology operations, maintenance, and support services to maintain CMS' data services hub..." CMS "intended to issue a fixed-price and time-and-materials task order." Among other elements, the "[v]endors . . .  were required to include any materials, travel and/or other direct costs (ODC)" in their quotation. It's these "ODCs" that, in the end, tripped up this acquisition. The ODCs included licenses for four versions of Red Hat's JBoss software (I love the name). As you will see, the JBoss software may or may not have been available on the schedule depending on who you ask.

CMS initially received six quotations and narrowed the group down to two vendors, Sparksoft (the awardee) and Scope InterTech ("Scope", the losing vendor and protester). I won't bore you with the details of all of the numerous emails and questions, etc., etc., not to mention the three protests over the course of this procurement. Needless to say, things were complicated. One of the complications, which was germane to this (the third) protest, arose over the question of whether the JBoss software could be acquired from a GSA vendor. As it turned out, there was no schedule vendor that offered the four needed versions of JBoss software for sale on a bundled basis.

The awardee's quotation, nevertheless, proposed the open market acquisition of the four JBoss licenses as a bundle.  The rejected vendor proposed the acquisition of the same four JBoss licenses from a schedule vendor on an unbundled basis but with a discounted price presumably because the four were being bought as a group. In either case, the same exact licenses were being offered for purchase. Got all this?

After CMS awarded the order to Sparksoft (now for the 3rd time), Scope protested asserting that, among other problems, Sparksoft's proposal violated GSA schedule competition requirements called for the open market acquisition of the JBoss software bundle when, in fact, Scope could and did offer the licenses from a schedule vendor. After the protest was filed, CMS posted an after-the-fact "justification and approval for other than full and open competition to add the bundled . . . licenses as open market items" to Sparksoft's award on the ground that "Sparksoft was forced to quote the open market bundled JBoss software licences because these items were not available on a GSA schedule." This basically was CMS's argument that its purchase decision was sound.

Essentially, the agency's argument rested on a contention that no supplier offered the requisite four versions of the software on a bundled basis on any GSA schedule; thus, Sparksoft had no choice but to acquire the licenses on the open market. Scope obviously disagreed because it had a supplier that offered the licenses for sale on its GSA Schedule, but only on an unbundled basis. GAO sided with Scope because CMS's insistence on the bundling requirement was little more than a semantic distinction in the absence of any difference - either way, the agency would get the same !#%@ thing. GAO sustained the protest and recommended that CMS "cancel the order . . . , assess its actual requirements," and, if the agency moves ahead with the procurement, "it should reevaluate proposals consistent with the RFQ and the rules applicable to FSS procurements, and make a new source selection." 

GAO could not, in my view, fathom why bundling the licenses was so crucial that CMS permitted an open market acquisition in this case. GAO saw no difference between the purchase of the four licenses as a bundle when the same four licenses could be bought from a schedule vendor with a discount on each of the licenses as if they were being bought as a bundle. To conclude otherwise would, as GAO put it, "circumvent[] the very purpose of the FSS . . . , to award contracts to vendors quoting scheduled items."

Bottom line - if a schedule order calls for a product or service that may or may not be on your list depending on how you describe it, think twice. In this case, the "bundle" label didn't matter and an otherwise defensible award got unwound.

The protest is Scope InfoTech, Inc., B-414782.4; B-414782.5 (March 22, 2018). Click here to access the decision (and immerse yourself in the other issues in the protest).