Monday, October 12, 2015

Unduly Restrictive Solicitation Provisions

One common bid protest scenario are challenges that a solicitation specification or requirement is unduly restrictive of competition. When a protestor challenges a requirement as such the procuring agency has the responsibility of establishing that the specification or requirement is reasonably necessary to meet the agency's needs. The Comptroller General will examine the adequacy of the agency's justification for a restrictive solicitation provision to ensure that it is rational and can withstand logical scrutiny. The fact that a requirement may be burdensome or even impossible for a particular firm to meet does not make it objectionable if the requirement properly reflects the agency's needs.

A recent bid protest decision handed down by the Comptroller General illustrates this concept. NASA solicited bids for required financial audits of its Goddard Child Development Center and for its Goddard Employees' Exchange. The statements of work required audits to be performed in accordance with GAGAS (Generally Accepted Government Auditing Standards) and also included the requirement that offerors were required to provide evidence that they had a Peer Review withing the last three years in accordance with GAGAS.

One company challenged the peer review requirements contending that the peer review requirements were unduly restrictive of competition. The protestor argued that certain state statutes and regulations may provide an exemption from the peer review requirement.

The Comptroller General(CG) didn't buy the argument. The CG found that NASA had established a reasonable basis for the peer review requirement. NASA maintained that the requirements are necessary for compliance with federal law, explaining that the Inspector General (IG) Act of 1978 requires agency IGs to assure that work performed by non-federal auditors complies with GAGAS. GAGAS requires that organizations performing audits have an external peer review performed by reviewers independent of the audit organization being reviewed at least once every three years (see GAGAS 3.82(b). Therefore NASA asserted that contracting with a vendor that has not had a peer review would be in contravention of GAGAS and, by extension, the IG Act.

The CG concluded that the inclusion of the Peer Review requirement was reasonable.

By the way, if you would like to see what a Peer Review Report looks like, check out the reports for the Department of Defense Office of Inspector General (DoD-IG) or the Defense Contract Audit Agency (DCAA). To see an example of a Peer Review report issued for non-federal auditors, click here.

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