Protest challenging the AbilityOne Commission’s decision to use price competition in a procurement as part of a pilot program is sustained. The AbilityOne Commission decided to implement, through an interim policy, a pilot program to use competitive procedures for a base support contract at Ft. Meade. The protester alleged that the decision to use competitive procedures violated the Javits-Wagner-O’Day Act, the federal law that created the AbilityOne program. The court agreed with the protester. Congress and the AbilityOne Commission have developed a statutory and regulatory procurement scheme that excludes price competition. The pilot program, which made price competition part of the selection criteria, fundamentally changed the AbilityOne procurement process. But the pilot program was never approved by Congress, and it did not go through the Commission’s normal rulemaking process. The Commission could not implement this type of change to the procurement process through an interim policy.
The AbilityOne program was established by the Javits-Wagner-O’Day Act to provide jobs to individuals with vision impairment and severe disabilities. As part of the Act, Congress created a committee, the AbilityOne Commission, to identify programs and services furnished by qualifying non-profit agencies that are suitable for government procurement. Once the Commission identifies a good or service suitable for procurement from a qualified non-profit, that good or service is placed a procurement list, and federal agencies must obtain that good or service through a qualified non-profit. Because the policy of the AbilityOne Program is to increase opportunities for the blind and people with disabilities, procurements under the program are designated as “other than competitive,” meaning that full and open competition is not required.
As part of the AbilityOne program, Congress directed the AbilityOne Commission to designate central non-profit agencies (CNAs). These CNAs facilitate the distribution of orders of goods and services on the procurement list to the qualified non-profit agencies that will actually provide them.
Here is how an AbilityOne procurement works: A federal agency provides the AbilityOne commission with information—e.g., solicitation, statement of work, procurement history—that the Commission uses to assess whether a product or service is suitable for inclusion on the procurement list. The AbilityOne Commission distributes the information to CNAs, which in turn provide the information to interested qualified non-profits. The non-profits submit a technical proposal to the CNA without pricing. The CNA evaluates the technical proposals. Once the CNA identifies a non-profit to perform the contract, the selected non-profit, the CNA, and agency customer negotiate a price. The CNA then recommends to the AbilityOne Commission that the services be added to the procurement list, and that the non-profit be authorized to perform those services at the price the parties negotiated. If the Commission determines that the work is suitable for inclusion on the procurement list, it publishes the services in the Federal Register. The federal agency may then award the contract to the non-profit.
In Section 898 of the National Defense Authorization Act FY 2017, Congress directed the Secretary of Defense to establish a panel on AbilityOne oversight to explore opportunities for competition in the AbilityOne Program. IN 2018, the DoD AbilityOne panel made its first report to Congress. In the report, the panel proposed requiring best value tradeoffs in AbilityOne acquisitions that consider price.
Congress did not act on the panel’s recommendation. The AbilityOne Commission, however, did. Although the Commission has authority to adopt its own regulations, it eschewed the regulation process in this case. Instead, the Commission adopted an Interim Pilot Test in which it would institute competitive procedures into the process for selecting qualified non-profits. Under this pilot program, the pricing of goods and services would occur as part of the procurement evaluation instead of during negotiations between the non-profit, CNA, and federal agency.
The Army requested that the AbilityOne use the competitive processes pilot program use for a base operations support contract at Fort Meade. The AbilityOne commission issued a memorandum formalizing the decision to use competitive processes for the base support contract in May 2020.
Melwood Horticultural Training Center was the AbilityOne non-profit agency that had been performing the base operations support contract at Ft. Meade. When the AbilityOne Commission announced the decision to use competitive processes for the base support contract, Melwood filed a pre-award bid protest with the Court of Federal Claims, challenging the decision. The court found that the protest was not ripe because it did not challenge final agency action. The protest only challenged the memorandum announcing the pilot program; it did not challenge an action that actually implemented the program. Thus, the court dismissed Melwood’s protest.
While the protest was pending, the CNA for Ft. Meade, SourceAmerica, issued an Opportunity Notice announcing its intent to conduct a procurement that would include price competition among qualified non-profits. The Notice provided that the AbilityOne Commission would recommend a non-profit that offered a technically-acceptable proposal that presented the best value to the government based on a tradeoff between past performance and price. Melwood then filed a second protest challenging the opportunity notice and asking the court to enjoin the award of contract using the pilot procedures.
The government alleged that Melwood’s second protest was untimely under Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007). The government argued that Melwood should have amended its previous complaint when SourceAmerica issued the Opportunity Notice. By failing to amend its complaint, and then waiting 20 days to file a new complaint, the government contended, Melwood had sat on its rights and waived any objection it had the complaint.
The court summarily rejected this argument, reasoning that Melwood had not sat on its rights. To the contrary, from the beginning, Melwood had been vocally and diligently complaining about a flaw in the procurement process. The purpose of the Blue & Gold rule is to ensure that protester’s raise concerns early; it is not a trap for the overly earnest protester. The waiver rule did not apply to this case.
Turning to the merits, the court noted that the crux of the case was whether the interim policy was a permissible exercise of the AbilityOne Commission’s authority, or whether it contravened applicable statutes and regulation.
The court found that pilot program violated federal statute. Under 41 U.S.C. § 8504, the AbilityOne Commission must procure products and services according to its own regulations. In this case, the AbilityOne Commission conducted the procurement in accordance with a pilot program that was never implemented into the regulations.
What’s more, the court reasoned, the pilot program contravened the AbilityOne program’s regulations. The AbilityOne regulations provide that the Commission may revise prices through collaborative negotiations after the a non-profit has been selected. The pilot program, however, did not contemplate collaborative pricing; instead, it created a process by which non-profits engage in a price competition.
The government argued that the competition was merely a means of price discovery, and that even with the pilot program, price would still be set collaboratively. But the court found this argument paper-thin. The AbilityOne Commission was conducting a price competition through the pilot program. Because the pilot program required non-profits to suggest a price before even being considered for the procurement list, it forced them to negotiate against themselves just to be added to the list.
The government also argued that the pilot program did not really contemplate a competition based solely on price because Opportunity Notice also provided for evaluation of other factors. The court noted that while this was true, the Opportunity Notice ultimately contemplated a best value tradeoff, which considered prices.
The government contended that the AbilityOne regulations merely permit but do not require collaborative negotiations to determine price. The court, however, found that this was a post-hoc rationalization—i.e., a convenient litigation position. The interim policy did not refer to any of the AbilityOne regulations, nor did it attempt to justify the pilot program was some other methodology that was permitted by the regulations.
In short, Congress and the AbilityOne Commission had developed a procurement scheme that excludes price competition. The pilot program, however, made price competition part of the selection criteria. The pilot program thus fundamentally changed process in which AbilityOne procurements were handled. But the program was never approved by Congress, nor did it go through the Commission’s normal rulemaking process. The Commission could not institute this program through an interim policy.
After consider the four factors for injunctive relief, the court found that Melwood was entitled to an injunction that precluded the AbilityOne Commission from using competitive procedure for the Ft. Meade contract.
Melwood is represented by Meghan A. Douris and Alix K. Town of Oles Morrison Rinker & Baker LLP. The government is represented by Tanya B. Koenig, Steven C. Hough, Douglas K. Mickle, Martin F. Hockey, and Brian M. Boynton of the Department of Justice as well as Robert B. Neill and of the Army along with Timi N. Kenealy of the AbilityOne Commission.
