Bid Protests On The Basis Of Cardinal Change: The Fine Line Between Solicitations And Contract Administration

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The Government Accountability Office’s (“GAO”) Comptroller General and the U.S. Court of Federal Claims (“COFC”) regularly consider bid protests.  Bid protests are challenges to the terms of a solicitation or to the award of a federal contract.  Post-award protests are generally the result of an interested, but unsuccessful, offeror challenging the agency determination that another offeror provided the best value to the Government per the criteria set forth in the solicitation.  Occasionally, offerors challenge the post-award performance of a contract; however, these tribunals typically use their discretion to dismiss such protests, as contract administration is generally beyond bid protest jurisdiction.

However, the GAO and the COFC have recognized at least one scenario in which they will consider matters of contract administration through a bid protest.  They reserved the right to review significant post-award contract modifications that circumvent the Competition in Contracting Act’s (“CICA”) “full and open competition” requirement.  This scenario is often referred to as the cardinal change doctrine.  In American Air Filter Company, Inc. B-188408, Feb. 16, 1978, 78-1 CPD ¶ 136, the agency changed a solicitation requirement for gasoline powered heaters to one for diesel powered heaters after the award.  The practical results of such a change were a doubling of planned performance time, a 29% increase in price, and an agency finding that the successful offeror’s work performed developing the gasoline engines prior to the cardinal change was for naught. Though it avoided the term “cardinal change”, the GAO sustained the protest, recommending that the agency terminate the awarded contract and issue an updated solicitation.

Despite the cardinal change doctrine allowing these tribunals to consider what might be considered contract administration issues, the nature of the dispute is such that a remedy is not always available to the protester.  In Webcraft Packaging, B-194087, Aug. 14, 1979, 1979 U.S. Comp. Gen. LEXIS 3077, an agency solicitation for paper had stringent requirements, which many potential offerors deemed not feasible during the bid process, leading them to submit “no bids.” Upon award, the successful offeror was unable to acquire paper that met the solicitation’s requirements. The agency subsequently relaxed the standards for the contract. One of the “no bid” offerors then filed a protest on the grounds that the field of competition materially changed due to the modification.  Despite sustaining the protest based on a cardinal change, the GAO stated that “[w]e cannot recommend corrective action in this instance due to the status of the procurement.”

Additionally, the COFC can also grant relief where government post-award actions violate the CICA.  One such example is Cardinal Maintenance Services v. United States, 63 Fed. Cl. 98 (2004) involving a cleaning services contract with an initial base period of one year and four subsequent one-year options.  During performance, the government issued changes that resulted in the contract pricing increasing nearly 80%.  The COFC held that a cardinal change had occurred and ordered the government to come up with a plan to re-solicit the work, while permitting the contract at issue to continue being performed for nine months to prevent disruptions.

While the cardinal change doctrine is a niche area of government contracting, it demonstrates why unsuccessful bidders should pay attention to competitors’ contract performance.  The government is within its right to execute change orders during performance, as needs arise. However, the government may not alter the work so drastically that it requires the contractor to perform duties materially different from those originally bargained for, as such actions exceed the scope of the contract’s changes clause and circumvent the competitive process. If the scope of early contract performance vastly exceeds the scope of the original solicitation, offerors may have a second chance to challenge the award. 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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