The experiment over, TSA now under FAR

Infotech and the law | Legal insights for today's market

The six-year procurement experiment that exempted the
Transportation Security Administration from Federal
Acquisition Regulation rules has finally come to an end. After
June 23, all TSA procurements became subject to the FAR
rather than to the Acquisition Management System rules used by the
Federal Aviation Administration.

When TSA was formed within the
Homeland Security Department, the Bush
administration argued that it needed more
flexibility than the FAR allowed so TSA
could get on with the business of screening
the traveling public from terrorists
without the bother of complying with the
procurement rules other agencies have to
follow.

After six years and numerous congressional
and Government Accountability
Office reviews singling out TSA for ineffective
procurement practices, lawmakers
decided they had seen enough. TSA's 2008
appropriations act directed the agency to
use the FAR for future procurements.

Not only does the change mean TSA's
$1.7 billion acquisition budget will be
spent according to the same rules that
govern the rest of the
federal government,
but competitors for
TSA contracts will
have an opportunity
to protest improper TSA contract awards
in a neutral forum. GAO has published a
final rule stating that procurements on
solicitations issued by TSA on or after
June 23 will be subject to GAO protest
jurisdiction. Previously, contractors had to
file protests of TSA procurements at a disputes
office run by FAA.

Placing TSA under the FAR has the
potential to materially affect some contractors,
especially those that provide services.
About 80 percent of TSA's acquisitions
are service contracts. One big difference
between the FAR and TSA's former
rules is that sole-source contracts, which
TSA widely uses, are disfavored under the
FAR.

In another step toward better competition,
the Defense Department issued a
policy memo in late May implementing
the enhanced competition requirements
for task and delivery orders under multiple-
award contracts, which were included
in DOD's 2008 authorization act.

Although the FAR has not yet been modified
to include those new requirements,
DOD has directed all of its procurement
offices to follow them for task and delivery
orders issued after
May 27.

The rules now require DOD to give all
multiple-award contract holders a fair
chance to compete for orders in excess
of $5 million. At a minimum, the
change means that all contractors will
get a clear statement of the task- or
delivery-order requirements, a reasonable
period of time to prepare an offer,
and notice of the evaluation factors to
be used in selecting a supplier.

After an order is awarded, every contractor
that submitted an offer will
receive a written statement detailing
the basis of the order award and offering
an opportunity for a debriefing. The
right to protest a task-order award is still
limited to orders of more than $10 million,
so the post-award information is
helpful for future competition but doesn't
subject the ordering process to protest
delays for smaller awards.

Orders of less than $10 million can be
protested if the order increases the scope,
period or maximum value of the multiple-award
contract, but that would be a rare
occurrence.

Jonathan Cain (jtcain@mintz.com) is a member of
law firm Mintz Levin.

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