Infotech and the Law: Reform the task order ombudsman, or suffer the consequences

The Acquisition Advisory Panel, formed by the National Defense Authorization Act of 2004, allegedly plans to issue its draft report this month, recommending changes in federal contracting rules. Among those will be to establish the right of contractors to protest task and delivery orders, for more than $5 million, that are issued under multiple-award, indefinite-delivery, indefinite-quantity contracts.

The Federal Acquisition Streamlining Act (FASA) of 1994 barred protests of most task and delivery awards. Instead, it gave disappointed bidders the right to file complaints with the agency task-and-delivery order ombudsman. Twelve years after FASA, multiple-award IDIQ contracts dominate the acquisition landscape. Task-and-delivery orders grow larger, and sole-source task-and-delivery order awards are prevalent.

The advisory panel's suggested expansion of the bid protest process invites review of the ombudsman's role in multiple-award IDIQ vehicles.

According to FASA, multiple-award contract holders generally are entitled to "a fair opportunity to be considered" for each order exceeding $2,500. The agency must follow its announced placement procedures and must apply its stated selection criteria for the contracts in question.

If a contractor believes that an agency has not treated it fairly, FASA lets the contractor complain to the agency's independent authority designated as the ombudsman.

However, the task-and-delivery order ombudsman system has been a bit of a mystery. Many contractors, and some agency officials, don't even know it exists. Few of our clients have invoked their rights under it.

Ombudsmen do not appear to have the power, actual or perceived, to impose their true views of the situation on the contracting officer. The adjudicatory process is often unstated and ad hoc. Decisions go unpublished. As a result, the ombudsman system does little to correct injustices and has little salutary effect on the acquisition process.

Contractors may have another option, as a recent decision of the Armed Services Board of Contract Appeals explained. Under FASA, a contractor can't protest, but it can sue the agency for breach of contract. In L-3 Communications Corp. (ASBCA No. 54920), the board of contract appeals held in a July ruling that it had jurisdiction over a contractor's claim that the agency breached the ordering clause of the contract.

L-3's bid for the delivery order was $69 million, compared to the Boeing Co.'s bid of $100 million, but the agency selected Boeing's proposal as offering the best value to the government. L-3 claimed that the agency deviated from the ordering evaluation scheme, and sought $2 million in lost profits and other damages.

The board held that, although L-3 had no right to protest the delivery order, L-3 could try to establish a breach of the contract and recover damages.

Contractors prefer not to sue their customers, and proving damages under an IDIQ contract often is difficult. The current scheme affords few good options, yet huge dollars are at stake.

If the task and delivery order ombudsman process had some teeth, it could serve all parties' interests.

Complaints could be resolved quickly, informally and with a sense of fairness, which would be consistent with FASA's streamlining objective. Contract claims also might be avoided.

And expanding the role of bid protests might not be necessary. It is too bad that agencies have not policed themselves. May the best protester win.

John Jensen is a partner in the government contracts practice at Pillsbury Winthrop Shaw Pittman LLP in McLean, Va. He can be reached at john.jensen@pillsburylaw.com.