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February 06, 2023 - Protests & Litigation

January 2023 Bid Protest Roundup: Size Protests, Blue & Gold, Sole Source

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

Since the January Bid Protest Roundup marks the beginning of February, we begin with a takeaway that needs no supporting authority beyond common sense: if you have not already done so, get your Valentine’s Day gift now. And, like a box of chocolates desperately procured at the last minute, this Roundup has a bit of everything: a case from the Federal Circuit on bid protest jurisdiction, a Court of Federal Claims case exploring the nuances of the Blue & Gold Fleet rule, and a capstone from the GAO on the Small Business Innovative Research (“SBIR”) program. We begin with a case from the Federal Circuit concerning the bid protest jurisdiction of the Court of Federal Claims.

22nd Century Techs., Inc. v. United States, No. 22-1275 (Fed. Cir. Jan. 10, 2023)

In 22nd Century Technologies, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) affirmed a Court of Federal Claims (“CoFC”) decision that it lacked jurisdiction to review a Small Business Administration size determination made in connection with a task order procurement.22nd Century Technologies (“22nd Century”) was the recipient of an IDIQ contract, “RS3,” which provides “knowledge-based support services for requirements with Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance related needs.”[1] Although the RS3 IDIQ was itself not limited to small businesses, task orders issued under it could be set aside for small business, and in such set-aside procurements, only small businesses could submit a bid and receive award. When 22nd Century submitted its proposal for the RS3 IDIQ contract, it was a small business and represented itself as such. However, by the time it submitted its task order proposal submission on February 8, 2021, it had outgrown its small business status. The agency awarded 22nd Century the task order.

After 22nd Century received the task order, two disappointed offerors filed size protests, arguing that the awardee was not small when it submitted the task order bid, as the relevant Request for Proposal (“RFP”) required. The SBA Area Office determined that, during the procurement, the contracting officer issued a request that offerors indicate whether they are a small business on a form. The Area Office held that this request effectively constituted a request for recertification of size status in connection with task order proposals, and thus 22nd Century was “other than small,” and ineligible, for award. 22nd Century appealed this decision, and three months later, the SBA’s Office of Hearing Appeals (“OHA”) affirmed the Area Office’s determination. The agency then terminated its award to 22nd Century.

22nd Century filed a bid protest at the CoFC to enjoin the termination of the task order, arguing that, because the RFP lacked an explicit size recertification request, the termination was invalid. The government moved to dismiss pursuant to the Federal Acquisition Streamlining Act of 1994 (“FASA”), 10 U.S.C. § 3406(f), which bars review of certain task order procurements at the CoFC. The court granted the government’s motion on the ground that the challenged actions were connected to the issuance of a task or delivery order that did not fall within an exception to FASA sufficient to confer jurisdiction. The court noted that, although it would ordinarily have jurisdiction to review an SBA size determination in connection with a bid protest, jurisdiction here was barred under FASA. 22nd Century subsequently appealed to the Federal Circuit.

The protester argued that FASA’s bar on bid protests did not affect protests arising from an OHA size determination; in other words, that a “size protest” is different from a standard bid protest. Relying on Harmonia Holdings Group, LLC v. United States, 999 F.3d 1397, 1402–03 (Fed. Cir. 2021), the protester asserted that the Federal Circuit had distinguished size protests from bid protests, and accordingly, the CoFC could exercise jurisdiction over the matter. Alternatively, the protester argued that, although its protest relied on CoFC bid protest jurisdiction, the case was, in essence, a challenge to the agency’s decision to terminate 22nd Century’s task order, a distinct event from issuance of the task order.

The Federal Circuit rejected both arguments. Harmonia, the court noted, never suggested that a size protest could serve as a basis for CoFC jurisdiction; the unambiguous language in FASA barred jurisdiction over bid protests involving task orders with the exception of two narrow exceptions not met in this case. FASA, the court held, “effectively eliminates all judicial review for protests made in connection with a procurement designated as a task order—perhaps even in the event of an agency’s egregious, or even criminal, conduct.”FASA circumscribes the CoFC’s bid protest jurisdiction, even under the Tucker Act, its primary jurisdictional statute. FASA restricts CoFC review of certain task orders or delivery orders that do not either (1) alter the scope, period, or maximum value of a contract under which a task order is issued or (2) exceed $25 million in value.Since neither exception applied to the task order, the CoFC lacked jurisdiction to hear the case.

The Federal Circuit also found the protester’s second argument flawed, holding that a challenge to a termination would have to be brought pursuant to the Contract Disputes Act (“CDA”). The Federal Circuit found that, although the CDA permitted nonmonetary claims, it knew of no case in which an agency was enjoined from terminating a contract pursuant to the CDA. More fundamentally, a claim under the CDA would have to comply with CDA requirements, including the requirement to file a claim with, and receive a final decision from, the contracting officer. The protester did not assert it had done either.


Take a step back and consider the nature of your claim and the jurisdictional limits of your chosen forum. The CoFC is a court of limited jurisdiction. FASA prohibits the CoFC from hearing task order or delivery order protests unless the order affects the scope, period, or maximum value of the contract under which the order is issued, or if the order itself is over $25 million. Absent one of those exceptions, the CoFC lacks jurisdiction to adjudicate a protest in connection with a task or delivery order. Additionally, the challenged action should be appropriate to the jurisdictional scheme. A termination should be pursued under the CDA, which has its own requirements. These requirements include presentment to a contracting officer and issuance of a contracting officer’s final decision.

SLS Fed. Servs., LLC v. United States, No. 22-1215 (Fed. Cl. Jan. 10, 2023)

Next is a fascinating case in which the CoFC found the Blue & Gold Fleet rule did not bar a post-award protest that, in essence, challenged a solicitation’s terms. SLS Federal Services (“SLS”) successfully protested the Naval Facilities Engineering Systems Command’s award of an indefinite-delivery global contingency construction contract to six other contractors. SLS argued that the agency failed to request adequate price information in its solicitation, rendering the agency unable to conduct a price reasonableness analysis, and also that the agency failed to conduct discussions that are required by the Defense Federal Acquisition Regulation Supplement (“DFARS”).

The solicitation provided that award would be on a best-value tradeoff analysis, considering cost and non-cost factors.Following award, IDIQ recipients would compete for task orders. Notably, the solicitation requested only cost data, which included hourly labor rates and indirect ceiling rates. This data excluded profit, a component of price. The evaluation involved an “Evaluation Board,” which evaluated the cost and non-cost factors, compiling separate reports for each. Next, an “Advisory Council” reviewed these findings, created its own report, and issued an award recommendation. Finally, a Source Selection Authority reviewed recommendations and, if it determined discussions were unnecessary, selected contracts that provided the best value to the government.

When it did not receive an award, SLS filed a protest at the GAO, alleging that the agency should have conducted discussions and failed to analyze price reasonableness. SLS contended that, by failing to request price information, the agency was unable to assess price reasonableness. Finding “potential merit” in the price reasonableness argument, the agency decided to take corrective action, indicating it would “address the evaluation of the proposals, including, but not limited to, price reasonableness.” The GAO subsequently dismissed SLS’s protest.

Several months later, the agency announced that its award decision was unchanged. The Evaluation Board’s report indicated that the only corrective step taken was to remove a Contract Reporting Assessment Reporting System (“CPARS”) evaluation, but the corrective action otherwise included no amendments or requests for proposal revisions. SLS filed a second protest with the GAO and, following disputes over document production, filed a protest at the Court of Federal Claims.

At the CoFC, the intervenor argued that SLS forfeited its ability to challenge price reasonableness because its price reasonableness argument was, in essence, an untimely challenge to a patent error in the solicitation. Under Blue & Gold, such a challenge would have to be asserted prior to the receipt of final proposals. The court, however, rejected this argument because the agency never raised the waiver defense at the GAO.Had it done so, Blue & Gold would have barred SLS’s challenge at the CoFC.Instead, the agency decided to take corrective action based, in part, on the protester’s assertion that the agency should have requested price information to conduct a proper price reasonableness analysis. By making that choice, the agency became susceptible to a challenge that its corrective action failed to fix the procurement error.

The court next examined the merits of the protester’s price reasonableness argument and found that, although the agency ostensibly took corrective action in part to address a potential price reasonableness defect, it never obtained the missing price data and remained unable to analyze price reasonableness. Therefore, the agency’s corrective actions did not cure the alleged procurement defect.

The agency countered that it properly analyzed price reasonableness under FAR Subpart 15.404-1(b), and the cost information it collected allowed it to determine whether prices were reasonable. The court was unpersuaded, holding that the agency could not have analyzed price reasonableness—although the FAR permits evaluation of price without considering costs, this presupposes that an agency possesses some pricing information. Because the solicitation only required cost information, it lacked the necessary information to perform a price analysis. This flaw continued because the agency’s corrective action never attempted to obtain price information.FAR Subpart 15.404-1(b), the court explained, “em[powers agencies to review proposed prices ‘without evaluating its separate cost elements[,]’” but the reverse is not true.An agency does not perform a price analysis when it examines cost elements and ignores price.Price is broader than cost and includes profit.To satisfy FAR Subpart 15.404-1(b), the agency must compare price, which it did not do.

SLS also prevailed in its argument that the agency should have conducted discussions. The court observed that, in covered Defense Department procurements, “it is settled that DFARS 215.306 ‘create[s] a presumption in favor of’ discussions.”[2]DFARS 215.306(c)(1) states that, for acquisitions with a value greater than $100 million, “contracting officers should conduct discussions.” The court agreed with SLS’s contention that this language created a presumption that discussions would take place for a qualifying procurement.The court noted that FAR 2.101 made clear that “should” means “an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance[,]” and precedent confirmed this interpretation; and there was “near universal agreement that DFARS 215.306 creates a presumption that defense agencies will engage in discussions when an acquisition is valued at $100 million or more[,]” and the agency cannot choose to ignore this requirement without documenting a rational justification for doing so. Thus, the agency erred by not conducting discussions.

The Court ruled that Blue & Gold did not apply here as well. Although the solicitation stated that the agency did not intend to conduct discussions, this did not put offerors on notice that the agency would violate the DFARS.


Blue & Gold is a potent weapon that agencies may wield whenever a protest ground could arguably be tied to a patent error in a solicitation. This remarkable case shows that Blue & Gold needs to be invoked as a defense or may be waived. This is particularly true if an agency takes corrective action based upon a ground that could have been avoided had the Blue & Gold defense (or its GAO counterparts) been used. Having taken corrective action in response to a protest ground that could have been dismissed as waived or untimely, an agency may not later “hide behind” the rulewhen its corrective action fails to address the defect.

Second, DFARS 215.306 creates a presumption that defense agencies will engage in discussions when an acquisition subject to DFARS Part 215 has a value of $100 million or more.If an agency subject to the DFARS does not conduct discussions in such a procurement, it may provide a basis for protest if the agency fails to provide a compelling explanation for not holding them.

PublicRelay, B-421154, et al. (Comp. Gen. Jan. 17, 2023)

Our final case is an unsuccessful protest that an agency improperly failed to enter into negotiations for an SBIR phase III award on a sole source basis. In PublicRelay, the eponymous protester contested issue of an order to another small business for a contract for media database, monitoring and analytics, and news briefing services for the SBA’s Office of Communication and Public Liaison.

The GAO decision provides a neat summary of the program.SBIR is a program intended to increase small business participation in federally funded research and development (“R&D”). The program requires certain agencies, including the SBA and the National Science Foundation, to reserve a portion of their R&D funds for award to small businesses. The program consists of three phases. In phase I, firms apply for award to test the merits of a concept; in phase II, firms may submit a proposal to develop the concept; and in phase III, agencies may procure work that derives from, extends, or completes efforts under phases I and II, where appropriate.

PublicRelay asserted that it received contracts from the National Science Foundation under SBIR, and through phase I and phase II programs, developed certain media analysis software and built and tested software testing modules. When PublicRelay learned of the Office of Communications & Public Liaison (“OCPL”)’s need for media monitoring and analytics, it informed OCPL that it was a SBIR company that performed “media monitoring briefings, and analytics for almost 100 of the Fortune 500[,]” expressed interest in responding to a solicitation for such requirements, and asked whether OCPL would issue a solicitation for these needs.

The contracting officer for OCPL, however, informed PublicRelay that it would use GSA schedule contracts to fill these needs, and since PublicRelay was not on these schedules, it would not be eligible for award. OCPL posted a solicitation on GSA e-Buy. The contracting officer also requested PublicRelay provide a response addressing requirements in the solicitation’s performance work statement that might derive from, extend, or complete PublicRelay’s efforts under its earlier SBIR agreements, to which PublicRelay responded.

OCPL issued an order under the GSA multiple-award schedule to another vendor.PublicRelay subsequently requested the GSA pause its procurement and enter into good-faith negotiations for a SBIR phase III award. OCPL responded and advised PublicRelay that it determined its requirement would not constitute a SBIR phase III opportunity, because the requirement did not derive from, extend, or complete PublicRelay’s SBIR work.OCPL provided four reasons for this decision. First, it asserted it was unaware of PublicRelay’s SBIR work when it drafted the requirement. Second, the Performance Work Statement (“PWS”) did not require the technology PublicRelay provided in its response. Third, the requirement was long-standing and was established prior to PublicRelay’s entry into the SBIR program. Finally, OCPL did not create its requirements using PublicRelay’s concepts, ideas, or research.

PublicRelay protested, arguing that OCPL violated the SBIR policy directive, which required it to enter into good-faith negotiations for a phase III contract. The protest asserted OCPL’s determination that its requirements did not qualify as phase III work were incorrect and that performance would, in fact, extend its work under prior SBIR awards. None of the reasons OCPL provided, it continued, satisfied SBIR standards governing whether PublicRelay should receive award. OCPL contended that its requirement had no relation to PublicRelay’s prior SBIR work and did not require the protester’s technology, and that it was therefore not obligated to negotiate.

The GAO determined that although OCPL could have pursued a phase II award, it was not required to do so. The GAO rejected PublicRelay’s contention that the SBA’s requirement met the definition of a phase III award as an extension of the technology that it developed under its SBIR phase I and phase II efforts.

Examining the SBA’s policy directives, the GAO determined the SBA’s policy directive provided agencies discretion to pursue SBIR phase III awards, and such awards were required only when an agency sought the specific technology developed under the SBIR program. This requirement applies “when an agency seeks the specific technology developed by the SBIR awardee under its prior awards.” Although the OCPL’s requirements could have constituted an extension of PublicRelay’s phase I and II technology because PublicRelay would have employed that technology in its technical solution, the agency was not obligated to pursue a phase III award because it did not specifically seek to use that technology. The OCPL properly performed market research for its requirements and properly awarded contract to a source on GSA e-Buy.


If an agency seeks to use the particular technology a business developed under an SBIR or Small Business Technology Transfer (“STTR”) phase I or II award, it is generally obligated to negotiate in good faith with that entity. If, however, an agency’s requirements are not predicated on any specific technology, a contractor cannot use the SBIR or STTR program to compel the agency to negotiate with it on a sole-source basis. An agency generally may, however, engage in sole-source negotiations if it wishes, provided the entity’s approach to the new work would derive from, extend, or complete its prior phase I or II work.

[1] AKA the Responsive Strategic Sourcing for Services, or “RS3” contract.

[2] Citing Oak Grove v. United States, 155 Fed. Cl. 84, 108 (2021).

MoFo law clerk Thomas Lee contributed to this article.