The Competition in Contracting Act (CICA) mandates the use of procurement procedures enabling full and open competition in federal acquisition. Therefore, government agencies may not place task or delivery orders that fall outside the scope of the underlying master contract, such as a blanket purchase agreement (BPA) or indefinite delivery indefinite quantity (IDIQ) contract. Consequently, contractors may challenge the issuance of task or delivery orders that fall outside the scope of the underlying master contract in the form of a bid protest. Depending on the protestor’s choice of forum, the Government Accountability Office (GAO) or the Court of Federal Claims (COFC) must then decide whether there are material differences in scope between the protested task or delivery order and the relevant underlying master contract.

In B-412821, the GAO sustained such a bid protest challenging the issuance of an out-of-scope sole-source delivery order under a Government Services Administration (GSA) Federal Supply Schedule (FSS) Blanket Purchase Agreement (BPA). The protest involved the acquisition of Microsoft e-mail products for the Internal Revenue Service (IRS). The BPA was issued in 2013 for maintenance and software assurance services for the agency’s existing inventory of Microsoft products and services for a period of three years. The BPA included a complete schedule of the Microsoft product licenses owned by the IRS, along with their quantities. The terms of the BPA expressly permitted the IRS to upgrade and use the latest version of each Microsoft product during the term of the BPA. Additionally, if Microsoft products owned by the IRS became unsupported by the manufacturer, the IRS retained the right to convert its licenses to comparable, supported Microsoft products at no cost. In other words, by utilizing this BPA, the IRS intended to keep its portfolio of Microsoft licenses up to date with the latest versions of the software.

The delivery order subject to the protest was placed against the BPA by the IRS in June 2014. The protestor alleged that the IRS exceeded the scope of the underlying BPA by improperly acquiring email-as-a-service (EaaS) capabilities on a sole-source basis, as EaaS capabilities were not contemplated under the BPA. Notably, the IRS’s email capabilities at that point resided entirely on local agency computers and were obtained using more than 100,000 Office Professional Pro Licenses on a term basis. The protestor argued that since EaaS was a cloud-based product that did not install software on local IRS computers, it was distinct from what the BPA had originally contemplated. Therefore, according to the protestor, the IRS should have competed its EaaS requirements among all vendors capable of providing the service. Meanwhile, the IRS denied the protestor’s allegations and stated that it did not acquire a new EaaS capability by awarding the sole-source delivery order under the FSS BPA. Instead, the IRS maintained that it simply upgraded its Microsoft licenses to the latest version of Microsoft products, as was its prerogative under the BPA. Specifically, the contracting officer (CO) stated that the IRS upgraded its “Office Professional Plus” licenses to “Office Pro Plus” licenses on a term basis, pointing out that it was the agency’s intention that the licenses would all reside locally on IRS computers. Notably, Microsoft’s “Office Professional Plus” product was a “hybrid” cloud email solution that provided the IRS an option to host most of its email users on the cloud while also hosting certain user accounts that required enhanced security locally on IRS servers. However, the government argued that despite this hybrid capability, the IRS did not deploy, or intend to deploy in the future, any user email accounts to the cloud.

The GAO disagreed with the IRS, finding that the CO’s representations were factually inaccurate. Specifically, the GAO determined that the “Office Pro Plus” product acquired under the BPA was an Office 365 cloud-based product distinct from the “Office Professional Plus” product already owned by the IRS. The GAO pointed to an email from a senior IRS IT official that referred to the agency’s recent acquisition of Microsoft product licenses as Office 365 licenses. In the email, the agency official also referred to the “Office Pro Plus” product as a “cloud solution for email.” The GAO also noted several differences between Microsoft’s product literature for the recently acquired hybrid cloud product and the licenses originally contemplated under the BPA. Specifically, the IRS possessed “Exchange Standard Client Access Licenses” in its existing inventory under the BPA, which were described as enabling users to access an organization’s own network server. On the other hand, the protested delivery order acquired licenses for Microsoft’s “Exchange Online Service,” which was described by Microsoft as a product designed to host emails on Microsoft’s servers in the cloud. Therefore, the IRS had acquired a cloud-based Microsoft 365 EaaS product via the delivery order despite the underlying BPA not identifying any cloud-based products. The GAO found that such an acquisition exceeded the scope of the FSS BPA because the BPA’s terms limited acquisition under it to updated or replacement versions of preexisting software already installed locally on agency computers. Finally, the GAO also determined that the IRS’ decision not to utilize Microsoft cloud servers by deploying the acquired software product locally within the IRS computing environment was made retroactively in reaction to the subject protest. Therefore, the GAO sustained the protest by deciding that the IRS used the delivery order to acquire a “hybrid” cloud-based email solution materially different from the products contemplated under the BPA.

Contractors protesting the issuance of a task or delivery order for exceeding the scope of the underlying master contract should aim to demonstrate that the order’s requirements could not have been reasonably anticipated when the underlying master contract was being awarded. In other words, protestors should show that the products or services being acquired under the task or delivery order are materially different from the products or services that were originally contemplated under the master contract. As an initial step, contractors can determine the extent or scope of the requirements that could have been reasonably contemplated under the underlying master contract at formation. If the scope of the task or delivery order at issue is sufficiently different from the master contract to constitute a material difference, it may be a valid basis to file a protest.

This Bid Protests Insight provides a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.