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Statutory Considerations in Filing Improper Bundling Protests

Contract bundling refers generally to the consolidation of requirements that were previously separately competed. The Small Business Act (SBA) and the Competition in Contracting Act (CICA) require Government agencies to justify their decision when bundling procurement requirements. While CICA broadly prohibits unnecessary contract bundling by generally prohibiting competition-restricting conditions in solicitations, the SBA specifically requires agencies to demonstrate measurably substantial benefits to justify bundled procurements. Therefore, CICA’s statutory restrictions on bundled procurements have a broader scope than that of the SBA. These differences mean that the standards of justification required under each act are different.

o Protesting Bundling Under the Competition in Contracting Act (CICA)

The CICA requires solicitations to provide full and open competition to the maximum extent practicable and only contain competition-restricting provisions when necessary to satisfy agency needs. Therefore, this broad CICA requirement favoring competition provides the required statutory basis to challenge bundled procurements. Since bundled procurements necessarily combine multiple separate requirements into one contract, they have the inherent potential to restrict competition by excluding contractors that can only perform a portion of the bundled requirement. Consequently, the CICA broadly prohibits such an outcome by mandating Government agencies to provide full and open competition to the maximum extent practicable. In interpreting the CICA’s full and open competition requirements in the context of an improper bundling bid protest allegation, the adjudicating forum determines whether the agency has a demonstrably reasonable basis for its contention that contract bundling was necessary. If the procuring Government agency fails to provide a reasonable basis for its contract bundling action, the bid protest is sustained.

o Protesting Bundling Under the Small Business Act (SBA)

The SBA supplements the CICA’s general restriction against bundling of requirements with a more focused statutory limitation against contract bundling impacting small businesses. Under the SBA, it is mandated that government agencies refrain from combining two or more previously separate contracts into a single solicitation that would be unsuitable for award to a small business to the maximum extent practicable. In other words, the SBA restricts federal Government agencies from engaging in unnecessary bundling actions that reduce small business participation. Federal contractors that are small businesses are likely more familiar with this implementation of the bundling restrictions. In resolving protests challenging improper bundling under the SBA, the adjudicative forum determines whether the procuring Government agency is receiving measurably substantial benefits by bundling the requirements. For instance, if cost savings are used as a justification for the bundling action, the agency must show substantial cost savings relative to the dollar value of the procurement. The bid protest is sustained if the agency’s rationale fails to justify the bundling action.

Notably, this restriction against bundling requirements is not absolute. The procuring agency may nevertheless justify its bundling action by providing an adequately documented analysis that demonstrates that the agency received measurably substantial benefits from the bundling action compared to the alternative. Under the SBA, such benefits may include but are not limited to cost savings, quality improvements, reductions in acquisition timelines, and improved terms and conditions. However, according to the SBA, a mere reduction in administrative or personnel costs alone is not by itself a sufficient justification to properly bundle contract requirements unless the expected cost-savings are substantial relative to the dollar value of the procurement requirements to be consolidated.

Understanding this statutory framework is essential for contractors contemplating bid protests in response to bundled requirements. In addition to any rule of two considerations, contractors looking to challenge solicitations based on improper bundling should carefully assess the statutory framework applicable to their bundling protest. If appropriate, Contractors filing such protests should challenge the Government’s bundling decision under the broader CICA basis in the alternative, along with the more specific SBA basis, to avoid denials based on the narrower SBA basis alone.

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.