Solicitations for federal contracts performed in foreign countries may include definitive responsibility criteria mandating compliance with the laws and requirements of the host nation. Such criteria are considered objective standards, included in the solicitation to evaluate the offerors’ ability to perform the contract. Procuring agencies may restrict competition using such requirements if the definitive responsibility criteria are reasonably necessary to meet the government’s minimum needs. If an offeror fails to meet specifically included responsibility criteria mandating compliance with foreign laws, it is deemed non-responsible and considered ineligible for an award. Of course, offerors may challenge solicitation terms requiring compliance with foreign laws as unduly restrictive of competition. In such cases, the procuring agency must establish that the solicitation terms containing the responsibility criteria are reasonably necessary to meet its minimum needs. While the agency’s explanation must withstand logical scrutiny to be considered adequate, an offeror’s disagreement with the explanation alone does not demonstrate that the agency’s reasoning is unreasonable. Ultimately, when solicitations for contracts involving performance in foreign countries incorporate definitive responsibility criteria based on foreign laws, prospective offerors must either comply with the terms of the solicitation or demonstrate that the relevant requirements are clearly unreasonable.

In B-422744.2, a bid protest decision issued on December 19, 2024, the Government Accountability Office (GAO) denied the protest after the protester expressly acknowledged, during the pendency of the protest, that the restrictive solicitation requirement was necessary under the U.S.-Spain Agreement on Defense Cooperation (ADC). The U.S. Navy issued the task order request for proposals (RFP) for the construction of an explosive ordnance disposal facility at the U.S. Naval Station in Rota, Spain, to holders of an indefinite-delivery indefinite-quantity (IDIQ) contract under the procedures of Federal Acquisition Regulation (FAR) 16.505. After the solicitation was issued, the U.S.-Spain Permanent Committee, which was created to implement the ADC, issued a joint memorandum removing specific methods for offerors to demonstrate financial and technical capabilities that were contemplated by the solicitation and instead required offerors to register with the Spanish Ministry of Finance.

Following the issuance of the joint memorandum, the Navy amended the solicitation to incorporate the registration requirement and asked offerors to include with their proposals, a certification confirming their compliance. The protester filed a protest before the close of the proposal deadline, challenging the requirement as unduly restrictive of competition, arbitrary, capricious, and contrary to law. However, after filing the protest, the protester acknowledged that the solicitation terms concerning registration with the Spanish Ministry, although restrictive, were nevertheless required by the ADC and the implementing joint memorandum. In light of this acknowledgement, the GAO found that the amended solicitation mandating compliance with the Spanish registration requirements was necessary to meet the Navy’s needs and denied the protest.

Meanwhile, in B-410024, a decision issued on October 10, 2014, the GAO reviewed the procuring agency’s decision to include a definitive responsibility criterion and found it reasonable, despite the protester’s disagreement. The U.S. Navy issued the underlying RFP for services supporting base operations at the Rota Station. The protester filed a pre-award protest challenging specific terms of the solicitation as unduly restrictive of competition for needing Certificates of Classification, which were no longer required under Spanish law. Among other arguments, the protester asserted that since there was a change in the relevant Spanish law, the U.S. Air Force had not required offerors to provide the certificate. The protester even pointed to two Air Force solicitations that required performance in Spain but did not require the certificate after the change in Spanish law.

The Navy conceded that a relevant Spanish law was amended to remove the Certificate of Classification requirement for service contractors. However, it maintained that the transitional provisions of the law provided that the article eliminating the certificate requirement would be implemented by subsequent regulation, and until such regulation was issued, the previous requirements would remain effective. The agency took the position that since no such regulations had been issued since the amendment of the Spanish law, the Certificate of Competency was still required. The GAO reviewed the protester’s arguments alongside the Navy’s interpretation of the various Spanish laws relevant to the procurement and concluded that even if its arguments had merit, the protester had nevertheless failed to demonstrate that the Navy’s interpretation of the transitional provisions of the Spanish law was clearly unreasonable. Stated another way, although both parties’ interpretation of the relevant Spanish law could be deemed rational, the protester’s disagreement with the agency’s position was insufficient to prove the unreasonableness of the agency’s decision in this matter. Consequently, the GAO concluded that the inclusion of the responsibility criterion concerning the Certificate of Competition was within the agency’s discretion and denied the protest.

Solicitations for federal contracts performed in foreign countries may restrict competition by using definitive responsibility criteria that mandate compliance with host-nation laws, provided the requirements are necessary to meet the government’s minimum needs. In this regard, foreign laws imposing requirements that must be satisfied to undertake contractual performance are considered essential to meet the government’s needs and form a reasonable basis for a solicitation requirement. Therefore, when presented with such solicitation requirements, offerors must either comply or challenge the relevant terms as unduly restrictive of competition. If challenged, it is then the procuring agency’s burden to prove that the restrictive terms are reasonably necessary to meet its needs. Once the agency establishes that its position is logically supported, either through a reasonable interpretation of applicable foreign law, international agreement, treaty, or otherwise, the protester must then demonstrate that the agency’s explanation is clearly unreasonable. Offerors should be mindful that, as shown in the decision described immediately above, mere disagreement with the procuring agency in such cases is insufficient to show the clear unreasonableness of the agency’s position. This is true even when the protester’s own explanation or interpretation of the applicable foreign laws is also tenable.

This Federal Procurement Insight is provided as 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.