Congress provides budget authority for the executive branch federal agencies, who may then enter contracts with financial obligations. Multiple separate pieces of important legislation regulate federal government procurement, including the following.

• The Armed Services Procurement Act and the Federal Property and Administrative Services Act – as implemented, they are the foundation of modern government contracts intended to provide an economic and efficient system for the government’s procurement and supply of personal property and non-personal services and performance of related functions.
• The Anti-Deficiency Act – establishes criminal penalties for knowingly and wilfully authorising, including by contract, an expenditure or obligation exceeding an amount available in a Congressional appropriation or fund for the expenditure or obligation.
• The Competition in Contracting Act of 1984 – requires that, except as authorised by statute, an executive agency comply with full and open competition requirements.
• Small Business Act and Small Business Innovation Development Act – as implemented, establish a framework to ensure that a fair proportion of total purchases and contracts or subcontracts for property and services for the government be placed with small-business enterprises to maintain and strengthen the economy of the US.
• The Contract Disputes Act of 1978 – requires that contract disputes be raised first by the filing of a claim with the contracting officer within six years of the accrual of the claim. Claims above USD100,000 require certification. An adverse decision may then be appealed in 90 days to a board of contract appeals or within a year to the Court of Federal Claims.
• The Tucker Act – waives sovereign immunity for any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.
• Federal Acquisition Streamlining Act of 1994 and Federal Acquisition Reform Act of 1996 – established a critical shift in the way the US government procures commercial products and services by:
1. requiring procurement of commercial items to the maximum extent practicable;
2. requiring a list of laws inapplicable to procurements of commercial items; and
3. requiring inclusion of new laws on that list without an affirmative determination that it would not be in the best interest of the federal government to exempt contracts for the procurement of commercial items.

Also require a list of laws inapplicable to subcontracts for commercial items, which, as implemented, further reduces the regulatory burden on commercial item subcontractors.

• The Buy American Act (BAA) and the Trade Agreements Act (TAA) – two of multiple statutes related to domestic sourcing. Under the BAA, domestic products receive a price preference. Where trade agreements apply, the TAA waives the BAA preference to treat countries with trade agreements or otherwise identified as “designated countries” equally. For procurements subject to the World Trade Organization Government Procurement Agreement, procurement of non-designated country end products is prohibited absent a non-availability determination.
• Annual Appropriations Acts and the National Defense Authorization Act (NDAA). The NDAA has been enacted for 61 consecutive years and has become a reliable legislative vehicle covering a wide range of policy matters. It establishes programmes and policies at the US Department of Defense (DOD) and other federal agencies, and provides guidance regarding use of funds in the performance of these.

The Federal Acquisition Regulation system is the codification and publication of the uniform policies and procedures for acquisition by all executive agencies. The Federal Acquisition Regulation (FAR) provides the principal set of regulations for public procurement and is further implemented and supplemented by agency acquisition regulations. The FAR applies to public procurement, ie, supplies or services acquired by contract using Congressionally appropriated funds. Contract clauses set forth in the FAR are incorporated into government contracts as prescribed by the FAR. The FAR has the effect of law and is published in the US Code of Federal Regulations. A copy of the FAR is available online.

Federal agencies and departments oversee the award and execution of public contracts. In general, unless specifically prohibited by law, authority and responsibility to contract for authorised supplies and services are vested in the agency head. However, contracts may be entered into and signed on behalf of the government only by contracting officers, establishing a unique role for the contracting officer in the US government procurement system. The federal agencies and departments use the FAR, which may be supplemented to accommodate their unique procurement requirements (https://www.acquisition.gov/content/regulations). For example, the Department of Defense has the Defense Federal Acquisition Regulation Supplement (DFARS), which adds to FAR requirements. State and local authorities use their own procurement regulations, which are beyond the scope of this chapter.

The Federal Acquisition Regulation applies to contracts for both supplies and services. Deviations from the FAR are relatively rare and must be authorised above the level of the contracting officer, in some cases by the head of the procuring agency. The FAR accommodates many different types of contract structures. For example, contract types are not limited to but may include:

• Fixed Priced Contracts (the price of goods or services provided does not change and risk of loss rests with the contractor);
• Cost-Reimbursement Contracts (the contractor is reimbursed for costs); and
• Time and Materials Contracts (the contractor is reimbursed at an agreed labour rate and materials cost with a price ceiling).

Given that cost reimbursement contracts lack a contractor incentive to control costs, the contract fee may not be based on a percentage of cost but rather be fixed or include an incentive or award component. The fee in a cost-plus-fixed-fee contract is statutorily limited to a certain percentage of the estimated cost of the contract:

• generally – 10%;
• contract for experimental, developmental or research work – 15%; or
• architectural or engineering services relating to any public works or utility project – 6% of the estimated cost of construction.

The FAR provides for simplified acquisition procedures where the value of the contract falls below the simplified acquisition threshold (SAT) (which is set at USD250,000 with some exceptions at the discretion of the head of the agency) and for micro-purchases where the value of the purchase is less than USD10,000, with some exceptions. These thresholds may be adjusted every so often for inflation and other factors. With few exceptions, micro-purchases do not require provisions or clauses, including regulatory clauses specified by the FAR. Purchases under the SAT also are subject to far fewer regulatory requirements than larger procurements. The SAT may also be adjusted, depending on the acquisition situation. For example, supplies or services supporting a contingency operation outside the United States or for the acquisition of commercial items may have higher thresholds.

Agencies are generally required to conduct procurement procedures to maximise full and open competition while conducting efficient operations. This means all responsible contractors may be permitted to provide sealed bids or participate in a competitive negotiation process. Exceptions to this full and open competition requirement may include awards using simplified acquisition procedures or task orders placed under existing contracts.

Procurement set-aside programmes exist to provide preferential treatment for small businesses generally including those owned by veterans and women. Moreover, statutes and regulations, notably the Buy American Act and the Trade Agreements Act, create procurement preferences for goods and services from US sources as well as those of certain US trading countries. Contract awardees may have to certify their size, ownership or the origin of the products they provide as part of these preference programmes.

Non-US entities are permitted to bid on government contracts but must be registered in the US System for Award Management (SAM) and obtain a NATO Commercial and Government Entity (NCAGE) Code. Non-US entities may be ineligible for certain preferences, prohibited from performing classified contracts and restricted from transferring certain controlled information to non-US persons.

The Federal Acquisition Regulation system is meant to deliver a timely, best value product or service for the government, while maintaining the public’s trust and fulfilling public policy objectives. The objective is to achieve these goals by maximising the use of commercial products and services; using contractors who have a track record of successful past performance or who demonstrate a current superior ability to perform; and promoting competition. The acquisition team is relied upon to exercise initiative and sound business judgement, and they may assume, if a specific strategy, practice, policy or procedure is in the best interests of the government and is not addressed in the FAR, nor prohibited by law, executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority.

FAR part 11 provides regulatory guidance for how agencies may describe their requirements. The contracting officer must state the requirements with respect to an acquisition of supplies or services in terms of the functions to be performed, performance required or the essential physical characteristics. While the use of performance specifications is preferred to encourage offerors to propose innovative solutions, the use of brand name or equal purchase descriptions may be advantageous under certain circumstances to assist offerors in understanding the requirements. If a brand name is used, a general description of those salient physical, functional or performance characteristics of the brand name item that an “equal” item must meet to be acceptable for award are also required.

Unless there are compelling circumstances or other exceptions, federal agencies advertise proposed procurement opportunities more than USD25,000 by posting at the US government official website. Opportunities posted to the website are accessible to the public and various deadlines apply to when bids must be submitted depending on the type of contract.

Federal agencies conduct “market research” by collecting and analysing information about available industry capabilities within the market to satisfy agency needs. FAR part 10 provides specific requirements for market research. Market research must be performed and documented, for example, before developing new requirements documents or requesting bids that exceed the simplified acquisition threshold.

Acquisitions begin with a description of the government’s needs, stated in terms sufficient to allow conduct of market research. Market research is then conducted to determine if commercial products, commercial services or non-developmental items are available or could be modified to meet the government’s needs. The extent of market research will vary, depending on such factors as urgency, estimated dollar value, complexity and past experience.

The contracting officer may use market research conducted within 18 months before the award of any task or delivery order if the information is still current, accurate and relevant. Market research involves obtaining information specific to the product or service being acquired and includes an analysis of whether the government’s needs can be met by commercially available products, as well as additional considerations such as warranties, discounts, energy efficiency, and whether the government’s needs can be met by small businesses. If the contracting officer fails to conduct adequate market research, it could be the basis for a protest against the solicitation or the award.

Principal types of tender procedures are sealed bidding and negotiated contracts. Sealed bidding employs competitive bids, public opening of bids, and awards. Required steps include the following:

• preparation of invitations for bids;
• publicising the invitation for bids, allowing adequate time to respond;
• submission of bids, to be opened at the time and place stated in the solicitation for the public opening of bids;
• evaluation of bids without discussion with bidders;
• award to the responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the government, considering only price and the price-related factors included in the invitation.

Sealed bids must be used in the following circumstances:

• if time permits;
• the award will be made only on the basis of price and other price-related factors;
• it is not necessary to conduct discussions with the responding offerors; and
• there is a reasonable expectation of receiving more than one sealed bid.

Negotiated contracts may be used only when sealed bids are not appropriate. Negotiated contracts may be lowest price technically acceptable or best value procurements. The former may only be used when multiple conditions are satisfied, including that the agency can comprehensively and clearly describe the minimum requirements in terms of performance objectives, measures and standards that will be used to determine the acceptability of offers, and the agency would realise no, or minimal, value from a proposal that exceeds the minimum technical or performance requirements. A best value trade-off may be used where it may be in the interests of the government to consider award to other than the lowest priced offeror or other than the highest technically rated offeror. When using a trade-off process, all evaluation factors and significant subfactors that will affect contract award and their relative importance must be clearly stated in the solicitation, and the solicitation must state whether all evaluation factors other than cost or price, when combined, are significantly more important than, approximately equal to, or significantly less important than cost or price. The perceived benefits of the higher-priced proposal must merit the additional cost, and the rationale for trade-offs must be documented in the file. When discussions are conducted in a negotiated procurement, the contracting officer must, at minimum, indicate deficiencies, significant weaknesses, and adverse past performance information to which the offeror has not yet had an opportunity to respond. Agencies may not conduct unequal discussions so as to favour one offeror over another.

The contracting officer may use simplified acquisition procedures as explained in 1.3 Types of Contracts Subject to Procurement Regulation, sealed bidding or contracting by negotiation among other types of contracting options. Sealed bidding, for example, is a method of contracting that employs competitive bids, public opening of bids, and awards. This type of procurement lends itself to requirements that can be described clearly, accurately and completely. Unnecessarily restrictive specifications or requirements that might unduly limit the number of bidders are prohibited. Bidders submit sealed bids, which are opened at a particular time and place and evaluated without discussions. An award is made to a responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the government, considering only price and the price-related factors included in the invitation.

In a negotiated procurement, the agency can obtain best value in negotiated acquisitions by using any one or a combination of source selection approaches, and the relative importance of cost or price may vary. FAR part 15 provides guidance for contracting officers. For example, the FAR advises that in acquisitions where the requirement is clearly definable and the risk of unsuccessful contract performance is minimal, cost or price may play a dominant role in source selection. The less definitive the requirement, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection.

The legislation permits a contracting authority to award a contract under circumstances permitting other than full and open competition in the following situations.

• There is only one responsible source, and no other supplies or services will satisfy agency requirements. Under certain circumstances, supplies may also be deemed available from only one source in the case of a follow-on contract for the continued development or production of a major system or highly specialised equipment, including major components. In addition, under certain circumstances, services may be deemed available only from one source in follow-on contracts for the continued provision of highly specialised services.
• There is unusual and compelling urgency. This exception applies where an unusual and compelling urgency precludes full and open competition, and delay in award of a contract would result in serious injury, financial or other, to the government. This exception has specified limits, including that the exception may not be used where the urgency arises from the agency’s lack of reasonable planning.
• Award is necessary to maintain a facility or supplier available capable of furnishing supplies or services in case of a national emergency or to achieve industrial mobilisation, including to train a selected supplier or create or maintain the required domestic capability for production of critical supplies.
• Full and open competition also need not be provided for when:
1. precluded by the terms of an international agreement or a treaty between the United States and a foreign government or international organisation, or the written directions of a foreign government reimbursing the agency for the cost of the acquisition of the supplies or services for such government;
2. a statute expressly authorises or requires that the acquisition be made through another agency or from a specified source;
3. the disclosure of the agency’s needs would compromise the national security unless the agency is permitted to limit the number of sources from which it solicits bids or proposals; or
4. the agency head determines that it is not in the public interest. However, this exception can only be authorised at an extremely high level – essentially only by an agency head, which authority may not be delegated.

To use these exceptions, contracting officers must justify the use in writing, certify the accuracy and completeness of the justification, and obtain the requisite approval. The justifications are subject to procurement challenges through bid protests. In such case, the decision-maker will focus on the adequacy of the rationale and conclusions set forth in the justification.

FAR part 5 describes requirements for the dissemination of information including the publication of bidding opportunities. When required to publicise, an agency must transmit a notice of proposed contract action to the GPE at SAM.gov at least 15 days before issuance of a solicitation, or a proposed contract action the government intends to solicit and negotiate with only one source, except that, for acquisitions of commercial products or commercial services, the contracting officer may establish a shorter period for issuance of the solicitation or use the combined synopsis and solicitation procedure.

Except for the acquisition of commercial products or commercial services, generally agencies must allow at least 30 days for receipt of bids or proposals from the date of issuance of a solicitation if the proposed contract action is expected to exceed the simplified acquisition threshold. However, agencies must allow at least a 45-day response time for receipt of bids or proposals for proposed contract actions categorised as research and development if the proposed contract action is expected to exceed the simplified acquisition threshold. Other exceptions exist.

While certain contracts may be set aside only for US small businesses, government procurements generally are unrestricted and offerors need not be US companies. Offerors must be registered in the System for Award Management (SAM) at SAM.gov and timely submit an offer in response to the solicitation. The contracting officer will make an award decision based on the solicitation criteria, which must reflect the agency’s legitimate need, and the agency’s evaluation of bids or proposals applying those criteria. However, agencies may only solicit offers from and award contracts to responsible contractors. Contractors debarred or suspended for lack of present responsibility are excluded from receiving contracts, as are entities declared ineligible on the basis of statutory or other regulatory procedures, eg, companies declared ineligible by the Department of Labor for violations of the Service Contract Act. In general, contracting officers also are not permitted knowingly to award contracts to a government employee or to a business concern or other organisation owned or substantially owned or controlled by one or more government employees. No DOD contract under a national security programme may be awarded to an entity controlled by a foreign government if that entity requires access to proscribed information to perform the contract.

Before awarding a contract, the contracting officer also must make a separate responsibility determination. To be responsible, a prospective contractor must:

• have adequate financial resources to perform the contract, or the ability to obtain them;
• be able to comply with the required or proposed schedule, taking into consideration all existing commitments;
• have a satisfactory performance record;
• have a satisfactory record of integrity and business ethics;
• have the necessary organisation, experience, accounting and operational controls, and technical skills, or the ability to obtain them;
• have the necessary production, construction, and technical equipment and facilities, or the ability to obtain them; and
• be otherwise qualified and eligible to receive an award under applicable laws and regulations.

The contracting officer may not award a contract to a prospective contractor determined to be non-responsible.

As discussed in 2.5 Direct Contract Awards, the Competition in Contracting Act permits procurement from only one or a limited number of suppliers if justified in accordance with the exceptions set forth in that statute. Purchases under the micro-purchase threshold (generally USD10,000) may be awarded without soliciting competitive quotations if the contracting officer or other individual appointed considers the price to be reasonable. For purchases under the simplified acquisition threshold (generally USD250,000), the contracting officer must promote competition to the maximum extent practicable to obtain supplies and services from the source whose offer is the most advantageous to the government, considering the administrative cost of the purchase. The contracting officer must not solicit quotations based on personal preference or restrict solicitation to suppliers of well-known and widely distributed makes or brands.

Evaluation criteria vary depending on the type of procurement. The lowest price technically acceptable proposal may be appropriate when best value is expected to result from selection of the technically acceptable proposal with the lowest evaluated price. FAR part 15 provides that the evaluation factors and significant subfactors that establish the requirements of acceptability must be set forth in the solicitation and specify that award will be made on the basis of the lowest evaluated price of proposals meeting or exceeding the acceptability standards for non-cost factors.

In other procurements, evaluation criteria may be unique to the type of contractor involved. For example, FAR part 36 provides that potential construction, architecture and engineering services companies should be evaluated using a specialised list of evaluation criteria, including professional qualifications, specialised experience, and capacity to accomplish the work, among others.

Agencies cannot solicit offers from, or award contracts to, entities that have been debarred or suspended for lack of present responsibility, unless the agency head determines that there is a compelling reason. The debarring official may debar a contractor for reasons including the following:

• a conviction of or civil judgment for fraud or a criminal offence in connection with obtaining, attempting to obtain, or performing a public contract or subcontract;
• commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating Federal criminal tax laws, or receiving stolen property; or
• commission of any other offence indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a government contractor or subcontractor.

A debarring official also may debar a contractor for reasons including:

• serious violations of the terms of a government contract or subcontract; and
• knowing failure by a principal, until three years after final payment on any government contract awarded to the contractor, to timely disclose to the government, in connection with the award, performance, or closeout of the contract or a subcontract thereunder, credible evidence of certain violations of criminal law, violation of the civil False Claims Act, or significant overpayments on the contract.

Further, a debarring authority may debar a contractor based on any other cause of so serious or compelling a nature that it affects the present responsibility of the contractor or subcontractor. A full list of causes for debarment is set forth in the Federal Acquisition Regulation in addition to the procedure for consideration of debarment.

As discussed in 2.8 Eligibility for Participation in a Procurement Process, in individual procurements a contracting officer also may not award a contract to a prospective contractor they determine to be non-responsible.

Federal law requires agencies to use “full and open competition” in conducting procurements, with limited exceptions as discussed in 2.5 Direct Contract Awards. To this end, federal law requires that solicitations clearly state all factors and significant subfactors affecting contract award and their relative importance. Certain factors such as price or cost, and past performance, typically must be evaluated. However, the solicitation need not disclose an agency’s “rating method”.

Federal agencies are given broad discretion in evaluating offerors’ proposals. However, they are required to evaluate proposals based solely on the factors identified in the solicitation. An agency may use evaluation considerations not expressly stated in a solicitation only when these are reasonably and logically encompassed within the stated evaluation criteria and there is a “clear nexus” between the stated criteria and the unstated consideration.

Tribunals adjudicating procurement protests will sustain a protest where the agency’s evaluations or conclusions are inconsistent with the solicitation’s evaluation criteria.

In competitive procurements, agencies desiring to conduct negotiations with offerors – termed “discussions” – must establish a competitive range, which is comprised of all of the most highly rated proposals, unless the range is further reduced for purposes of efficiency. Agencies must “promptly” notify offerors in writing when their proposals are excluded from the competitive range or otherwise eliminated from the competition prior to award. The notice must state the basis for the determination and that a proposal revision will not be considered. Similarly, within three days after the date of contract award, agencies must provide written notice to unsuccessful offerors whose proposals were in the competitive range but were not selected. This post-award notice must include specified information including, in general terms, the reasons that the offeror’s proposal was not accepted. Federal agencies are prohibited from disclosing an offeror’s confidential business information to any other offeror.

In procurements using simplified acquisition procedures (as discussed in 1.3 Types of Contracts Subject to Procurement Regulation) that do not exceed the simplified acquisition threshold (ie, USD250,000) and for which automatic electronic notification is not provided, notification to unsuccessful offerors is only given if requested or required by federal regulation.

Generally, offerors are afforded the opportunity to receive from the agency conducting the procurement the general basis for its selection decision and contract award. Depending on the type of procurement, this information is termed either a “debrief” or a “brief explanation”. A “debrief” and a “brief explanation” are not the same – a debrief is more extensive and confers on an offeror additional time to file a protest.

For competitive negotiated acquisitions, regulations do not prescribe a time for notifying successful offerors as they do for unsuccessful offerors; likewise for successful offerors in acquisitions using simplified acquisition procedures. For sealed bid acquisitions, the agency must make the contract award within the time for acceptance specified in the bid or an extension.

However, federal regulations provide extensive guidelines for public announcements of awards. For example, federal agencies generally must make information available on awards over USD4.5 million in sufficient time for the federal agency concerned to announce it by 5pm ET on the day of award. In general, contract awards are noticed publicly to the “Governmentwide Point of Entry”, currently at SAM.gov.

As set forth in 4 Review Procedures, an interested party objecting to improprieties in a solicitation is permitted to protest to the agency, GAO or the Court of Federal Claims. As a minimum, this permits a decision on the record. Oral hearings do not occur as a matter of right in agency and GAO protests but commonly occur in Court of Federal Claims protests as determined by the judge.

Federal law does not provide for a “standstill period” in connection with procurement law. However, agencies must suspend contract performance if a protest is received within the statutorily prescribed timeline. See 4.3 Interim Measures.

In order of ascendency, review of the agency’s decision may be done by the federal agency itself, the US Government Accountability Office (GAO) or the US Court of Federal Claims (COFC). Agencies must use their “best efforts” to resolve concerns raised by an interested party.

GAO has authority under law to decide a protest concerning an alleged violation of a procurement statute or regulation submitted to GAO by an “interested party”. Similarly, the COFC has jurisdiction to render judgment on an action by an interested party objecting to a solicitation or the award of a contract or any alleged violation of statute or regulation in connection with a procurement.

GAO’s rulings do not legally bind the parties to a bid protest, nor are they controlling on the COFC. Consequently, the COFC does not act as an appeals court for GAO decisions, rather it performs applies its own standard of review of an agency’s decisions in bid protests filed at the COFC either as an initial matter or as a follow-on protest to an agency or GAO protest. The US Court of Appeals for the Federal Circuit hears appeals from the COFC; and the Supreme Court has jurisdiction over appeals from the Federal Circuit.

A federal agency that determines, in connection with a protest, that a solicitation, proposed award or award does not comply with the requirements of law or regulation, may:

• take any action that could have been recommended by GAO had the protest been filed with GAO;
• pay the cost, exclusive of profit, of filing and pursuing the protest, including reasonable attorney, consultant, and expert witness fees, and bid and proposal preparation costs; and
• require the awardee to reimburse the government’s costs, where a post-award protest is sustained as the result of an awardee’s intentional or negligent misstatement, misrepresentation or miscertification.

When appropriate, the contracting officer shall also refer such matter to the agency debarment official for consideration.

If GAO determines that the solicitation, proposed award or award does not comply with a statute or regulation, GAO “shall recommend” that the agency:

• refrain from exercising any of its options under the contract;
• recompete the contract immediately;
• cancel the solicitation where appropriate;
• issue a new solicitation;
• terminate the contract;
• award a contract consistent with applicable procurement requirements;
• implement any combination of the preceding recommendations; or
• implement such other recommendations as GAO determines necessary to promote compliance with procurement statutes and regulations.

Additionally, GAO may recommend that the agency pay an interested party the costs of filing and pursuing the protest, including reasonable attorneys’ fees and consultant and expert witness fees; and bid and proposal preparation costs. However, GAO will not recommend reimbursement of attorney’s fees (at a capped rate) except where the evaluation challenges were clearly meritorious, or intertwined with clearly meritorious issues, and the agency did not take corrective action to address the protests until late in the protest process.

The COFC may award any relief that the court considers proper, including declaratory and injunctive relief, except that any monetary relief shall be limited to bid preparation and proposal costs. In addition, it is possible to recover attorney’s fees (at a rate capped by statute) provided that the protestor prevails and the government’s positions are not “substantially justified” – a deferential reasonableness standard.

Federal statute sets forth circumstances under which an agency may not award a contract or must suspend performance of a contract in connection with procurement protests. An agency also may voluntarily hold contract performance after timely protest notice under certain conditions.

At the agency protest level, upon receipt of a pre- or post-award protest, the contract may not be awarded (or performance must be suspended) pending resolution of the protest, unless award or performance is justified, in writing, for urgent and compelling reasons or determined to be in the best interest of the government. Justification for these decisions must be approved at a level above the contracting officer, or by another official pursuant to agency procedures.

For GAO protests, an agency may not award a contract in any procurement after it has been timely notified of a protest by GAO while the protest is pending, except that an agency may override the stay upon a written finding that urgent and compelling circumstances significantly affecting interests of the United States will not permit waiting for GAO’s protest decision, and after advising GAO of that finding. Specifically, an agency must suspend performance on a contract when the agency receives notice of a protest within ten days after contract award or within five days after a debriefing date offered to the protester for any debriefing that is requested and, when requested, is required. For DOD procurements, the five-day period related to a debrief does not commence until the day the federal agency delivers to the unsuccessful offeror the written responses to any additional questions related to the debrief submitted within two business days of the debrief.

In addition to the foregoing statutorily available interim measures, the COFC has the authority to issue temporary restraining orders and preliminary injunctions enjoining the agency and the awardee from transitioning or performance on the contract.

Challenges to an agency’s procurement may be brought to the agency itself, GAO or the COFC. Agency-level protests are addressed to the contracting officer or other agency official designated to receive protests. However, in accordance with agency procedures, interested parties may request an independent review of their protest at a level above the contracting officer, which may be available as an alternative to the contracting officer considering the protest or may be available as an appeal of a contracting officer’s protest decision.

An “interested party” may protest directly to GAO or the COFC. In this regard, “interested party” means an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract. This means that bid protest standing does not exist for citizens, generally, who object to an award; in some cases, for a contractor that failed to submit an offer; or for an actual offeror that would not be eligible for award even if all procurement defects were corrected.

If a protest is first lodged with GAO, the right to file a protest in the COFC is unaffected by GAO’s protest process, and the interested party may subsequently protest the award decision to the COFC. However, if an interested party first lodges a protest with the COFC, the interested party may not subsequently protest the award decision to GAO because GAO will dismiss such a protest pursuant to its regulations.

The timeliness standards for a protest will depend on the forum selected to bring the protest, and the circumstances regarding the protest. For an agency-level protest, protests based on alleged apparent improprieties in a solicitation must be filed before bid opening or the closing date for receipt of proposals. In all other cases, protests shall be filed no later than ten days after the basis of protest is known or should have been known, whichever is earlier.

For a GAO protest, the timeliness standards are complex, and strictly followed. Broadly, protests challenging improprieties in a solicitation must be lodged before bid opening or the closing date for receipt of proposals. In nearly all other cases, protests must be lodged ten days after the protest is known or should have been known, whichever is earlier.

An exception to these time standards exists for protests involving competitive proposals under which a debriefing is required when requested. Generally, protests must not be filed before the debriefing and must be filed no later than ten days after the debriefing is held. For DOD procurements, debriefings are not considered concluded until the date that the post-award debriefing is delivered, or, if additional written questions related to the debriefing are timely received, the date the agency delivers its written response – whichever date is later. Additionally, for good cause shown or where it determines that a protest raises issues significant to the procurement system, GAO may consider an untimely protest.

In the event that a protester preceded a GAO protest with an agency-level protest, the protester must file a protest with GAO within ten days of actual or constructive knowledge of initial adverse agency action, provided that the protester filed its agency-level protest in accordance with the foregoing timelines.

The COFC is not bound by GAO’s timeliness rules. In the pre-award context, in general, a protester must challenge the terms of a solicitation prior to bid opening or the time set for receipt of initial proposals. In the post-award context, as a practical matter, protests must be filed as soon as practicable, otherwise the protester risks that the court will be unable to provide any meaningful relief if contract performance has concluded.

The length of time to complete a protest will depend on the facts specific to the protest and the forum selected to bring the protest. For an agency-level protest, federal agencies must make best efforts to resolve the protest within 35 days after the protest is filed. GAO must issue a decision on a protest within 100 days after the protest is filed. Additionally, GAO has an “express option” which will be adopted at the discretion of GAO and only in those cases suitable for resolution within 65 days. The COFC does not have a set protest timeline. However, the court’s stated practice is to expedite protest cases to the extent practicable.

In fiscal year (FY) 2023, GAO received 2,025 protest-related cases and sustained 31% of the protests resolved on the merits, which is significantly higher than the sustain rate in any other year in recent memory. The significant increase in sustained protest is due to the 119 successful protests of a single information technology services procurement. The sustain rate is expected to return to the 10–15% range from prior years.

GAO measures an “effectiveness rate”, which is based on a protester obtaining some form of relief, either through agency voluntary corrective action or GAO sustaining the protest. For FY 2023, GAO reported a 57% effectiveness rate, which is an increase over the 51% effectiveness in FY 2022 for largely the same reason as the increased sustain rate.

In the COFC in FY 2023: 169 bid protest cases were filed; and 152 disposed of, both representing slight increases from FY 2022.

Protests filed for an agency-level protest do not incur a filing fee. The cost to file a protest with GAO is USD350. The cost to file a bid protest in the COFC is USD402.

The overall cost of a bid protest to include legal fees will depend on the circumstances of each bid protest both procedurally and substantively. Protests that are closed early due to a federal agency voluntarily taking corrective action shortly after receipt of the protest will be less expensive than a bid protest that proceeds through all the protest-related steps to a final decision. Some of the considerations that will raise costs are whether motions-related practice is involved, such as requests for dismissal, whether expert consultants are necessary, and whether the protest proceeds to a hearing – more common before the COFC, but uncommon in GAO protests. As a general rule, agency-level protests are the least expensive, followed by GAO, then the COFC, but this general rule is subject to each protest’s specific circumstances. Overall, costs for bid protests ranging from tens of thousands to several hundred thousand US dollars would not be unusual. The costs that a successful protester may recover is limited in all forums, as discussed in 4.2 Remedies Available for Breach of Procurement Legislation.

US government contracts can be modified like commercial contracts, with some important caveats. Only contracting officers acting within the scope of their authority may modify contracts on behalf of the government. The FAR directs that other government personnel shall not direct or encourage the contractor to perform work that should be the subject of a contract modification.

There are two modification categories: bilateral and unilateral. Bilateral modifications, those agreed upon by the contractor and the contracting officer, may be made to implement negotiated equitable adjustments in contract schedule or price resulting from the issuance of a change order, or to reflect other agreements of the parties modifying the contract’s terms. However, because of the requirement for competition in government contracts, bilateral modifications may only implement changes within the contract’s scope.

Out-of-scope modification may be subject to bid protests. In determining whether a modification is beyond the contract’s scope, decision-makers will evaluate whether there is a material difference between the modified contract and the contract originally awarded. A critical consideration is whether the solicitation for the original contract adequately advised offerors of the potential for the type of change found in the modification, and thus whether the modification could have changed the field of competition.

The government also has the right to make limited types of unilateral modifications. These include the following.

• Administrative changes that do not affect the parties’ substantive rights such as changes in the paying office or appropriations data.
• Modifications effectuating a unilateral termination of the contract by the government. This includes unilateral termination of the contract for convenience whenever it is in the government’s interest to do so.
• Change orders under the Changes clause. Government contracts contain a Changes clause affording the government the unilateral right to modify the contract. The scope of the Changes clause varies depending on contract type. However, the government’s contractual right to unilaterally change the contract is much more limited than the government’s authority to issue bilateral modifications within the scope of the contract.
• Changes specifically authorised by clauses other than a Changes clause such as the Property clause, Options clause, or the Stop Work clause. Under the Property clause, for example, the contracting officer may unilaterally modify the contract, at any time, to increase or decrease the amount of government-furnished property provided under the contract; substitute other government-furnished property; or withdraw authority to use property. Under the Options clause, the contracting officer may unilaterally exercise a contract option, but only within a strict contractually specified period and strictly in accordance with its terms. The Stop Work clause permits the contracting officer unilaterally to order the contractor to stop all, or part, of the work for a period of up to 90 days.

FAR establishes the right of the government to terminate a contractor for default. For example, in fixed-price supply or services contracts, the contracting officer may terminate for default where the contractor:

• fails to deliver the supplies or to perform the services within the time specified in the contract;
• fails to make progress so as to endanger performance of the contract; or
• fails to perform any of the other provisions of the contract.

Generally, government contracts contain excusable delay provisions that either limit the liability of the contractor or deem a contractor not in default where the failure to perform is from causes beyond the control and without the fault or negligence of the contractor.

FAR also affords the government a unilateral right to terminate a contract for convenience, in whole or in part, when it is in the government’s interest. Such a termination does not entitle the contractor to breach damages but does allow the contractor to recover costs previously paid for the performance of the contract before the effective date of the termination, the cost of settling termination settlement proposals under terminated subcontracts and the reasonable costs of settlement of the work terminated.

Under the Christian doctrine, named for the case that established the principle, the government has the right to terminate a contract for its convenience, even if the contract itself does not include the termination for convenience provision. The termination for convenience clause is a mandatory clause that expresses a significant or deeply ingrained strand of public procurement policy and therefore it will be read into a contract even where omitted.

Neither GAO nor the Court of Federal Claims will second guess an agency’s determination with respect to award of a contract. Rather, the Court of Federal Claims will determine whether the agency’s action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. GAO, too, will sustain a protest where the agency violated a procurement statute or regulation and the violation prejudiced the protester. Further, GAO, in reviewing an agency’s evaluation of proposals and source selection decision, will not re-evaluate submissions but instead will examine the supporting record to determine whether the decision was reasonable, consistent with the stated evaluation criteria and adequately documented.

False Claims Act (FCA) risk is a significant concern for contractors doing business with the US government. The FCA imposes liability on entities and individuals who “knowingly present a false or fraudulent claim for payment”, where knowledge of the falsity, including for example, undisclosed failures to comply with contract terms the contractor knows are material to the government’s payment decision, encompasses actual knowledge, deliberate ignorance or recklessness. In US ex rel. Schutte v Supervalu, Inc., 598 US 739 (2023), the Supreme Court unanimously ruled that, in determining scienter, facial ambiguity alone is not sufficient to preclude a finding that defendants knew their claims were false. The Court held the test is not whether it can be argued that an interpretation of relevant provisions is objectively reasonable but rather whether, subjectively, at the time it submitted its claims, a company believed or had reason to believe its interpretation was correct.

InSchutte, two pharmacies, SuperValu and Safeway, allegedly defrauded federal healthcare programmes, Medicare and Medicaid, by reporting higher prices than those “usually and customarily” charged to the public. The pharmacies argued that the term was ambiguous and that, objectively, it was reasonable to understand the term to refer to their higher “retail prices”. However, the whistle-blower petitioner in the case argued that the pharmacies had received notice that the phrase “usual and customary” referred to the pharmacies’ lower “discounted prices”. The Court held that this subjective knowledge could render the pharmacies’ claims false, even if the interpretation they argued was objectively reasonable.

As a practical matter, this case makes it more difficult for defendants to win early dismissal of FCA lawsuits against them as a matter of law. Instead, defendants must wait until discovery into their knowledge and subjective beliefs has been completed before the court will decide the case in their favour.

In Texas v Biden, No 6:22-CV-00004, S D Tex. (2023), three states – Texas, Louisiana and Mississippi – challenged one of President Biden’s executive orders as exceeding his authority under the Procurement Act. Executive Order (EO) 14026 increased the hourly minimum wage paid by federal contractors and subcontractors to certain employees to USD15 per hour beginning 30 January 2022, with annual increases. To be enforceable, an EO must represent a valid exercise of the President’s power (ie, the action must be within the president’s constitutional authority and not an action reserved in the Constitution, eg, for Congress). The Court concluded that, under the Procurement Act, the “President’s authority is limited to the supervisory role of buying and selling goods”, which does not include “a unilateral policy-making power to increase the minimum wage of employees of federal contractors”.

In striking down the new requirement, the Court concluded that the Act “provides a relatively hands-off framework that enables agencies to determine for themselves the quantity and quality of items to procure on behalf of the federal government” and “does not confer authority for the President to decree broad employment rules”. This case is another example of courts limiting the power of the president to impose procurement policy through executive order, which had for years been thought to be expansive.

No significant legislative amendments are currently being considered. However, each year, the National Defense Authorization Act (NDAA) includes a number of provisions addressing procurement policy. On publication of this guide (April 2024), the FY 2025 NDAA has not yet been introduced in either the House or the Senate and the final version is not expected to pass until December.