Federal Circuit: A Mandatory Source Under “ABILITYONE” Program Qualifies As A “Prospective Bidder” Under Law

by Jack Delman, Retired Judge

  • Bid Protests, Case Reviews

In SEKRI, Inc. v. United States, 34 F.4th 1063, 2022 WL 1510321 (5/13/22), the Federal Circuit held that a mandatory source under the AbilityOne Program qualified as a “prospective bidder” on a competitive solicitation and had the “standing” to file a protest challenging agency action that bypassed the mandatory source. The Court also held that the mandatory source did not waive its rights to file the protest action. The Court reversed a lower court decision dismissing the protest.

Nature of the Procurement

In 2019, the Defense Logistics Agency (DLA) issued a solicitation, amended in 2020, that sought the acquisition of Advanced Tactical Assault Panels and associated components (ATAPs). An ATAP was generally described as a fighting load carrier worn with a parachute harness that could be configured to hold M4 magazines, grenades, a first aid kit and general-purpose pouches. DLA contemplated the award of a firm-fixed price IDIQ contract with a base year and yearly options. The acquisition was unrestricted, and award was to be made on a “best value” basis. The deadline for proposals was October 7, 2020.

SourceAmerica (SA), the central nonprofit agency that acts as representative and coordinator for participating nonprofit agencies under the AbilityOne Program, learned of the planned acquisition and contacted DLA by email In June 2020. SA advised the DLA that ATAP was on the Committee “Procurement List”, and that SEKRI, a nonprofit participating agency, was the authorized supplier under law. SA inquired whether DLA planned to acquire ATAP from SEKRI under the AbilityOne Program. The CO responded that the acquisition was to be based on full and open competition and invited SEKRI to participate.

SEKRI did not submit a proposal. After the conclusion of the proposal period and before award, SEKRI filed this protest action in the U.S. Court of Federal Claims (the lower court), contending that the agency’s planned acquisition method was contrary to law.

The Lower Court Rules

The court granted the agency’s motion to dismiss the protest. The court found that SEKRI was not an actual bidder or prospective bidder. Thus, SEKRI was not an “interested party” under law and did not have the standing to file the protest. The court also found that SEKRI failed to diligently pursue its protest rights by failing to file the protest before close of the proposal period. The court concluded that SEKRI waived its right to file the protest action. SEKRI appealed the dismissal to the Federal Circuit.

The Federal Circuit Rules

The Federal Circuit ruled that the lower court erred in dismissing the protest. SEKRI was the designated mandatory source of ATAP under the AbilityOne Program, and SA timely notified DLA of this fact. Notwithstanding, DLA continued the competitive solicitation, and thus knowingly violated its obligation under law to procure ATAP from SEKRI absent exceptions not applicable here. This sufficed to qualify SEKRI as a prospective bidder with the standing to bring a protest action under law. Moreover, SEKRI through SA, provided a timely challenge to the solicitation, and filed its protest shortly after the close of the bidding period and prior to award. SEKRI did not waive its right to file the protest action.

The Court reversed the dismissal of the protest by the lower court and remanded the case for further proceedings consistent with the opinion.

Lessons Learned

This case is a significant victory for the AbilityOne program!  Particularly striking in the Court’s decision was language that emphasized the government’s affirmative obligation to determine whether a procurement is subject to a mandatory source, that is, this onus is on the procuring activity, not on the participants in the program. Whether the Federal Circuit will continue to uphold the letter – and the spirit – of the AbilityOne Program in future cases remains to be seen. Stay tuned!