The Navy argued the FAR ³ requires full and open competition while the regulations ⁴ state that the competition requirement does not apply to ID/IQ contracts, i.e. task and delivery contracts.  The GAO rejected this argument and avers the Small Business Act ⁵ and the Competition in Contracting Act ⁶ were harmonized.   The regulations at FAR Part 16.5 apply to task and delivery orders whereas the competition requirements in FAR Part 6 do not apply to ordering.  The Rule of Two implements the Small Business Act and applies to orders.  The GAO decided that the Rule of Two applies to any acquisition over $100,000.  Orders are properly viewed as acquisitions.  Every order placed can be considered a contract, and every contract is an acquisition.  “In sum, we conclude that individually competed task and delivery orders are “acquisitions” for purposes of FAR 19.502-2 (b) so that the Rule of Two applies.”

The moral of the story is that small business concerns should insist that the CO follow the requirements stated in the Rule of Two in ID / IQ task order competition as well as in regular competitions for contracts.  The larger question is whether CO’s will try to declare all acquisitions as full and open in order to avoid the Rule of Two and decide two or more proposals from small business concerns would not be received. Since protest of such orders will not be accepted

under $10 Million, the government can merely invoke full and open competition and avoid the Rule of Two and a protest. Hence, awards to small businesses may decline as a result of the Delex case.

Tom Petruska, Owner
Contracts Unlimited, Incorporated

The foregoing is not legal advice or a legal opinion.  See your attorney for legal advice.

Footnotes:

1.15 USC 644 (J)

2. FAR 19.502-2

3. FAR 6.203 (C)

4. FAR 16.505 (b) (i) (ii)

5. 15 U.S.C. 644 (a)

6. 10 U.S.C. 2304 (a)

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