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When Agencies Should Settle for Less: Brand Name Bid Protests

May 9, 2022, 8:45 AM

U.S. agencies regularly tell prospective contract bidders that they must provide a certain brand name product in their proposals—or that only one supplier has the right item—resulting in some companies claiming to be unfairly excluded from competing.

A recent Government Accountability Office decision upholding a defense agency’s request for hollow pins used in Army helicopters made by Boeing Co. illustrates how agencies get leeway on brand name restrictions.

That pin restriction was reasonable because the government said it lacked adequate data, data rights, or both to purchase hollow pins from other sources, the GAO said in CM Manufacturing Inc., a decision released April 14.

Protester CM Manufacturing said it should have been allowed to offer its own hollow pins, and it claimed the agency improperly listed Boeing as the only approved supply source.

Contractors claiming that the brand name requirements are unfairly restrictive have a tough time overcoming the deference that agencies receive to make decisions about their own needs.

It’s a “heavy lift for the protester,” Joseph J. Petrillo of Smith Pachter McWhorter PLC in Tysons Corner, Va., told Bloomberg Law.

Gaps in Logic

But success is possible if a challenger can show the agency didn’t do the work to explain the restriction.

Protesters “will really need to identify any gaps in logic or inaccuracies in the Justification & Approval determinations that the agencies issue in support of such limitations,” Alex Gorelik of Smith Currie & Hancock LLP, Washington, said. Then they’ll have to draw “the necessary connections between those flaws in the agency’s rationale and the agency’s erroneous conclusion that it needs a particular brand name item.”

A protester should focus on two issues, Shane McCall of Koprince McCall Pottroff LLC in Lawrence, Kan., said.

The first is whether an agency has based its restriction on the fact that the product has been in use for a long time, he said.

Long time usage isn’t enough for a brand name to be essential, he said.

“The agency must also base its decision on market research showing that other companies’ similar products do not meet the agency’s needs,” McCall said.

One way to show an agency doesn’t really need the specific brand name is to submit a capability statement showing that other sources can meet agency needs, said Cherie Owen of Crowell & Moring LLP in Washington.

The Federal Acquisition Regulation requires agencies to consider capability statements from all responsible sources, she said.

A protester “can show that the agency doesn’t actually need the specific brand name item it says it needs by demonstrating that the J&A contains faulty reasoning or was based on inadequate information,” she said.

Market Research

Two GAO decisions from September 2020 and December 2021 show brand name protests will succeed if agencies don’t take necessary steps to back up their rationale.

In Mythics Inc., Mythics and Oracle America Inc. argued that the Library of Congress’ cloud computing procurement was unduly restrictive for seeking only Amazon, Google, and Microsoft products.

When the agency issued the solicitation, it failed to publish a J&A to justify the restriction as required by the Federal Acquisition Regulation, the GAO said in its decision to sustain.

An agency must explain its basis for concluding that only a brand name product—and no other supplies or services—will meet agency requirements, the GAO said.

The solicitation was also inadequate because it lacked a statement of salient characteristics peculiar to the brand name products that could be met by an alternate product, the GAO said.

And in Westwind Computer Products Inc., the GAO sustained a protest of the U.S. Department of Agriculture’s Microsoft brand name limitation in a software procurement because the department failed to provide market research showing that other companies’ similar products didn’t meet the department’s needs or couldn’t be modified to do so.

The research actually suggested that the USDA planned to conduct a subsequent competition without a brand name restriction, the GAO said.

Federal agencies are generally free to rely on their expertise to decide what they need from their contractors.

But federal procurement law prefers full and open competition, which means bidders have protest options when a federal agency falls short of justifying a brand name request.

Agencies “must develop specifications in a manner designed to obtain full and open competition, while including restrictions only to the extent necessary to satisfy an agency’s minimum needs,” Gorelik said.

To contact the reporter on this story: Daniel Seiden in Washington at dseiden@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com