Contractor Responsibility Considerations in the GSA FSS Program

The General Services Administration (GSA) Federal Supply Schedule (FSS) program provides federal agencies with a streamlined process for acquiring commercial goods and services. The GSA awards indefinite-delivery contracts after following the contractor responsibility requirements outlined in the Federal Acquisition Regulation (FAR). Under FAR 9.1, contracting officers (COs) must determine a prospective contractor’s responsibility, or capability to perform, before awarding a contract. The requirement for an affirmative responsibility determination applies to the award of the FSS contract, not to orders placed under it. This is because responsibility determinations must be made for prospective contractors rather than existing ones, and the GSA makes an affirmative responsibility determination before the contractor’s overarching indefinite-delivery FSS contract is awarded. This approach is consistent with the regulatory framework governing responsibility determinations, which renders the concept of responsibility inapplicable once a contract has been awarded. However, if the CO nevertheless elects to make a responsibility determination before placing an FSS order, he must do so in a reasonable manner. 

In B-296493.6, the Government Accountability Office (GAO) first explained that agencies are not required to make responsibility determinations when placing orders under pre-existing FSS contracts. The Department of Housing and Urban Development (HUD) issued a task order under a contractor’s FSS contract for operational support and corrective maintenance services for the HUD Tenant Rental Assistance Certification System (TRACS). The request for quotation (RFQ) contemplated a best value award of a fixed-price task order with a two-month base period and two one-month options. The agency received two quotations by the closing date of receipt of quotations, with the awardee bidding a total price of $264,202 and the protester submitting a quote of $529,627. When the agency found the two offers technically equal and awarded the task order to the lower-priced quote as representing the best value to the government, the protester filed its protest. Among other arguments, the protester alleged that the CO failed to consider available information bearing upon the awardee’s responsibility before making an award. The protester pointed to the awardee’s Dun and Bradstreet (D&B) report as indicating that the awardee lacked the required financial resources for performance, particularly given the deep discounts being offered. The protester also argued that the discounts should have prompted HUD to reassess the validity of GSA’s initial responsibility determination.

Meanwhile, the agency argued that it was not required to make a responsibility determination because it was simply placing an order under the awardee’s FSS contract for which the GSA had already made a responsibility determination. The GAO agreed with the procuring agency on this aspect of the protest, noting that once an offeror is deemed responsible and awarded a contract, the government need not make an additional responsibility determination during contract performance. In support of its decision, the GAO noted that the concept of responsibility expressly applied to prospective contractors rather than current ones. It also pointed to a prior decision holding that the CO did not need to make a new responsibility determination before deciding whether to exercise a contract option. The GAO also explained that after the GSA awarded the schedule contract, the contractor’s responsibility no longer affected the procuring agency’s ability to place orders under that contract, since the responsibility determination was already made. Consequently, the GAO concluded that the GSA’s initial determination of responsibility satisfied FAR requirements and that HUD was not required to make an additional determination when awarding the task order. 

The FAR requires procuring agencies to ensure that prospective contractors are capable of performing federal contracts. As a result, COs must make an affirmative determination of responsibility before making an award. These determinations are prospective and apply only to offerors, so agencies are not required to reassess contractor responsibility during performance. In the context of the FSS program, because GSA makes an affirmative responsibility determination before the indefinite-delivery FSS contract is awarded, procuring agencies that utilize the FSS program need not make additional responsibility determinations when placing orders under schedule contracts. Therefore, responsibility determinations at the order level do not form a valid basis for protest. One notable exception to this rule is when a CO decides to make a responsibility determination at the task order level, even though it is not required. As a clarification of its holding in B-296493.6 described above, the GAO later ruled in B-401438 that such discretionary responsibility determinations may constitute a valid basis for protest. In these cases, if the CO’s discretionary responsibility determination is challenged, the GAO will review the determination to ensure that it is reasonable and adequately documented. 

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.