BRIDGE TO NOWHERE: Bridge contracts are often used to prevent service disruption after a contract ends, when a new contract is not immediately awarded. They are intended to ‘bridge’ the interim. Without proper planning and oversight, however, these contract actions do not offer the best value to the government. (Image by Getty Images)
DOD awards too many bridge contracts, limiting competition. Here’s how to fix that.
by Dennis P. Longo
The third article in the On Contracting series, based on the Competition in Army Contracting course developed by the author for the Office of the Deputy Assistant Secretary of the Army for Procurement.
It’s been said that greatness is not measured by the walls we build, but by the bridges. Department of Defense leadership disagrees.
For several years, DOD has exploited the use of temporary contract extensions without obtaining competitive bids. Known as bridge actions, these temporary extensions weren’t necessarily planned in advance, but have often been used as a way to prolong delivery of items or services under a contract until a replacement contract is awarded.
Ellen M. Lord, then undersecretary of defense for acquisition, technology and logistics issued a memorandum on Jan. 31, 2018, titled “Bridge Actions Reduction Measures and Reporting Requirement,” observing that in fiscal year 2015, there were over 1,100 bridge actions with obligations exceeding $13.7 billion. These bridge actions, in Lord’s view, represent a lost opportunity for savings that could have been reached by awarding new, competitively awarded contracts.
Lord isn’t the sole voice making this observation. A March 2012 Government Accountability Office (GAO) report (GAO 12-384) found that 18 of 111 justifications and approvals reviewed were bridge contracts with a total value of more than $9 billion, with five of the 18 awarded as a result of protests. Of the remaining awards, the most frequent reasons for the bridge actions included changing office managers multiple times, difficulties writing requirements that met the contracting officer’s standards, conflicting end-of-year responsibilities for contracting staff and extended length of time to approve acquisition strategies.
A 2014 report (GAO 14-304) found that 12 of 34 contracts awarded on the basis of urgency were bridge contracts with a total value of more than $466 million and an average period of performance of 11 months. The impact? Higher costs to DOD because of inefficiencies and the cost of administering bridge contracts, strain on the contracting workforce because bridge contracts must be justified and awarded while a follow-on contract is being sought, and the loss of benefits associated with full and open competition.
Another GAO report (GAO 16-15), released in 2015, examined the insight agencies had on the characteristics and reasons bridge contracts were used. GAO concluded that agencies have little to no insight into their use of bridge contracts, and that the period of performance of many bridge contracts spanned multiple years, and increased contract prices.
If you don’t know where you’re going, any road will take you there.
A definition for “bridge action,” also referred to as “bridge contract,” does not exist in the Federal Acquisition Regulation (FAR) or Defense FAR Supplement (DFARS). This returns us to Lord’s 2018 memo that established a DOD definition and guidance for bridge actions:
A bridge action describes a non-competitive action requiring a justification to include, but not limited to, a formal justification and approval (FAR Part 6 or 13.5), limited sources justification (FAR Subpart 8.4), and exception to fair opportunity (FAR Subpart 16.5), to retain the current or similar product or service as a result of delay in the negotiation and award of a follow-on contract.
DOD ‘BRIDGE ACTION’ DEFINITION—A TWO-PART TEST
A non-competitive action requires a justification to retain the current or similar product or service.
When the government solicits bids or proposals to award or modify a contract, the solicitation must promote full and open competition; that is, it must be issued without limiting competition. A “justification and approval” must be prepared for a contract award or contract modification that limits competition to one or more companies. For this part of the test, there must be a need to continue performance of an existing contract until a follow-on contract is awarded.
A result of a delay in the negotiation and award of a follow-on contract.
This second part of the two-part test applies where negotiation and award of a follow-on contract has been delayed.
What’s a follow-on contract?
FAR 6.302-1(a)(2)(ii) characterizes a follow-on contract as a “contract for the continued development or production of a major system or highly specialized equipment.”
As noted, reasons for awarding bridge contracts may be delays caused by bid protests, lengthy revisions to government procurement requirements or delays in awarding a contract, as well as delays that may be caused by an inexperienced and overwhelmed acquisition workforce.
The key, however, is that if there is no delay in the negotiation and award of a follow-on, the action is not a bridge action.
OPTIONS AND BRIDGE ACTIONS
Under the “Option to Extend Services” clause at FAR 52.217-8, the government may require continued performance of any services within the limits and at the rates specified in the contract, not to exceed six months.
The contracting officer may invoke the clause to continue performance under the contract without full and open competition when the option was evaluated and priced at the time of award.
However, the clause is not “self-executing,” meaning that the conditions and price of any option must be evaluated before they are acceptable by both parties.
Would you agree to let a waiter in a restaurant select an entree for you? Suppose you enter your favorite restaurant and order chicken marsala. The restaurant is out of chicken, so instead, the waiter serves you a bowl of mac and cheese. You tell the waiter, “I asked for chicken marsala.” The waiter says, “I decided to replace the chicken marsala with the mac and cheese because we ran out of chicken” and walks away. Clearly, the waiter cannot compel you to buy the mac and cheese at his option without your consent.
Likewise, according to FAR 17.207(f), contracting officers must evaluate options when the contract is initially awarded so both parties understand and agree to the terms of the option and its cost.
However, when the option was evaluated and priced at the time the contract was initially awarded, the option may be exercised to “bridge” or extend the contract’s period of performance until the follow-on contract is awarded. In such cases, executing the clause is NOT considered a bridge action.
Executing the clause is considered a bridge action when the clause was NOT evaluated and priced at the time of award of the contract or order, thus requiring a justification to limit competition.
The rationale for the bridge action must focus on (a) why and how the delay occurred, (b) why the bridge action is needed, and (c) how to resolve the delay.
To explain why and how the delay occurred, the rationale should focus on the specific circumstances of the delay, when it occurred, what we did to overcome the circumstances and why the delays could not have been mitigated.
To explain why the bridge action is needed, the rationale should focus on why we waited until now to request it, include specific dates in explaining when the delay occurred, and describe how the cost estimate was calculated, how the period of performance for the bridge action was calculated and what injury the government will sustain if the bridge is not executed.
To explain how to resolve the delay, the justification for the bridge action should include a milestone chart to illustrate where we intended to be when we initially determined the schedule for award of the follow-on contract, as well as an explanation of how the revised dates for award of the follow-on contract were estimated.
The milestone chart may, for example, provide the original procurement events in the “Events” column, the dates those events were estimated to be accomplished in the “Initial” column and a record of “Revised” dates that surpassed the “Initial” dates, with reasons in the “Notes” column explaining why the scheduled events and initial dates were surpassed.
Challenges to bridge actions
- Don’t let assumptions justify your actions.
Key point: Don’t assume the necessity for a bridge action outweighs the requirement to conduct proper market research.
FAR Part 6 requires that notices of proposed contract actions have been published and any responses considered before award of a sole-source contract using the “only one responsible source” and “no other supplies or services will satisfy agency requirements” exception to full and open competition.
An agency published a notice of its intent to award a sole-source bridge contract to a company named MTC for a six-month period, including an option to extend services for an additional six months and invited all responsible parties to submit capability statements. Career Systems Development Corp. submitted its capability statement to the agency as directed by the pre-solicitation notice. A day after the notice was published, the agency’s chief procurement officer signed the sole-source justification and approval and awarded the sole-source contract to MTC. The justification and approval stated that no other firms expressed an interest in the procurement.
Career Systems Development Corp. protested the sole-source action (B-411346).
It argued that the sole-source justification was deficient because the agency failed to consider its capability statement and the justification was the result of a lack of advance procurement planning.
The agency maintained that the invitation for capability statements was a “mere formality” and that the consideration of Career Systems Development’s capability statement was “actually irrelevant” to determining whether the agency’s sole-source decision was reasonable.
In sustaining the protest, GAO ruled that the agency’s failure to meaningfully assess any offeror’s ability to perform the requirement with minimal disruption was improperly justified.
- Don’t proceed in the company of predetermined conclusions.
Key point: Poor time management does not justify executing a bridge action.
In Global Dynamics, LLC v. U.S., No. 17-1875C, the Court of Federal Claims found that award of a bridge contract lacked a rational basis.
As a result of a number of protest actions, an agency posted its intention to award a fifth sole-source bridge contract to the incumbent contractor. This fifth bridge action increased the originally estimated 120 days to more than 250 days because (1) three retirements resulted in a personnel shortage; (2) available personnel were working on a number of other matters; and (3) the expected value of the contract was significantly increased, requiring additional work.
Global Dynamics, LLC challenged the fifth bridge contract, arguing that the agency’s decision to award the bridge was improper and prejudicial. The Court of Federal Claims agreed, stating that staffing, prioritizing other work and the increased work under the contract were all the result of the agency’s failures.
- Don’t avoid the fact that we knew the contract expiration date when the contract was initially awarded.
Key point: Lack of advance planning does not justify limiting competition. [See FAR 6.301(c)(1)]
In Innovation Development Enterprises of America, Inc. v. U.S., No. 11-217C, an agency had 5 1/2 years available to plan for its follow-on procurement and failed to do so before awarding a sole-source bridge contract to the incumbent.
The agency’s justification was that market research could not be done in the short time available, and that currently no other contractors existed with both the technical and professional skills necessary to support the requirement.
The Court of Federal Claims sustained the protest, saying that the agency could not have been unaware of the expiring five-year contract with the incumbent “well in advance” of the bridge action. The sole-source contract involved a lack of advance planning, irrational reasoning and numerous violations of procurement law and regulations.
Reducing the impact of bridge actions
Bridge actions may be unavoidable, particularly when a protest delays a contract award. However, efforts to overcome the impact of a bridge action should routinely be explored. For example:
- Focus on the elements that must be maintained until the follow-on action is awarded.
It may not be necessary to extend the full suite of performance requirements that are identified in a performance work statement in order to support the immediate mission requirement. Seek to identify only the mission-essential elements of the work statement that must be maintained without a gap in performance until the follow-on action is awarded.
Once mission-essential elements are identified, calculate the cost and performance term of those essential elements for use in the justification for the bridge action.
- Reduce the amount of work that must be performed under the bridge action.
Review the contract’s statement of work to reduce or eliminate elements that can be postponed until the follow-on contract is awarded.
- Divide the requirement and issue separate competitive actions.
Divide the immediate requirement into individual procurement requirements that may be separately issued under full and open competitive procedures until the follow-on action is awarded. Competitive procedures include:
- Small business set-asides under FAR Subpart 19.5.
- 8(a) Program set-asides under FAR Subpart 19.8.
- Set-asides under the Service-Disabled Veteran-Owned Small Business Procurement Program or Women-Owned Small Business Program.
- Orders placed under multiple-award task or delivery order contracts pursuant to FAR Subpart 16.5.
- Orders placed under indefinite-quantity contracts.
- Take advantage of the flexibility permissible by the “Changes” clause.
Identify elements of the requirement that may be executable by operation of that clause to reduce the total impact of the bridge action.
The “Changes” clause ensures flexibility the government requires during performance of a contract and affords the contracting officer the discretion to order additional work within the scope of the contract without providing for full and open competition.
Bridge actions endure high-level and persistent scrutiny. The rationale in the justification must focus on why we need the bridge action in the first place. Do not avoid the fact that we knew the contract would expire when we initially awarded the contract. Justify the proposed period of performance and the estimated cost for the bridge contract. Tell the story, be precise and include dates. Don’t let haste result in impulsive or potentially irresponsible actions; don’t proceed in the company of assumptions or predetermined conclusions; and tell the truth, the whole truth and nothing but the truth.
For more information, view the Competition in Army Contracting course at https://go.usa.gov/xvy7z. This site is CAC enabled.
DENNIS P. LONGO is the advocate for competition, task and delivery order ombudsman and senior procurement analyst for Army Contracting Command at Aberdeen Proving Ground, Maryland. A member of the Army Acquisition Corps, he holds a bachelor’s degree from the University of Baltimore and is Level III certified in contracting. His assignments include acquisition specialist at the Program Manager for Chemical Demilitarization within the U.S. Army Chemical Materials Activity and procurement analyst at U.S. Army Legal Services Agency. He served in the military from 1971 to 1973 at the Southern European Task Force, Italy and was deployed to Iraq as a civilian in 2003. He authored the DAU Continuous Learning DOD Purchase Card Tutorial in 2002 and the DASA (P) Competition in Army Contracting course in 2019. He has been teaching courses on competition in contracting since 2004. The first of the author’s On Contracting articles appeared in the Winter 2020 edition of Army AL&T.
Read the full article in the Summer 2020 issue of Army AL&T magazine.
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