K-LAK Corp. v. United States
98 Fed. Cl. 1
Fed. Cl.2011Background
- K-LAK Corp, an incumbent 8(a) BD program credit-report contractor for the Air Force, performed under a one-year contract from Oct 1, 2007 to Sept 30, 2008 at $3.80 per report.
- Air Force learned Equifax provided similar reports to the Army under GSA/FSS for $1.50 and sought to adjust pricing toward market value but could not reach below $3.05 with K-LAK.
- On Aug 14, 2008, the Air Force CO informed SBA and K-LAK that it would not exercise the option to extend the contract, citing inability to provide at a fair market price.
- SBA requested information and did not act further; after contract expiration, the Air Force obtained reports from the FSS via GPC.
- SBA advised on Dec 17, 2008 that it had no authority to release the requirement from the 8(a) program; by May 6, 2009 the government stated no current requirement and referenced possible future use of the 8(a) BD program.
- Plaintiff filed suit on Nov 10, 2009 challenging the Air Force’s decision to use the FSS rather than continue the 8(a) set-aside.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Lawfulness of using FSS instead of 8(a) set-aside | K-LAK argues this withdraws the 8(a) requirement and awards to a large vendor. | Air Force lawfully met needs via FSS with discretion to choose procurement method. | Lawful and within agency discretion. |
| applicability of Rule of Two / Part 19 to FSS purchases | Competition rules (Rule of Two) apply if set-aside could meet needs. | Rule of Two and Part 19 do not apply to FSS purchases; FSS buys are exempt from those set-aside procedures. | Rule of Two/Part 19 not applicable to FSS. |
| Standing to challenge the FSS decision | K-LAK had standing as a potential awardee and interested party if FSS was unlawful. | Standing exists to challenge the decision to use the FSS as the governing procurement method. | K-LAK had standing to challenge the use of the FSS. |
Key Cases Cited
- PAI Corp. v. United States, 614 F.3d 1347 (Fed. Cir. 2010) (arb cap abuse of discretion standard for bid protests)
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir. 2005) (arbitrary, capricious, or not in accordance with law review)
- Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009) (procurement procedure review framework)
- Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324 (Fed. Cir. 2001) (broad discretion to contracting officers; rational basis standard)
- Galen Med. Assocs. v. United States, 369 F.3d 1324 (Fed. Cir. 2004) (violation of regulation or procedure standard)
- Tyler Constr. Grp. v. United States, 570 F.3d 1329 (Fed. Cir. 2009) (broad procurement discretion; continuity of operations considerations)