In the case of K-Lak Corp v. U.S., 2010 WL 3123265, August 3, 2010, the United States Court of Federal Claims found it had jurisdiciton to hear an incumbent 8(a) contractor’s objection to the Air Force’s failure to exercise its option on its contract to provide credit reports to the Air Force. The Air Force located a less expensive source on a Federal Supply Schedule (FSS), did not exercise K-Lak’s option, removed the requirement from the 8a program, and awarded an FSS order to Equifax.

The government tried to get K-Lak’s complaint in the Court of Federal Claims dismissed on jurisdictional grounds, arguing that the failure to exercise the option was a contract dispute that was not “ripe” for the Court’s jurisdiction because no contracting officer final decision had been made. There is a line of cases holding that a plaintiff cannot bypass the Contract Disputes Act process by claiming it is challenging a procurement decision when in fact the objection goes to contract administration. The Court distinguished the K-Lak case from the case precedents by saying K-Lak was challenging more than just a failure to exercise its option — it was challenging the removal of the requirement from the 8(a) program as well.

The other issue raised by the government was whether the plaintiff had standing to bring the case. The Air Force argued that plaintiff was not an actual or prospective bidder, but rather a successful bidder on the contract it had been awarded. This argument was rejected; K-Lak was an actual or prospective bidder on the contract for credit report checks which was awarded by the Air Force to Equifax. The fact that K-Lak was not on the Federal Supply Schedule is not fatal to it’s standing as it is challenging the agency’s decision to change course in the procurement and acquire the services through the Schedule.

K-Lak is an “interested party” within the meaning of the United States Court of Federal Claims bid protest jurisdiction to challenge the Air Force decision to procure credit report check services from the Federal Supply Schedule in lieu of continuing the requirement in the 8(a) program. The motion to dismiss was denied.

Contact  Karen Hindson for your government contract law or Federal Supply Schedule questions.