The limits of procurement law - agency authoriity

This GAO decision is a short example of the limits of procurement law, or government contracting as the feds say. Procurement law is not part of the common law, it is statutorily imposed by the legislature, with regulations made by the executive branch, to allow the executive branch to acquire stuff to meet its operational and other legislatively allowed needs.

NB: I take liberties when presenting material in this blawg. You must read the source material at the link and not rely on this, or other, post(s) for information that comes from the horse's mouth. Some have characterized this matter as coming from the other end.

Matter of: A-Z Cleaning Solutions

DIGEST: The United States Mint, a federal agency within the Department of the Treasury, is not subject to the Government Accountability Office’s bid protest jurisdiction under the Competition in Contracting Act of 1984, because the Mint is statutorily exempt from all federal procurement laws and regulations.

A-Z Cleaning Solutions, of Pittsburg, California, protests the award of a contract to Clean Solutions Services, Inc., of San Francisco, California, under a solicitation issued by the Department of the Treasury, United States Mint for janitorial and laundry services in San Francisco. The protester contends that the agency erred in its evaluation of proposals and in its best-value tradeoff decision.

The United States Mint, an agency within the United States Department of the Treasury, asserts that it is statutorily exempt from our bid protest jurisdiction, and therefore this protest should be dismissed. We agree. We dismiss the protest for lack of jurisdiction.

Under the Competition in Contracting Act of 1984 (CICA), our Office has jurisdiction to resolve bid protests concerning solicitations and contract awards that are issued “by a Federal agency.” CICA provides that the term “Federal agency” has the meaning given in statute that defines the term “Federal agency” as including any “executive agency,” which is defined as any executive department or independent establishment in the executive branch of the government.” The Mint, as part of the Department of the Treasury, is an executive agency that otherwise would be subject to our bid protest jurisdiction under CICA.

In 1996, however, Congress established the United States Mint Public Enterprise Fund (USMPEF) to finance the programs and operations of the Mint. Of note, the establishing legislation for the USMPEF included the following proviso: “Provided further, That provisions of law governing procurement or public contracts shall not be applicable to the procurement of goods or services necessary for carrying out Mint programs and operations.” The same provision defines Mint programs and operations as follows:

(1) the activities concerning, and assets utilized in, the production, administration, distribution, marketing, purchase, sale, and management of coinage, numismatic items, the protection and safeguarding of Mint assets and those non-Mint assets in the custody of the Mint, and the Fund; and (2) includes capital, personnel salaries and compensation, functions relating to operations, marketing, distribution, promotion, advertising, official reception and representation, the acquisition or replacement of equipment, the renovation or modernization of facilities, and the construction or acquisition of new buildings.

The provision further contemplates that all receipts from Mint operations and programs be deposited in the USMPEF, and that all expenses incurred for operations and programs of the Mint that the Secretary of the Treasury determines to be ordinary and reasonable incidents of Mint operations and programs be paid out of the USMPEF. As a result of these provisions, the agency represents that the Mint is entirely funded by and operates within the USMPEF.

Because the establishing legislation provides that federal procurement laws and regulations do not apply to the procurement of goods or services necessary for carrying out the Mint’s operations and programs, and those operations and programs are defined broadly enough to encompass substantially all of the Mint’s activities, we conclude that the Mint is not subject to the terms of CICA. Furthermore, because the bid protest jurisdiction of our Office derives from CICA, we must conclude that the Mint is not subject to that jurisdiction.

Our Office reached a similar conclusion when considering whether our bid protest jurisdiction extended to the United States Postal Service (USPS). The USPS is an independent establishment of the executive branch, and thus it is a federal agency, like the Mint, that would otherwise be subject to our bid protest jurisdiction. However, by law, the USPS is expressly exempted from any “Federal law dealing with public or Federal contracts.”

Similarly, the Presidio Trust, a wholly-owned government corporation, would otherwise be subject to our jurisdiction, but is statutorily exempt from all federal procurement laws and regulations but for certain enumerated exceptions, which do not include CICA.

Thus, for an instrumentality of the executive branch to be free from the procurement requirements imposed on the executive branch by the legislature, the instrumentality must be given express leave by the legislature. 

We have seen on Guam, for instance, the Mayor's Council of Guam create a non-profit organization to take responsibility for operating the annual Liberation Day Carnival and festivities for the sole purpose of doing so without restrictions imposed by the procurement law. This case illustrates the wishful thinking of such action.