On August 22, the Court of Federal Claims ("COFC") denied a bid protest challenging a solicitation's payment terms for deviating from commercial practice, holding that the commercial contract requirements prescribed by the Federal Acquisitions Streamlining Act ("FASA") and FAR Part 12 (governing commercial acquisitions) do not apply to the terms of solicitations issued under Federal Supply Schedules ("FSSs"). CGI Federal, Inc. v. United States, — Fed.Cl. —, 2014 WL 4179360 (2014). The protest stemmed from a solicitation for recovery audit services by the Center for Medicare and Medicaid Services, which included delayed payment terms requiring contractors to wait up to 420 days after recovering overpayments to invoice the government in order to allow for the possibility of appeals; the protest alleged that this deviated from customary commercial practice—recovery audit contractors are customarily paid within 60 days of identifying an overpayment—and that the agency was required under FASA to obtain a waiver from this departure from customary commercial practice under FAR Part 12. Although the court agreed that the payment provision deviated from customary commercial practice, it nevertheless upheld the solicitation term because, in the court's view, the solicitation was not required to comply with FASA or FAR Part 12. In a detailed statutory construction-based analysis, in which the court compared cross-references to FAR Part 12 and FAR Subpart 8.4, the court held that neither FASA nor FAR Part 12's requirements applied to a procurement under FAR Subpart 8.4.
The decision has been stayed pending appeal; if sustained, its logic could extend to virtually all commercial requirements for FSS buys. Notwithstanding the pendency of the appeal, contractors considering or holding FSSs are advised to note that individual agencies, under this decision, retain discretion to impose non-customary terms and conditions even when ordering through the FSS.
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