When the government blackballs your sub, CICA is no help

Subcontractors have little recourse when an agency orders the prime to kick them off their team.

That was the situation FCN Inc. found itself in. It was bidding to be a teammate to Invictus on a task order bid under the SITE III vehicle.

While Invictus was evaluating FCN’s quote, the Defense Intelligence Agency was separately reviewing whether FCN had an organizational conflict of interest.

DIA told Invictus to drop the company and that is what Invictus did.

FCN went to the Government Accountability Office to challenge that decision. But in a short, four-page decision GAO said FCN did not have standing to challenge the decision. In legal terms, FCN was not an “interested party.”

It doesn’t matter that FCN would suffer financially because of a lost business opportunity, GAO said.

DIA asked GAO to dismiss the protest because it doesn’t meet the requirements for an interested party under the Competition in Contracting Act.

The procurement law defines an interested party as a “prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract,” GAO said, quoting CICA.

“Under these rules, a prospective subcontractor does not qualify as an interested party,” GAO said.

FCN argued that because DIA told Invictus to remove FCN from its team, the removal was a government action, and FCN should be able to protest.

But GAO said no. Invictus held its own evaluations for its subcontractors and retained “substantial responsibility” for the subs, and DIA did not, GAO wrote.

That was actually GAO's second, independent reason for dismissal: even setting aside the interested-party problem, GAO said it has no jurisdiction over a subcontract award unless the agency handled substantially all of the substantive procurement work itself. Here, Invictus — not DIA — wrote the RFQ soliciting its subcontractors, ran the evaluation, and made the call on its teammates, so GAO stayed out.

The U.S. Court of Federal Claims made a similar ruling when FCN went to the court to get a stay to stop work under the task order while GAO weighed the protest.

But the court denied the request. Like GAO, the court said that FCN was not an interested party and couldn’t request a stay.

So, what is the lesson beyond this decision?

Subcontractors cannot rely on CICA to protect them. Instead, they need to lean into teaming agreements and other contractual mechanisms between them and their prime.