Source: http://wifcon.com/pd35_003.htm
Timestamp: 2019-04-19 07:15:41+00:00

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Oracle contends that the agency did not have the authority to award the [Production-Other Transaction Agreement] P-OTA because, in the protester’s view, the initial, prototype OTA was commercial in nature and thus did not qualify as a prototype project under 10 U.S.C. § 2371b(a). Protest at 5, 20‑24. The Army argues the prototype OTA properly qualified as a prototype project because it complied with internal guidance. COS/MOL at 14. The agency sought a “repeatable process that highly automates the installation of these applications and the op[eration]s and maintenance of these applications down the road into a commercial cloud environment,” which, it argues, meets the definition of a prototype project. Tr. at 421:8-12. In this regard, the agency contends that a commercial program could still qualify as a prototype project if it had not been previously deployed within the DoD, in part due to the DoD’s stringent security requirements. Id. at 408:12-15, 415:17-22. In this regard, neither the agency nor the protester could identify any DoD entity that had successfully implemented a similar automated migration program. Id. at 408:19-21.
A prototype project can generally be described as a preliminary pilot, test, evaluation, demonstration, or agile development activity used to evaluate the technical or manufacturing feasibility or military utility of a particular technology, process, concept, end item, effect, or other discrete feature. Prototype projects may include systems, subsystems, components, materials, methodology, technology, or processes. By way of illustration, a prototype project may involve: a proof of concept; a pilot; a novel application of commercial technologies for defense purposes; a creation, design, development, demonstration of technical or operational utility; or combinations of the foregoing, related to a prototype.
AR, Tab 16, OT Prototype Guide, at 4.
We find that the original effort procured under the prototype OTA properly consisted of a prototype project. In this regard, the migration of TRANSCOM’s applications can fairly be called a “pilot” or “test” program, as well as a “demonstration” of REAN’s capabilities. The agency procured an “agile systems development enterprise” that included “the demonstration of a repeatable framework consisting of tools, processes and methodologies for securing, migrating (re-hosting) and refactoring, existing applications into a government-approved commercial cloud environment.” AR, Tab 6a, Prototype OTA, at 12. The initial award consisted of a proof of concept. AR, Tab 5a, Prototype OTA D&F, at 4.
Although the protester urges our Office to apply a dictionary definition of “prototype,” instead of that in the OT Prototype Guide, we decline to do so where the agency guidance was published well in advance of the AOI and the protester does not explain how the definition in the OT Prototype Guide is improper, ambiguous, or should be disregarded in favor of another definition. See, e.g., AINS, Inc., B‑400760.4, B-400760.5, Jan. 19, 2010, 2010 CPD ¶ 32 at 11 (relying on internal guidance for definition of terms); Protest at 22-23. On this record, we conclude that the underlying prototype OTA properly consisted of a prototype project.
This protest also challenges the agency’s use of its statutory authority to award a follow-on P-OTA under 10 U.S.C. § 2371b(f). Both Oracle and the Army agree that the P-OTA was awarded without competitive procedures, relying on the exception under subsection (f)(2). Protester Post-Hearing Brief at 22-25; Agency Post-Hearing Brief at 7. Oracle argues that the Army lacked the authority to award a follow-on P-OTA because the prototype OTA did not provide for a follow-on P-OTA, as required by subsection (f)(1). Protester Comments at 24-25. Oracle also alleges that the P-OTA award was improper because the prototype project is not complete, a prerequisite to award under subsection (f)(2)(B). Protester Post-Hearing Brief at 64. The agency contends that its award of the P-OTA complied with the relevant statutory requirements to enter into a follow-on production transaction. COS/MOL at 50. Here, we find that the Army did not comply with the statutory provisions regarding the award of a P-OTA because the prototype OTA did not provide for the award of a follow-on production transaction and because the prototype project provided for in the prototype OTA has not been completed.
(1) A transaction entered into under this section for a prototype project may provide for the award of a follow-on production contract or transaction to the participants in the transaction. A transaction includes all individual prototype subprojects awarded under the transaction to a consortium of United States industry and academic institutions.
(B) the participants in the transaction successfully completed the prototype project provided for in the transaction.
(3) Contracts and transactions entered into pursuant to this subsection may be awarded using the authority in subsection (a), under the authority of chapter 137 of this title, or under such procedures, terms, and conditions as the Secretary of Defense may establish by regulation.
The starting point for our analysis is the statutory language used by Congress. See Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S. Ct. 2051, 64 L. Ed. 2d 766 (1980) (“We begin with the familiar canon of statutory construction that the starting point for interpreting a statute is the language of the statute itself.”). In construing the statute, “‘we look first to its language, giving the words used their ordinary meaning.’” Ingalls Shipbuilding, Inc. v. Director, Office of Workers’ Compensation Programs, 519 U. S. 248, 255, 117 S. Ct. 796, 136 L. Ed. 2d 736 (1997) (quoting Moskal v. United States, 498 U. S. 103, 108, 111 S. Ct. 461, 112 L. Ed. 2d 449 (1990)). Generally, we must give effect to all words in the statute, as Congress does not enact unnecessary language. Life Techs. Corp. v. Promega Corp., 580 U.S. __, __, 137 S. Ct. 734, 740, 197 L. Ed. 2d 33, 41 (2017) (citing Hibbs v. Winn, 542 U.S. 88, 89, 124 S. Ct. 2276, 159 L. Ed. 2d 172 (2004)). It is a cardinal principle of statutory construction that a statute ought to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant. TRW Inc. v. Andrews, 534 U.S. 19, 31, 122 S. Ct. 441, 151 L. Ed. 2d 339 (2001), citing Duncan v. Walker, 533 U.S. 167, 174, 121 S. Ct. 2120, 2125, 150 L. Ed. 2d 251 (2001). If the statutory language is clear and unambiguous, the inquiry ends with the plain meaning. Myore v. Nicholson, 489 F.3d 1207, 1211 (Fed. Cir. 2007) (internal citations omitted). GAO likewise applies the “plain meaning” rule of statutory interpretation. See, e.g., Technatomy Corp., B-405130, June 14, 2011, 2011 CPD ¶ 107.
Applying the principles above to the language of 10 U.S.C. § 2371b(f), we conclude that a follow-on P-OTA may only be awarded to the prototype transaction participants without the use of competitive procedures if the “transaction entered into under this section for a prototype project”--i.e., the prototype OTA itself--“provide[d] for the award of a follow-on production contract or transaction to the participants in the transaction.” 10 U.S.C. § 2371b(f)(1), (2). The Army acknowledges that the prototype OTA does not in any way “provide for” a follow-on P-OTA. Agency Post-Hearing Brief at 10. The agency contends, however, that the June 2016 CSO’s references to a possible follow-on P-OTA satisfy the statutory requirement to “provide for” a P‑OTA. Id. at 11 (“The language in the CSO has the same effect as if it were specifically incorporated in the individual prototype OTAs – it is clearly an optional part of the intent of the parties from the inception, if the prototype is successful.”); see also tr. at 257:5-13 (“Q. Where is your . . . authority to award a follow-on production transaction without having that follow-on transaction being initially provided for in a transaction under paragraph [(f)]1? A: Again, I point to the CSO and the fact that we had in there[,] in the solicitation document that we were going to potentially go to commercial.”).
The agency argues that the CSO’s language properly “provides for” a follow-on P‑OTA in accordance with subsection 2371b(f)(1), in order to allow for a non-competitive award of a P-OTA under (f)(2). Agency Post-Hearing Brief at 10-11. This position, however, fails to consider that such award is only permitted if there is a provision for follow-on production included in “[a] transaction entered into under this section.” 10 U.S.C. § 2371b(f)(1). In this regard, the CSO (and for that matter, the AOI) cannot be a “transaction [that is] entered into,” because it is a standalone announcement. Id. The “transaction” is the legal instrument itself, and not the solicitation documents. MorphoTrust, supra, at 6; see also Exploration Partners, supra, at 4. Thus, the only reasonable reading of this phrase is as a reference to the prototype OTA itself, which does qualify as a “transaction [that is] entered into.” Id. We therefore conclude that the Army’s argument as to the sufficiency of the CSO references is unreasonable because it neither reflects the ordinary meaning of the statute nor accounts for all of the phrases therein. TRW Inc. v. Andrews, supra; Alaska Dept. of Envtl. Conservation v. Environmental Protection Agency, 540 U.S. 461, 489 n.13, 124 S. Ct. 983, 157 L. Ed. 2d 967 (“a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant”) (citation omitted).
Not only is this reading consistent with the plain meaning of the statute, but it is also concordant with the agency’s own internal guidance, which advises that the agency’s “acquisition approach should . . . [a]ddress the OT source selection process, the nature and extent of the competition for the prototype project, and any planned follow-on activities.” AR, Tab 16, OT Prototype Guide at 10; id. at 6 (“It is the Agreements Officer’s responsibility to ensure that the terms and conditions negotiated [for the prototype OTA] are appropriate for the particular prototype project and should consider expected follow-on needs.”). The agency explains, however, that although all of the DIUx OTAs contemplate that the prototype “projects may eventually result in follow-on production,” planning for a P-OTA was not addressed at the time of the award of the prototype OTA because “it’s too early in the process.” Tr. at 157:18-20; 158:1.
Thus, because the plain and unambiguous meaning of the statute provides that the Army only has the authority to award a follow-on P-OTA if it was provided for in the prototype OTA, and because the prototype OTA here included no provision for a follow-on P-OTA, we conclude that the Army lacked the statutory authority to award the P-OTA and sustain the protest on this basis.
As another prerequisite to award of a P-OTA without competition, subsection (f)(2) states that “the participants in the transaction [must have] successfully completed the prototype project provided for in the transaction.” 10 U.S.C. § 2371b(f)(2)(B). Oracle asserts that the agency lacked authority to award the P-OTA because the prototype project was not completed. Protester Post-Hearing Brief at 63-64. The Army contends that “[t]he prototype project was successfully completed (as required by section (f)(2)(B)) under the prototype other transaction agreement awarded to REAN on May 23, 2017.” COS/MOL at 22.
The prototype OTA as awarded contemplated the migration of six applications, and the option to migrate an additional six. AR, Tab 6a, Prototype OTA, at 4, 7. The prototype OTA was subsequently modified to include enclave migration. AR, Tab 7e, Amend. P0005, at 1 (“The purpose of this modification is to incorporate the movement of Enclaves into the prototype effort.”). The enclave work was not completed on February 1, 2018, when the Army signed the D&F approving the award of the P-OTA and awarded the P‑OTA. Tr. at 86:18-20.
The Army acknowledges that the enclave work is not complete, but contends that its award of the P-OTA was nevertheless in compliance with the statute because REAN had completed those “parts of the prototype” project that were included in the P-OTA. COS/MOL at 30 (“Only those same capabilities successfully prototyped are included in the production OT.”); tr. at 471:19. Because award of a P-OTA requires “successful complet[ion of] the prototype project provided for in the transaction,” the Army in essence argues that, for the purposes of awarding the $950 million P-OTA, the enclave work is not part of the prototype project. COS/MOL at 21; 10 U.S.C. § 2371b(f)(2).
We apply the same principles of statutory interpretation described above to determine whether the requirement for successful completion of “the prototype project provided for in the transaction” refers to all of the prototype project or only the project as initially awarded. Again, the plain meaning of the phrase “completed the prototype project provided for in the transaction” is the entire prototype project described in the transaction, i.e., the instrument itself. Here, the record shows that the transaction includes enclaves. Furthermore, if the enclaves were not properly part of the “prototype project,” then they would not be included in the Army’s award authority under 10 U.S.C. § 2371b(a).
Under the Competition in Contracting Act of 1984 (CICA) and our Bid Protest Regulations, we review protests concerning alleged violations of procurement statutes or regulations by federal agencies in the award or proposed award of contracts for the procurement of goods and services, and solicitations leading to such awards. See 31 U.S.C. §§ 3551(1), 3552; 4 C.F.R. § 21.1(a). We have also found that agreements issued by an agency under its “other transaction” authority “are not procurement contracts, and therefore we generally do not review protests of the award, or solicitations for the award, of these agreements under our bid protest jurisdiction.” Rocketplane Kistler, B-310741, Jan. 28, 2008, 2008 CPD ¶ 22 at 3; see also Exploration Partners, LLC, B-298804, Dec. 19, 2006, 2006 CPD ¶ 201 at 3 (finding that “other transaction” agreements, cooperative agreements, and other non-procurement instruments are not procurement contracts); Strong Envtl., Inc., B-311005, Mar. 10, 2008, 2008 CPD ¶ 57 at 4 (GAO does not have jurisdiction to consider the award of a cooperative agreement); Sprint Commc’ns Co. L.P., B-256586, B-256586.2, May 9, 1994, 94-1 CPD ¶ 300 at 3. We will review, however, a timely protest that an agency is improperly using its “other transaction” authority. See Rocketplane Kistler, supra.
We find that TSA has statutory authority to enter into “other transaction” agreements, and the protester has not shown that TSA’s use of this authority for the Pre✓® Application Expansion Initiative is inconsistent with TSA’s statute.
Congress granted “other transaction” authority to TSA. Specifically, TSA “is authorized to enter into and perform such contracts, leases, cooperative agreements, or other transactions as may be necessary to carry out the functions of the Administrator and the Administration.” 49 U.S.C. § 106(l)(6) (emphasis added). Further, it is clear that the solicitation here for the TSA Pre✓® Application Expansion Initiative falls within the scope of TSA’s “other transaction” authority. Unlike the limited “other transaction” authority provided to certain other federal agencies, TSA’s “other transaction” authority may be used for any purpose “necessary to carry out” the agency’s functions. There is no express statutory prohibition on TSA using its “other transaction” authority for the Pre✓® Application Expansion Initiative, nor any statutory requirement that this particular program be done by means of a procurement contract.
Where, as here, a decision--such as whether to use “other transaction” authority--is authorized by statute or regulation, our Office will not make an independent determination of the matter. MCR Fed., LLC, B‑401954.2, Aug. 17, 2010, 2010 CPD ¶ 196 at 5; Knights’ Piping, Inc.; World Wide Marine & Indus. Servs., B‑280398.2, B-280398.3, Oct. 9, 1998, 98-2 CPD ¶ 91 at 6. Instead, our review of a discretionary agency action is limited to whether the action undertaken was a knowing and authorized one. See, e.g., CIGNA Gov’t Servs., LLC, B-401068.4, B‑401068.5, Sept. 9, 2010, 2010 CPD ¶ 230 at 14 (holding that our review of an agency’s discretion to waive an organizational conflict of interest was confined to whether the waiver outlined the extent of the conflict and was executed by a duly-authorized agency official).
Here we find TSA’s decision to use its “other transaction” authority unobjectionable. In this regard, the record reflects that the head of the TSA contracting activity prepared and duly executed a written determination that outlined the rationale for the agency’s use of its “other transaction” authority for the TSA Pre✓® Application Expansion Initiative. The determination first recognized the “other transaction” authority possessed by the agency. The determination also included a detailed discussion of the bases for his conclusion that an “other transaction” agreement would provide flexibilities necessary to the successful accomplishment of the program, and would be in the best interests of the government. See AR, Tab 2, TSA D&F, Dec. 12, 2014, at 1-2. Additionally, there is no dispute that the head of the TSA contracting activity was authorized to make such a determination, or that the resulting solicitation was consistent in scope with the approved use of the agency’s “other transaction” authority. We therefore have no basis to question the reasonableness of the agency’s actions. See CIGNA Gov’t Servs., LLC, supra.
MorphoTrust does not dispute that TSA possesses “other transaction” authority. Rather, MorphoTrust maintains that the agency is required by the Federal Grant and Cooperative Agreement Act (FGCAA) to conduct the TSA Pre✓® Application Expansion Initiative as a procurement contract. We disagree.
The protesters each raise various arguments about the terms and conditions of the [notice of funding availability] NOFA. All of the protesters argue that HUD’s use of a NOFA, and the characterization of the [Annual Contributions Contract] ACCs that HUD seeks to award via this NOFA as cooperative agreements, are improper. The protesters contend that HUD is seeking contract administration services that must be solicited through a procurement instrument that results in the award of contracts.
The Federal Grant and Cooperative Agreement Act (FGCAA) establishes the general criteria that agencies must follow in deciding which legal instrument to use when entering into a funding relationship with a state, locality or other recipient for an authorized purpose. 31 U.S.C. §§ 6301-6308 (2006). In this regard, the FGCAA provides that an agency must use a procurement contract when “the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government;” or the agency otherwise “decides in a specific instance that the use of a procurement contract is appropriate.” 31 U.S.C. § 6303.
The FGCAA further provides that an “agency shall use a cooperative agreement” when the principal purpose of the relationship “is to transfer a thing of value to the State, local government, or other recipient to carry out a public purpose of support or stimulation authorized by law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government,” and “substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.” 31 U.S.C. § 6305.
Put differently, the use of a grant or cooperative agreement is appropriate if the principal purpose of the agreement is to provide assistance to the recipient to accomplish a public objective authorized by law. In contrast, if the federal agency’s principal purpose is to acquire goods or services for the direct benefit or use of the federal government, then a procurement contract must be used.
Our Office has recognized that it is often difficult to draw fine lines between the types of arrangements that require the use of procurement contracts and those that do not. Environmental Protection Agency--Inspector General--Cooperative Agreement--Procurement, B-262110, Mar. 19, 1997, 97-1 CPD ¶ 131 at 4. The principal purpose of the relationship between the federal government and the state, local government, or other entity is not always clear, and we have recognized that this can be particularly so where the federal government provides assistance to specified recipients by using an intermediary. GAO, Principles of Federal Appropriations Law, vol. II, at 10-20 (3rd ed. 2006); see 360Training.com, Inc. v. United States, 2012 U.S. Claims LEXIS 502 at *11-12 (Fed. Cl. Apr. 26, 2012). The intermediary or third party situation arises where an assistance relationship, such as a grant or cooperative agreement, is authorized to specified recipients, but the Federal grantor delivers the assistance to the authorized recipients by utilizing another party. GAO, Principles of Federal Appropriations Law, Vol. II, at 10-19. In such circumstances, “[t]he choice of instrument for an intermediary relationship depends solely on the principal federal purpose in the relationship with the intermediary.” S. Rep. No. 97-180, at 3 (1981) quoted in GAO, Principles of Federal Appropriations Law, vol. II, at 10-20.
In this regard, where the government’s principal purpose is to “acquire” an intermediary’s services, which ultimately may be delivered to an authorized recipient, or if the agency otherwise would have to use its own staff to provide the services offered by the intermediary to the beneficiaries, then a procurement contract is the proper instrument. Id; 360Training.com v. United States, Inc., supra; Civic Action Institute, B-206272, Sept. 24, 1982, 82-2 CPD ¶ 270 at 4, aff’d, Civil Action Institute--Recon., B-206272.2, Nov. 2, 1982, 82-2 CPD ¶ 399. On the other hand, where the Government’s principal purpose is to “assist” the intermediary in providing goods or services to the authorized recipient, the use of an assistance instrument, such as a cooperative agreement, is proper. GAO, Principles of Federal Appropriations Law, vol. II, at 10-20.
The FGCAA gives agencies considerable discretion in determining whether to use a contract, grant, or cooperative agreement, and our Office will not question such determinations unless it appears that the agency acted unreasonably, disregarded statutory and regulatory guidance, or lacked authority to enter into a particular relationship. Civic Action Institute, supra, at 3. In determining whether an agency’s selection and proposed use of a grant or cooperative agreement, rather than a contract, is reasonably based and consistent with statutory and regulatory guidance, our analysis of the nature of the contemplated relationship between the federal agency and the other party includes the consideration of the substance of the proposed agreement based upon the surrounding circumstances. B-257430, Sept. 12, 1994.
In contending that the instruments at issue here are properly designated cooperative agreements, HUD points out that The Housing Act of 1937, as amended and codified, provides that it “is the policy of the United States . . . to assist states and political subdivisions of States to address the shortage of housing affordable to low-income families.” 42 U.S.C. § 1437(a)(B); AR at 11; Supp. AR at 2. HUD maintains that the NOFA, which will result in the issuance of cooperative agreements, is in furtherance of the Act’s stated policy to provide assistance to states and political subdivisions of states. HUD specifically argues here that the “principal purpose of the ACCs between HUD and the PHAs is to assist the states and local governments by having PHAs, which are governmental entities, administer [HAP] contracts with property owners in order to serve the federal, state, and PHAs’ public purpose of promoting affordable housing for low-income families.” AR at 11.
Referencing the FGCAA criteria for cooperative agreements, HUD further explains that through the ACCs, HUD transfers a “thing of value” to the PHAs, by providing the PHAs with the funds necessary to make payments under the HAP contracts, as well as by paying the PHAs an “administrative fee” that compensates the PHAs for its services. AR at 12. HUD notes here that under the ACC, a PHA may use the “excess funds generated by the ACC to provide additional housing services” under other programs supported by the PHA, and that HUD is therefore supporting “the PHA’s public purpose.” Id.
HUD further maintains that it “is not assigning work to PHAs that it is otherwise required to do,” based upon its view that HUD “is not obligated to administer the HAP contracts itself.” AR at 13. HUD argues here that “[t]here is nothing in the United States Housing Act of 1937, or, more specifically, Section 8 of that Act, that obligates HUD to administer HAP contracts.” Supp. AR at 10. HUD also explains that the cognizant PHAs, rather than HUD, are listed as contract administrators on the majority of HAP contracts currently in effect, and that because of this, HUD is not obligated to serve as a contract administrator. Id. HUD thus concludes that its issuance of a NOFA providing for the issuance of cooperative agreements for the administration by PHAs of Project-Based Section 8 HAP contracts was reasonable and consistent with applicable statutes and regulations.
In addressing HUD’s arguments, we begin with the agency’s assertion that the principal purpose of the ACCs to be awarded under the NOFA--consistent with The Housing Act of 1937--is to “assist” PHAs “to address the shortage of housing affordable to low-income families” by providing a thing of value, that is, money, to the PHAs. See 42 U.S.C § 1437(a)(B); AR at 11; Supp. AR at 2. In this regard, we find unpersuasive HUD’s argument that its payments to property owners in accordance with the terms of its HAP contracts can properly be considered as the transfer of a thing of value to the PHAs. As set forth above, although the HAP contract payments are made through the PHAs in accordance with their obligations under the ACCs to administer the HAP contracts, the PHAs themselves have no rights to the payments (or control over them) once HUD authorizes the payments and transfers the funds to the PHAs for distribution. The PHAs, consistent with their roles as contract administrators, act only as a “conduit” for the payments. See AR, Tab 4, 53 Fed. Reg. 8050 (1988), at BATES 247 (HUD’s explanation as to why it views its Section 8 housing assistance payments as “outside the scope” of Office of Management and Budget’s Circular A-102 that governs grants and cooperative agreements with state and local governments). That is, and as described above, the PHAs have no right to retain or use for other purposes any of the funds it receives for payment to the property owners. In fact, the ACCs require that the funds, once received by the PHAs from HUD, be promptly transferred to the property owners, and require that any excess funds and interest earned on HAP funds by the PHAs be remitted to HUD or invested in accordance with HUD requirements. AR, Tab 3, ACC, at BATES 194.
Next, although we agree that HUD is clearly providing “a thing of value” to the PHAs through HUD’s payment of an administrative fee, we do not agree that the principal purpose of HUD’s payment of administrative fees to the PHAs is to “assist” the PHAs in the performance of their mission. Rather, as evidenced by the record, the administrative fees are paid to the PHAs as compensation for their provision of service--i.e., administering the HAP contracts. This arrangement, that is, the payment of fees by HUD for the PHAs’ services as contract administrators, is provided for by the NOFA and ACCs to be awarded. See AR, Tab 3, ACC, at BATES 194 (“The PHA shall use Administrative Fees to pay the operating expenses of the PHA to administer HAP Contracts”).
We also disagree with HUD’s assertion that it is under no obligation to administer the HAP contracts because the PHAs, and not HUD, are listed as the contract administrators on most HAP contracts. In this regard, the “HUD Occupancy Handbook” acknowledges, in the context of the Project-Based Section 8 rental assistance program, that “HUD has primary responsibility for contract administration but has assigned portions of these responsibilities” to PHAs whose “responsibilities focus on the day-to-day monitoring and servicing of Section 8 HAP contracts.” Supp. AR, Tab 17, HUD Occupancy Handbook 4350.3 REV-1, at BATES 533. Further, the Project-Based Section 8 HAP “Basic Renewal Contract” provided by HUD specifically obligates HUD, and not the contract administrator, to provide the housing assistance payments. Supp. AR, Tab 18, Project-Based Section 8 HAP Basic Renewal Contract, at BATES 546. HUD’s HAP Basic Renewal Contract notes elsewhere that “HUD shall take any action HUD determines necessary for the continuation of housing assistance payments to the Owner in accordance with the Renewal Contract” where a PHA, serving as the contract administrator, fails to transfer the housing assistance payments to the property owner as required under the relevant HAP contract. Id. at BATES 551.
Given our view, as set forth above, that HUD is legally obligated to pay the property owners under the terms of the HAP contracts, and HUD’s recognition that it has primary responsibility for contract administration but has assigned portions of these responsibilities to PHAs, we also find that HUD’s principal purpose for its relationship with the PHAs as contemplated by the NOFA and set forth in the ACC, is to acquire the PHAs’ services as contract administrators. In this regard, the asserted “public purpose” provided by the PHAs under the NOFA--the administration of HAP contracts--is essentially the same purpose HUD is required to accomplish under the terms of its HAP contracts, wherein HUD is ultimately obligated to the property owners. As such, the principal purpose of the NOFA and ACCs to be awarded under the NOFA is for HUD’s direct benefit and use. B-257430, Sept. 12, 1994, at 4. Again, the NOFA provides, and HUD’s past practices demonstrate, that if a PHA is unable to provide contract administration services for the Project-Based Section 8 rental assistance program, HUD staff has provided and will provide such services. See 360Training.com v. United States, Inc., supra (an agency is acquiring the intermediary’s services for its own direct benefit or use if the agency otherwise would have to use its own staff to provide the services offered by the intermediary); see also GAO, Principles of Federal Appropriations Law, Vol. II, at 10-20.
For the reasons set forth above, we conclude that HUD’s issuance of a NOFA providing for the award of cooperative agreements was unreasonable and in disregard of applicable statutory guidance. We also conclude that HUD is required to use a procurement instrument that results in a contract in order to obtain the provision of contract administration services by PHAs for the Project-Based Section 8 HAP contracts. Finally, given our conclusion that HUD should use a procurement instrument that results in the award of contracts, rather than a notice that results in the execution of cooperative agreements, these protests fall squarely within the jurisdiction of our Office. See Energy Conversion Devices, Inc., supra.
The protesters also argue that certain terms of the NOFA are inconsistent with procurement statute and regulation, including the FAR, and are otherwise improper. We need not address these concerns. In this regard, HUD “admits that it did not follow the requirements in CICA or the FAR” in preparing its NOFA, and that it “would expect the protests to be sustained” should our Office determine, as we have, that the protests are within GAO’s jurisdiction. HUD Response to Protesters’ Requests for Documents (June 12, 2012) at 2. As a result, the protests are sustained.
(2) the agency decides in a specific instance that the use of a procurement contract is appropriate.
NASA obtains no vehicles, supply service, prototype, hardware, or other property, no systems or vehicle designs, and only the minimum Government-purpose data rights legally required by the Space Act. The Announcement does not provide NASA any right to future use of systems and vehicles developed and demonstrated under COTS Phase 1, for [International Space Station] supply missions or for any other purpose. The participant, not NASA, proposes the capabilities it will demonstrate and establishes the technical and schedule milestones for those demonstrations.
For the reasons explained below, however, the Court finds that it need not resolve many of these questions in order to dispose of this case. Having found jurisdiction to determine whether the [performance-based annual contributions contracts] PBACCs are procurement contracts or cooperative agreements, the Court must now proceed to analyze this question on the merits. If, following such an analysis, the Court finds that the PBACCs are procurement contracts, CICA would apply, and further related analysis would become necessary. However, because the Court does not reach this conclusion, but instead finds that HUD has properly classified the PBACCs as cooperative agreements, it need not reach any CICA-related issues raised by the parties.
Accordingly, the Court will explain why, after examining the Housing Act of 1937, as amended, and in light of the standards set forth in the [Federal Grant and Cooperative Agreement Act] FGCAA, it has determined that the PBACCs are best classified as cooperative agreements rather than procurement contracts.
The Federal Grant and Cooperative Agreement Act of 1977, or FGCAA, “provides guidance to executive agencies in determining which legal instrument to use when forming a [contractual] relationship” between the agency and another party. 360Training.com, 104 Fed. Cl. at 579; 31 U.S.C. §§ 6301-6308. The FGCAA establishes what is sometimes referred to as the “principal purpose” test, providing that “[a]n executive agency shall use a procurement contract as the legal instrument reflecting a relationship between the United States Government” and a recipient when “the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit of the United States Government[.]” 31 U.S.C. § 6303 (emphasis added). Conversely, the FGCAA counsels that “[a]n executive agency shall use a cooperative agreement … when (1) “the principal purpose of the relationship is to transfer a thing of value” to the recipient in order “to carry out a public purpose of support or stimulation authorized by a law of the United States,” and (2) “substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.” Id. § 6305 (emphasis added).
The FGCAA standards are expressed in mandatory, not precatory, terms. Nonetheless, as HUD and at least some of the Plaintiffs recognize, these standards do not provide hard-and-fast, one-size-fits-all rules. Rather, because every agency has inherent authority to enter into procurement contracts, but must be specifically authorized by statute to enter into assistance agreements, the FGCAA standards must be applied within the context of the agency’s specific statutory mandate in entering into the contractual relationship in question. U.S. Government Accountability Office, Principles of Federal Appropriations Law, Vol. II, p. 10-17 (2006) (“GAO Redbook”) (“[T]he relevant legislation must be studied to determine whether an assistance relationship is authorized at all, and if so, under what circumstances and conditions.”); see also HUD Mem. at 26 (“Although Congress enacted the FGCAA … to establish criteria for Federal agency use of grants, cooperative agreements, and procurement contracts, the decision as to which legal instrument is appropriate depends, in the initial analysis, on the agency’s statutory authority.”); NHC Mem. at 39 (“There are two steps involved in conducting an FGCAA analysis, and we do not disagree that the first step in determining the correct funding instrument” is to examine “‘whether the agency has statutory authority to engage in assistance transactions at all’”) (quoting GAO Redbook at 10-17”); AHSC Mem. at 37 (similar).
In order to determine whether the PBACCs are procurement contracts or cooperative agreements, the Court will therefore begin with a close examination of the “precise statutory obligations” underlying these contracts, as contained in the 1937 Housing Act, as amended. 360Training.com, 104 Fed. Cl. at 579. Once the nature of these obligations has been determined, the Court will then examine them in light of the standards delineated by the FGCAA. See GAO Redbook at 10-17 (“[D]eterminations of whether an agency has authority to enter into [cooperative agreements] in the first instance must be based on the agency’s authorizing or program legislation. Once the necessary underlying authority is found, the legal instrument … that fits the arrangement as contemplated must be used, using the [FGCAA] definitions for guidance as to which instrument is appropriate.”).
The PBACCs are Consistent With the Standards for Cooperative Agreements Set Forth in the FGCAA.
As explained above, the FGCAA establishes a “principal purpose” test for the determination of whether a particular governmental contract is properly categorized as a procurement contract or a cooperative agreement. When “the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit of the United States Government,” an agency must use a procurement contract. 31 U.S.C. § 6303 (emphasis added). Conversely, when (1) “the principal purpose of the relationship is to transfer a thing of value” to the recipient in order “to carry out a public purpose of support or stimulation authorized by a law of the United States,” and (2) “substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement,” the agency may use an assistance agreement. Id. § 6305 (emphasis added).
Citing these standards, the Government argues that the contracts in question hew much more closely to the latter definition. Specifically, HUD posits that it “has not and is not acquiring any services when it grants administrative authority and transfers funds to [Public Housing Authorities] PHAs via the [annual contributions contracts] ACCs,” but “[r]ather … is engaged in a core statutory duty of providing funding assistance to state-sponsored PHAs[.]” HUD Mem at 22. Moreover, HUD argues that it “has retained authority to make certain decisions [and] to control the administration of the program … to ensure that Federal funds are spent in strict accordance with the terms of the HAP contracts and Federal law,” which dovetails with the FGCAA’s instruction that “substantial involvement” on the part of the Government is indicative of a cooperative agreement, not a procurement contract. Id. at 32.
Whether a contract is a procurement contract or a cooperative agreement is a question of law. Maint. Eng’rs v. United States, 749 F.2d 724, 726 n.3 (Fed. Cir. 1984). On appeal, Appellants argue that the Court of Federal Claims erred in holding that the [performance-based annual contributions contracts] PBACCs at issue are cooperative agreements, as opposed to procurement contracts. They also argue that, in any event, the trial court erred by failing to address whether the [Notice of Funding Availability] NOFA’s anticompetitive provisions are arbitrary and capricious under the APA.
With respect to Appellants’ first argument, this court agrees with Appellants that the [Performance-Based Contract Administrators] PBAACs are procurement contracts and not cooperative agreements. Based on this record, the primary purpose of the PBACCs is to procure the services of the PBCAs to support HUD’s staff and provide assistance to HUD with the oversight and monitoring of Section 8 housing assistance. For example, the PBCA outsourcing program was created in response to federal budget restraints and sought to “improve the oversight of HUD’s project-based program.” J.A. 300/A.R. 253. HUD acknowledged its intention “to procure the services of contract administrators to assume many of these specific duties, in order to release HUD staff for those duties that only government can perform and to increase accountability for subsidy payments.” J.A. 300/A.R. 259 (emphasis added). HUD also acknowledged that due to “major staff downsizing . . . HUD sought new ways to conduct its business[,] such as the Request for Proposals for outside contractors to administer HUD’s portfolio of Section 8 contract[s].” J.A. 300/A.R. 3764 (emphasis added).
The record in this case also shows that HUD’s 1999 RFP, which contains substantially similar terms as the 2011 and 2012 competitions, stated that it “pays billions of dollars annually to [project owners and] seeks to improve its performance of the management and operations of this function through this RFP.” J.A 300/A.R. 428. The RFP added that it would evaluate the proposals “to determine which offerors represent the best overall value . . . to the Department.” J.A. 300/A.R. 442 (emphasis added). And, as recently as 2013, HUD has acknowledged that “PBCAs have helped make HUD a leader among Federal agencies in reducing improper payments,” J.A. 300/A.R. 1963, and that “PBCAs are integral to the Department’s efforts to be more effective and efficient in the oversight and monitoring of this program.” J.A.300/A.R. 1960. HUD has also consistently described the role of the PBCAs as “support” for HUD’s Field Staff. J.A. 300/A.R. 1964 (“Field Staff perform the following functions, with support from PBCA’s, to administer the [program] . . . .”).
The record belies HUD’s argument that the housing assistance payments it makes to the PBCAs are a “thing of a value” within the ambit of 31 U.S.C. § 6305. HUD has a legal obligation to provide project owners with housing assistance payments under the HAP contracts. See J.A. 300/A.R. 2276. Transferring funds to the PBCAs to transfer to the project owners is not conferring anything of value on the PBCAs, especially where the PBCAs have no rights to, or control over, those funds. Moreover, the PBCAs must remit any excess funds and interest earned back to HUD. J.A. 300/A.R. 2849.
Likewise, the administrative fee paid to the PBCAs do not constitute a “thing of value” either. While money can be a “thing of value” under 31 U.S.C. § 6305 in certain circumstances, the administrative fee here appears only to cover the operating expenses of administering HAP contracts on behalf of HUD.
At most, HUD has merely created an intermediary relationship with the PBCAs “[w]here the [PBCAs are] not receiving assistance from the federal agency but [are] merely used to provide a service to another entity which is eligible for assistance.” S. Rep. No. 97-180, at 5 (1981). “The fact that the product or service produced by the intermediary may benefit another party is irrelevant.” Id. In the case of an intermediary relationship, “the proper instrument is a procurement contract.” Id. V.

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