WASHINGTON, DC (May 31, 2018)- The following is a statement from Ralph O. White, Managing Associate General Counsel for Procurement Law at GAO, regarding today’s decision resolving the protest filed by Oracle America, Inc., B‑416061, May 31, 2018.
On May 31, 2018, the U.S. Government Accountability Office (GAO) sustained a protest filed by Oracle America, Inc. (Oracle), of Reston, Virginia, challenging the Department of the Army’s entry into a follow-on production other transaction agreement (OTA) with REAN Cloud LLC, of Herndon, Virginia. (An OTA permits agencies, with the appropriate statutory authority, to enter into agreements that are not viewed as federal contracts; as a result, these instruments are not governed by contracting statutes.) The production OTA at issue here allows Department of Defense entities to obtain migration of their legacy software applications to a commercial cloud service provider. The not-to-exceed value of the production OTA is $950 million. Despite the value stated on the face of the OTA, DOD has advised REAN that it will limit the value of orders placed against the agreement to $65 million.
In its protest, Oracle asserted that the agency did not properly exercise the authority granted to it under 10 U.S.C. § 2371b to enter into a follow-on production OTA. GAO sustained the protest because we determined that the agency did not comply with the statutory preconditions in 10 U.S.C. § 2371b(f) addressing the award of a follow-on production OTA. GAO recommended that the agency terminate the production OTA, and either use competitive procurement procedures in accordance with statutory and regulatory requirements; prepare the appropriate justification required by the Competition in Contracting Act of 1984 to award a contract without competition; or review its other transaction authority to determine whether it is possible to comply with the statutory preconditions for entering into a production OTA.