E.K.K. Investments, LLC

Decision

Matter of: E.K.K. Investments, LLC

File: B-423246

Date: March 25, 2025

DIGEST

Protest challenging agency’s establishment of a blanket purchase agreement for fresh fruits and vegetables using other than competitive procedures is sustained where the agency did not issue a justification and approval and did not solicit offers from as many sources as practicable.

E.K.K. Investments, LLC d/b/a EKK Investments LLC, of Los Angeles, California, protests the establishment of a blanket purchase agreement (BPA) with Coastal Pacific Food Distributors, Inc. (CPFD), of Stockton, California, by the Defense Commissary Agency (DeCA) to procure fresh fruits and vegetables for resale at commissary stores. The protester argues that DeCA failed to comply with the requirements for using other than competitive procedures when it established the BPA.

We sustain the protest.

BACKGROUND

On August 23, 2024, DeCA emailed a request for information (RFI) to six companies that had been identified as potential sources to provide fresh fruits and vegetables to commissary stores in Korea. Agency Report (AR), Exh. 1, RFI[1]; Contracting Officer’s Statement (COS) ¶ 6. The email stated: “The purpose is to benchmark industry capabilities, best practices, use of data, and communication and transportation standards with regard to fresh fruits and vegetable processes. NOTE: THIS IS NOT A SOLICITATION FOR PROPOSALS; THIS IS A REQUEST FOR INFORMATION (RFI) ONLY.” AR, Exh. 1, RFI. A draft BPA and a document with 15 questions were attached to the email.[2] AR, Exh. 1, RFI; AR, Exh. 2, Draft BPA; AR, Exh. 3, Evaluation Questions. On September 10, DeCA provided answers to questions from the companies concerning the draft BPA. COS ¶ 9. In its written responses, DeCA advised that it intended to establish the BPA with a single source, presuming satisfactory performance. AR, Exh. 4, BPA Questions and Answers at 362.

DeCA received responses to the RFI from four of the six companies, including EKK Investments and CPFD. COS ¶ 10; AR, Exh. 9, CPFD Resp.; AR, Exh. 22, EKK Resp. After reviewing and scoring the responses to the RFI, DeCA determined it was in the agency’s best interest to establish the BPA with CPFD.[3] COS ¶ 15; AR, Exh. 41, Agency Memorandum, Oct. 1 at 299-300.1.

On November 5, the contracting officer prepared a memorandum documenting the agency’s decision to purchase fresh fruits and vegetables for resale at commissary stores in Korea using procedures other than full and open competition pursuant to sections 2484(f) and 3204(a)(5) of title 10 of the United States Code. COS ¶ 13; AR, Exh. 5, Agency Memorandum, Nov. 5. Subsequently, on December 10, the agency established a BPA with CPFD. COS ¶ 16. DeCA did not issue a justification and approval (J&A) document.

Also on December 10, the protester emailed the contracting officer, asking if the agency would be issuing a solicitation for the BPA. COS ¶ 20. On December 12, the contracting officer informed EKK Investments that the BPA had been established with CPFD. Id.

On December 23, EKK Investments filed this protest with our Office.[4]

DISCUSSION

EKK Investments contends that DeCA failed to comply with the requirements for using other than competitive procedures when it established the BPA with CPFD.[5] Protest at 2; Comments at 1. Specifically, the protester argues that the agency failed to issue a J&A, and it failed to solicit offers from as many sources as practicable. DeCA responds that it was not required to execute a J&A or solicit offers from as many sources as practicable because section 2484(f) of title 10 of the United States Code permits the agency to procure any commercial product for resale at commissary stores without competition. Memorandum of Law (MOL) at 11-14.

As discussed below, we conclude that DeCA was required to issue a J&A and solicit offers from as many sources as practicable before establishing the BPA with CPFD on a noncompetitive basis, and we sustain the protest. Before turning to the merits, we discuss the procurement statutes and regulations relevant to this protest.

Relevant Statutory and Regulatory Authorities

There are three relevant statutory provisions: 10 U.S.C. §§ 2484(f), 3204(a)(5), and 3204(e)(4)(B); and two relevant regulatory provisions: FAR sections 6.302‑5(c)(2)(i) and 6.301(d). Section 2484(f) of title 10 of the United States Code, procurement of commercial products using procedures other than competitive procedures, provides: “The Secretary of Defense may use the exception provided in section 3204(a)(5) of this title for the procurement of any commercial product (including brand-name and generic items) for resale in, at, or by commissary stores.”[6] The cross-referenced statute, section 3204(a)(5), as relevant here, provides that an agency may use noncompetitive procedures when “the agency’s need is for a brand-name commercial product for authorized resale.” 10 U.S.C. § 3204(a)(5). In sum, section 2484(f) authorizes DeCA to use the noncompetitive procedures authorized under section 3204(a)(5) when procuring any commercial products for resale; it does not, however, address whether the agency is required to execute a J&A or solicit offers from as many sources as practicable.

Generally, when an agency uses other than competitive procedures, it is required to prepare a J&A. 10 U.S.C. § 3204(e)(1)(A). The Competition in Contracting Act (CICA) identifies exceptions to the requirement to execute a J&A, one of which is “when the agency’s need is for a brand-name commercial product for authorized resale.” 10 U.S.C. § 3204(e)(4)(B). This exception is reflected in FAR section 6.302‑5(c)(2)(i).[7]

Additionally, FAR section 6.301(d) provides: “When not providing for full and open competition, the contracting officer shall solicit offers from as many potential sources as is practicable under the circumstances.”

Here, in establishing the BPA, the agency relied on section 3204(a)(5), as well as section 2484(f), and the protester does not challenge DeCA’s use of those authorities to establish a BPA using noncompetitive procedures. Instead, the parties disagree as to whether DeCA was required to issue a J&A and to solicit offers from as many sources as practicable when relying on these authorities to procure fresh fruits and vegetables for resale at commissary stores.

Requirement to Issue a J&A

EKK Investments argues that DeCA violated CICA and the FAR when it established the BPA with CPFD using noncompetitive procedures without issuing a J&A. Comments at 1-2 (citing 10 U.S.C. § 3204 and FAR subpart 6.3). The agency responds that it was not required to execute a J&A because a J&A is not required for the procurement of commercial products for resale in commissary stores. MOL at 11. DeCA elaborates that “because § 2484(f) now brings all commercial products (including generic) under § 3204(a)(5), it necessarily follows that the exemption [for executing a J&A] under § 3204(e)(4)(B) applies to those same items.” Supp. MOL at 2. Similarly, the agency asserts that “FAR 6.302-5(c)(2)(ii)’s [sic[8]] exemption of brand-name resale products from the J&A requirement must now be understood to include all commercial products for resale in light of the statutory amendment.”[9] MOL at 11-12.

Our Office applies the “plain meaning” rule of statutory interpretation. See, e.g., Oracle America, Inc., B-416061, May 31, 2018, 2018 CPD ¶ 180 at 16. We “begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose.” Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 175 (2009); see Curtin Mar. Corp., B-417175.2, March 29, 2019, 2019 CPD ¶ 117 at 9. This is because the “starting point in discerning congressional intent is the existing statutory text.” Lamie v. United States Trustee, 540 U.S. 526, 534 (2004). It is not in our Office’s purview to object to such language or question the intent of policymakers, rather, in interpreting statutes, where the statutory language provides an unambiguous expression of the intent of Congress, our inquiry ends there. See Technatomy Corp., B-405130, June 14, 2011, 2011 CPD ¶ 107 at 5 n.5.

Here, the plain language of the relevant statutes is clear, and it does not support the agency’s argument that DeCA was exempt from issuing a J&A when it noncompetitively procured other than brand-name commercial products for resale. We find the agency conflates the broad exception to full and open competition set forth in section 2484(f), which allows DeCA to use noncompetitive procedures when acquiring commercial products for resale, with the exemption in section 3204(e)(4)(B), which allows an agency to noncompetitively acquire commercial brand-name products for resale without issuing a J&A.

As noted above, Congress amended section 2484(f) to expand DeCA’s authority to use CICA’s noncompetitive procedures set forth under section 3204(a)(5) when procuring commercial products for resale (to include brand-name and generic products). Prior to the amendment, DeCA could only use the authority to noncompetitively procure brand-name commercial products for resale. Section 2484(f), however, speaks only to the use of noncompetitive procedures under section 3204(a)(5).[10] Although Congress could have done so, section 2484(f) does not address the separate, albeit related, requirements under section 3204(e) regarding J&As.

Section 3204(e), which is separate and apart from section 3204(a)(5), generally requires agencies to prepare and publish J&As when using noncompetitive procedures under section 3204(a). However, section 3204(e)(4)(B) exempts procurements for a “brand-name commercial product” from the requirement to prepare a J&A. 10 U.S.C. § 3204(e)(4)(B). The exemption from issuing a J&A specified in section 3204(e)(4)(B), which was present when Congress amended 2484(f), is unambiguously limited to noncompetitive procurements of brand-name commercial products for resale, and it does not reference section 2484(f)’s authority for DeCA to noncompetitively procure generic items.

DeCA asks our Office to infer that when Congress amended section 2484(f) to expand the authority for the use of noncompetitive procedures under section 3204(a)(5) from brand-name only procurements to commercial product procurements more broadly, it also intended to broadly exempt DeCA’s acquisitions of commercial products from any requirement to prepare a J&A under section 3204(e)(4)(B). We see no basis to make such an inference. When the plain language of the statue is clear--as is the case here--our inquiry ends there. As explained above, Congress amended section 2484(f) to expressly give DeCA more expansive authority to purchase commercial products using noncompetitive procedures under section 3204(a)(5). Congress did not, however, expand the J&A exemption under section 3204(e)(4)(B), which by its terms expressly only applies to noncompetitive procurements of brand-name products for resale.

For similar reasons, we reject DeCA’s argument that it was exempt from the FAR’s requirement to prepare a J&A. Like the statutory exemption, FAR section 6.302‑5(c)(2)(i) exempts contracts awarded for brand-name commercial products for resale from the requirement to prepare a J&A--it does not exempt acquisitions of all commercial products for resale. The plain meaning of the provision is clear, and we decline to infer that the expansion of DeCA’s authority to acquire generic commercial products on a noncompetitive basis implicitly exempted DeCA from the FAR’s requirement to prepare a J&A.

We conclude that pursuant to CICA and FAR section 6.302-5(c)(2), DeCA was required to prepare a J&A in connection with the establishment of the BPA with CPFD. It is undisputed that DeCA did not prepare a J&A, and we sustain the protest on that basis.

Solicitation of Offers

As noted above, FAR section 6.301(d) provides that when an agency uses other than full and open competitive procedures, it is required to solicit offers from as many potential sources as practicable under the circumstances.

The protester contends that FAR section 6.301(d) required DeCA to solicit offers from as many sources as practicable, and the agency impermissibly did not solicit offers from any source other than CPFD. Comments at 8-9. The agency responds that it was not required to solicit offers from as many sources as practicable because requiring multi-source solicitations for commercial products for resale would be contrary to Congress’s intent to permit commissary stores to operate like commercial grocery stores. MOL at 12-14 (quoting 10 U.S.C. § 2484(a)). DeCA also asserts that although it was not required to solicit offers from as many sources as practicable, its actions “were nevertheless in harmony with the general policy” to do so. Id. at 14.

Where parties disagree as to the interpretation of a regulation, our analysis begins with the language of the disputed provision. Coast to Coast Computer Prods., Inc.,
B-419624.2, June 28, 2021, 2021 CPD ¶ 237 at 10. If the regulation has a plain and unambiguous meaning, the inquiry ends with that plain meaning. Id.

We agree with EKK Investments that FAR section 6.301(d) plainly and unambiguously requires agencies to solicit offers from as many sources as practicable when using other than competitive procedures--regardless of whether the agency is acquiring commercial products for resale.[11]

The agency cites no statutory or regulatory authority exempting DeCA from the requirement to solicit offers from as many sources as practicable. Instead, the agency asserts that by amending section 2484(f) to encompass all commercial products and stating commissary stores are intended to be similar to commercial grocery stores, Congress expressed its intent to exempt DeCA from this requirement. MOL at 13. We disagree. As discussed above, section 2484(f) authorizes the use of noncompetitive procedures under section 3204(a)(5)--it does not speak to the scope of any competition when using such procedures. The requirement for the contracting officer to “solicit offers from as many potential sources as is practicable under the circumstances” is set forth in FAR section 6.301(d) and is unambiguous. This is an important consideration because if a regulation has a plain and unambiguous meaning, our inquiry ends with the plain meaning.[12] Coast to Coast, supra.

Alternatively, DeCA contends that the agency solicited offers from as many sources as practicable by sending the RFI and draft BPA to six firms. MOL at 14-15. The protester argues that the agency’s efforts do not establish compliance with FAR section 6.301(d). Comments at 10.

We find the agency’s arguments unavailing. Here, the agency did not issue a solicitation--it issued an RFI that expressly stated it was not a solicitation. AR, Exh. 1, RFI. The FAR provides: “RFIs may be used when the Government does not presently intend to award a contract, but wants to obtain price, delivery, other market information, or capabilities for planning purposes. Responses to these notices are not offers and cannot be accepted by the Government to form a binding contract.” FAR 15.201(e). Accordingly, because the agency solicited responses to an RFI--and not offers--we find it did not solicit offers by issuing the RFI.

Additionally, DeCA has not shown that it would have been impracticable to solicit offers from sources other than CPFD. DeCA sent the RFI to six firms on August 23, 2024, and it established the BPA with CPFD on December 10--nearly 4 months later. COS ¶¶ 6, 16. The agency has not explained why it could not have solicited additional offers during that time. On this record, we find the agency did not solicit offers from as many sources as practicable, and we sustain the protest on that basis.

RECOMMENDATION

In light of the agency’s failure to comply with the requirements for using other than competitive procedures when it established the BPA with CPFD, we recommend that the agency cancel the BPA. We further recommend that to the extent DeCA has a requirement to acquire fresh fruits and vegetables for resale at commissary stores in Korea, it should either acquire its needs competitively or take the steps necessary to acquire its needs using other than competitive procedures, consistent with this decision.

Additionally, we recommend that the protester be reimbursed the reasonable costs of filing and pursuing its protest, including attorneys’ fees. 4 C.F.R. § 21.8(d)(1). The protester’s certified claim for costs, detailing the time expended and costs incurred, must be submitted to the agency within 60 days of receiving this decision. 4 C.F.R. § 21.8(f)(1).

The protest is sustained.

Edda Emmanuelli Perez
General Counsel