## Facts

- The Department of the Army’s Rock Island Defense Megacenter, acting under procurement authority delegated by the Defense Information Systems Agency (DISA), sought upgrades to an existing mainframe configuration.
- The requirement consisted of two upgraded central-processing units and two expanded memory units, collectively costing about $200,000, with each item priced below $50,000.
- The government issued four separate purchase orders—one per item—directly to the incumbent supplier, Amdahl Corporation, rather than using a single competitive solicitation.
- For each order, the agency executed an urgency statement to justify using simplified acquisition procedures and to avoid pre-award public notice.
- L.A. Systems (LAS), a prospective vendor, protested, alleging the government improperly fragmented a single requirement to keep each order below the simplified acquisition threshold and improperly avoided required public notice.
- The government argued the approach was driven by funding being released in blocks and by a need to obligate funds before fiscal year-end.

## Issues

1. Whether issuing four separate sub-$50,000 orders for an integrated, known requirement of about $200,000 was an improper fragmentation designed to avoid competition and public notice requirements.
2. Whether a desire to obligate funds before fiscal year-end constituted “urgency” sufficient to excuse otherwise applicable public notice and competition requirements.

## Decision

- The Board sustained the protest.
- It treated the four orders as a single procurement for purposes of competition and notice requirements.
- It found the government improperly used simplified acquisition procedures by dividing the requirement into smaller orders.
- It rejected year-end fiscal constraints as a valid urgency basis to avoid required public notice and competition.

## Legal Principles

- An agency may not divide a known, integrated procurement requirement into multiple smaller purchases to qualify for simplified acquisition procedures and thereby avoid applicable competition and public notice obligations.
- Procurement legality turns on the substance of the government’s requirement and planning, not on internal funding-release sequencing.
- “Urgency” exceptions to notice and competition must be tied to legitimate mission needs; the need to obligate expiring fiscal-year funds, standing alone, is insufficient.

## Conclusion

The Board held that the Army and DISA unlawfully structured an integrated mainframe-upgrade acquisition as multiple under-threshold orders to the incumbent, and that year-end funding pressure did not justify bypassing required notice and full and open competition.


L.A. Sys. v. Dep’t of the Army & Def. Info. Sys. Agency, GSBCA No. 13472-P (1996)