Solicitations for federal contracts often contain provisions that generally require compliance with all state and local laws, including obtaining all state and local licenses or permits necessary for performance. The Federal Acquisition Regulation (FAR) contains a permits and responsibilities clause at FAR 52.236-7, which requires contractors to obtain state and local licenses or permits relevant to the work being performed, which provides in pertinent part:
“The Contractor shall, without additional expense to the Government, be responsible for obtaining any necessary licenses and permits, and for complying with any Federal, State, and municipal laws, codes, and regulations applicable to the performance of the work.”
When included in federal solicitations, FAR 52.236-7 or similar provisions that generally mandate a contractor’s compliance with state and local laws, such as by obtaining licenses or permits, do not require offerors to demonstrate compliance prior to award. This is because such matters are considered a matter of contract administration, only applicable to the successful contractor during the performance phase of the contract. Furthermore, such general solicitation provisions concerning state and local licenses have no impact on the procuring agency’s award decision, except as a general matter of responsibility. Thus, unless the solicitation specifically instructs otherwise, offerors need not obtain state and local licenses or permits before contract award on account of these general provisions.
In B-423526; B-423526.2, a bid protest decision issued on August 4, 2025, the GAO dismissed a protest containing a challenge based on FAR 52.236-7. The Air Force had issued the underlying Request for Proposal (RFP) for construction, sustainment, restoration, and modernization services at the Minot Air Force Base in North Dakota. The protester challenged the contracting officer’s responsibility determination by alleging that the awardee did not possess proper state licenses to perform construction contracts in North Dakota. The protester argued that since the awardee lacked proper state licensing, the award was made in violation of the provision at FAR 52.236-7, which was incorporated in the solicitation by reference. Meanwhile, the Air Force maintained that the responsibility determination was in accordance with applicable procurement law and the terms of the solicitation. The agency pointed out that the solicitation did not contain any specific provisions mandating offerors to obtain state licenses prior to award, noting that FAR 52.236-7 referred only to matters of contract administration. In its decision, the GAO agreed with the agency that the RFP did not specifically instruct offerors to possess state or local licenses at proposal submission or any time before award. Consequently, the protest was dismissed because, although FAR 52.236-7 required the eventual contractor to obtain necessary state and local licenses, its requirements were only applicable to the performance phase of the contract.
Similarly, in B-402061, a decision issued on December 14, 2009, the GAO dismissed a bid protest based upon an allegedly invalid state registration of the awardee after finding that the permits and responsibility provision of the solicitation did not require pre-award compliance. The United States Department of Agriculture (USDA) issued the relevant RFP for the supply and installation of three solar-powered systems on federal property in Montana. The protester alleged that Montana state law required companies to be formally registered as construction contractors before they could install solar-powered systems. Since the awardee was not registered as a construction contractor in Montana, the protester argued that the award violated FAR 52.236-7, which was included in the solicitation. However, the GAO rejected this argument, finding that the protester had failed to provide a colorable basis to sustain the protest. The GAO explained that even though solicitation provisions such as FAR 52.236-7 generally call for the contractor to obtain relevant state and local licenses, offerors need not obtain such licenses or permits before award. Consequently, the protest was dismissed because FAR 52.236-7 did not require the awardee to obtain the relevant state registration prior to the award.Solicitations for federal contracts often contain general provisions, such as FAR 52.236-7, that require the contractor to comply with all applicable state and local laws, codes, and regulations related to performance. Under these general provisions, contractors may be required to obtain all necessary state and local licenses or permits. However, unless the solicitation specifically requires offerors to acquire the relevant licenses or permits at the time of proposal submission or at some point before contract award, such general provisions do not provide a valid basis to challenge an award. This is because the status of the contractor’s state and local licenses or permits is considered a matter of contract administration outside the purview of GAO’s bid protest jurisdiction. Furthermore, offerors may not challenge a solicitation for failing to specifically provide which state or local licenses must be obtained, as protesters are not permitted to allege that a solicitation is not sufficiently restrictive of competition. Ultimately, solicitation provisions, such as FAR 52.236-7, that generally require the contractor to acquire all necessary state and local licenses or permits for performance, do not require offerors to demonstrate pre-award compliance, unless the solicitation specifically instructs otherwise.
This Federal Procurement Insight is provided as a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.