Prominently displayed in the lobby of the United States Court of Federal Claims are these words of Abraham Lincoln: “It is as much the duty of government to render prompt justice against itself, in favor of citizens, as it is to administer the same, between private individuals.” To this end, when it comes to federal acquisitions, Congress has set forth specific rules for agencies to follow, and also has provided specific procedures for private contractors to follow to protest any unfair or improper treatment. The point of this article is to provide an overview of the present federal procurement protest scheme so that the reader, whether private contractor or agency employee, is better prepared to recognize the signs of a developing protest, to respond appropriately, and, should a protest be filed, to make informed decisions throughout the protest process.
To protest a federal procurement action, one must be an “interested party.” As defined in 31 U.S.C. § 3551(2), the term “interested party,” with respect to a particular acquisition, means “an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by the failure to award the contract.” This statute governs protests lodged with the United States General Accounting Office (GAO), and Federal Acquisition Regulation (FAR) 33.101 applies the same definition to agency-level protests.
In other words, to be an interested party, a protester must be able to show a stake in the outcome of the protest. A protester’s status may thus be affected by a number of variables, including the particular issues being protested, the type of acquisition, and the range of offered costs/prices. In Advanced Designs Corp., B-275928, Apr. 21, 1997, 98-1 CPD ¶ 100, at 6, for example, GAO held that the protester was not an interested party to challenge the award because its proposal had been deemed “technically unacceptable,” and there was another proposal besides the awardee’s that had been found technically acceptable. This is in line with GAO policy that “[w]here the protester would not be in line for an award, even if we were to resolve the protested issues in its favor, the firm generally lacks standing as an interested party.” Id. See also Kongdan Kumnan Restaurant/Good Food Service, B-276846.2, Feb. 23, 1998, 98-1 CPD ¶ 57, at 5 (offeror third in line was not interested party to protest award).
The particular issues being challenged will frequently determine the “interest” of a protester. In a small business set-aside, for example, a protester that is not a qualifying small business may be an interested party for the purpose of protesting the set-aside decision, but not for the purpose of protesting the contract award decision. See Air Transport Association, B-278621, Feb. 19, 1998, 98-1 CPD ¶ 56, at 3. In the same vein, a contract modification may be protested by a potential competitor as being beyond the scope of the original contract, even though no proposals have been requested or submitted, “since the work covered by the modification would otherwise be subject to the statutory requirements for competition.” Sprint Communications Company, B-278407.2, Feb. 13, 1998, 98-1 CPD ¶ 60, at 6. In one recent decision involving a small business set-aside, GAO dismissed a protester represented by this firm on the basis of the agency’s challenge to the protester’s size status, only to subsequently reinstate the protester when the Small Business Administration found the protester to be a qualifying small business. Advanced Data Concepts, Inc., B-280967, Sept. 23, 1998 (protest reinstated Oct. 5, 1998).
The United States Court of Federal Claims, whose protest jurisdiction arises under the Tucker Act, 28 U.S.C. § 1491(b)(1), generally follows the GAO definition of interested party, since its jurisdictional statute does not define the term. See C C Distributors, Inc v. United States, 38 Fed.Cl. 771, 778-79 (1997). The court has also made it clear, however, that it is not bound by the GAO definition, and does not intend to apply the standard in a “wooden” fashion. CCL, Inc. v. United States, 39 Fed.Cl. 780, 790 (1997); see also ATA Defense Industries, Inc. v. United States, 38 Fed.Cl. 489, 494 (1997). Accordingly, in a situation where one’s status as an “interested party” seems tenuous, but the protest issues are deemed sufficiently compelling to pursue a protest, filing the protest in the United States Court of Federal Claims may provide a more friendly forum, albeit only slightly, for having a hearing on the merits of the protest.
As quoted above, an interested party is one whose economic interest would be affected by the award, or failure to award, a particular contract. This does not mean, however, that an award decision is the only action that can provide the basis for protest. While most protests revolve around proposal evaluation or best value selection decisions, submission of a proposal is not a prerequisite to filing a protest. See ATA Defense Industries, supra.
Recognizing a protestable issue is an art, but a good point to begin thinking about this subject is when something “just doesn’t make sense” or “just doesn’t seem right” about a particular acquisition. The overriding requirement for federal acquisitions is “full and open” competition, mandated by the Competition in Contracting Act of 1984. 41 U.S.C. §§ 253(a)(1)(A), 403(6); 10 U.S.C. § 2304(a)(1)(A). If an agency takes action that seems contrary to this standard, it may be worth investigating further. For example, if a particular solicitation requirement seems unnecessary, or if an agency’s needs are not clearly defined in the solicitation, these may be deemed unduly restrictive of competition. See Hoechst Marion Roussel, Inc., B-279073, May 4, 1998, 98-1 CPD ¶ 127, at 3-5. Likewise, if a competitor is issued a task order on an existing contract that seems beyond the scope of that contract, and seems like something that should have been the basis of a separate competition, the task order may be successfully protested. See Ervin and Associates, Inc., B-278850, Mar. 23, 1998, 98-1 CPD ¶ 89, at 7-8.
One practice that often comes under scrutiny as unduly restrictive of competition is contract “bundling,” where diverse requirements are combined, or “bundled,” into a single acquisition. The argument here generally is that such bundling has the effect of precluding small businesses from competing. See National Customer Engineering, B-251135, Mar. 11, 1993, 93-1 CPD ¶ 225, at 4-5. The issue whether bundling is necessary to meet agency needs, or whether it is unnecessary and thus unduly restrictive of competition, is a valid protest basis. Id.; see also Pemco Aeroplex, Inc., B-280397, Sept. 25, 1998.
Just as a bundling decision can be challenged as unduly restrictive, so too can an agency’s decision to set aside an acquisition for small business. In an unusual decision, which Peter Kilcullen addresses in detail elsewhere in this newsletter, GAO recently sustained a protest by a small business challenging an agency decision not to set aside a procurement for small business concerns, this due to insufficient agency efforts to ascertain whether competition could be obtained from small businesses able to timely deliver conforming supplies. Safety Storage, Inc., B-280851, Oct. 29, 1998.
In summary, if an agency does something with respect to an acquisition that has the effect of putting a particular bidder or offeror at a disadvantage, it is a fair bet that experienced counsel has an argument, supported by the statutes and the case law, that the action is unduly restrictive of competition. This usually involves questioning the solicitation itself, demonstrating that the field of protestable issues can in fact be quite broad.
The answer to this question is straightforward. As of January 1, 1997, both pre- and post-award protests can be filed in the United States Court of Federal Claims, any federal district court, GAO, or the agency administering the acquisition. The more vexing question is where a particular protest should be brought.
The first consideration should always be given to filing an agency protest. FAR Part 33 sets forth general procedures for agency-level protests, but agency regulations should also be reviewed. The advantage of an agency-level protest is that it is an “in house” action that gives the agency an opportunity to correct its “error” without third-party intervention. This is often an appealing option for contractors seeking to maintain good relations with the customer. The problem is that agencies are well aware that they have much discretion in procurement actions, and they are not likely to see their decisions in the same light as the contractor, particularly so if an agency-level protest is not reviewed at a level higher than the contracting officer. Secondly, there are no strict procedures that an agency must follow in considering a protest. While FAR 33.103(g) directs agencies to “make their best efforts to resolve agency protests within 35 days after the protest is filed,” there is no enforcement mechanism available for agency failure to meet this guideline. For example, although an agency cannot award a contract with a protest pending, it is not inconceivable that a contracting officer might let a pre-award protest drag on, then deny the protest, and award the contract on the same day. The protester could still bring its protest to court or to GAO, but it would no longer be a pre-award protest, one easily remedied with a change to the solicitation. Similarly, in a post-award setting, a contracting officer may “voluntarily” stay contract performance, but is not required to do so.
The primary forum is GAO. Here, strict procedures govern all aspects of the protest, from the filing date to the decision date (100 days from the filing date). 31 U.S.C. § 3551, et al; 4 C.F.R., Part 21. One advantage to filing at GAO are “mandatory stay” provisions that preclude an agency from either awarding a contract or from authorizing contract performance until after GAO issues its decision. 31 U.S.C. § 3553. This protection is limited, however, since the agency can override a preaward stay upon a written finding that “urgent and compelling circumstances” will not permit waiting for a GAO decision. 31 U.S.C. § 3553(c)(2)(A). In a post-award protest, an agency need only assert that proceeding is in the “best interests” of the United States, else, again, that “urgent and compelling circumstances” will not permit waiting for a GAO decision. 31 U.S.C. § 3553(d)(3)(C)(i). An override decision may be challenged in a federal district court, but, given the broad discretion afforded under the statute, the challenge is a difficult one.
GAO provides a relatively simple and inexpensive forum for protest litigation, although the magnitude of an acquisition, and the number and type of issues involved, may result in a substantial undertaking. An additional advantage of going to GAO is that a successful protester will generally be entitled to reimbursement of its costs, including attorney fees (not to exceed $150 per hour, except for prevailing small businesses). 31 U.S.C. § 3554(c); 4 C.F.R. § 21.8(d).
The major concern of contractors with a filing at GAO is the likelihood of success. While it is true that agencies have broad discretion, and the odds of success are generally with the agency, the picture is not nearly as bleak as agencies would have potential protesters believe. The GAO “sustain rate,” or the percentage of protests that result in a formal decision in the protester’s favor, hovers between 12 and 15 percent. A more telling indicator of success, however, is the “Protester Effectiveness Rate,” or “PER,” which measures the percentage of cases that result in the protester gaining some form of relief, including voluntary corrective action by the agency. Given recent Alternative Dispute Resolution (ADR) initiatives at GAO, the PER is a much more accurate measure of success than the sustain rate. As this article is being written, for example, this firm, representing a protester, has just received word, following a conference call with the GAO staff attorney, that the agency is taking corrective action, this less than two weeks prior to the GAO decision date. While the protest will be dismissed as a result, and therefore will not be “sustained,” the protest objective has been achieved, and most of the protest costs should be recoverable. 4 C.F.R. § 21.8(e).
The PER at GAO stood at 44 percent for the fiscal year that ended September 30, 1998. While this still shows the odds are in agencies’ favor, it certainly paints a more positive picture of the process. The 44 percent PER becomes even higher when one considers that a number of unsuccessful protests should probably never have been filed in the first place. Unlike the courts, GAO allows pro se filings, without the assistance of counsel, and many of these protests simply have no chance of success. Finding and developing protestable issues in an acquisition is, as noted above, a bit of an art, and those who are not practiced in this art are not likely to succeed. While GAO sometimes appears to bend over backwards to support agency decisions, definitely it will not do a protester’s homework, even if a protester is representing itself. In addition, reviewing the evaluation process usually requires the issuance of a protective order, and generally outside counsel or consultants will be the only persons admitted thereunder. As a result, a pro se protester will not be allowed to see the documents that are most relevant to the protest.
The United States Court of Federal Claims and federal district courts provide a viable alternative to GAO, and in some circumstances these forums may be preferred. In addition, the courts are available as a second forum in the event a GAO protest is unsuccessful. The courts are not appellate courts for review of GAO decisions, but rather additional forums for de novo review of agency decisions. The courts take the same general position as GAO, that agency decisions are entitled to broad deference, and must be upheld unless shown to be arbitrary, capricious, or an abuse of discretion. See ATA Defense Industries, 38 Fed.Cl., at 497. The strict timeliness rules at GAO do not apply to the courts, however, and so a protest that might have been dismissed as untimely at GAO may still be brought in court. Obtaining an injunction from the courts is not an automatic procedure like the GAO mandatory stay, but once issued, an injunction cannot be overridden by the agency as can a GAO mandatory stay.
Since a protest effectively stops the wheels of government in their tracks, the protest system is designed to move quickly. To ensure that an agency’s programs are not unduly delayed, agencies and the GAO place strict time constraints on when a protest can be filed. While the courts’ rules are not so explicit, undue delay by the protester will receive close scrutiny from the judge in any restraining order or injunction decision.
For an agency protest, the filing must occur “no later than 10 days after the basis of protest is known or should have been known, whichever is earlier.” FAR 33.103(e). If the protest is alleging improprieties in the solicitation, the protest must be filed “before bid opening or the closing date for receipt of proposals.” Id. The GAO imposes similar time restrictions, with the additional caveat that, when a statutorily-required debriefing is requested, a protest may not be filed “before the debriefing date offered to the protester,” but must be filed not later than 10 calendar days thereafter. One trap for the unwary here is when a potential competitive range protester is offered the alternative option of a more thorough post-award debriefing in response to its preaward debriefing request. Opting for a post-award debriefing “could affect the timeliness of any protest filed subsequent to the debriefing.” FAR 15.505(a)(2).
If this is not enough confusion, 31 U.S.C. § 3553(d)(3)(A) requires that an agency receive notice of a protest from GAO “within 10 days after contract award or within 5 days after a debriefing date offered to the protester” in order for the mandatory stay, or suspension of contract performance, to take effect. Allowing one day for this notice to be given offers a four-day filing “window” after the debriefing to ensure that contract performance is stopped.
The bottom line to be remembered here is that protest timeliness restrictions are many and varied, and are strictly enforced by agencies and GAO. Accordingly, taking a “wait and see” attitude is generally not an option in a protest. While the ultimate decision may be not to protest, investigation into the possibility must begin promptly after a potential basis for protest appears.
As to form, GAO requires only that protests be in writing, and that they incorporate certain information, including “a detailed statement of the legal and factual grounds of protest”. 4 C.F.R. § 21.1(c)(4). Filing may be accomplished via hand delivery, mail, commercial carrier, or fax, with the warning that “parties wishing to file a document by facsimile transmission or other electronic means must ensure that the necessary equipment is operational at GAO’s Procurement Law Control Group.” 4 C.F.R. § 21.0(g).
In a court protest, counsel must represent corporate protesters, and the filing is more formal. An initial filing generally includes a complaint, motions for a temporary restraining order and/or a preliminary injunction, and legal memoranda in support of those motions. At the United States Court of Federal Claims, new guidance also requires 24 hours notice before filing the protest complaint, so that a Department of Justice attorney can be assigned to the case in advance. Failure to provide advance notice does not preclude the filing of the protest, however.
Here, we enter the realm of speculation, where every potential protest evokes a different calculus. Much like an agency weighing appropriate evaluation factors, a prospective protester must weigh critical protest factors such as cost, importance of the contract, likelihood of success, potential outcomes, etc., etc., etc. One factor that, in this writer’s opinion, often receives excessive weight, particularly from small, developing businesses, is the fear of retribution, or of creating ill will, on the part of the agency. While it is no surprise that agencies do not welcome protests with open arms, any reaction depends more on the issues raised in a protest than on the act of filing itself. Is the protest needlessly vindictive, poorly stated, or patently frivolous? If so, a protester may very well create customer resentment, and with good reason. Conversely, a well-founded protest, which points out grounds of protest in a matter-of-fact fashion, and alerts an agency to potential deficiencies in its process, has real value in holding agencies to the required standards, and is generally treated with a degree of respect by the affected agency. In many cases, an agency may be all too aware of its evaluation shortcomings, and failure to call agencies on a blatant error out of a desire to maintain cordial relations results in nothing more than a missed business opportunity. A successful contractor should take a cue on this issue from General George Patton, who may have said, “I don’t care if they like me; I want them to respect me.”
One final question to be considered is “why intervene?” If a protest is filed, the actual or prospective awardee is not required to do anything-the agency has attorneys and contracting officers who will actively defend contract award decisions. Remember, however, that those professionals are representing the agency’s interests, not the awardee’s, and these interests are not the same. By intervening in a protest before GAO (or, where the judge allows, in court), a bidder or offeror can ensure that its interests are protected through the entire protest process, and that it is not “blindsided,” because of its lack of representation, by the sudden loss of a valuable contract.
The federal procurement protest system provides intricate, confusing, occasionally frustrating, and always imperfect forums. Nevertheless, with a little professional guidance, a protest lodged with these forums can provide meaningful relief from unfair or improper treatment. Bear in mind that this article is only an overview, and it is not intended as a comprehensive guide. The pitfalls described herein are only samples. Each acquisition is unique, and relevant facts must be carefully scrutinized to determine an appropriate course of action.
— Chris Jensen
Copyright © 1998 Kilcullen, Wilson & Kilcullen. All rights reserved.