Bid Protest Basics for Government Contracts

Bid Protest Basics for Government Contracts

Presented by: Todd Garland

Clear Law Institute | 4601 N. Fairfax Dr., Ste 1200 | Arlington | VA | 22203

www.clearlawinstitute.com

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[email protected]

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Clear Law Institute, © 2019

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Presented to:

Clear Law Institute Todd M. Garland

www.dcbar.org

© 2018 Smith Pachter McWhorter PLC

Attorney Client Privileged

Confidential

Attorney Work Product

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Mr. Garland’s practice focuses on government contracts and construction issues, procurement disputes, bid protests, and complex commercial litigation.

He represents contractors before the Government Accountability Office (“GAO”), Court of Federal Claims, and agency boards of contract appeals. He also represents contractors and subcontractors in commercial disputes in federal and state court.

Todd M. Garland Senior Associate, SMITH PACHTER MCWHORTER PLC [email protected]



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STATUTORY & REGULATORY AUTHORITY

► Competition in Contracting Act

► Small Business Act

► Procurement Integrity Act

► Federal Acquisition Regulation

► Contract Disputes Act

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COMPETITION IN CONTRACTING ACT

► 41 U.S.C. § 3301, et seq. (Civilian); 10 U.S.C. § 2304, et seq. (DoD)

► Mandates “full and open" competition for most procurements

► Requires higher level approval and justification to limit competition or for sole source awards

► Permits challenges to procurements that limit competition



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CONTRACTING AND PROCUREMENT TECHNIQUES

► GSA Schedule Contracting (FAR Subpart 8.4) Pre-negotiated price and terms

► Commercial Items (FAR Part 12) Must fall within definition of "commercial item“

► Simplified Acquisitions (FAR Part 13) Under $250,000 in most cases*

► Sealed Bidding (FAR Part 14) Award to low price responsive bid

► Competitive Negotiation (FAR Part 15) Best value Various factors (e.g., cost/price, past performance,

technical, management)

► Task and delivery order contracts (FAR Part 16)

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WHAT IS A PROTEST?

A written objection submitted by an interested party against:

1. The terms of the solicitation (pre-award)

2. The procurement process (pre-award)

3. Exclusion from the competition (pre- or post-award)

4. A competitor's eligibility (pre- or post-award)

5. The award or proposed award of a contract (post-award)



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WHY IS THERE A GOVERNMENT PROTEST PROCESS? In a recent Bar program (Sept. 2017), two Judges from the Court of Federal Claims spoke on the role of protests. The Court press release noted:

There was a strong general view that the bid protest jurisdiction was important to both the public and the government. It gives the contractor confidence in the integrity of the system and encourages people and companies to compete for government contracts. This in turn helps the government and the public to get the best quality at the lowest price.

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NO COMMERCIAL COUNTERPART

A protest is a challenge to a public agency's procurement action and is unique to public procurements.

There is a strong public interest in ensuring confidence in the integrity of the procurement process.

The law of commercial contracts does not generally provide a basis for a seller to challenge a private buyer's decision to choose another supplier.



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WHY PROTEST?

► Pre-Award

Open procurement to competition

Correct procurement or solicitation concerns/eliminate restrictive terms

► Post-Award

Obtain award

Obtain opportunity for award: re-evaluation or revised proposal

Obtain bid or proposal costs

Defend record/impact other procurements

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WHAT MAY BE PROTESTED? EXAMPLES:

► Challenge to a sole source award or non-competitive

acquisition

► Challenge to the terms of the solicitation

► Challenge to the acceptance or rejection of a bid or

proposal

► Challenges to agency evaluation or award

Past Performance

Technical

Management

Cost or Price

Best value/tradeoff

Responsibility

Conflicts of interest



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WHAT RISKS FROM PROTESTING?

► Damage customer relations (KO, PM, Others)

► Outside Legal costs

► In-house costs

► In-house disruption

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DO I NEED TO WIN A PROTEST TO GET EFFECTIVE RELIEF? AGENCY VOLUNTARY CORRECTIVE ACTION

► Award

► Re-evaluation

► Revised proposals

► Discussions

► Clarifications

► Solicitation cancellation

► Solicitation amendment

► Others: Retain government furnished property or security clearance



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AGENCY CORRECTIVE ACTION CHALLENGES

► Challenge corrective action before dismissal of protest by forum

► File new protest

► By protester, awardee-intervenor, or possibly by third parties

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BID PROTEST AVOIDANCE

► Cannot avoid all protests

► Make it easier for agency to award to you

► Reduce likelihood of protest

Read and follow the solicitation, the FAR, and agency FAR supplements and any special agency rules

Follow solicitation instructions regarding proposal format and submission

Address organizational and personal conflicts of interest issues in advance



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PROTEST FORA

1. Agency*

2. Government Accountability Office ("GAO")

3. U.S. Court of Federal Claims ("COFC")

4. Federal Aviation Administration Office of Dispute Resolution for Acquisition ("ODRA")

* Protesters are not required to exhaust agency administrative remedies

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PRE-PROTEST ALTERNATIVES

► Good option for issues typically raised in pre-award protests

► Usually too little time post-award

► Contact Contracting Officer

RFP questions

Request guidance

► Contact agency counsel

► Invoke FAR 33.103(b) (all parties should use their best efforts to resolve issues at the contracting officer level through "frank and open discussions" before agency protest filing)



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PRE-AWARD PROTEST GROUNDS

► Frequently raised pre-award protest grounds (regardless of forum)

Unduly restrictive of competition

Elimination from competitive range

Organizational conflicts of interest (“OCIs”)

Procurement Integrity Act violations (special 14-day rule)

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IDENTIFYING PRE-AWARD PROTEST GROUNDS

► General rule

Solicitation terms affecting firm's ability to compete or the "fairness" of the evaluation criteria should be raised as a defect in the solicitation

Must be raised before the deadline for submitting proposals



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AGENCY PROTESTS

► Filed directly with contracting officer/cognizant government authority

► Procedures informal and flexible

► Protesters are not required to exhaust agency administrative remedies

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AGENCY PROTESTS TIMING FOR MERITS

► Agency-level protests generally follow GAO timeliness rules – unless agency rules impose more stringent deadlines

Solicitation must specify agency protest procedures

► Pre-Award: file before date for receipt of proposals*

► All other cases: within 10 calendar days of when protester knew or should have known basis for protest

* (or date for revised proposals if protesting amendment after initial proposals)



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AGENCY PROTESTS – TIME FOR STAY

► Pre-Award Stay: CO shall not make award if protest is filed before award

► Post-Award Stay: if received within 10 days of contract award or 5 days of "required debriefing"

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WHAT IS A "REQUIRED DEBRIEFING?"

► Required Debriefing:

Depends on procurement type

For competitive solicitations (FAR 15 negotiated procurements) or (FAR 16.5 task orders over certain dollar thresholds). Not for FAR 8.4 (GSA Schedule Orders)* or FAR 14 (sealed bids)

Debriefing must be timely requested



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AGENCY PROTESTS – STAY OVERRIDES

► Override of Stay

"Urgent and compelling" or

In "the best interest of the government"

► Decision must be in writing

► Decision must be approved at a "level above the CO"

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AGENCY PROTESTS - PROCESSING

► Can request review above contracting officer

► Resolved in about 35 days

► Usually no discovery

► Written decision required



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AGENCY PROTESTS – "initial adverse agency action"

► Protester can appeal denial of agency-level protest to GAO

► GAO rule at 4 C.F.R. § 21.2(a)(3) requires protest of denial of agency-level protest to be filed within 10 days of actual or constructive knowledge of initial adverse agency action

► Adverse agency action defined as action that is prejudicial to the position taken by the protester in the agency-level protest (this includes opening of bids or receipt of proposals)

► Stay not extended by GAO protest unless agency volunteers

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AGENCY PROTESTS – REMEDIES

► Any action GAO could have “recommended” if protest had been filed with GAO

► Costs for prosecution of the protest

► Awardee may have to pay agency if misrepresentation by awardee found

► If unhappy w/agency decision, protester may file with GAO (ten days) or COFC – but no automatic stay at GAO

► If granted, original awardee can protest to GAO or COFC



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GAO BID PROTEST ANNUAL REPORT TO CONGRESS

► Fiscal year 2018: Report dated November 27, 2018*

► 2,607 protests filed (less than 1% increase)

► 622 decisions on the merits (sustained and denied)

► 92 sustains or 15%

► Hearings: 5 cases (0.51%)

► Effectiveness rate per GAO: 44% (based on a protester obtaining some form of relief from the agency based on a percentage of all protests closed this fiscal year)

* https://www.gao.gov/assets/700/695707.pdf

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GAO ELECTRONIC FILING SYSTEM

► Electronic Protest Docketing System ("EPDS"), effective May 1, 2018

► Sole means for filing a protest at GAO unless the protest contains classified information

► New filing fee - $350

► Before May 1, 2018, GAO had operated the EPDS on a limited, pilot basis



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GAO PROTESTS WHO MAY PARTICIPATE?

► Protester – challenge to award or solicitation terms

► Procuring agency – automatic "defendant"

► Intervenors Awardee if award has been made

If no award – any bidder or offeror who appears to have a substantial prospect of receiving an award if protest is denied (but interpreted differently based on procurement issues)

► GSA or SBA – if invited by GAO or requested by GSA or SBA

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GAO PROTESTS WHY INTERVENE? ► To defend contract award

► Support/assist agency in defending award

An agency's interests may not be the same as the company's interest

Company is in better position to defend against attacks on company's proposal

Agency attorney may not have the time to dedicate to defend against the protest

► Able to participate in hearing

► May submit written comments



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GAO PROTESTS WHAT GAO WILL NOT CONSIDER

► Small Business Issues (SBA)

Size

NAICS

COC (certificate of competency)

Section 8(a)

► Judicial Proceedings

GAO will not hear protests that are subject of pending federal court litigation unless requested by court

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GAO PROTESTS WHAT GAO WILL NOT CONSIDER

► Subcontractor protests

Unless requested to do so by agency

► Contract administration issues

► Procurements by non-federal agencies

► Debarment and suspension issues



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GAO PROTESTS WHEN MUST A PROTEST BE FILED?

► GAO – Two Timeliness Considerations

For GAO jurisdiction

For CICA stay purposes

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GAO PROTESTS WHEN MUST A PROTEST BE FILED (for GAO jurisdiction)?

► Defective Solicitation: before opening/closing for receipt of initial proposals

► Amendment to Solicitation = Basis for Protest: file by next due date for revised proposals (New rule: if no revised proposals, ten-day rule; effective May 1, 2018)

► Gov't Delay of Pre-Award Debriefing (e.g., competitive range exclusion):

Agency may delay debriefing until after award (when in govt's best interest)

If offeror asks for debriefing post-award, protest may be untimely

If delayed and timely requested by offeror, offeror is entitled to post-award debriefing

If filed within 10 days, timely for GAO purposes



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GAO PROTESTS WHEN MUST A PROTEST BE FILED (for GAO jurisdiction)?

(cont’d) ► Required Debriefing:

For competitive solicitations (FAR Part 15 and some Multiple Award Task Order Contracts)

Debriefing must be requested in writing within 3 days

May not file protest before debriefing date

Must file no later than 10 days "after the date on which the debriefing is held"

► All other: File within 10 days after actual/constructive

knowledge of basis for protest

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GAO PROTESTS WHEN MUST A PROTEST BE FILED IF NOT A SOLICITATION CHALLENGE? FOR THE MERITS:

► Within 10 days after actual or constructive notice of basis; or

► Within 10 days of a requested and required debriefing;

► Where debriefing is requested and required, protest before debriefing will be dismissed as premature.



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ENHANCED DOD DEBRIEFINGS ► March 22, 2018. DOD Class Deviation in response to

Section 818 of the 2018 National Defense Authorization Act

► DOD is required to provide unsuccessful offerors who are given a required debriefing the opportunity to submit additional questions relating to the debriefing within two business days after receiving the debriefing

► The agency must respond in writing to the additional questions within five business days after receipt of the questions and must hold the debriefing open until it delivers its written responses to the unsuccessful offeror

► The automatic stay required by CICA and FAR must be provided if a protest is filed at the GAO within five calendar days after the government delivers its written responses to the additional questions

► Only applies to DOD agencies

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GAO PROTESTS CICA STAY (AUTOMATIC STAY) ► Pre-award Protests

No contract award after receiving notice of timely protest from GAO before award

► Post-award Protests (Five Day Rule)

Contract performance suspended immediately when agency receives notice of protest from GAO within 10 days of contract award date or within 5 days after date offered for required post-award debriefing, whichever is later

Only applies to requested and required debriefing under FAR Part 15

May apply to multiple award task orders over $ threshold

Does not apply to: (1) GSA federal supply schedule contract orders or (2) sealed bid procurements under FAR Part 14

*automatic stay triggered ONLY by notice from GAO (GAO provides notice within 24 hours)



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GAO PROTESTS CICA STAY OVERRIDE

► Pre-award protest stay

Urgent and compelling circumstances AND Agency is likely to award the contract within 30

days of written override decision

► Post-award protest stay Continued performance is in best interests of

United States OR Urgent and compelling circumstances

significantly affect interests of United States

*agency must notify GAO if it is going to override stay *override decisions subject to judicial review, not review by GAO

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GAO PROTESTS SCOPE OF REVIEW

► Violations of procurement statutes/regulations

► Arbitrary/capricious actions

► Abuse of discretion

► Burden on protester to show agency action is unreasonable

► GAO considers entire record surrounding agency conduct



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GAO PROTESTS SCOPE OF REVIEW (cont'd)

► Agency may not provide rationale for decision for first time in a protest

► Burden on gov't for timeliness challenges

► Protests must demonstrate prejudice

"substantial chance for award" but for agency error

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GAO PROTESTS "RECOMMENDATIONS"

► GAO decisions are "recommendations"

► Agencies that do not implement GAO "recommendations" must make written report to GAO

GAO reports this to Congress

► Agencies almost always follow GAO recommendations



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GAO PROTESTS "RECOMMENDATIONS" (cont'd)

► GAO's recommendations consider:

Degree of prejudice to other parties/procurement integrity

Good faith of the parties

Extent of contract performance

Cost to government

Urgency of procurement

Effect on agency’s mission

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GAO PROTESTS "RECOMMENDATIONS" (cont'd)

1. Refrain from exercising options under existing contract

2. Termination of existing contract 3. Re-compete the contract 4. Issue new solicitation 5. Award contract consistent with statute and

regulation 6. Such other recommendation(s) as GAO

determines necessary to promote compliance with CICA

7. Protest Costs, attorneys' fees 8. Bid preparation costs



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GAO PROTESTS TIMELINE OF GAO BID PROTEST PROCESS

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COFC PROTESTS WHO MAY PROTEST?

► Aggrieved bidder (same as GAO)

► Intervention by awardee

► Protest at COFC preempts any GAO protest



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COFC PROTESTS TIMING

► Waiver or laches

► Blue & Gold. Challenges to solicitation terms must be filed before proposal due date or are waived

► Concourse; Sontora Tech. (COFC). OCI protest and other issues known before award may need to be filed pre-award

► No other specific timing rule. Subject to laches

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COFC PROTESTS TEMPORARY RESTRAINING ORDERS AND PRELIMINARY INJUNCTIONS: STAY NOT AUTOMATIC

Four Part Test:

1. Likelihood of success on merits

2. Degree of immediate irreparable injury if relief is not granted

3. Degree of harm to party being enjoined if relief is granted

4. Impact of injunction on public policy considerations



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OTHER CONSIDERATIONS

► 28 U.S.C. 1491(b)

► "Due regard to the interests of national defense and national security and the need for expeditious resolution of the action"

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COFC PROTESTS STANDARD OF REVIEW

► Administrative Procedure Act ("APA") standard

► Court determines whether agency acted arbitrarily, capriciously, or not otherwise in accordance with law

► Plaintiff must demonstrate either: Agency decision making process lacks rationale

basis

or

There is a clear and prejudicial violation of applicable statutes and regulations

► COFC may give deference to GAO decisions



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COFC BID PROTEST SCHEDULES ► There is no standard COFC bid protest

schedule

► Depends on whether the agency agrees to voluntary stay or you need a temporary restraining order or preliminary injunction

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PROTEST "APPEALS"

► GAO

Request for Reconsideration at GAO

File new protest at COFC

► COFC

To United States Court of Appeals for the Federal Circuit (CAFC)



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ADVANTAGES OF AGENCY PROTESTS

► More informal and less costly than GAO or COFC

► Good last chance to persuade agency to change course without having to file adversarial action at GAO or COFC

► Does not preclude a later protest at GAO or COFC if agency denies protest

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DISADVANTAGES OF AGENCY PROTESTS

► Agency less likely to admit mistakes

► No protective order

► No access to source selection record

► No opportunity for hearing

► No automatic continuation of stay if protester loses at agency and then proceeds to protest at GAO



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ADVANTAGES OF GAO PROTESTS

► Automatic stay provision prevents award while protest is adjudicated

► Detailed, understandable rules

► Can be less expensive compared to court

► Somewhat informal

► Counsel allowed to review agency documents, including competing proposals

► Pro se representation allowed (but do not get to see documents under protective order)

► Relatively quick decisions (100 day deadline)

► Main forum for bid protests - specialty

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DISADVANTAGES OF GAO PROTESTS

► Tight timeliness for initial protest and

filings

► Cannot issue injunctive or declaratory relief

► Hearings are rare

► Decisions are not "binding"



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ADVANTAGES OF COFC PROTESTS

► Can grant injunctive and declaratory relief

► Generally familiar with government contracts

► More flexibility on timeliness

► More formal

► Oral argument before Judge

► Decisions are binding on protester/agency

► Decisions are subject to appellate review

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DISADVANTAGES OF COFC PROTESTS

► No automatic stay

► More formal

► May be more costly

► Litigation can be prolonged



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PROTECTIVE ORDERS AT GAO AND COFC

► Admission (only if not involved in competitive decision making)

Outside counsel

Some in-house counsel

Some outside consultants

► Redactions/Two-Day Rule

► Violations

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INTERVENORS – GAO

► Awardee if award has been made

► If no award has been made – any bidder or

offeror who appears to have a substantial

prospect of receiving an award



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INTERVENORS – COFC

► Intervention of right

► Permissive

► Awardees can almost always intervene

► Court may permit participation as amicus if intervention rules not met

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WHY INTERVENE?

► Support/assist agency in defending award

Agency's interests may not be the same as the company's interests

Company is in better position to defend against attacks on company's proposal

Agency attorney may not have the time to dedicate to defend against the protest

► Protect confidential information from disclosure



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DEFENDING PROTESTS

► Understanding the awardee's right to intervene in protests

Protect confidential information from disclosure

File comments to agency report supporting basis of award

Stay in the loop about status of the protest

File a motion to dismiss protest; potential grounds include (1) untimely; (2) lack of prejudice; and (3) failed to state a valid protest ground

► Working with agency counsel to defend award

Provide relevant facts and law to support the award

Defend agency award as appropriate, reasonable, and consistent with the solicitation

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Questions?

Todd M. Garland

SMITH PACHTER MCWHORTER PLC

8000 Towers Crescent, Suite 900

Tysons Corner, Virginia 22182

Tel: (703) 847-6300

These materials are intended to provide a general overview of federal contract and subcontract review. You

should contact an attorney to obtain specific advice with respect to any particular issue or problem.

© Smith Pachter McWhorter PLC 2018

Bid Protest Basics for Government Contracts

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