The Independent Counsel

Government Contracts


Federal Bid Protests


BY JOSEPH VALOF

Every contractor doing business with the federal government ought to carry the bid protest arrow in his quiver. The following is an overview of the federal bid protest process,* including a discussion of the alternatives for a contractor to consider when he believes his bid for a federal contract has been, or is about to be, unfairly denied.

What Is a Bid Protest?

A bid “protest” is a written objection filed by an “interested party,” defined as someone whose interests are being or about to be harmed by a procurement procedure or award of an agency of the federal government. FAR Part 33 (§ 33.101).

Protests can be either pre-award or post-award. To be considered pre-award, a protest must be filed either before bids or offers are due, to protest improper specifications, the omission of a required provision, ambiguities, or indefinite evaluation factors; or after offers are submitted but before the award is made, often to protest the contractor’s elimination from award consideration.

A post award protest is one that is filed after the award is made or the contractor selected, usually to protest the award itself.

Where to Seek Relief?

The Federal Acquisition Reform Act of 1996 (“FASA II”) eliminated the General Services Board of Contract Appeals, which exercised subject matter jurisdiction over bid protests in the information technology area. This eliminated a forum that had been especially favorable for computer hardware and software contractors due to its familiarity with information technology issues.

Four adjudicatory fora for bid protests now remain as follows: (i) the procuring agency itself, (ii) the General Accounting Office of the General Services Administration (“GAO”) in Washington D.C., (iii) the United States Court of Federal Claims in Washington D.C. (the “Claims Court”), and (iv) the contractor’s local federal district court.

The contractor may employ any one or several of these fora for a given bid protest though each carries its unique costs and benefits. The contractor considering a bid protest will be well advised to weigh these costs and benefits carefully before choosing where and how to present his case. Some positives and negatives of each forum are discussed as follows:

1. The Procuring Agency

The aggrieved contractor should almost always consider filing his bid protest first with the procuring agency itself as the first step. Some agencies, including the United States Postal Service for example, even require that any bid protest must be initiated with the agency prior to resorting to a higher forum.

Your protest to the procuring agency may be either pre-award or post-award, and will almost certainly be heard by the very same Procuring Contract Officer (“PCO”) who may have erred in the first place. This first step will rarely produce a favorable result if your disagreement is fundamental, but it may be relatively quick and inexpensive, as well as required.

You also may obtain correction of obvious or clerical errors, and will in any event set the protest up for review in the next forum, since you must include your protest and the PCO’s response within your next filing.

Negatives: The PCO may deny your protest ‘ad hoc’ without even referring it to supervisors; review of documents by counsel is rarely permitted; and procedures vary from agency to agency.

2. The General Accounting Office

The GAO may hear both pre-award and post-award protests under its general authority to audit and settle financial matters on behalf of the federal government.

Positives: GAO protests operate under a set of detailed, widely-understood rules; a GAO protest is relatively inexpensive and informal; most protests result in with-holding the award or a stay of performance while pending; the GAO permits the contractor’s counsel to review all agency documents, including competing proposals.

Negatives: Protests are sustained only when the contractor establishes an ‘unequivocal’ violation of procurement law - not easy to do since GAO does not permit full blown discovery (i.e. depositions, interrogatories and requests for admission); hearings are rare.

Also, though quasi-judicial powers such as the ability to issue protective orders and conduct hearings were given to it in 1991, the GAO still cannot order injunctive or declaratory relief, as can the courts.

Finally, lengthening processing times for the GAO to render a decision can defeat the contractor’s objective of obtaining timely relief. Though the 1991 reforms narrowed the allowable time for a decision from 125 days to 100, the GAO may re-classify any issue that arises during the review process, adding another 100-days for each “new” protest, and dimming the contractor’s prospects accordingly.

Other considerations: The GAO will usually hear only a party in a direct contractual relationship with the federal government, so it is not a satisfactory forum for a subcontractor experiencing award difficulties with its Prime unless the subcontractor has somehow accepted direct responsibility to the federal government under its contract, perhaps through the filing of a teaming agreement.

3. The United States Court of Federal Claims

The Claims Court is a trial court like any federal district court, and exercises subject matter jurisdiction over claims against the federal government. In government contracts cases, however this court hears only pre-award bid protests. This means that it may be necessary to obtain a stay of an award, either from the procuring agency, the GAO, or the Court itself, if jurisdiction is to be retained. Decisions are generally rendered promptly and, as in a district court, occasionally may be obtained the day of hearing.

Some positives: The Claims Court and all district courts have the equity powers to grant injunctive relief and issue declaratory judgments - these can be very useful forms of relief to a contractor seeking to wrest a contract award away from a third party; Claims Court judges tend to be familiar with government contracts principles; that court’s discovery tools can be useful in proving complicated cases.

Negatives: Litigation before the Claims Court, as with all federal cases, can be very costly, and in some cases can drag on for years.

4. Federal District Courts

Most federal district courts now only hear post-award disputes. The following three federal judicial districts, however, will hear both pre and post award protests: notably the 1st Circuit (for actions arising within Massachusetts, Maine, New Hampshire, Rhode Island, and Puerto Rico); the 3rd Circuit (covering Pennsylvania. New Jersey, Delaware, and the U.S. Virgin Islands); and the U.S. District Court for the Central District of California.

An additional benefit of resorting to a U.S. district court for one’s bid protest, besides those discussed under ‘Claims Court, is that of geographic convenience. Negatives include the lesser degree of familiarity with government contract law that prevails among district court judges than in other available fora.

Final Observations

The success rate for federal contractors in each forum discussed above runs at approximately 20% according to published accounts.

Other issues to be considered besides those discussed above include the nature of the protest or issues involved, whether or not discovery may be needed to enable the protester to prove his case, whether or not the protester is the incumbent contractor, and the amount of money at stake.

Some special tribunals, such as are maintained by the Small Business Administration, the Department of Labor, and the Justice Department, may also have jurisdiction over particular contracts.

Finally, a cautionary note: a protest will not generally be considered unless it is filed timely, i.e. within whatever stated “calendar” or “federal working days,” applies with a particular agency. That deadline must thus always be considered at the very outset when considering a possible bid protest.

Comment: Selecting the right forum for hearing a federal bid protest, and following procedures that are appropriate to the issues involved and forum selected, are critical to a government contractor’s prospects for meaningful, timely relief.

© ASSOCIATION OF INDEPENDENT GENERAL COUNSEL 1998; (all rights reserved). This article is not intended as legal advice. Consult a qualified attorney for assistance concerning a specific issue or problem.