It is no secret that federal procurement spending has dropped considerably in recent years. With less dollars being spent and fewer procurements, government contracts are increasingly turning to the bid protest process for a second chance to compete for, and hopefully win, new contracts, and preserve their incumbent contracts. The statistics bear this out. Bid protest activity at the U.S. Government Accountability Office ("GAO") has steadily increased year-over-year, with a record 2,561 protests filed in fiscal year 2014 alone. But more filings has not meant more sustained protests; the GAO sustain rate in 2014 fell to its lowest recent level of only 13 percent (though this does not account for voluntary agency corrective actions, which have remained steady). These statistics, and the new federal procurement reality, reinforce the need for contractors to think carefully about effective protest strategies and emerging issues to maximize their chances to successfully protest procurements (or defend contract awards). Below are ten key trends and tips to keep in mind:
1. Common Protest Grounds Remain Winners.
As reported by GAO, the most common protest grounds in 2014 contended that the agency failed to follow stated evaluation criteria, engaged in making and producing a flawed source selection or award decision, engaged in an unreasonable technical evaluation, and/or engaged in disparate treatment between offerors (either in proposal evaluations or through discussions). Recent protests saw fewer challenges involving the lack of documentation or challenges to cost evaluations, perhaps in part because of shifting procurement trends towards the increasing use of fixed price contracts and in connection with the growing number of lowest price/technically acceptable procurements.
2. Focus on Process.
Regardless of the particular argument being advanced, protesters are more likely to prevail if they focus on flaws in the agency's evaluation process. Subjective debates about the merits of an award are almost always unproductive because GAO affords agencies considerable discretion on their conclusions regarding such matters; for example, whether the protester's technical approach was poor, acceptable, good, or excellent. However, this same discretion is not extended the manner in which agency's arrived at their conclusions. GAO will sustain a protest if the protester can show prejudicial process errors, like the agency failed to follow the solicitation's stated evaluation criteria, relied on an unstated criteria to discriminate among offerors, or reached conclusions which are not reflected in the evaluation record. Successful protest arguments often focus on objective process errors in the agency's evaluation and award process. Highlighting these types of defects may also encourage an agency to take early corrective action and can improve the chances of a sustained protest.
3. Make Disparate Treatment Arguments.
Whenever possible, protesters should seek to make arguments that their proposals were disparately evaluated relative to the awardee's proposal. Such unequal treatment arguments are important because they give protesters a basis to request the awardee's proposal as part of the agency report. Having the awardee's information and comparing it side-by-side with yours and the agency's respective evaluations will significantly improve the protester's chances of demonstrating that the agency engaged in improper disparate treatment.
4. Supplemental Protests Are Key.
Because a protestor has limited information at the time of a contract award and initial protest, protestors and their counsel should focus closely on developing protestable issues that will position counsel to have a broader look at the record as the protest develops. As one example, having the awardee's proposal is important because it usually allows the protester to identify supplemental protest grounds. In many cases, protests are won, or corrective action is taken, on the basis of supplemental protest grounds rather than the initial protest.
5. Mind Trends in LTPA Procurements.
Consistent with declining federal spending and efforts to wring cost of out the procurement process, recent years have seen an increasing use of fixed price contracts in lowest priced technically acceptable ("LPTA") procurements, over the more traditional best value procurements of the past. Although offering the lowest price is a necessary part of winning the contract, price alone is not a sufficient condition to award. Offerors must still ensure that their proposed technical solutions demonstrate an adequate understanding of solicitation requirements and is realistic to meet the agency's needs and schedule. If the customer is not confident that the offeror understands requirements and that performance risk can be successfully managed, they may find the offeror technically unacceptable and select the next offeror even though its price may be significantly higher. In short, while price is important, offerors competing for LPTA contracts should ensure that their proposals are compliant with the solicitation's terms, realistic, and whenever possible, demonstrate performance that exceeds minimum requirements or otherwise provides benefits and advantages not required by the solicitation. These potential discriminators, which the agency can recognize as strengths, are still very relevant considerations in LPTA settings.
6. The CICA Stay Loophole.
A primary advantage of filing a protest at GAO versus other forums (e.g., the Court of Federal Claims or directly with the agency) has been the automatic stay of contract performance under the Competition in Contracting Act ("CICA") during the pendency of the protest, which is 100 days, unless the protest is sooner dismissed or the agency takes corrective action. As a practical matter, the stay has benefitted protesters who are incumbents because it has generally resulted in the agency issuing a bridge contract to the protester to continue the work for the duration of the protest. Agencies generally issue a bridge contract, rather than seek an override of the automatic stay before the U.S. Court of the Federal Claims, because of the heavy burden placed on the agency to obtain an override. However, where a multiple award ID/IQ contract is in place, and the protest concerns a new task order under the current contract, some agencies have started circumventing the traditional override process by sole sourcing a task order bridge contract to the non-incumbent awardee at a value less than $10 million. This allows the awardee, rather than the incumbent protester, to perform the contract while the protest is pending. Because GAO generally lacks jurisdiction over task orders valued at less than $10 million, and the Court has no protest jurisdiction over task orders at all, this novel approach effectively allows agencies to bypass the purpose of the CICA stay, which is to preserve the status quo until the protest has been resolved, and leaves protesters with no recourse to either challenge the agency's sole source justification or its circumvention of CICA. Until Congress closes this loophole, the potential lack of a bridge contract during the protest period, and the associated revenue loss, should factor into the risk/benefit analysis for incumbents in such situations when deciding whether to protest.
7. Intervention as Protest Insurance.
Even though the majority of protests that proceed to a decision are denied, a procurement awardee or other interested party has a vested interest in the outcome that almost always warrants participation in the protest process through intervention. No other party to a protest, even an agency that awarded you the contract, will be able to represent your interests as well as counsel admitted under a protective order. Intervention by outside counsel will afford an awardee representation who will have access to complete copies of protest filings, and help assess whether, and to what extent, the intervenor's interests will be served by actively assisting in the defense of the protest. Intervention can run the gamut from merely receiving and reviewing filings to actively coordinating on strategy with agency counsel defending an award, but without participating at all you are leaving your interests at risk. In short, if you can intervene in a protest, you should.
8. Check the Clock.
Bid protests are subject to strict timeliness rules that vary based on the type of procurement and forum. At GAO, contractors typically have 10 days - at the most - to file a post-award protest from when they knew or should have known their basis for protest. Timeliness rules are particularly important where protestors are seeking a stay of contract award or performance (as is almost always the case). For example, to obtain a stay of award under CICA on a procurement with a required debriefing, the protest must be filed - and the agency notified by GAO of that filing - within 5 days of the date offered for the debriefing. The key takeaway: if you've learned adverse information regarding a procurement, the clock is ticking. It is critical to engage your legal advisors as early is possible to prepare an assessment of your options, and if necessary, protest filings.
9. Two Bites at the Apple.
A common strategy is to first file your protest at GAO, and depending on the developments during those proceedings or their outcomes by the GAO, to take another shot by refiling the protest at the Court of Federal Claims. Protesters who find their chances of success low at GAO are free to withdraw their protests and refile them at the Court. Indeed, a protester can refile its protest at the Court even after GAO has denied it. While the Court recognizes GAO's bid protest expertise, it does not consider GAO decisions binding or precedential. The Court is not bound by GAO's analysis or decisions and takes a de novo review of any protests before it. Because the Court arrives at its own factual and legal conclusions it can, and with growing frequency does, sustain a protest previously denied by GAO.
10. Keys to the Kingdom.
Access to an agency's source selection documents and the awardee's proposal is paramount in maximizing your chances of success in a protest. While GAO rules limits a protester's access to documents to only those that are relevant to its allegations, which may only lead to partial access, the Court of Federal Claims requires the government to automatically provide all documents related or used in the procurement as part of the administrative record in the case. Thus, while going to Court is generally more expensive than GAO, this key difference may justify that premium in bigger ticket protests where the entire procurement needs to be carefully scrubbed.
By keeping informed of the latest developments in the bid protest arena, government contractors can position themselves to anticipate key issues in bid protests and advance their interests in contested procurements. This will be of critical importance as the competition to secure new contracts-and retain existing ones-continues to increase.
Justin Chiarodo (chiarodoc@dicksteinshapiro.com) and David Yang (yangd@dicksteinshapiro.com) are partners in Dickstein Shapiro LLP's Government Contracts Practice.
