Top Ten Things Every Government Contractor Should Know About Bid Protests

By Dave Nadler, Partner, Dickstein Shapiro LLP

As government contracting continues to become more competitive in response to shrinking budgets for federal contracts, more disappointed offerors are pursuing bid protests to protect their interests. After climbing rapidly through the mid-2000s, federal government spending on contracts reached a high of almost $541 billion in Fiscal Year ("FY") 2008. Since then, spending has dropped to $517.1 billion in FY 2012 and continued to decline in FY 2013. As contractors fight to maintain their piece of the federal procurement budget, it is increasingly important for these contractors to understand their options for challenging agency procurement decisions through bid protests.

1. Interested Party/Standing

To file a bid protest, a protestor must demonstrate that it has standing as an interested party, meaning the protestor must be an actual or prospective offeror whose direct economic interest would be affected by the award of a contract or by the failure to award a contract. Thus, while a protester challenging the terms of a solicitation must be an actual or prospective offeror, a protestor challenging an agency's selection decision must also demonstrate that it would be next in line for an award but for the agency error or that it would regain the opportunity to compete if its protest was sustained.

2. Forum Selection

A contractor challenging a federal procurement may generally choose to file a bid protest before the agency administering the procurement, the Government Accountability Office (GAO), or the United States Court of Federal Claims (COFC). Agency-level protests typically offer the least expensive and quickest option for a disappointed offeror, followed by GAO protests, and then COFC protests. For agency-level protests, the Federal Acquisition Regulation (FAR) requires agencies to use best efforts to resolve a protest within 35 days after the protest is filed, although some agencies have implemented their own rules requiring shorter timeframes for resolution. The FAR similarly imposes a strict deadline for resolving protests filed before GAO; however, GAO has up to 100 days after the initial protest filing to issue a decision. By contrast, there are no time constraints on COFC's authority to resolve bid protests.

Further, because none of these forums hold appellate jurisdiction over the others, a protestor who is unsatisfied with the result of a protest may re-file the protest in a different forum, with limited exceptions. For example, a protestor disappointed with the outcome of a GAO protest may be able to file a COFC protest, but a protestor that starts at the COFC cannot later file a GAO protest based on the same issue. Thus, contractors may want to start with an agency-level or GAO protest before going to the COFC.

Although agency-level protests may be relatively quick and inexpensive, they also have significant disadvantages compared to GAO and COFC protests. For example, agency-level protestors have no right to discovery. By contrast, GAO and COFC protests require limited discovery, which means agencies must produce an agency report or administrative record containing all documents relevant to the protest. Further, in some cases, a COFC protest may allow for additional discovery (e.g., depositions).

Another important distinction between agencies, GAO, and the COFC is the difference in remedies available to a disappointed bidder. While agencies and GAO have limited authority and only can issue recommendations, the COFC has the power to enforce its judgments. Although this distinction has the potential to significantly impact forum selection, as a practical matter agencies generally follow GAO's recommendations.

3. CICA Automatic Stay

One significant advantage only offered by GAO protests is the availability of an automatic stay of contract award or performance under the Competition in Contracting Act ("CICA"). To obtain a CICA stay, the protestor only needs to file its protest within 10 days of the contract award or within five days of its debriefing. However, the requirement for a CICA stay is not triggered until GAO provides notice of the protest filing to the contracting agency. Further, because GAO has up to a day to provide the required notice, contractors should file protests in advance of the filing deadline when requesting a CICA stay to ensure that GAO has sufficient time to notify the contracting agency.

By contrast, CICA stays are not available in COFC protests. Nonetheless, the COFC may stay contract award or performance through granting injunctive relief, although grants of injunctive relief require the protestor to satisfy a relatively high standard. Further, protestors must not only satisfy a high burden to warrant injunctive relief, but also must post security in an amount deemed appropriate by the court to pay the costs and damages sustained by a party found to have been wrongfully enjoined or restrained.

4. Agency Debriefings

Even though competitive procurements require the agency to conduct a debriefing with an offeror following the award decision, the manner and content of debriefings vary greatly. In some procurements, the agency may provide a written debriefing, while in others the agency may provide an in-person or telephonic debriefing. Moreover, some debriefings include detailed analysis, redacted versions of source selection documents, and even an opportunity for the protestor to have the agency respond to specific questions. Other debriefings, are limited to the information required under the FAR - e.g., evaluation of significant weaknesses or deficiencies in the offeror's proposal, overall evaluated cost or price and technical rating, or overall ranking of the offerors. Unfortunately, despite the lack of uniformity and the limited regulations governing the scope of debriefings, an offeror cannot protest the content of its debriefing.

5. Pre-Award vs. Post-Award Protests

Regardless of which forum a protestor chooses, protests challenging the terms of a solicitation must be filed prior to the closing date for proposal submissions. After that deadline passes, a protestor only can challenge the terms of a solicitation if those terms contain a latent ambiguity, meaning that the solicitation error was subtle and not capable of being identified until the evaluation. The latent ambiguity exception, however, often can prove a difficult standard to meet. Thus, before the proposal submission deadline, contractors should carefully review solicitations for any unclear or potentially discriminatory terms and consider addressing those terms with the agency and, if necessary, filing a protest. By contrast, post-award protests may challenge a much broader range of issues and follow different timeliness rules.

6. Timeliness Rules

Except when based on alleged improprieties in a solicitation, agency-level protests and GAO protests must be filed no later than 10 days after the basis of protest is known or should have been known, whichever is earlier. Agencies however, may consider the merits of a protest filed outside the 10 day requirement for good cause or when the agency determines that a protest raises issues significant to the agency's acquisition system. Further, where the protest challenges a competitive procurement under which a required debriefing is requested, the protestor has until 10 days after the debriefing to file a protest. However, the protest must be filed within five days of the debriefing to secure a suspension of contract performance. Unlike agency-level and GAO protests, the COFC does not require protestors to satisfy strict filing deadlines in most cases, although the COFC has effectively adopted GAO's timeliness rule for protests challenging solicitation improprieties.

7. Hearings

Although hearings are regularly held in protests before the COFC, GAO holds hearings in a limited number of protests. Generally, GAO will hold a hearing only to resolve a factual dispute that requires assessing witness credibility or where GAO determines that a hearing would be more efficient than proceeding on written submissions only. As evidence of how rarely GAO conducts hearings, between FY 2008 and 2012, GAO conducted hearings for only 260 of 10,768 protests filed.

8. Filing Trends

Although the number of GAO protests continues to rise, the rate of increase has tapered off in recent years. In FY 2012, GAO saw 2,475 protests filed, compared to 2,353 in FY 2011, 2,229 in FY 2010, 1,989 in FY 2009, and 1,652 in FY 2008. By contrast, the COFC hears a relatively stable number of protests each year. Between FY 2005 and FY 2010, only 454 protests were filed before the COFC.

9. Success Rates

Despite the noted increase in GAO protest filings, the sustain rate has remained relatively stable. In FY 2012, GAO sustained 18.6% of protests, compared to 16% in FY 2011, 19% in FY 2010, 18% in FY 2009, and 21% in FY 2008. Although these figures may seem low, GAO tracks this data only on protests where GAO issues a formal recommendation. As such, GAO's statistics fail to account for protests in which a protestor successfully obtains corrective action from an agency.

10. Potential Changes to GAO's Handling of Protest

Despite the drastic increase in protest filings, GAO continues to maintain a manual docketing system. However, GAO's FY 2014 budget request asked Congress to provide GAO the authority to collect a filing fee for protests so that it could fund development, implementation, and maintenance of an electronic docketing system. In response to GAO's request, the U.S. House of Representatives and Senate appropriations bills have included language that would authorize GAO to collect the fee, although neither bill specifies the amount of the fee.