Court Dismisses Protest Due to Complaint Delay

By: Paul Emanuelli

This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.

In its January 2020 decision in TakeCare Insurance Company, Inc v. Territory of Guam, the Superior Court of Guam rejected a bid protest after determining that the complainant was aware of its grounds of complaint when the RFP was first posted but failed to raise its concerns in a timely manner. The dispute dealt with an RFP for group health and dental insurance. The RFP required that Guam Regional Medical City (GRMC), Guam’s only private hospital, be included in the bidder’s network. The complainant, TakeCare Insurance, planned to access preferred GRMC rates through another insurer, but then discovered that GRMC would not be extending those rates to the complainant. TakeCare Insurance then brought a bid protest, claiming that GRMC was using its powers to disqualify TakeCare as a bidder. However, the Court rejected the protest, finding that GRMC’s role in the procurement process was identified in the RFP and that the complainant should have raised its concerns at that time:

D. TakeCare learned of the facts giving rise to its protest when the RFP was issued

Guam’s procurement statute requires that an aggrieved bidder must file its written protest within fourteen days after the protestor knows or should have known of the fact giving rise thereto. 5 GCA § 5425. The Government argues that the fourteen-day period began on the 23 date that the RFP was issued. TakeCare argues that the fourteen-day period began on the date GRMC informed TakeCare that GRMC would not allow TakeCare to access NetCare’s in-network rates with GRMC, effectively disqualifying TakeCare as a bidder.

TakeCare’s protest alleges that GRMC wrongfully used the power bestowed upon it by Public Law 35-2 to disqualify TakeCare as a bidder. It is undisputed that TakeCare had access to the RFP on April 1, 2019. The terms of the RFP included that any bidder must include GRMC in its network. The question is whether access to the RFP was sufficient to put TakeCare on notice of the facts which gave rise to its protest.

TakeCare argues that the RFP “did not require that TakeCare or any other bidder ever have a ‘direct contract’ with GRMC. Thus, TakeCare had no reason to be alarmed or concerned on April 1, 2019 that it did not have a ‘direct contract’ with GRMC.” Opp’n to Mot. for Summ. J. at 3 (Nov. 7, 2019). TakeCare assumed that GRMC would either accept its arrangement with NetCare to give TakeCare’s insureds access to GRMC, or that it would succeed in negotiating a direct contract with GRMC that would include GRMC in TakeCare’s in-network coverage.

Because this was merely an assumption, TakeCare was aware that a breakdown in negotiations with G1UvIC would lead to TakeCare being disqualified as a bidder. While it was not until negotiations ended that the effective disqualification of TakeCare materialized, TakeCare was aware of the RFP’s allegedly improper delegation of authority to GRMC on April 1, 2019, when the RFP was issued. TakeCare’s conduct suggests that the issuance of the RFP was sufficient to put TakeCare on notice of GRMC’s authority in the procurement process.

The Court therefore granted the government’s motion for summary judgment, ruling that the complaint was untimely and therefore could not proceed.

As this case illustrates, the strict limitation periods that apply to many bid protest regimes typically begin to run from the time that a potential complainant first discovers the alleged procurement infraction. This serves as an effective barrier against after-the-fact complaints by unsuccessful suppliers who fail to raise timely concerns and only seek to challenge an aspect of a procurement process retroactively after they fail to succeed in that competition.