This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its September 2018 report entitled Government Contract Bid Protests: Analysis of Legal Processes and Recent Developments the United States Congressional Research Service analyzed the US federal bid protest regime and provided a useful case study on the advantages and disadvantages of implementing bid protest mechanisms through institutional-level procedures, independent bid protest at the Government Accountability Office (GAO), and through formal court-based litigation at the United States Court of Federal Claims (COFC).
As the congressional report explains, agency- and GAO-level bid protests are faster and less expensive than court-based challenges and result in an automatic stay of the disputed contract award pending a resolution of the complaint; however, those rulings are ultimately less binding than formal court rulings. Court-based bid protests also offer a higher degree of document disclosure and a broader range of potential remedies:
Generally, protests before the procuring agency and GAO tend to be resolved faster and less expensively than challenges before the COFC because they are subject to specific resolution timetables and less formal procedures. Additionally, parties that file a protest with either the procuring agency or GAO generally gain the benefit of an “automatic stay” that bars an agency from awarding or implementing a contract while a protest is pending. In contrast, while filing a protest with the COFC is frequently more time-consuming and expensive and does not trigger an automatic stay, protests before the COFC have the potential to result in legally binding and conclusive judicial decisions and orders.
Procuring agency decisions and GAO bid protest recommendations, on the other hand, are not legally binding. Furthermore, interested parties that disagree with GAO or procuring agency decisions generally can still bring claims before the COFC, whereas the reverse route is generally not permitted.
Another important distinction among the forums is that the scope of discovery is potentially broader in a protest before the COFC because the court generally reviews the entire administrative record of a procurement. In contrast, neither GAO nor the procuring agency hearing a bid protest typically compels a procuring agency to produce documents, and GAO typically reviews only those documents that are relevant to the particular protest. Furthermore, while GAO and the procuring agency are limited to a finite list of statutorily authorized remedies, the COFC may “award any relief that the court considers proper” with the exception of certain monetary relief.
The congressional report further details that while agency-level bid protest procedures are required under the US Federal Acquisition Regulation (known as FAR), those procedures are not subject to public reporting and are therefore less transparent than GAO- or court-based bid protest procedures:
Provisions of the FAR, which were implemented pursuant to a 1995 Executive Order and several broad procurement-related statutory authorities, require executive branch procuring agencies to “provide for inexpensive, informal, procedurally simple, and expeditious resolution of protests.” There are no comprehensive publicly available data on protests before procuring agencies; agency protest decisions are not published; and the relevant FAR provisions, which stress speed and simplicity, provide limited guidance for how agencies are expected to implement these “informal” protest procedures. Given the dearth of publicly available data, it is difficult to draw firm conclusions regarding the consistencies and differences of procuring agency protest processes across the government.
However, while agency-level protests are less transparent, those protests offer an expedited resolution timeframe, along with the above-noted automatic stay of the challenged contract award:
The relevant FAR provisions provide some standard procedures applicable to agencies hearing a bid protest. For example, only an “interested party” may file a valid protest with a procuring agency. The term “interested party” is defined as an “actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract.” Interested parties that file a protest with a procuring agency generally do not have a legal right to compel discovery from the procuring agency, although agencies could voluntarily share certain information. In addition, agencies are expected to resolve a protest within 35 days of its receipt.
When a procuring agency receives a protest from an interested party, the agency must halt (i.e., “stay”) the award or implementation of the relevant contract until the protest is resolved, unless the agency concludes that there are “urgent and compelling reasons” or where moving forward with the contract is “in the best interest of the Government.” The purpose of this “automatic stay” is to ensure that agencies have sufficient opportunity to remedy legal violations before the contract moves forward.
Furthermore, as the congressional report explains, agencies are required to provide written reasons of their protest decisions and those decisions remain subject to appeals to the GAO or the COFC:
Procuring agencies are expected to provide parties a “well-reasoned” explanation of the agency’s protest decision. Procuring agencies may provide the same relief that GAO is authorized by law to recommend, which, as discussed below, includes canceling or reissuing a contract or solicitation. The primary recourse for parties that are unsatisfied with how the procuring agency resolved the protest generally is to file a protest with either GAO or the COFC.
Turning to the second bid protest option, the congressional report offers the following overview of GAO bid protest procedures:
GAO has been a forum for resolving protests for nearly a century and is the only agency with the authority to hear protests from across the federal government. Federal law, primarily through CICA, authorizes “interested parties” to file a protest with GAO regarding a federal agency’s procurement contract solicitation or award. More specifically, federal law provides that these parties can argue that a federal agency violated a statute or regulation in the way in which the agency defined who may be eligible for a contract in the solicitation, canceled a contract solicitation, or determined who is awarded a contract.
As with agency-level bid protests, the congressional report explains that the GAO process provides a streamlined and accessible avenue for bid challenges:
Federal law generally requires protests before GAO to be “inexpensive and expeditious” and establishes time limits for filings by the parties and for rulings by GAO that are shorter than those that are applicable to a typical judicial process, but longer than those applicable to protests before a procuring agency. GAO protests normally must be filed within 10 days of the time in which the violation “is known or should have been known.” Absent extenuating circumstances, GAO dismisses untimely protests. GAO also must inform the relevant agency of a protest within one day of the protest being filed. This notice typically triggers a 30-day window for the procuring agency to respond, unless GAO provides an extension. The procuring agency generally must provide GAO and the protestor all documents “relevant” to the protest for GAO’s consideration. GAO generally has 100 days from the day on which the protest was originally filed to issue a recommendation in a matter, although GAO may also consider protests pursuant to an “express” proceeding for cases that GAO determines may be feasibly resolved within 65 days.
Similar to agency-level protests, GAO protests result in the automatic stay of challenged contract awards:
Upon receiving notice from GAO, the procuring agency typically must implement an automatic stay, thus halting the award or performance of a contract until GAO issues a recommendation on the protest. By statute, the procuring agency generally may only lift, or “override,” the automatic stay prior to GAO’s recommendation for a limited number of reasons, such as if “performance of the contract is in the best interests of the United States” or there are “urgent and compelling circumstances which significantly affect interests of the United States [that] will not permit waiting for the decision of [GAO].” Agencies that override an automatic stay must justify the decision in writing and provide notice to GAO. GAO does not have legal authority to reverse an automatic stay override or to review the decision. However, the COFC, upon a motion from an interested party, can review an agency’s decision to override the stay. The COFC may reverse the agency’s decision to override the stay through the issuance of a temporary restraining order or preliminary injunction that requires an agency to halt performance of the contract.
As with agency-level protests, the GAO is required to provide a written decision after hearing a protest and, where the procurement rules have been breached, recommend a remedy:
After considering the legal basis for the protest, GAO may issue a decision either denying the protest and recommending that the agency move forward with the award or performance of the contract, or sustaining the protest and recommending further action by the procuring agency. In the latter scenario, GAO may recommend that agencies reissue a solicitation, rebid a contract, cancel a contract, or take certain other steps outlined in Section 3554(b) of Title 31. If GAO concludes that an agency failed to comply with a procurement law or regulation, GAO may recommend that the agency pay the challenging party’s attorneys’ fees and certain other costs associated with filing the protest.
While as a strict matter of law GAO recommendations are not legally binding, the congressional report explains that, as a matter of practice, government agencies almost always implement GAO rulings, particularly since those rulings can also be relied on by complainants as evidence in any subsequent court-based appeal:
Although GAO recommendations are explicitly established by statute as non-legally binding on the procuring agency, GAO must “promptly” inform Congress of any instance in which a federal agency does not comply with a GAO bid protest recommendation. GAO must further advise Congress whether it believes the noncompliance warrants a congressional investigation or some other legislative response “in order to correct an inequity or to preserve the integrity of the procurement process.” In practice, executive agencies almost always implement GAO recommendations, and the COFC, while not bound by GAO interpretations of law, “gives due weight and deference to GAO recommendations” when assessing challenges from parties unhappy with the outcome of a GAO bid protest.
Turning to the third protest option under the US federal system, the congressional report describes the bid protest procedures at the Court of Federal Claims (COFC) as follows:
The COFC is the only judicial forum authorized by Congress to hear bid protests. Parties to protests filed with the COFC must comply with the court’s rules of practice (Rules of the Court of Federal Claims (RCFC)), which are modeled after the Federal Rules of Civil Procedure. Additionally, the challenging party must demonstrate that it qualifies as an “interested party.” The COFC and its appellate court, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit), have interpreted the term “interested party” consistent with the CICA definition of the term discussed above.
The COFC reviews final agency procurement actions in accordance with the Administrative Procedure Act (APA) and will only set aside an agency’s action if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” The COFC generally requires the procuring agency to provide the full administrative record associated with the protested procurement, including all of the agency’s correspondence with the protestor and the contractor that won the procurement contract as well as internal evaluations of contract offers. The COFC “may award any relief that the court considers proper, including declaratory and injunctive relief except that any monetary relief shall be limited to bid preparation and proposal costs.” COFC-issued remedies are legally binding and may be enforced through contempt of court, among other legal powers.
The congressional report explains that court protests do not result in an automatic stay of the challenged contract; rather, complainants must convince the court that they are likely to suffer irreparable harm if the contract is awarded to a competitor before the court will grant an injunction to stop the contract award:
Parties may file bid protest lawsuits with the COFC before or after filing protests with the procuring agency or GAO. In contrast to the processes applicable to the two nonjudicial forums, parties that initiate a bid protest through the COFC do not gain the benefit of an automatic stay. Instead, parties may request that the procuring agency voluntarily impose a stay, or they may petition the court to issue a preliminary injunction or temporary restraining order. These “extraordinary remed[ies]” generally enjoin or restrain a party from taking certain actions, and, thus, can provide similar protections as an automatic stay. Nevertheless, the COFC will only issue these remedies “in extremely limited circumstances” where a petitioner is able to meet exacting standards, including demonstrating that the petitioner will likely suffer irreparable harm in the absence of such relief and succeed on the merits of its claims.
The congressional report also notes that in recent years the timeframes for court-based bid protests have been accelerated to align with the expedited processes available at the GAO:
Subsequent to a 2007 opinion of the Federal Circuit Court of Appeals, the COFC generally reviews protests based on solicitations in the same time frame as that applicable to GAO. However, in contrast to the 10-day filing deadlines applicable to GAO post-award protests discussed above, post-award protests at the COFC generally are not subject to specific initial filing deadlines other than potentially the general six-year statute of limitations applicable to claims against the federal government. In practice, however, procurement decisions typically are made well before the end of this six-year period, and the COFC can bar claims on equitable grounds (e.g., laches, equitable estoppel) when, for instance, a “protester’s delay in filing was unreasonable and prejudicial to the agency or other parties.” COFC bid protest opinions also do not have to be issued within a specific time frame like those before the procuring agency and GAO. Consequently, the COFC often takes longer to issue a ruling on the merits of a protest than the procuring agency and GAO. COFC rulings, like TROs and similar remedies discussed above, are legally enforceable, and they may be appealed to the Federal Circuit.
The congressional report further notes that establishing a bid protest regime helps enhance the accountability of government institutions in the administration of their procurement processes:
Congress likely intended to further a number of objectives by statutorily authorizing contractors to challenge federal procurement solicitations and awards through the bid protest process described above. Allowing protests can help ensure that procuring agencies comply with federal law and, consequently, advance congressional prerogatives. The bid protest system also can help promote fairness and transparency in the procurement process, which arguably encourages participation and increases competition for federal procurement awards. This, in turn, has the potential to improve the quality and reduce the costs of goods and services purchased by the government. Similarly, the absence of a protest system might undermine public confidence that contract award decisions are based on merit and in compliance with the law, which could discourage participation by qualified and reputable parties and result in wasteful government spending.
However, the report also cautions that the enhanced accountability created by bid protest procedures should be balanced against the adverse operational impact on government bodies created by the resulting disruptions to government contracting processes:
Although few are likely to argue with these general benefits, protests arguably may impede the timely acquisition of goods and services, at least in certain circumstances. In particular, some commentators have expressed concern that contractors are filing protests that are highly unlikely to be successful, if not entirely baseless, as a way to harm competitors or extend the performance of existing contracts. Even if these protests ultimately prove to be unsuccessful, they often force procuring agencies to expend time and money defending their actions and can hold up the agency’s ability to acquire goods and services needed to implement their congressionally mandated operations. Furthermore, the expectation of protests might drive up the administrative costs of soliciting and awarding contracts as agencies defensively go beyond their legal requirements to ensure that their procurement decisions are sufficiently documented and justified.
According to a congressionally mandated report, some stakeholders believe that, while the potential for a bid protest generally does not have a significant effect on an agency’s overall operations, it could cause an agency to fail to meet programmatic deadlines, which might lead to a loss of appropriations. Some have also noted that the fear of a potential protest can impact an agency’s procurement contract decision making by, for instance, causing acquisition personnel to prioritize price over quality.
While finding the right balance between accountability and efficiency will remain an ongoing challenge in the US federal system, this congressional report serves as a useful case study for jurisdictions that are implementing new bid protest mechanisms or considering improvements to their existing procedures.
