INTRODUCTION The Protest Forums and the Process

This introduction provides a general overview of the bid protest process and the forums where protests are filed. It begins with the definition of a “protest” and then explains the three different forums where a protest can be filed.

Definition of a “Protest”

Before examining the three bid protest forums, it is helpful to define what “protest” means in our federal procurement system. Section 33.101 of the Federal Acquisition Regulation (FAR) defines the term protest as follows:

… a written objection by an interested party to any of the following:

(1) A solicitation or other request by an agency for offers for a contract for the procurement of property or services.

(2) The cancellation of the solicitation or other request.

(3) An award or proposed award of the contract.

(4) A termination or cancellation of an award of the contract, if the written objection contains an allegation that the termination or cancellation is based in whole or in part on improprieties concerning the award of the contract.

It is important to note that this definition clarifies that only “interested parties” may file a protest. An interested party is an actual or prospective offeror whose direct economic interest would be affected by an award. Prior to the date set for receipt of proposals, the pool of interested parties may be rather large. The courts use a slightly different definition as clarified by the Court of Appeals for the Federal Circuit (CAFC). For pre-award protests in the courts, an interested party need only be an “actual or prospective offeror” asserting “a non-trivial competitive injury.” See Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1361 (Fed. Cir. 2009). Although this definition typically excludes advocacy groups or other entities that lack the capacity to perform the work, it still covers a large group of potential litigants. However, after the date set for receipt of proposals, the pool of interested parties shrinks to those companies or individuals that submitted an offer in response to the solicitation.

The Three Protest Forums and Their Governing Rules

In our federal procurement system, a party seeking to file a protest has three protest forums (or “venues”) available: (1) the procuring agency itself, (2) the Government Accountability Office (GAO), and (3) the Court of Federal Claims (COFC). The procedural rules governing protests depend on the forum the protester selects:

• Agency-level protests are governed by FAR § 33.103, Protests to the agency; agency-specific FAR supplements; and other agency-level implementing policies.

• GAO protests are governed by 4 C.F.R. Part 21, “Bid Protest Regulations.”

• COFC protests are governed by the Rules of the Court of Federal Claims (RCFC) in general and Appendix C to those rules, “Procedure in Procurement Protest Cases,” in particular.

Any party intending to file a protest must be familiar with the applicable rules. In addition to these traditional protests, there is a specific process for protesting a small business’ representation of its small business status. These “size protests” are adjudicated by the Small Business Administration (SBA) and explained in FAR Subpart 19.3.

Protests to the Procuring Agency

Before the GAO started hearing protests in the 1920s, the only protest forum available was the procuring agency itself. This oldest protest forum is still available today. Prospective contractors that have a complaint based on the conduct of a procurement can always submit a written protest to the agency. The rules for these “agency-level protests” are set out at FAR § 33.103 and any additional agency-level supplements to that FAR section. Unfortunately, government-wide statistics on agency-level protests are not readily available to the public. Thus, there is no clear information showing the number of these protests that are filed by year or the results of these protests.

Protests to the agency can be filed directly (in writing) with the contracting officer. Additionally, protesters can seek an independent review of their protest at “a level above the contracting officer.” Some agencies make this review available as (1) an appeals process from the contracting officer’s protest decision, (2) an alternative to a protest to the contracting officer, or (3) both. Although the agency is required to explain its unique process via “agency procedures and/or solicitations,” this is not always done. Consequently, a protester interested in this procedure must find out what the agency’s specific process is for this independent review.

One of the most important aspects of bid protests is the time period in which they must be filed; failure to file a protest on time will often lead to a dismissal of the protest. The timeliness rules for filing an agency-level protest are similar to those at the GAO. Agency-level protests challenging the terms of a solicitation must be filed before the date set for the receipt of proposals (or bid opening). Protests that challenge the agency’s evaluation must be filed within ten days after the basis of the protest is known or should have been known (whichever is earlier). Although an exception allows an agency to entertain an untimely protest “for good cause shown, or where it determines that a protest raises issues significant to the agency’s acquisition system,” protesters should not rely on this narrow (and discretionary) exception. In other words, the timeliness rules governing agency-level protests are critical and any would-be protester needs to be aware of them or risk the likely dismissal of the protest.

If the protest is timely, it triggers an “administrative stay” of the procurement. This means that if the timely protest is filed before the award (usually challenging the terms of the solicitation), the agency cannot award the contract until the protest is resolved. If the protest is timely filed after the award, the administrative stay prevents performance of the contract until the protest is resolved. This administrative stay can be lifted, however, by an official above the contracting officer if it is determined (in writing) that lifting the stay is in the best interests of the government. The official who is able to authorize the lifting of the stay varies by agency.

Regardless of the relative ease of securing an override of an administrative stay, agencies will usually make their best efforts to implement the administrative stay until the agency-level protest is decided. The FAR requires that agencies make their “best efforts” to resolve protests within 35 days after they are filed. In light of the comparatively short period of time it takes to decide an agency-level protest, the government is usually able to keep the stay in place with relatively little disruption to the underlying requirement.

Although the agency-level “stay” is rather short, it is not unusual for the agency to take “corrective action” to address a concern raised in an agency-level protest. Often the government is motivated to take corrective action instead of deciding a protest on its merits because the corrective action has the potential of allowing a contract to move forward more swiftly than going all the way to a decision, especially in terms of a pre-award protest. If the agency takes corrective action, the protest will typically be dismissed by the agency as academic, which is the way the GAO handles similar situations.

A fundamental legal concept applicable to bid protests (as well as many other areas of the law) is the “standard of review” that a protest forum will apply to cases brought before it. Stated simply, this is the standard against which the protest forum will judge the government’s contracting action. Essentially, it explains the amount of deference afforded to an agency’s (or lower tribunal’s) decisions.

Surprisingly, the FAR provides little guidance regarding a standard of review for agency-level protests. The only language that appears to be relevant is the FAR § 33.103(h) requirement that “[a]gency protest decisions shall be well-reasoned, and explain the agency position.” Consequently, the general agency practice is to apply the same standard that the GAO uses: examining whether there was a rational basis for the decision, whether the action was in violation of a statute or regulation, and whether any such error competitively prejudiced the protester.

Although agency-level protests can be an effective and efficient way to challenge a solicitation or an evaluation, many offerors (or prospective offerors) are skeptical that the agency will review their protest objectively. Protesters often believe they will not get a fair hearing before the agency. One of the “checks” on the agency-level protest system is the ability to request an independent review of the protest “at a level above the contracting officer.”

Agency protests are designed to be resolved swiftly. In response to a protest, an agency can take any appropriate action that will bring the contracting action into compliance with procurement laws and regulations. More specifically, in terms of an agency-level protest, FAR § 33.102(b) explains that the agency head (or designee) can:

(1) Take any action that could have been recommended by the Comptroller General [GAO] had the protest been filed with the Government Accountability Office;

(2) Pay appropriate [bid preparation] costs [including costs (exclusive of profits) of filing and pursuing the protest including attorney, consultant and expert witness fees, and bid and proposal preparation costs]; and

(3) Require the awardee to reimburse the Government’s costs… where a post-award protest is sustained as the result of an awardee’s intentional or negligent misstatement, misrepresentation, or miscertification.

The FAR explains that agencies are required to make their “best efforts” to resolve agency-level protests within 35 days. Of course, agencies can decide protests much sooner than 35 days if they are willing and able. On balance, agency-level protests are less time-consuming than their GAO and COFC counterparts.

Protests to the GAO

The most popular external protest forum is the Government Accountability Office. An investigative arm of Congress that was created by the Budget and Accounting Act of 1921, the GAO is often referred to as “the Congressional watchdog” because of the numerous audits it conducts—many of which focus on the executive agency’s oversight of taxpayer dollars. The GAO has been hearing protest since the 1920s.

Compared to the more complicated procedures inherent in COFC protests, the GAO provides a more user-friendly forum, especially for pro se litigants. Further, unlike at the COFC, both protesters and the government can count on receiving a decision within 100 days; Congress requires the GAO to decide a protest no later than 100 days from the date on which it is filed. The GAO, unlike the agencies and the COFC, publicly reports its protest statistics (see Table 1-1 for fiscal years 2001 through 2013).

The number of GAO protests has risen significantly over the past five to six years. In FY 2013, for example, over 1,000 more protests were filed than in FY 2007.

Notably, only about 20–25 percent of filed protests result in a “merit-based decision”—meaning that the GAO actually denies or sustains the protest. The majority of protests are dismissed. The three most common reasons for dismissal appear to be that (1) the protest was untimely filed, (2) the agency decides to take corrective action, resulting in the GAO’s dismissing the action as academic, or (3) the protest challenges a decision that is outside the GAO’s jurisdiction.

As with agency-level protests, the time period for filing a protest at the GAO is critical. Over the years numerous protests have been dismissed because a protester simply waited too long to file the protest. Pre-award protests challenging the terms of a solicitation must be filed before the date set for the receipt of proposals in all three forums. In post-award protests, very tight timelines must be met under the GAO’s rules. Generally, these protests must be filed within ten days of the contract award or, for negotiated procurements, within ten days of a required debriefing.

The importance of these various timeliness rules cannot be overstated. Typically, timeliness is the first issue government attorneys consider when a protest is filed at any forum. As a general rule, would-be protesters that sit on their protest rights will lose them.

Table 1-1. Cases Heard and Decided by the GAO, FY 2001–2013

One of the most attractive features for protesters at the GAO is the “stay” that is mandated by the Competition in Contracting Act. This is aptly referred to as the “CICA stay.” If the protest is timely, the CICA stay provides an immediate and automatic procedural remedy to the (timely) protester: a stay of contract award or performance. This procedural mechanism acts to preserve the status quo until the protest can be decided. The CICA stay is a statutory requirement codified at 31 U.S.C. § 3553(c) and (d).

Although both agency-level and GAO protests can trigger a stay, the CICA stay stemming from a GAO protest is much more difficult for most procuring agencies to override. Furthermore, the period of the stay is generally much longer than the administrative stay, lasting up to 100 days. This is one reason that the GAO is such an attractive forum for protesters. In the Army, for example, most contracting activities must get express written approval from the Deputy Assistant Secretary of the Army for Procurement [DASA(P)] to override a CICA stay (Army FAR Supplement § 5133.104). By contrast, an administrative stay triggered by an agency-level protest can be overridden as long as such an action is approved at a level above the contracting officer and in accordance with local acquisition rules.

In other words, it is administratively easier for an agency to override an administrative stay stemming from an agency-level protest than a CICA stay stemming from a GAO protest. An override of a CICA stay also requires notification to the GAO. Although the GAO will not review an agency’s override decision, that decision can be challenged at the Court of Federal Claims. That is, the current system allows for a protest to be pending at the GAO while separate litigation proceeds at the COFC focused solely on the government’s decision to override the CICA stay.

A quirk in the system allows a protest to be timely “for protest purposes” but untimely “for purposes of the CICA stay.” Specifically, a valid GAO protest can be filed within ten days of a required debriefing; however, to get the sought-after CICA stay, the protest in these situations must be filed within five days of the required debriefing. Thus, a protest filed eight days after a required debriefing may be timely for protest purposes yet untimely for purposes of a CICA stay.

“Corrective action” at the GAO is a unique aspect of this type of litigation. It is an option open to the government contracting officer in both pre-award and post-award protests. It typically allows the government to go back and address the issue raised by the protester (as well as any other issue the agency may have discovered in hindsight) instead of defending the protest all the way to a merit-based decision. In light of the CICA stay, corrective action is often a very attractive alternative for the government.

For example, if a disappointed offeror notices in its debriefing that the government incorrectly evaluated its proposal, the offeror may file a protest at the GAO, which often triggers a CICA stay. The offeror’s protest ground will explain that the government failed to evaluate the offeror’s proposal properly for one of a multitude of reasons.

Unbeknownst to many protesters, this protest will trigger an intense intra-agency examination into the contracting action that is being challenged. Typically, this means that the agency’s procurement attorneys (who may or may not have previously reviewed the action) will closely examine the contracting action. Further, the agency’s protest trial attorney (within DOD this is often a different attorney from a separate legal organization) will also closely examine the action. In high-visibility procurements, the protest will often trigger heightened reviews by the contracting officer’s supervisory chain and the contract policy office. Stated simply, a GAO protest will typically result in many new sets of eyes examining the contracting action to determine if it is defensible.

More often than not, in the post-award context, this re-evaluation results in the same awardee being selected. (Often the decision to take corrective action is not based on the agency’s failure to select the appropriate awardee, but rather on the agency’s failure to properly document the rationale for such a selection.) The re-evaluation will typically be much more thoroughly documented by the contracting agency and reviewed by various agency officials, including the agency’s lawyers. Consequently, the new source selection decision document (SSDD) is typically more detailed and more “protest-proof” than the original SSDD.

Since many protests are triggered by the information provided to an offeror in the debriefing, a contracting activity is wise to ensure that the debriefing is accurate and clearly explains the government’s decision in accordance with the FAR. Contracting officers sometimes lose sight of the fact that an offeror’s sole window into the government’s conduct of the source selection process is contained in the debriefing. A well-organized and thorough debriefing (either written or oral) that clearly and logically explains the award decision can often deter a protest from being filed because it can demonstrate to an offeror that it was given a fair shot in the competition. Conversely, a poorly conducted or poorly written debriefing can often spark understandable outrage or frustration in disappointed offerors—which obviously increases the chances that a protest will be filed.

Although a protester is free to file a new protest after the corrective action is completed, it is generally less likely at that point that the GAO will overturn the government’s decision. Because the government will usually ensure that a new decision is thoroughly documented and reviewed, a protester filing the same (or similar) protest following corrective action should not have unreasonable expectations that its protest will be sustained. Furthermore, to many protesters’ chagrin, even a sustained protest does not mean that the underlying contract will end up being awarded to their company.

The GAO’s standard of review for post-award bid protests focuses on whether the agency’s decision was “reasonable and consistent with the stated evaluation criteria and applicable procurement statutes and regulations.” However, this standard of review must be read in light of the further requirement that a protester demonstrate “competitive prejudice.” That is, the protester must demonstrate that “but for” the agency’s error there was a reasonable possibility that the protester would have received the award.” In other words, the GAO may find that the agency’s decision was either unreasonable or inconsistent with the evaluation criteria, regulations, or statutes but still not sustain a protest unless the protester can demonstrate the additional requirement of competitive prejudice.

If a GAO protest is successful (“sustained”), the GAO can recommend that the agency take one or more of a wide range of actions to comply with procurement laws and regulations. These remedies are set out in the GAO’s bid protest regulations (4 C.F.R. § 21.8) as follows:

(1) Refrain from exercising options under the contract;

(2) Terminate the contract;

(3) Recompete the contract;

(4) Issue a new solicitation;

(5) Award a contract consistent with statute or regulation; or

(6) Such other recommendation(s) as GAO determines necessary to promote compliance.

Further, the GAO can recommend that the agency reimburse the protester for the costs of filing and pursuing the protest, including attorneys’ fees and consultant and expert witness fees. Reimbursement of these costs is usually recommended when the protest is sustained or if the agency unduly delays taking corrective action in the face of a clearly meritorious protest. As a general rule, if the agency takes corrective action prior to the date it is required to file an agency report, the GAO will not recommend that the agency reimburse the protester for its costs of filing and pursuing the protest.

Protests to the Court of Federal Claims

Although protests to the Court of Federal Claims (COFC) are far less common than protests filed at the GAO, the COFC plays a critical role for several reasons. First, in terms of post-award protests, the COFC is generally available if the protester is not satisfied with the GAO’s decision. Essentially, the COFC provides a “second bite at the apple.”

Second, a protest that is decided by the COFC is not reviewable by the GAO. Consequently, a COFC decision on a protest is usually the final decision on the protest—unless it is appealed and the Court of Appeals for the Federal Circuit (CAFC) overturns that decision.

Finally, the COFC is the sole path to the CAFC. In other words, a protester cannot appeal a GAO protest decision directly to the CAFC. Since Supreme Court cases focusing on government contract formation issues are rare, a CAFC decision on a protest issue typically represents the highest level of judicial review on contract formation issues.

Procurement protests to the COFC generally come from two separate sources: (1) protests that are filed directly—without having gone through the GAO and (2) protests that are filed following a GAO denial or dismissal. A COFC protest that follows a GAO decision essentially starts an entirely new trial on the underlying issues. In other words, the COFC is not a traditional appellate forum for challenging the GAO’s bid protest decisions; rather, the protest represents a new trial on the merits regardless of the GAO’s prior decision. “Under the existing statutory arrangement, a protester may file a GAO protest, litigate it fully, and, if disappointed, commence the entire process anew before the COFC.”

An apples-to-apples statistical comparison of protests filed at the GAO and protests filed at the COFC is difficult to perform because the COFC does not make its protest statistics publicly available. However, comparing COFC protests from calendar years 2000 through 2011, only a relatively small percent of protests are filed in the COFC as opposed to the GAO (see Table 1-2).

Table 1-2. COFC Protests, 2000–2011

Clearly, the GAO is a far more popular protest forum. This is not surprising given that the GAO is a much less expensive and procedurally simpler forum in which to file a protest—and in light of the powerful and automatic CICA stay. (Although a preliminary injunction from the COFC can have the same effect as a CICA stay, there is no guarantee that the COFC will enter such an injunction.)

Although somewhat rare, some COFC cases have disagreed with the GAO’s decisions. Although the COFC is not a “higher court” to the GAO in the traditional sense, the structure of the protest process gives the COFC the final say on the matter—unless, of course, it is appealed to the CAFC and the CAFC disagrees with the COFC decision. (In at least one case that effectively overturned the prior GAO decision, the COFC couched its decision in terms of the “reasonableness” of the agency’s decision to follow a particular GAO recommendation.)

The COFC’s jurisidiction and the standard by which the COFC reviews protests were explained succinctly in a recent case as follows:

The Court has jurisdiction over this bid protest pursuant to 28 U.S.C. § 1491(b)(1). In a bid protest, a reviewing court shall set aside an agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” See § 1491(b)(4) (adopting the standard set forth in 5 U.S.C. § 706). This standard is satisfied when two conditions are met: (1) the procurement decision lacked a rational basis or involved a violation of regulation or procedure; and (2) the protestor was prejudiced by this error.

Manus Med., LLC v. United States, 14-26C, (Fed. Cl. Mar. 10, 2014).

The remedies at the COFC come primarily in the form of injunctions: (1) temporary restraining orders, (2) preliminary injunctions, and (3) declaratory relief. The COFC’s injunctive relief is quite broad. As the CAFC has explained:

The Tucker Act, as amended by the Administrative Dispute Resolution Act of 1996, provides the Court of Federal Claims jurisdiction to render judgment on “an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1). The Tucker Act also explicitly empowers the court to “award any relief that the court considers proper, including declaratory and injunctive relief….” Id. § 1491(b) (2) (emphasis added). Thus, once jurisdiction attaches, the Court of Federal Claims has broad equitable powers to fashion an appropriate remedy. We give deference to the Court of Federal Claims’ decision to grant or deny injunctive relief, only disturbing its decision if it abused its discretion. PGBA, LLC v. United States, 389 F.3d 1219, 1223 (Fed. Cir. 2004).

Turner Const. Co., Inc. v. United States, 645 F.3d 1377 (Fed. Cir. 2011).

Oddly, there are no timeliness rules for filing a post-award protest at the COFC. The Department of Defense submitted a legislative proposal for the 2013 National Defense Authorization Act to address timeless concerns; the issue is still a subject of debate by Congress and industry.

The COFC can award reasonable bid-preparation costs to a meritorious protester. The award of attorneys’ fees to a protester is controlled by the Equal Access to Justice Act (EAJA). The party seeking relief under EAJA must demonstrate that (1) it prevailed in the action, (2) the government’s position was not “substantially justified,” (3) the award of attorneys’ fees would not be unjust, and (4) the EAJA application is timely and supported by an itemized statement. 28 U.S.C. § 2412(a)(1).

Currently, EAJA fees are available only to businesses with a net worth under $7 million that employ fewer than 500 people or individuals with a net worth under $2 million. A prevailing party can collect these fees only if the court determines that the legal position taken by the United States was not “substantially justified.” Thus, a protester could prevail on a bid protest yet not be able to collect any attorneys’ fees.

This relatively high hurdle to recovering attorneys’ fees is yet another reason that the GAO tends to be a much more attractive forum to protesters. At the GAO, a sustained protest is almost always accompanied by a recommendation that reasonable costs be paid to the protester—including reasonable attorneys’ fees.

Appeals to the Court of Appeals for the Federal Circuit

The Court of Appeals for the Federal Circuit is a very important court in our federal procurement system. The CAFC has jurisdiction over appeals of the COFC protest decisions pursuant to 28 U.S.C. § 1292(a)(1) and (c)(1). Because the CAFC is the superior court to the COFC and Supreme Court cases on contract formation issues are rare, a CAFC decision is typically the definitive judicial decision on any given topic. That being said, CAFC decisions rarely overrule a COFC decision. “CAFC reviews COFC’s rulings on motions for judgment on the administrative record de novo… and factual findings based on the administrative record for clear error.” In other words, the CAFC has a high level of deference to the COFC in terms of the underlying factual record; however, the CAFC is not bound (at all) by the COFC’s legal analysis.

An Important Additional Note: The Bar to Protesting Task Orders Under $10 Million Under ID/IQ Contracts

The protest system allows a large number of contracting actions to be challenged, but there is one glaring exception: task orders and delivery orders (hereafter “task orders”) placed against indefinite delivery/indefinite quantity (ID/IQ) contracts. Currently, protests against task orders are not allowed unless the task order (1) increases the scope, period, or maximum value of the contract or (2) exceeds $10 million (in which case the protest may be filed only with the GAO).

Since ID/IQ contracts are so prevalent in federal contracting, this is an enormous exception to the general rule allowing contracting actions to be protested. Starting with the passage of the Federal Acquisition Streamlining Act of 1994 until 2008, all task orders, regardless of the dollar value, were virtually immune from protests. Concerned that this level of protest immunity could encourage too many noncompetitive (and therefore potentially wasteful) contracting actions, Congress narrowed this exception by allowing the GAO (and only the GAO) to hear protests of all task orders that exceed $10 million. Regardless, considering that the government routinely issues task orders under $10 million to fill its needs, this bar to protests shields billions of dollars’ worth of contracting actions from protests every year.

Despite the bar on protests of task orders under $10 million, certain types of task order protests are always allowed. These are protests arguing that a particular task order increases the “scope, period, or maximum value” of the contract. The theory behind this “exception to the exception” is that a task order that violates one of these three limitations was not subject to competition originally, and therefore such a task order should not enjoy immunity from protest.

Further, it is important to note that the bar against task order protests does not extend to orders that are placed off GSA Schedules. See FAR Subpart 8.4. This is made clear in two cases, one from the GAO and one from the COFC. See Severn Co. Inc. B-275717.2, April 28, 1997, and Idea International, Inc. v. United States, 74 Fed. Cl. 129 (2006).

Each of the three forums available for filing a bid protest—the procuring agency, the GAO, and the COFC—clearly has its pros and cons for protesters. Now that we have examined these forums and the process, we can turn to the key excerpts from these decisions, broken down by protest ground.