Communication is key to any protest or lawsuit. While it is common for parties in a legal dispute to hold their cards close to the vest, significant problems arise when strategic discretion becomes closer to manipulation of facts. In Level 3 Communications, LLC v. United States, the United States Court of Federal Claims (the “Court”) ruled that the Government violated its duty of candor to the Court by failing to keep the court apprised of all events potentially impacting an ongoing bid protest.
The underlying dispute in this case involved a bid protest of a Defense Information Systems Agency decision to award a federal telecommunications contract to a bidder whose bid price greatly exceeded that of the protester. On September 15, 2016, the parties participated in oral argument before the Court on their Cross Motions for Judgment on the Administrative Record. During argument, the Government (i.e., the Department of Justice attorney representing the agency) repeatedly answered the Court’s question on what the awardee was presently doing on the contract by saying the awardee was “preparing to perform on December 1.” When pressed by the Court, the Government explained that this meant the awardee was testing its product and setting up subcontracts to aid in performance, which primarily involved upgrading military telecommunications equipment.
On November 9th, the Court contacted the parties to ask if the awardee was still prepared to perform on December 1. The Government then informed the Court that performance was completed on November 1st. At a November 14th hearing, the Court made clear that it believed it had been misled by the Government:
It was the Court’s impression that what [it] allowed [the agency] to do until the decision [on the bid protest] was [issued] was to . . . hire subcontractors to get ready to perform on December 1st. It appears [the agency] went on ahead and performed in any event. It also appears that the Government either wasn’t informed by [the agency] or was, but in any event, you knew on November 1st, and you did not inform the Court, nor did [the agency].
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I am going to issue a TRO today, so there will be no additional work on this contract until the [c]ourt issues an opinion. That’s number one. Number two, I am going to submit this matter to the [United State Court of Federal Claims’] Committee and I am going to recommend sanctions, Rule 11 sanctions against the Government, and to preclude you from practicing before this Court, the entire Court, not just me, the entire Court. In addition, I am going to contemplate awarding the Plaintiff whatever lawyers’ fees they’ve [incurred to date]. I have never had a situation before where I felt that the Government misinformed the [c]ourt.
The Court, in a December 5, 2016 Memorandum Opinion resolving the parties’ Cross Motions, ordered the Government to show cause why its conduct did not violate RCFC 11(b) (“Rule 11”), which requires that representations to the Court be accurate, supported by evidence, and for a proper purpose. In addition, the Court raised concerns that the Government may have violated its duty of candor to the tribunal.
In the Court’s most recent opinion on the Rule 11 issue, the Court ultimately concluded that Government did not violate Rule 11, but did violate the duty of candor to the Court.
The Court noted that candor to the tribunal is particularly important in the bid protest context because the plaintiff’s Complaint typically demands a temporary or permanent injunction and the plaintiff and the Court do not typically have immediate access to the administrative record:
Therefore, the court must rely on the Government’s representation as to the precise status of contract performance to ascertain whether the circumstances warrant an injunction. If the Government will not voluntarily stay performance, the court is then faced with the dilemma of having to consider whether to issue an injunction, without a full record, to preserve plaintiff’s ability potentially to be reconsidered and awarded the contract at issue.
In this case, the Court had not initially issued an injunction because the Government represented that no significant work on the contract would take place before December 1, 2016. By the time the Court realized it had been misled by the Government, it was too late as the work had already been performed.
Even though the Court did not issue Rule 11 sanctions, it did issue a warning to the Government for future protests:
Some forty-plus years ago, the court, as a GS-12 trial lawyer in the Department of Justice, was trained to be truthful, direct, and complete in all communications with federal judges. “First and always,” in the words of my supervising chief. Maybe times have changed. Maybe not. In any event, the court has determined to rely on [the Department of Justice supervising attorney] to impress … on other Government lawyers who practice before the United States Court of Federal Claims and other federal courts, that the duty of candor matters.
Image courtesy of flickr (licensed) by ollesvensson)