5598849912_35bd1b4d3b_oIt is not uncommon for a disappointed offeror in a fixed-price procurement to be astonished at how low the awardee’s proposal price ends up being. This astonishment can lead to the desire to file a bid protest based on the argument that the awardee’s price is unreasonably low. Unfortunately, in many of the instances this protest argument is simply not viable because the solicitation did not require (nor allow) the government to conduct a “price realism” analysis. Just this month, GAO dismissed such a protest, because the solicitation did not contain a price realism clause. Why is this argument raised so often in the absence of a “price realism” clause? Because both contractors and the government are commonly confused by the distinction between price reasonableness and price realism.

Price Reasonableness vs. Price Realism

It seems like every few months, GAO or the Court of Federal Claims is issuing a decision wherein it needs to explain the distinction between price reasonableness and price realism because the protester has argued the awardee’s price is “unreasonably low.” GAO recently reiterated this distinction in Mountaineers Fire Crew, Inc.; ASP Fire, LLC; Diamond Rd. Maint. Inc. (d/b/a Diamond Fire), B-413520.5 et al., Feb. 27, 2017Continue Reading Price Realism Bid Protests: When Can You Argue that the Awardee’s Price is Too Low?

4916784656_878789d497_zCommunication 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. Continue Reading Breakdown in Communication Leads to Rule 11 Dispute in Bid Protest of Telecommunications Contract

GAO & COFC logos

One of the first discussions we have with a client considering a bid protest is which forum to choose for the protest – the Government Accountability Office (“GAO”) or the U.S. Court of Federal Claims (“Court”). Choosing the right forum can mean the difference between winning or losing a protest. In deciding, here are some of the key factors you, as a protester, should consider.

Value of a Stay of Performance of the Protested Contract

Usually the first consideration we address with our clients is the value of, or need for, a stay/suspension of performance of the protested contract while the protest is pending. A stay can be valuable to a protester for several reasons. In a services contract, because a stay of the protested contract will usually result in an extension of the incumbent contract while the protest is pending, obtaining a stay can be valuable to an incumbent contractor filing a protest. Obtaining a stay may also be necessary in certain cases to preserve the potential for meaningful relief if your protest is ultimately sustained. This is particularly the case in construction and supply contracts, where it is difficult to untangle contract performance once it’s been substantially commenced. In such cases even if you win your protest, the GAO or the Court may limit your relief to your bid and proposal costs if performance has already substantially progressed during the protest.

Where obtaining a stay is critical or highly advantageous to the protester, there is a major incentive to file the protest at GAO, where the protester is entitled to an automatic stay of contract performance if it files the protest within a specific time period.

Conversely, at the Court a protester is not entitled to an automatic stay, and must either hope that the government agrees to a voluntary stay or the Court issues a temporary restraining order (“TRO”). While the government actually agrees to voluntary stays of performance in many protests, there is no guarantee one will be offered. And obtaining a TRO can be difficult and adds to the cost of the protest. If obtaining a stay of performance is critical to a protester, GAO is usually the preferable forum. Continue Reading Choosing the Best Forum for Filing Your Bid Protest – GAO vs. Court of Federal Claims

16064489288_1323da98f9_k (1)Two pieces of federal legislation that  recently became law will have a major impact on government contractors seeking to protest Department of Defense (DoD) and Civilian Agencies task order awards.  Some changes are for the worse, others are for the better.  However, the best news for contractors is probably that some of the changes that were proposed did not make it into the final legislation.

2017 NDAA Divests GAO of Protest Jurisdiction Over of DoD Task Order Awards Between $10 Million and $25 Million

Signed into law Dec. 23, 2016, the 2017 National Defense Authorization Act (2017 NDAA) amends 10 U.S.C. § 2304c(e)(1)(B) by increasing the GAO’s jurisdictional threshold value for DoD task order protests from $10 million to $25 million.  Naturally, this large increase greatly impacts contractors on DoD acquisitions.  No legal remedy to protest DoD task orders less than $25 million will now exist, unless the protestor contends that the the order increases the scope, period, or maximum value of the contract under which the order is issued.  Since DoD lobbied for this large increase, contractors can expect DoD will aim to issue task orders under the new $25 million threshold knowing those task order awards will not be subject to a protest at GAO.

Civilian Task Order Act Restores GAO’s Protest Jurisdiction Over Protests of $10 Million+ Civilian Agency Task Order Awards

The Government Accountability Office (GAO) Civilian Task and Delivery Order Protest Authority Act of 2016 (Civilian Task Order Act), signed into law Dec. 14, 2016, restores GAO’s protest authority over civilian task orders valued at over $10 million.  The reinstatement of civilian task order protest jurisdiction at GAO is welcome news for disappointed offerors on civilian task order procurement, since they had no remedy during the prior three months to protest civilian agencies’ task order awards.

Bottom Line 

Although the increase in the DoD threshold to $25 million is unwelcome news, contractors can breathe a sigh of relief that other proposed protest reforms were not part of the final enacted 2017 NDAA.  Those proposed changes included an attempt to require contractors earning more than $100 million in annual revenue to reimburse GAO for costs incurred for processing an unsuccessful GAO bid protest and to make an incumbent contractor-protestor forfeit profits earned on a bridge contract or extension received during the resolution of an unsuccessful GAO bid protest, and to preclude contractors from filing a bid protest at the Court of Federal Claims after unsuccessfully pursuing a protest at GAO.  However, these proposed changes may not be dead forever.  The 2017 NDAA mandates that DoD contract with an independent research entity to carry out a comprehensive study on the prevalence and impact of bid protests on Department of Defense acquisitions, including protests filed with contracting agencies, the Government Accountability Office, and the Court of Federal Claims.  One of the focuses of the report is too analyze bid protests filed by incumbent contractors.  Contractors should keep an eye out for this report, as it could be used as ammunition to limit bid protests rights in the future.

Image courtesy of flickr (licensed) by Dean Hochman

Protest Sustain and Effectiveness rates at GAOBack in January, we wrote about the dramatic spike in bid protests sustained at GAO during the first quarter of fiscal year 2016.  At the time we noted that GAO was on pace to shatter the prior year’s number of bid protest sustains.  Today, GAO released its Bid Protest Annual Report to Congress for Fiscal Year 2016, and that report shows that in indeed GAO did shatter last year’s sustain numbers.  The “Sustain Rate” at GAO increased from a paltry 12% in FY 2015, to a robust 22.6% in FY 2016.  This is the highest Sustain Rate at GAO since FY 2007, when the rate hit 27%, and the largest year-to-year percentage increase since GAO began reporting the Sustain Rate in FY 2001.  Not only did the Sustain Rate go up by more than 10%, the actual number of sustains more than doubled, from 68 to 139.  In fact, there was only one less protest sustained in FY 2016 than in FY 2015 and FY 2014 combined.

But the spike in the Sustain Rate is only the beginning, as this year’s statistics yield some other interesting takeaways.

Effectiveness Rate Remains Steady Despite Sustain Rate Nearly Doubling

GAO not only annually reports the percentage of protests decided on the merits which are sustained (the “Sustain Rate”), it also reports the percentage of protests that are resolved favorably for the protestor either because the protest is sustained or because the agency took voluntary corrective action in response to the protest (the “Effectiveness Rate”).

What makes this year’s statistics even more interesting is that despite the fact that the Sustain Rate nearly doubled, the “Effectiveness Rate” went up by a mere 1%!  In other words, the combined number of sustains and corrective actions stayed essentially the same.   Continue Reading GAO Reports a Dramatic Spike in its Bid Protest Sustain Rate in FY 2016

5327892367_454a17f409_oWhile we hate to be the bearer of bad news, disappointed bidders may soon face a significant obstacle to protest an agency’s award decision of a task or delivery order.  Barring prompt Congressional action (a phrase that is rarely a good thing), the Government Accountability Office’s (“GAO”) jurisdiction over most civilian agency task or deliver order protests conducted will expire on September 30, 2016, leaving contractors little chance to challenge civilian agency award decisions.

Current Task or Delivery Order Bid Protest Jurisdiction

Jurisdiction for bid protests of task or delivery orders has endured a tumultuous history.  Over the past 20 years, Congress has limited and expanded the task or delivery order bid protest jurisdiction numerous times.

Currently, a contractor’s ability to protest the “issuance or proposed issuance of a task or delivery order” is governed by two separate, but similar, statutes: (i) 41 U.S.C. § 4106 (applicable to civilian agencies); and (ii) 10 U.S.C. § 2304c (applicable to the Department of Defense).  Both statutes contain identical language generally prohibiting bid protests of task or delivery order procurements, except under the following circumstances: Continue Reading “Sunset” Date Draws Closer on GAO’s Jurisdiction to Review Bid Protests of Civilian Agency Task Order Procurements

James F. NagleJames F. Nagle will give a special presentation at The Seminar Group’s upcoming 23rd Annual Washington Construction Law conference on September 15 at the Hilton Seattle. In Jim’s federal construction law presentation, he will provide an update on the False Claims Act, new programs  from the Small Business Administration and other new developments affecting construction law. Guests of Jim are eligible for a $100 discount with the promo code “FAC100.” Continue Reading Join James Nagle at the 23rd Annual Washington Construction Law Conference on September 15th

ncma-header-logoOn September 15, join Adam Lasky, partner in Oles Morrison’s Government Contracts Practice Group, along with Laurie Davis, senior contracting officer of Naval Sea Systems Command, as they discuss lessons learned from bid protests concerning cost or price realism analysis. In this webinar, Adam and Laurie will show procurement officers and contractors how they can avoid these same pitfalls and will focus on the following topics: Continue Reading Adam Lasky to present “Avoiding Cost and Price Analysis Pitfalls in Source Selection” in NCMA Webinar

3414558363_4dfff32e1c_oThe National Defense Authorization Act (“NDAA”) is an annual bill that sets forth the policy and budget priorities for the Department of Defense for an upcoming fiscal year.  Striving to achieve bipartisan support, Congress’s task to reach an agreement on the NDAA is a daunting one.  Only after months of intense negotiations, meetings, and hearings are the thousands of pages of the NDAA ready for a vote in the House and Senate.  Last year, President Barack Obama vetoed the NDAA for Fiscal Year 2016.

On April 12, 2016, the House Armed Services Committee (“HASC”) Chairman, Representative Mac Thornberry (R-TX) kicked off this year’s process of developing the Fiscal Year 2017 NDAA (the “FY 17 NDAA”) when he introduced House Resolution 4904. Earlier this week, Rep. Thornberry, released his consolidated draft of the $610 billion FY 17 NDAA, dubbed the “Chairman’s Mark.”

Among the many initiatives and policies set forth in the 758-page bill, at least one provision of the FY 17 NDAA is likely to stand out to many federal government contractors.   Specifically, Section 831 provides that the Department of Defense must commission an “independent entity” to conduct a review of the bid protest process and submit a final report to the HASC detailing its findings before July 1, 2017. Continue Reading Proposed FY 2017 NDAA Seeks Study on Bid Protest Reform

Last Friday, the Government Accountability Office (GAO) released a Federal Register notice setting forth proposed amendments to the GAO Bid Protest Regulations (4 C.F.R. Part 21).   Below, we review the major proposed changes to the GAO Bid Protest Regulations you should know about:

Electronic Protest Docketing System

On January 17, 2014, Congress passed the Consolidated Appropriations Act for 2014 (codified at 31 U.S.C. 3555(c)), which included a provision requiring GAO to develop an electronic case filing system for bid protests.  The proposed amendments now provide the first glimpse into the much-anticipated electronic case filing system, called the Electronic Protest Docketing System (EPDS).

According to the proposed amendments, the EPDS will become an integral part of the bid protest process.  Specifically:

EPDS will be the sole means for filing a bid protest at GAO (with the exception of protests containing classified information) and will enable parties to a bid protest and GAO to file and receive documents.

While the proposed amendments offer little detail regarding the functionality and design of the EPDS, GAO promises to provide more detailed information about the system once the amended GAO Bid Protest Regulations are finalized.

Fee for Bid Protest Filings

Currently, filing a bid protest at GAO does not require the protester to pay a filing fee.  This practice will likely soon change.  In addition to requiring GAO to establish an electronic case filing system (i.e., the EPDS), the Consolidated Appropriations Act for 2014 also mandated GAO to collect filing fees to “support the establishment and operation of the electronic system.”

Although the proposed amendments are subject to change prior to finalization, GAO “anticipates the bid protest filing fee will be $350.”  The amount of the filing fee will be reviewed by GAO every two years to ensure that the filing fees collected are adequate to operate and maintain the EPDS.  However, there is little clarity at this point regarding exactly how filing fees will be assessed in situations such as supplemental protest filings, or a protest filed after the Government utilizes corrective action in response to an earlier-filed protest.

Timeliness for Protests

Our blog previously featured an analysis of the GAO’s problematic decision in Protect the Force, Inc.-Recons., B-411897.3.  In that case, GAO dismissed a post-award bid protest filed by Protect the Force as untimely.  As we observed in our blog, GAO’s decision in Protect the Force exposed an ambiguity in 4 C.F.R. § 21.2(a) regarding the timeliness of a protest challenging an error or impropriety in a solicitation amendment, where the Government amends the solicitation but does not provide offerors an opportunity to submit revised proposals in response to the amendment.

In response to GAO’s decision in Protect the Force, GAO’s proposed amendments will revise the GAO Bid Protest Regulations “to clarify the time for filing challenges to a solicitation where the basis of the protest becomes known when there is no solicitation closing date or when no further submissions in response to the solicitation are anticipated.”  In fact, the proposed amendments will revise 4 C.F.R. § 21.2(a)(1) to state:

(a)(1) . . . If no closing time has been established, or if no further submissions are anticipated, any alleged solicitation improprieties must be protested within 10 days of when the alleged impropriety was known or should have been known.

Although the proposed amendment to 4 C.F.R. § 21.2(a)(1) resolves a situational ambiguity in the GAO Bid Protest Regulations, it adds yet another layer to an already complex set of rules governing the timeliness of bid protests.

Conclusion

It has been almost 8 years since any significant changes were made to the GAO Bid Protest Regulations.  While the majority of the proposed amendments are tailored towards the introduction and implementation of the EPDS, there are also other amendments to the GAO Bid Protest Regulations that are important.  Of course, we will keep you posted as developments regarding the proposed amendments arise.

Modified image courtesy of Flickr (licensed) by Tom Magliery