Archive for July, 2010

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Bid Protests, Part II – Which Arguments Will Win, and Which Won’t?

 Jennifer M. Miller and Anna G. Kizer

Wyrick Robbins Yates & Ponton LLP

Government Contracting Law Group

  You spend an extraordinary amount of time and effort putting together an excellent proposal for the government.  You feel great about your changes of award.  But then . . . you receive notice that the contract was awarded to another company.  How do you decide whether you should challenge (or “protest”) the agency’s decision?

 One of the most important decisions in deciding whether to protest an agency’s decision to award a contract to another company is determining whether you have a legitimate basis to protest the agency’s contract award.  All protests – and the possibility of succeeding on a protest – are extremely fact-specific; however, there are several protest arguments that tend to be more successful than others. 

 First, Some Facts and Figures

Have you ever wondered whether it is worth it to file a protest?  Doesn’t the government always win?  Aren’t you just throwing good money after bad to fight an award decision?  While protesters do have an uphill battle, the answers to these questions are not as clear cut as you might think. 

 In January of this year, the Government Accountability Office (“GAO”), which hears the bulk of bid protests, released its Bid Protest Statistics for Fiscal Years 2005-2009.  (http://www.gao.gov/special.pubs/bidpro09.pdf)  Of the 1,989 bid protests filed in Fiscal Year 2009, the protester received some form of relief in 45% of cases.  This includes cases where the agency voluntarily agreed to take corrective action in response to a protest, cases where GAO directed the agency to take corrective action, and cases where the agency agreed to take corrective action in order to resolve the protest without a decision by GAO on the merits.  Notably, the “effectiveness rate” of protests has risen over the last five years; in Fiscal Year 2005, the effectiveness rate was 37%. 

 So which arguments are more likely to result in a successful protest, and which arguments are likely to be a waste of your company’s time and resources?

 Winning Protest Arguments

When a protest is filed with GAO, GAO will not reevaluate the proposals or make its own determination as to their acceptability or relative merits.  Instead, GAO will examine the record to determine whether the evaluation was fair, reasonable and consistent with the evaluation criteria.  Therefore, in order to succeed on a protest, you must show that the evaluation was flawed in one of these three ways. 

 Successful protest arguments in these areas include:  the agency failed to conduct meaningful discussions, the agency did not conduct a proper tradeoff, the agency did not apply the evaluation criteria in the solicitation, the agency identified weaknesses or deficiencies that did not exist, and the agency did not treat offerors equally. 

The Agency Failed to Conduct Meaningful Discussions

 If an agency holds discussions with offerors, the agency has to make sure that those discussions are “meaningful.”  This generally means that the agency must identify for you:  (1) significant weaknesses, (2) deficiencies, and (3) adverse past performance information to which you have not yet had an opportunity to respond.  If you learn during the debriefing that the agency did not select you for award based on its conclusion that your proposal contained a significant weakness or deficiency, or based on adverse past performance information, and the agency did not raise those issues with you during discussions, you may have a viable ground to protest the award decision.

 The Agency Failed to Conduct a Proper Tradeoff or Failed to Properly Document a Tradeoff

 An agency generally reserves the right to award a contract based on the “best value” to the government – meaning that the agency does not have to award the contract to the lowest-priced offeror if it believes that another offeror’s superior technical approach warrants the additional cost.  However, if the agency awards the contract to a higher-priced offeror, the agency must perform a tradeoff analysis that identifies what benefits the higher-priced proposal offers that justify the extra cost, and the agency must document this analysis.  If the awardee’s price is much higher than yours, but there is little technical difference (facts that you can learn during your debriefing), you may have an argument that the agency did not perform a proper price/technical tradeoff and could not have properly documented that tradeoff. 

 The Agency Did Not Apply the Evaluation Criteria in the Solicitation

 It is a basic rule of government contract evaluations that the agency must evaluate proposals on the basis of the criteria set forth in the solicitation.  Therefore, if you learn at the debriefing that the agency rated your proposal poorly because you did not submit “x” with your proposal or because you did not propose to do “x” in your proposal – and “x” was not required by the solicitation – you likely have grounds to protest the award decision.

 The Agency Identified Weaknesses or Deficiencies That Don’t Exist

 Occasionally during a debriefing, the agency will identify a weakness or a deficiency in your proposal that you know is not accurate.  For example, the agency may say that you did not include a required résumé with your proposal when you did, or the agency may say you did not address a certain issue when you did.  You would be able to protest the agency’s faulty evaluation.

 The Agency Did Not Treat Offerors Equally

 In evaluating proposals, the agency has an obligation to treat offerors equally.  This means that if, for example, two offerors have similar past performance, they should receive a similar past performance evaluation.  If two offerors propose a similar approach, their approaches should be similarly evaluated.  If you and the awardee are similar in any given aspect but were not evaluated similarly by the agency, you may have grounds to protest. 

As another example, the solicitation may have had a requirement that you know the awardee could not meet (for example, perhaps the solicitation required the awardee to have a bona fide place of business in a given state, and you know that the awardee does not meet this requirement).  If the agency waives a solicitation requirement for the awardee, it has not treated all offerors fairly (since other offerors were required to meet that requirement).  This too will give you grounds to protest the award.

 Losing Protest Arguments

 The Agency Should Have Recognized That My Company Is the Best

 One commonly raised – but never successful – protest allegation is the protester’s insistence that it is simply better than the awardee.  The agency is entitled to a significant amount of discretion in evaluating proposals.  Simply disagreeing with the agency’s evaluation is the surest way to get your protest denied.

 The Awardee Does Not Qualify As a Small Business, HUBZone, SDVO SBC or Other Required Preference Status

 Many government contracts are “set aside” for competition among a certain type of business, such as small businesses, Historically Underutilized Business Zone (“HUBZone”) businesses, or Service-Disabled Veteran-Owned Small Business Concerns (“SDVO SBC”).  While you may believe that the contract awardee under one of these types of contracts does not qualify for the required status, a GAO protest is not the place to raise these types of challenges, and GAO will automatically dismiss these types of protests.  Each of these preference programs contains a set of regulations that govern protests, which generally must be filed with the contracting officer and will be considered by the U.S. Small Business Administration.

 The Awardee’s Price Is Too Low

 Where the contract is a firm-fixed price contract, protests claiming that the awardee’s price is “too low” are generally unsuccessful.  This is because there is no prohibition against a company submitting a low price – or even a below-cost price – in order to obtain a government contract.  One exception – although successful only in rare cases – is where the awardee’s price is so low that the awardee did not understand the full extent of the work specified in the solicitation and/or submitted a price proposal that did not take into account or reflect all of the contract requirements.

 There Is a Problem with the Solicitation

 The bid protest rules contain specific time limitations on when protests must be brought.  (See our article, “Bid Protests, Part I – What Losing (and Winning) Offerors Need to Know” for more information on the logistics of the protest process.)  While most protests cannot and should not be raised until after award (otherwise they will be “premature”), any protest challenging the terms of the solicitation must be brought before initial offers are submitted.  A protest challenging the terms of a solicitation after award will be dismissed.  Therefore, if you believe that the terms of a solicitation are unfair (“only one company could meet these requirements”) or unclear, you must raise those issues before submitting your initial offer; don’t wait until after contract award.

 The Agency Was Biased or Prejudiced

 While bias and prejudice (whether it is “the agency is out to get me” or “the agency went out of their way to award the contract to the awardee”) may seem like appealing arguments, they are very rarely – if ever – successful.  Government officials are presumed to act in good faith; therefore, bias or prejudice will never be found based on inference or speculation; a protester must provide credible evidence clearly demonstrating a bias against the protester or for the awardee.  This has proven to be a nearly insurmountable standard.

 Any Protest Allegation That Would Not Impact the Ultimate Award Decision

 In any protest, the protester not only needs to show that there was an error in the evaluation, but that the error could have impacted the ultimate award decision.  This means the protester has to show that, but for the agency’s actions, it would have had a substantial chance of receiving the award.  This often comes in to play in situations where the protester challenges a relatively minor error in the evaluation decision that would not have impacted the overall standings of the offerors, or where the protester challenges the evaluation of the awardee’s proposal, but there are one or more other companies in line for award before the protester.  If correcting an error would not change the award decision, your protest will not be successful.

 Conclusion

 Of course, there are numerous other protest allegations – successful and unsuccessful – that can be raised.  If you receive a notice of award stating that a contract has gone to your competitor instead of to you, consult with your legal counsel to develop questions that you can ask during your debriefing that might lead to viable protest grounds.  After the debriefing, good legal counsel with experience in government contract protests will advise you when you have a solid basis to protest – and when you do not. 

Should your company have any questions regarding these issues, or regarding any other government contracting issues, please do not hesitate to contact Benjamin N. Thompson (bthompson@wyrick.com), Jennifer M. Miller (jmiller@wyrick.com), or Anna G. Kizer (akizer@wyrick.com) in our firm’s Government Contracts Group.

Benjamin N. Thompson
Jennifer M. Miller

Anna G. Kizer
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607
Telephone:  (919) 781-4000
Facsimile:  (919) 781-4865

NOT LEGAL ADVICE:  This publication is not to be considered specific legal advice and should not be relied upon in lieu of advice from an attorney.  Each client’s situation is unique, and if you have need for legal advice, you should seek advice from an attorney.

CIRCULAR 230 NOTICE:  Any information regarding any U.S. federal tax matters contained in this communication is not intended or written to be used, and cannot be used, as advice for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Jennifer M. Miller and Anna G. Kizer

Wyrick Robbins Yates & Ponton LLP

Government Contracting Law Group

The Losing Offeror

A solicitation is issued, proposals are submitted and a contract is awarded.  Hold the confetti and streamers.  You lost the contract – now what?

You protest!  Well, not necessarily.  Generally speaking, if you are an unsuccessful offeror, you may protest a contract award made to another firm.  However, before you decide to do so, you should be aware of certain rules that govern when, how, why and where a protest should and could be brought, as well as practical recommendations as to the best course of action you should take in pursuing a protest.

If you are notified that a competitor has been awarded a contract, the first thing that you should do is to request a debriefing from the contracting officer.  But act quickly!  After receiving notice of contract award, you have three calendar days to submit a written request to the agency requesting a debriefing.  We recommend that all unsuccessful offerors request a debriefing for two equally important reasons.  First, the debriefing may uncover an error by the agency in its evaluation that might give you grounds to protest.  (See our article, “Bid Protests, Part II – Which Protest Arguments Will Win, and Which Won’t” for more information on successful and unsuccessful protest arguments.)  Equally important, the debriefing gives you a valuable opportunity to learn from any mistakes so that you can prepare better proposals in the future. 

Debriefings should generally be held within five calendar days after the agency receives the debriefing request.  You should make every effort to be available on the date suggested by the agency.  A delay at your request may impact your ability to later challenge the contract award.  While we generally do not suggest that legal counsel be involved in the debriefing (agencies tend to be much more tight-lipped when counsel is present), legal counsel can often help you identify questions to ask during the debriefing that might uncover problems in the agency’s evaluation.

If, after the debriefing, you believe that the agency has made an error in its evaluation, and that error impacted the award decision, you can protest the award.  Again, you need to act quickly in taking the necessary steps towards filing a protest. 

Protests can be filed with (1) the contracting agency, (2) the Government Accountability Office (“GAO”), or (3) the Court of Federal Claims.  The vast majority of protests are filed with the GAO, and, absent unusual circumstances, we generally recommend that protests be filed there based on cost, timeliness of a decision, and the protester’s rate of success.

If you file a protest with the contracting agency or the GAO, you have up to ten calendar days after your debriefing to file a protest.  However, we recommend that you file your protest within five calendar days of the debriefing because doing so will trigger an “automatic stay” of contract performance.  An “automatic stay” will prevent the contract awardee from starting performance until your protest is resolved.  This is important because, without the automatic stay, even if the GAO found that there was an error in the procurement, the GAO may find that it would be too disruptive and/or costly to stop contract performance once performance is already underway.  This leaves you with the possibility of only recovering the costs of preparing your proposal, but no chance of contract award.

Protesting in the Court of Federal Claims is a much more formal process than a GAO or agency protest.  However, protests filed in the Court of Federal Claims are not subject to the ten-day deadline on filing protests; therefore, the Court could be a possible alternative if you did not timely file a protest with the agency or GAO.  The Court of Federal Claims is also a potential alternative if you filed a protest at GAO but lost, as the Court will hear and consider a protest even if GAO has already denied the protest.  The more formal process at the Court, however, means two significant downsides: substantially more cost in legal fees and a much slower process to receive a final decision. 

GAO’s regulations require that a decision on the protest be issued no later than 100 days after the protest is filed.  Because of the formality of the Court of Federal Claims protest process and the lack of any hard deadline for a judge to issue a decision, decisions can take much longer – up to six months after the protest is filed, or even longer.

While a losing offeror can file its own protest, it is strongly recommended that you file any protest with the assistance of legal counsel.  Once a protest is filed, the agency is required to prepare an Agency Report that responds to the protest allegations and includes any documents relevant to the award decision (such as your proposal, the awardee’s proposal, and the agency’s source selection documents).  However, you will not be able to review most of these documents.  In nearly every protest, a Protective Order is entered that prevents the confidential or proprietary information of an offeror from being disclosed to any other offeror.  The Protective Order also restricts the disclosure of any of the agency’s source selection information to any of the offerors.  Only legal counsel can be admitted to the Protective Order and can see all of the information produced.  Legal counsel will then have the opportunity to submit “Comments” on the Agency Report.  If you are protesting the award to your competitor, your counsel would argue that the documents in the Agency Report support your protest and establish that the agency made an error in the award decision.  Obviously, therefore, if you are considering filing a protest, it is important to retain legal counsel with significant experience in pursuing protests since you will have to rely heavily on legal counsel to represent your interests in the protest.

The Winning Offeror

A solicitation is issued, proposals are submitted and a contract is awarded.  Break out the confetti and streamers – you won the contract!  But . . . then you learn that a competitor has protested your award.  How do you ensure that you keep the contract?

You intervene!  To protect your contract once a protest has been filed, you should participate in the post-award protest by “intervening” in the protest.  By intervening, you will be able to participate in the protest process and try to convince GAO or the Court of Federal Claims that the agency made the right decision in awarding the contract to you.  (There is no formal process for intervening in an agency protest.  However, such protests are fairly rare.)

Why is intervening a good idea?  Why not just let the government attorneys handle it?  Simply put, you cannot be sure that the government will protect your interests in the protest, as the government may not have the same level of desire to be sure that your company keeps the contract.  As you might expect, government lawyers are often overworked.  In addition, while many government lawyers have substantial experience in handling protests, not all do.  For these reasons, government lawyers often welcome the assistance that you and your counsel can provide in defending against a protest.

How, then, does one intervene in a protest?  If your company is the awardee, the contracting agency will notify you within a few days after a protest has been filed.  If the protest is filed within five days of the protester’s debriefing, you will likely be notified that there has been an “automatic stay” of contract performance and that you should stop work immediately.  If the protest is filed with GAO (as most are), you can seek to “intervene” by filing a Notice of Intervention with GAO.  If the protest is filed with the Court of Federal Claims, you must file a motion with the Court requesting that you be allowed to intervene.  These motions are typically granted if you are the contract awardee. 

As discussed above, after a protest is filed, the agency will submit an Agency Report, responding to the protest allegations and providing GAO and the parties’ counsel with copies of all relevant documents.  As an intervenor, you would have a right to submit “Comments” on the Agency Report.  The Comments would argue to GAO that the documents in the Agency Report support the conclusion made by the agency (that is, the decision to award you the contract).

While you may intervene in a protest without the assistance of legal counsel, in practice, this is not a good idea.  As stated earlier, due to the confidential and proprietary business information that inevitably will be disclosed by or about all parties during the protest proceedings, a Protective Order will more than likely be put in place.  Without outside counsel representing you, you will be unable to review the entire record, and your ability to zealously defend your contract award will be severely impeded.

Conclusion

Following the specific steps required to file a protest (if you lost the contract) or intervene in a protest (if you won the contract) is critical to protecting your interest in the contract.  It is always best to involve legal counsel with experience in government contracting protests as quickly as possible anytime you receive notice that you have lost a contract or notice that a contract that you received has been protested.  Legal counsel can help you be sure that your interests are fully protected and that no critical steps are missed. 

Should your company have any questions regarding these issues, or regarding any other government contracting issues, please do not hesitate to contact Benjamin N. Thompson (bthompson@wyrick.com), Jennifer M. Miller (jmiller@wyrick.com), or Anna G. Kizer (akizer@wyrick.com) in our firm’s Government Contracting Law Group.

Benjamin N. Thompson
Jennifer M. Miller

Anna G. Kizer
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607
Telephone:  (919) 781-4000
Facsimile:  (919) 781-4865

NOT LEGAL ADVICE:  This publication is not to be considered specific legal advice and should not be relied upon in lieu of advice from an attorney.  Each client’s situation is unique, and if you have need for legal advice, you should seek advice from an attorney.

CIRCULAR 230 NOTICE:  Any information regarding any U.S. federal tax matters contained in this communication is not intended or written to be used, and cannot be used, as advice for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

August 10, 2010

BASIC TRACK:   For Businesses Considering or Newly Engaged in Federal Contracting

0930-1015:      Doing Business With the Government (NC Procurement Technical Assistance Center, NCPTAC)

 1025-1050:      Business Development Tools and Assistance to Compete for and Win Federal Contracts (NC Military Business Center, NCMBC)

 1100-1145:      Small Business Programs in Federal Procurement –  US Small Business Administration (SBA)

 1155-1220:      Accelerating Small Business Growth (Partnership for Defense Innovation/Defense and Security Technology Accelerator)

 1230-1315:      Leveraging GSA Schedules, GSA Advantage, DoD E-mall and FedBid (General Services Administration, NCMBC)

 1325-1410:      Basic Proposal Writing (NCPTAC)

 ADVANCED TRACK: For Businesses Already Engaged and Growing in Federal Contracting

 0930-1015:      Federal Contract Types: What Your Business Needs to Know (NCMBC)

 1025-1110:      Cost Accounting Standards and Cost Estimating: Accounting Practices for Government Contractors (Cherry, Bekaert &             Holland, LLP)

 1120-1205:      Teaming and Limitations on Subcontracting in Federal Contracts (Wyrick, Robbins, Yates & Ponton, LLP)

 1215-1300:      Financing Government Contracts (DSIB, Ltd.)

 1310-1335:      Debriefs and the Protest Process (Williams Mullen)

 1345-1410:      Evaluating GSA and Recent Changes to GSA Affecting Your Business (GSA, NCMBC)

The first North Carolina Federal IT Symposium was well attended and received many positive comments!  We want to thank the supporters – attendees, speakers and companies who stepped up as sponsors, bought booths and actively participated in the event. 

 We plan to conduct a second annual NC Federal IT Symposium during late April 2011.  We would like your input as to the time frame and/or your suggestion for program items.   

 During the fall and early spring we are planning several IT training “road shows” – focused content seminars of a half day’s length held around the state.  If you would like to participate in this selection of topics, please address them on the blog – we would appreciate a “conversation” of freely expressed ideas as to the topics you want to delve into in more depth.

Thank you again for attending the NC Federal IT Symposium.  If you missed the event this year, please catch our upcoming workshops and the 2011 NC Federal IT Symposium!