GAO more and more using alternative dispute resolution in bid protests

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When the Government Accountability Office releases its annual summary of work by its bid protest adjudication unit, most people focus on how many cases it heard in the prior year. But within that number is an even more significant count. The number of cases it decided using alternative dispute resolution. Federal Drive with Tom Temin got more from Jenner and Block government contracting specialist Noah Bleicher.

Interview transcript:

Tom Temin: Mr. Bleicher, good to have you on.

Noah Bleicher: Hi Tom.

Tom Temin: First of all, in the context of the GAO deciding contract disputes, what do we mean by alternative dispute resolution? What does it mean in this context?

Noah Bleicher: So a bid protest, what we’re talking about here is a legal challenge to the award of a government contract, or to the terms of a solicitation for a government contract. And GAO is the forum that sees the most protests, right. So your listeners may understand that last year they saw about 2,150 protests, and that’s a lot of bid protests. Well, GAO has to issue a decision on those protests within 100 days. And the truth is, not every protest warrants a substantive decision on the merits. And that’s where alternative dispute resolution, ADR, comes in.

Tom Temin: Alright. In most other contexts, ADR means there’s an arbitrator that comes in and decides, and both parties agree ahead of time they’ll do what the arbitrator says, but in this case, it’s GAO. So how does the ADR work at GAO?

Noah Bleicher: That’s right. So at GAO, ADR is not the traditional ADR you’d think. There is no mediator or other arbitrator that steps in. The GAO attorney assigned to the case, he or she is the party that actually conducts the ADR. And liability damages, that’s not an issue. We’re not trying to reach a financial settlement. Rather, ADR at GAO is focused almost entirely on resolving the protest matter without the need for a substantive written decision on the merits. GAO conducts three different types of ADR. So they have what’s called negotiation assistance. And that’s where the GAO attorney assigned to the protest just tries to work out a resolution with the parties. He or she assists the parties in trying to find where there’s room of agreement and see if that’s a way that GAO could resolve the protest without having to get to the merits. GAO also performs litigation risk assessment ADR. And this is where the GAO attorney assigned to the protest just provides his or her informal views of the possible outcomes of the protest, identifies areas where there’s risk in each party’s argument. And maybe the party that sees a risky approach if they want to continue to pursue the protest, maybe that party decides they want to fold and withdraw the protest. By far, the most common type of ADR at GAO is what’s called outcome prediction ADR. And as the name implies, this is where the GAO attorney assigned to the case advises the parties of his or her view of the likely outcome of the case after the full development of the record. So when we’re really talking about ADR and looking at the numbers, the overwhelming majority of ADR is where the GAO attorney tells the parties what the likely outcome of the case will be.

Tom Temin: And I want to return to that third point, but let me ask you about the negotiation assistance with the parties. That must happen the least often because let’s say you protest a contract award, then the only outcome you want is that it would get switched to your company. So in that case, it seems like negotiation wouldn’t apply as much as it would in pre-award protests.

Noah Bleicher: That’s a good point Tom, and that’s exactly right. So for a post award protest, where you’re challenging the evaluation of proposals and the subsequent award based on that evaluation, there is going to be a lot of daylight between the parties. So it’d be really tricky to come up with some sort of an agreement through negotiation assistance. But remember, we’re talking also about challenges to the terms of a solicitation. So maybe a protester who wants more information in order to bid and compete intelligently on this procurement. It’s possible that there may not be a meritorious argument. But there’s a good argument. And maybe the agency is amenable to providing more information because the contract activity wants to get the best solutions. Their negotiation assistance really will have some benefit.

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Tom Temin: And you answered my next question. These negotiations can reflect back on what the agency that is running the competition can also do, not just the parties that might be bidding on it.

Noah Bleicher: That’s right. So when GAO conducts ADR, a lot of times it’s the contracting activity that really holds all the cards. They can decide that they want to either remedy whatever the procurement impropriety is, whether it’s an evaluation error or a problem with the terms of the solicitation, the agency holds the cards to decide whether they want to take action that will ultimately obviate the need for a GAO decision, because now the agency has decided based on that ADR, that they want to go back to the drawing board.

Tom Temin: And the other two types of resolution, litigation risk assessment, it’s not quite the same as outcome prediction, although they have elements of prediction in both cases. But in outcome prediction, which you said is the most commonly used way, how can the adjudicator know without having heard all of the facts, because sometimes these cases turn on very arcane readings of something deep within the solicitation mapped against something deep within the bid evaluations and in the bids themselves?

Noah Bleicher: That’s right. Bid protests could be some of the most nuanced areas of government contracting, no two cases are alike,. Which is one of the reasons I just love the area of law because despite the fact that GAO is seeing the number of protests that they see, they’re all different. But remember, when we’re talking litigation risk versus outcome prediction, that’s two different sides of the same spectrum, litigation risk is where there could still be additional briefing on the horizon. And so that means that the parties haven’t made all their arguments yet, but GAO still knows enough to advise the parties that there could be some potential risks if they pursue it. Outcome prediction on the other hand, that’s where the whole case is already been briefed. All the facts are known to GAO, they should not need any more information in order to reach the resolution. They’ve now vetted, the GAO attorney assigned to the case has now vetted what his or her decision will be, the bid protest leadership, everyone’s in agreement. And now it’s just a matter of, do we really need that written decision or can we explain verbally what the outcome is?

Tom Temin: And the outcome could be that the agency will reevaluate the bids or change something, or it could be that the protester will walk away. I mean, there’s a range of outcomes that could come from it. Correct?

Noah Bleicher: Right, Tom. So for ADR to be successful, GAO would need the party that’s advised that they’re going to lose the protest, they need that party to do something. And what that means is, if GAO is going to sustain the bid protest, GAO is gonna rule in favor of the protester. That means the agency has the burden of taking some sort of action. So the the contracting activity, the contracting agency, can wait until they get a decision on the merits, which will be a sustained decision, which is not a good look for a contracting agency. Or through ADR, they could learn that they’re going to lose, decide right then and there that they want to take what’s called corrective action, and go back and fix whatever impropriety GAO identified during the ADR. So that’s how it works from the agency side.

Tom Temin: And review one more time how often one of the three ADRs was used in the 2,100 or so cases last year.

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Noah Bleicher: Yeah. So last year we saw an uptick in ADR, that’s compared to the previous year. Last year, we saw that ADR was used in 124 bid protest matters. But in my view, the proper way to tell whether how frequent ADR is being used is by looking at it as a percentage of developed cases, not all cases, but rather developed cases. And this is a number that GAO stats reveal. GAO’s annual report has these numbers in there, but you got to do a little math to get there. So when I’m talking about developed cases, Tom, what I’m talking about is, remember, an agency can take corrective action and fix a procurement impropriety. They can do that very early in the process, they could do that on their own volition. And those are cases that they’re never going to get further briefing, further development. Those will be resolved through a quick dismissal from GAO, when the agency signals its intent to fix the glitch. We’re not talking about those cases. And that’s about 1,000 cases last year, that’s 47% of protest matters were resolved through corrective action. We’re not going to use ADR for those. Likewise, there is another chunk of the pie where the protester has filed a pleading that’s procedurally deficient. So for a number of different reasons, these could be where the protest was untimely, or where the bid protests or the contractor is not an interested party to pursue its protests. Right. So this is another chunk of the pie. We saw that about 500 times last fiscal year where GAO is not going to use ADR for those matters. So what’s left? What’s left is the protest matters that are procedurally sound and where the contract agency wants to defend its procurements actions, there’s no early corrective action. These are the developed cases and this is the slice of the pie where ADR could be a viable option to resolve the matter.

Tom Temin: And what has the trend been in the numbers of ADR types of cases over the past number of years?

Noah Bleicher: The use of ADR was consistently popular in the early 2000s. In fact, 2002 was the high watermark there, ADR was used 38% of developed matters. That’s a significant portion of cases that were resolved through ADR. But over the past several years, there’s been a notable decline in the use of ADR. GAO has employed ADR only about 12% of developed matters in the past five years or so. And fiscal year 2019, it was only used in about 6%. of developed matters. That’s one in 15 protest matters were resolved through ADR in fiscal year 2019. A significant downward trend until this past year. This past year, we saw that it was used in about one in five bid protests matters, 19%. So that’s a 210% increase in the use of ADR in fiscal year 2020.

Tom Temin: And to what do you attribute that rise?

Noah Bleicher: Well, first of all, 2019 had to be an anomaly. It just had to be. It was the lowest use of ADR and 20 years. 40 cases, right. So in a lot of ways we talked about how 2019 was so much better than 2020. Well, not for ADR at GAO. So this past year, I think we saw a bit of a course correction, whether it was an express direction from GAO leadership or just a fortuitous recalibration. The good news is that ADR is up. And there’s a second reason, which is the excuse for everything out of the ordinary in 2020. And that’s COVID. I think the pandemic impacted GAO’s usage of ADR. Let me explain Tom. So numerous GAO stakeholders are involved with publishing a bid protest decision, from the writing attorney assigned to the case who takes the first crack at drafting it, to the multiple levels of internal review. It is a robust and at least a couple of years ago is a paper heavy process. Now GAO’s bid protest team for sure has adjusted to the complexities of working remotely since at least midway through the fiscal year and still shepherding a draft decision to a publishable work product is quite an effort. So in my experience at GAO, and I served as a GAO adjudicator, a bid protest hearing officer for seven years. In my experience at GAO, ADR sometimes can serve as an internal case management tool to alleviate all these competing burdens of getting these decisions out the door within that very tight statutory timeline. And so this may have been especially true this year, the pandemic likely exacerbated the reality that sometimes from GAO’s standpoint, it’s easier to resolve a protest through ADR than issuing a public decision on the merits.

Tom Temin: Attorney Noah Bleicher is a government contracting specialist with the law firm Jenner and Block. Thanks so much for joining me.

Noah Bleicher: Thank you, Tom.

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