When it comes to reimbursements for the cost of contract protests, timing is everything

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When protesting contract awards, losing contractors can sometimes receive government reimbursement for the costs of the protest. The key is sometimes. In one recent case, a protester caused the agency to redo the whole award. But the protester didn’t get any money back for legal fees. Procurement attorney Joseph Petrillo had the details and lessons learned on Federal Drive with Tom Temin.

Interview transcript:

Tom Temin: And Joe this case, I guess it’s still not quite totally resolved, they haven’t re-awarded. But tell us the background here and how it led to that little dispute about legal fees, which I know every lawyer likes to get.

Joe Petrillo: Well, yes, it certainly helps when you can make your client pay less or nothing for protests, and a successful protest. The case was about a DHS acquisition of role playing services for a law enforcement training center. So these are people who are going to come in and pretend to be perpetrators or bystanders or whatever. And they’re going to use that as a way of educating and training law enforcement personnel. The evaluation criteria were best value trade off. And the factors were, first of all experience, then management, staffing and scheduling approach, past performance and price rounded out the four evaluation criteria.

Tom Temin: Performance literally in this case.

Joe Petrillo: Yes, indeed, quite literally. And the evaluation and proposal system was kind of complicated, had two phases. First of all, you submitted proposals that addressed only your experience. And the agency looked at those and decided who would go on to phase two of the acquisition. So then we’re gonna eliminate some people as having insufficient experience. And phase two, you were limited to an oral presentation about management staffing and scheduling your approach. And you could submit slides to accompany your oral presentation, but the solicitation said that the slides wouldn’t be evaluated. So the procurement went on to its conclusion.

Tom Temin: So what would the purpose of slides or some kind of a PowerPoint presentation be normally then if it’s not part of what the agency is evaluating?

Joe Petrillo: Well, that’s a good question. And we’ll see is as the story unfolds what role the slides played. After an award decision was made, one of the losing offerors, Narcorps Specialties, protested. And they went to GAO, filed a protest. While their protests had been filed, and they were waiting for the agency report, they received a debriefing, they thought they had some good issues, they thought that the agency had evaluated based on criteria that hadn’t stated and there were errors in the evaluation. So they added those to the protest. So finally, the agency submits to GAO its agency report with some of the documentation supporting the award decision and showing the evaluation process. And those documents would be shown to the attorneys and generally not to the client under a protective order. After that happened, Narcorps supplemented its protest and they felt they had a really good issue here. And that issue was that the agency had in fact evaluated the slides at the oral presentation, when you looked at the evaluation record, more than half of it in the evaluation consisted of references to the oral presentation.

Tom Temin: These are the same slides that originally the agency had said would not be part of the evaluation.

Joe Petrillo: Exactly.

Tom Temin: So they saw the slides and kind of like what they saw after all.

Joe Petrillo: Well, there’s an interesting question here. The regulations on oral presentations say that a record has to be made of them. And then it gives a whole spectrum of possibilities for recording or what happens at the oral presentation. The purpose of that is to show which portions of the oral presentation were used in the evaluation, otherwise, there’d be no record of that. And the spectrum goes all the way from a videotape or video recording of the presentations, to the notes of the agency folk who are listening to the evaluation. And they do include the slides. Here, apparently the notes weren’t good enough to support the evaluation. I’m speculating a bit. So the agency relied upon the slides.

Tom Temin: So all of this is laid before the GAO adjudicators, what happened next?

Joe Petrillo: Well, before they actually got to decide the case, the agency had to submit a supplemental report on the new protest. The agency looked at the new protest and said, “oops we made a mistake here.” So they did what an agency really is supposed to do in that instance, they took corrective action. They told GAO look, we’re gonna cancel the award decision. We’re gonna allow offerors to submit written proposals, and make an evaluation based on that and a new award decision. And GAO whenever you have that kind of situation, dismisses the protest fine, and goes to the next phase.

Tom Temin: Yeah, they tell the parties, go in peace and don’t call us again unless there’s another protest.

Joe Petrillo: Exactly. However, this company Narcorps Specialties now has spent time, effort and money on the protest. And that resulted in a redo of the procurement. So they felt that they were entitled to recover attorneys fees. The rules here are a little complicated. But generally, you have to show that you’ve prevailed in the protest either after the protestor reached a decision, or if the agency takes corrective action that they delayed unduly in reaching a decision. Now, how do you know they delayed unduly? Well, the rule of thumb, and there are exceptions, but the rule of thumb is that the agency must take corrective action before it files its next report after the good issue was raised. So here the the problem protester had was they raised the winning issue in their second supplemental protest. And the agency took corrective action before that report was due to GAO. They tried to get around it by making a novel argument that their other supplemental protest would have led the agency into the area of looking at this question of how they had documented the oral presentations. And that would have caused the agency to have to have corrective action. But GAO didn’t buy it, felt it was too attenuated a processor.

Tom Temin: So Narcorps could still get this award at this point, the thing is an open bid under evaluation, correct?

Joe Petrillo: That’s correct. I haven’t heard there’s been an award decision, but there will be a new award decision under the corrective action.

Tom Temin: But they won’t get their reimbursement for the legal fees thus far?

Joe Petrillo: Nope, they will not be able to recover that. And that does show a benefit the agency has in taking corrective action, and doing it promptly. Not only does it bring the procurement forward quicker than losing a protest and having to go through the same thing later — but it can save them some money on legal fees.

Tom Temin: And legal fees when they are reimbursed, does it come from GAO or does it come from the agency?

Joe Petrillo: It comes from the agency, the agency has to pay those fees. There are limits on how much can be recovered if you’re not a small business and issues like that, but it can get reasonably complicated. The point I think this protest shows is the benefits of taking corrective action and doing it early.

Tom Temin: And just out of curiosity, do you have any knowledge of whether agencies tend to budget for reimbursement of protest legal fees?

Joe Petrillo: Yeah, unfortunately, being in private practice, that’s not an issue that I need to do address. But that’s something maybe when you have one of your contracting officers on the show, you should ask them.

Tom Temin: Yeah, or one of the budget officers who try to turn it down when it comes up in the request. Procurement attorneys Joseph Petrillo is with Petrillo and Powell. Thanks so much for joining me.

Joe Petrillo: Thank you, Tom.

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