CBP’s late-stage solicitation change sparks bid protest

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When it comes to protesting defects in solicitations, timing is everything. U.S. Customs and Border Protection changed a solicitation after receiving bids. And it gave bidders very little time to make revisions. That sparked a protest that ended up in the U.S. Court of Appeals. Smith Pachter McWhorter procurement attorney Joe Petrillo had the details on the Federal Drive with Tom Temin.

Interview transcript: 

Tom Temin: And this is kind of a picky case, but with so many solicitations being protested these days ahead of even award, I think it’s a relevant one. So what happened?

Joseph Petrillo: You know, there are some tight time limits on protests — or particularly tight time limits on protests — to the Government Accountability Office. This case concerns the time limits on protests to the Court of Federal Claims, which have a different set of rules. And as you mentioned, it arose from a procurement by Customs and Border Patrol of a contract for IT services to run its automated system for handling shipments into the United States, clearing them and assessing tariffs on those shipments. As you can imagine, there’s a lot of stuff that comes into the country, and so it’s a big and important system. The solicitation provided for best value acquisition, and non-price factors were to be more important than price. And of those non-price factors, the technical was most important, although also evaluated were going to be management, quality assurance and past performance. There was therefore a fairly large solicitation and a large set of proposals that were issued. And finally, the acquisition was being held under GSA’s IT schedule, under the Federal Supply Schedule. So there was going to be a task order award to companies holding contracts with GSA under that schedule, and the procurement was limited to small business companies. So in that situation, as you mentioned, initial proposals were submitted. After that period, there were two fairly substantial revisions to the solicitation made by CBP.

Tom Temin: So in effect, CBP is sending the bids back.

Joseph Petrillo: In effect, it’s saying, yep, you’ve got to change some of the requirements, and we want to see proposal revisions. The odd thing there was that proposal revisions were limited to the staffing and key personnel section and the price. Other portions of the proposal were not supposed to be changed, even though the revisions to the solicitation were fairly significant. Harmonia, which thought it needed to make revisions to other parts of its proposal, submitted an agency-level protest on November 12, the day before revised proposals were due on November 13.

Tom Temin: They were protesting the limitations on the revisions, in other words.

Joseph Petrillo: Exactly. They wanted to be able to change other parts of their proposal and not be eliminated, and CBP went ahead, received revised proposals and then denied the agency-level protest on December 6. Now at that point, it would have been too late under GAO’s bid protest rules to protest the denial of the agency-level protest. But Harmonia did not go ahead and protest at that point to the Court of Federal Claims. Procurement went forward and ultimately CBP made award toward the end of April. At that point, Harmonia reviewed its options, decided it didn’t like the situation it was in and protested the award decision, including CBP’s failure to allow other proposal revisions. Now, as I mentioned, you have a different set of rules about timeliness at the court. There’s a statute of limitations, but that’s six years. There’s also an issue that arises when you’re seeking injunctive relief that you can’t sleep on your rights. You have to move fairly expeditiously to assert your rights in order to get an injunction, which is what, of course, most people filing a bid protest. [They] want a reevaluation or another round of bidding. In this particular case, there is also a judge-made rule, which the appellate court — the Federal Circuit — had put together some time ago in a case called Blue and Gold fleet. Under the Blue and Gold rule, if there’s a solicitation defect of some kind, and it’s possible to protest that before proposals are submitted, the doctrine is it must be objected to must be protested, or else the bidder waives its right to object at some later date, after award.

Tom Temin: We were speaking with Joe Petrillo. He’s a procurement attorney at Smith, Pachter McWhorter. So it seems like Harmonia had met that criteria, then it had protested even only a day, but still before the bids were due.

Joseph Petrillo: Well, the government didn’t think so. The government said that Harmonia needed to protest not just at the agency level, but to go forward and file its court protest after the agency protest had been denied. And there is enough time between that in the award that it could have filed a court protest at the Court of Federal Claims. It made that argument before the Court of Federal Claims, and the lower court agreed with the government’s argument and dismissed the protest for failing to file early enough. Harmonia, again, disagreed with that. And so the case went up to the Federal Circuit. And there, the Federal Circuit needed to determine how far this waiver doctrine went. What happens when there’s an agency-level protest that’s filed, denied, but then the protester doesn’t go forward and move that protest to court expeditiously, waits to see what the result is from the award decision? There had been a previous decision at the Federal Circuit in which an agency amended the solicitation after proposals were due and didn’t permit proposal revisions. And in that case, a company that hadn’t protested that until after award was held to be too late. So there was some question about whether Harmonia was on one side of the fence or the other. In this case, the Federal Circuit decided that since Harmonia had filed an agency-level protest, it met that requirement, and did not require Harmonia to then go forward and file the protest with the court immediately after the agency-level protest was denied. So Harmonia has the right to go forward and be heard to get its day in court. What they left open at the Federal Circuit, which will be interesting to see in the next phase, is what’s the result on the remedy if it’s successful. If Harmonia successful in its protest, the court can fashion various kinds of relief. Perhaps it will say that Harmonia waited too long, and therefore isn’t entitled to injunctive relief. And in that case, it’ll be getting something like proposal preparation costs, which are not really what you’re seeking in the bid protests.

Tom Temin: Right. But the court did not decide on whether the limitations on the amendments to the solicitation early on, whether those were valid or not.

Joseph Petrillo: All of that’s been kicked back to the trial court. You know, what the the appellate court does, in this instance, is decide if the case should go forward, it’s not going to then decide the merits. That’s up to the court to do in the first instance.

Tom Temin: And so that’s back at the lower court, then, at this point.

Joseph Petrillo: Right, right. The lesson here for people who are considering protests is that an agency-level protest will preserve your right to go forward at the Court of Federal Claims, given this precedent, but it isn’t clear, you know, that you’re going to still be able to get the kind of relief you want.

Tom Temin: Got it. In the meantime, did the work go forward with the winning bidder, non-hormonia? Or is that we don’t know yet?

Joseph Petrillo: I’m sure someone was doing this most important work. I don’t know if it was under the initial award or whether there was an extension of the incumbent contract. But I can’t imagine that other courts have left Customs and Border Patrol without a system to figure out how shipping gets into the country. We are having enough problems in that regard now.

Tom Temin: Indeed, we are. Joe Petrillo is a procurement attorney with Smith Pachter McWhorter. Thanks so much.

Joseph Petrillo: Thank you, Tom.

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