New year, new opportunities for contracting protests
Whether Congress passes a 2024 budget or not, federal agencies will continue to engage in contracting. That will mean continued protests by disappointed bidders...
Whether Congress passes a 2024 budget or not, federal agencies will continue to engage in contracting. That will mean continued protests by disappointed bidders. You can learn a lot from protests that have already been settled. For a roundup of some of the most significant protests of 2023, the Federal Drive with Tom Temin spoke with Haynes Boone procurement attorney Dan Ramish.
Interview Transcript:
Tom Temin And you’ve got a list you put together that you think are illustrative of the big trends that people should worry about this year, 2024. Let’s start with CIO-SP4 for protests. This is the big GWAC program from the [National Institutes of Health (NIH)].
Dan Ramish Yes, this procurement was very notable for the number of big protests, so many protests that set new records and broke the GAO’s bid protests statistics for the year. But in some regards, it was predictable because there were so many awards, 305 to 510 IDIQ contracts, each with five years and a five year option, and a maximum value of $50 billion. So the stakes are very high, so protests were fairly predictable. And the solicitation was pretty complex that NIH set up for itself. There was a three phase evaluation of proposals requiring offerors to submit a self scoring sheet that assigned points for offerors representations on experience and capabilities under various criteria identified in the solicitation. And the NIH said that it would validate the offerors self scoring, and then allow the highest rated offerors to advance to the next phase. And proposals were originally due on Aug. 27, 2021, but that date was postponed. There were multiple successive rounds of protests and corrective actions. And after amending the solicitation 16 times, the agency received proposals from 1,150 bidders. So massive, massive proposal. And I think one that illustrates some of the challenges of having a procurement of this size with this many different potential contracts, which ironically is intended to save time. But you see with amendment after amendment and protest after protest and corrective action that it draws out over time. So after the offerors were identified to move on, there were challenges brought, protesters raising grounds for challenging the exclusions from moving on to the next round and the ways that their proposals were evaluated.
Tom Temin It sounds like NIH wanted to create a marketplace with as many bidders as they could fit in. But yet you can’t just let anyone in because you don’t know whether everyone who would be on that marketplace is legitimate and can deliver according to what the government standards would be. So they had to be a big net, but yet still some filtration, I guess you’d say.
Dan Ramish Yeah, that’s right. And part of the design was that there would be all these different small business and socioeconomic categories. There was kind of a menu in that regard, but that added some additional complexities because offer was within an individual bucket, were supposed to only be evaluated against other offers in that bucket. So that complicated the calculations even further.
Tom Temin And so what do we learn from all of this?
Dan Ramish So GAO evaluated the protests and sustained protests on two grounds. First, that the agency didn’t adequately document that it validated all the offer or self scored proposals the way that it said that it would. The GAO said they didn’t determine that proposals were not validated, but there wasn’t adequate documentation to show that the agency had done its job to validate all of the proposals. And then the second issue was establishing cut lines for different socioeconomic groups. The GAO said that there were some inconsistencies and it wasn’t clear whether the agency had included on validated scores in establishing those cut offs for the proposals that would advance to the next round. I would say, though, the real takeaway from these successful proposals is that the agency, regardless of the size of the procurement, has to follow the rules that it sets for itself and document. That’s nothing groundbreaking there. But of course that’s a much bigger challenge when you’re dealing with some of these extremely massive contracts and that volume of proposals and contemplated awards.
Tom Temin Right. So you really have to be able to scale your management and oversight of what you’re doing when you have such a big number of possible parties involved.
Dan Ramish Yes. So some would even look at this and question whether this kind of self scoring is a good method, whether the agency should go back to the drawing board and how they evaluate these massive GWACS.
Tom Temin All right. We’re speaking with Dan Ramish. He’s a procurement attorney with Haynes Boone. And we’re talking about the most significant protests of the past year. And you mentioned two federal circuit decisions that clarify procedural and jurisdictional bid protest rules. These sound like a little bit more basic sticking to the knitting here.
Dan Ramish Yeah. So these are fairly technical distinctions but there things that procurement lawyers get excited about when you talk about the rules that the court of federal claims has for hearing bid protest decisions.
Tom Temin Well, apparently the contractors also get excited over them.
Dan Ramish That’s right. Certainly when it’s your protest on the line or your award, you care a lot about what the rules are. This has been kind of a pet project of the federal circuit, and there’s been a lot of progress this year on procedural rules and whether they’re properly considered jurisdictional rules. Because jurisdictional rules get special status. When I say jurisdictional rules, I mean the rules that go to the courts authority hear the case in the first place. And so if a rule is jurisdictional, it can be raised at any time. It can’t be waived or forfeited, and the court or other tribunal has to even raise it if the parties don’t if it comes to their attention, there could be an issue. So jurisdictional rules are kind of super charged as compared to other procedural rules. And the federal circuit looked at two specific bid protest rules, the blue and gold waiver rule regarding timeliness of solicitation challenges and the statutory standing rule or interested party rule. So M.R. Pittman, the first case on the blue and gold waiver rule, the protester submitted a proposal to repair pump units at a pump station, and the company had the lowest price of four bidders that responded to the solicitation, but was deemed ineligible for award because the contract was set aside for small business and the company didn’t qualify as a small business under the applicable makes code. So M.R. Pittman brought a postwar protest at GAO, alleging that the solicitation couldn’t be treated as a set aside because it left out the codes, without which couldn’t establish what the size was. GAO dismissed the protests as untimely and Pittman refiled it at the Court of Federal claims making the same argument, and the government filed a motion to dismiss and opposition to the contractors motion for a temporary restraining order and preliminary injunction. And there was a hearing and the court federal claims ruled that M.R. Pittman had waived its right to protest under blue and gold because it didn’t raise the issue until after the award was made. And under blue and gold that’s the rule, if you’re challenging the terms of a solicitation, you have to do it before the due date for proposal submission.
Tom Temin Right. Even though the merits might be in your favor, ultimately, if you don’t go about your procedures for protest correctly, that doesn’t matter.
Dan Ramish That’s right. And there was a suggestion that the protester kind of exploited the rules. Of course, if they had raised the issue before the due date for proposals and the agency could have clarified that it was a set aside and it wouldn’t have been eligible in the first place. So on appeal to the federal circuit, the appellate court considered the argument and said, well, blue and gold is not actually a jurisdictional rule. The prior cases in this area have been wrong on that. But it doesn’t matter, because ultimately, even though the dismissal was based on lack of jurisdiction, dismissal was proper, based on the failure to state the claim, at the end of the day, the contractor needed to raise the issue timely and failure to do so even in the final resolved, doomed, it’s doomed its proposal, and the Federal Circuit looked again at the circumstances and said it was obvious, it was a patent error in the solicitation. And so it was appropriate to require the challenge to be raised before a proposal due date.
Tom Temin Ok. And the second case in that category of procedural and jurisdictional bid protest rules.
Dan Ramish So the other case dealt with the so-called interested party rule or referred to in the federal Circuit’s decision is statutory standing. So the requirement that the contractor has to have a substantial chance of receiving an award in order to have standing to challenge with a protest. So in this case, CACI was one of five bidders for an armory contract to design and manufacture devices to encrypt and decrypt sensitive information on the battlefield. And the solicitation required the devices to use two factor authentication and the Army assigned CACI as proposal three deficiencies relating to the two factor authentication requirements. And CACI also disclosed in its proposal that one of its employees had been involved in a prior contract that created a document that was used in the solicitation. And the agency, the Army here awarded to another offeror and did so on the basis that CACI hadn’t had these deficiencies in its two factor authentication, didn’t raise any issue with OCI. So CACI then protests the assignment of the technical deficiencies, and then the agency says, Oh, by the way, you also had an organizational conflict of interest, so you’re not an interested party anyway. And the Court of Federal Claims looked at that and said they did their own evaluation, and said that there was an organizational conflict of interest, that the prior contract that CACI had was a contract and that therefore they weren’t eligible for an award. And so weren’t an interested party and they dismissed for basis of lack of jurisdiction.
Tom Temin So they came in to the whole competition as a party that was not eligible for an award, ultimately. And therefore, the jurisdictional rule came in, because if you can’t get an award, then you can’t have standing.
Dan Ramish That’s right. So whether they have the technical deficiencies or not was beside the point. Although the court did also decide in the trial proceeding that the technical deficiencies assigned by the agency were valid. So fast forward to the Federal Circuit’s decision. The circuit held that statutory standing similarly was not a jurisdictional rule, and in this case it overruled some 20 years of precedent, including its own prior cases. But the issue was then whether the technical deficiencies stood on their own, and the federal Circuit said that they did, even though the court had erred in making a determination of the organizational conflict of interest de novo, the fact that the technical deficiencies were properly assigned by the agency was enough to affirm the trial court’s decision. So in the final resolve, when you have some of these shifts in procedural rules, it’s not clear the extent of the practical effects that the change in status will have in the federal circuit in some of its decisions, such as on claims where it’s made similar moves in declaring procedural rules no longer jurisdictional, has said in most cases this won’t really make a difference. And we have some examples where the court found other grounds to support the decisions below.
Tom Temin The point is, you got to pay attention to the big cases because things change in the way the court looks at them and in the way that agencies go about their solicitations.
Dan Ramish That’s right. And in these cases, the federal circuit has been persuaded by Supreme Court precedent. So you have to have a broader perspective. And in the end, it is possible that contractors will get farther into the litigation because these protests can’t be kicked based on a motion to dismiss for lack of subject matter jurisdiction.
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Tom Temin
Tom Temin is host of the Federal Drive and has been providing insight on federal technology and management issues for more than 30 years.
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