Contractors have new grounds to protest their way into a multiple-award contract

Multiple-award contracts don’t mean everyone who bids get a slot. A new federal circuit court ruling shows that losing companies can protest those who did get an award and maybe knock them off. For details on this important case, the Federal Drive Host Tom Temin  talked with attorney Stephen Bacon of Rogers-Joseph-O’Donnell.

Interview Transcript: 

Tom Temin So this was protested, not to the [Government Accountability Office (GAO)], but to the court in the first place, the Court of Federal Claims. Tell us what happened here. Who’s suing who?

Stephen Bacon So this was a VA procurement, the [Transformation Twenty-One Total Technology-Next Generation (T4NG)] contract for IT services. Some of your listeners may know there’s a T4NG to second generation contract, that this was the first generation contract, and actually an onramp process where the VA was seeking to add contractors to the first generation of the T4NG contract. And so this protest involved a challenge to that competition for the on ramp.

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Tom Temin All right. And they were going to add several. And this one company did not make the cut and protested.

Stephen Bacon That’s right. So the solicitation as is often the case for a multiple award contract, it said that the VA intended to add seven awardees, but it gave the agency flexibility to choose the number of awardees, and the agency ultimately made nine awards to proposals that were either good or outstanding. And REV was rated acceptable and so it didn’t make the cut and then challenged that determination by the VA.

Tom Temin So REV losing company challenged the findings of excellent or good of some of the ones that did get awards. And what grounds did they base that on? What information did they have that would allow them to say, hey, they should have been acceptable like us, or we should have been good like them.

Stephen Bacon So REV actually had two categories of allegations. It’s common in a bid protest. In the first instance, they challenged the VA’s evaluation of their own proposal saying instead of acceptable, we should have been rated either good or outstanding because of flaws in the way that the agency evaluated our proposal. But they also challenged six of the awardees and argued that they should have been eliminated from the competition for one reason or another. They made allegations that some of the awardees had organizational conflicts of interest that should have excluded them, or had some other defect in their proposal that rendered them unacceptable under the terms of the solicitation.

Tom Temin Right. So those are pretty serious findings, organizational conflicts of interests. Something that raises eyebrows. But initially at the Court of Federal Claims, they were just ruled out on jurisdictional grounds, standing grounds, I should say.

Stephen Bacon On standing grounds with respect to the second category of allegations. So in a bid protest, one of the key sort of thresholds that you have to get over is to be able to establish if you have standing to protest, meaning that you have the right to even bring your allegations into court. And so that’s a two part test. The first is to decide whether you’re an actual offer or in the competition that has a direct economic interest in the outcome. That’s typically easy to satisfy as long as you’ve submitted a proposal. But there’s the second part of the test that was really at issue here. And that’s showing that there’s prejudicial error that you’re alleging, in other words, that you can show that there was a substantial chance that you would have received a contract if the agency didn’t make whatever error you’re alleging in the protest. And so that prong of the standing test was really kind of the core issue that the Court of Federal Claims used to say that REV didn’t have standing to challenge the awardees, because in the first instance, it didn’t establish that the agency had made any error in assigning an acceptable rating to its proposal. The court took that finding that there was no error in the acceptable finding. And so even if REV was able to successfully eliminate some of the awardees, the court ruled that it didn’t show that it would have had a substantial chance at winning the contract.

Tom Temin We’re speaking with Stephen Bacon. He’s an attorney with Rogers, Joseph O’Donnell. But then REV went to the Federal Circuit Court on appeal then and got a different finding.

Stephen Bacon That’s right. The Federal Circuit reversed, they brought this issue of standing, REV did, to the Federal Circuit, and the Federal Circuit disagreed with the way that the Court of Federal Claims addressed this standing question in the context of a multiple award contract where there’s no set number of guaranteed awardees. And the circuit disagreed with the Court of Federal Claims logic that if the six awardees that REV had challenged were eliminated, that they wouldn’t have had a substantial chance. The circuit agreed with the protester and said, if you had six of those awardees and they had been eliminated, there would have been room for REV to hypothetically get into the winner’s circle if its right about its allegations.

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Tom Temin Well, that’s like the San Francisco 49ers saying, well, if it wasn’t for those people from the Midwest and Kansas City, we would have won the Super Bowl. What is the meaning of that of saying, well, if. Because the if didn’t occur, those companies were rated higher.

Stephen Bacon That’s right. So it’s sort of a hypothetical test that the court engages in to decide whether they’re even going to address the merits of your protest. And so this isn’t ruling in favor of the protester on the merits. It’s just simply saying that the court should have grappled with and decided whether those six awardees should have been eliminated because the Court of Federal Claims just didn’t even reach those issues. And so this decision kicks it back to the lower court to say whether there was an organizational conflict of interest or whether there were some reason that the protester pointed out correctly, potentially, that some of those awardees should have been eliminated.

Tom Temin So at this point, then, FEVS has spent a lot of time and money to break new legal ground, but not necessarily to get that contract.

Stephen Bacon That’s right. This doesn’t mean that they’re necessarily going to get into the winner’s circle, but it gives them another opportunity to go back to the Court of Federal claims and have their, at least at a minimum, have their OCI allegations heard and their allegations that some of the other awardees should have been eliminated, heard. And if that’s the case, if they’re able to prevail on that, then in theory they could get an award.

Tom Temin Right. But does that happen automatically? Once the Federal Circuit Court has rendered its opinion, is it up to the company to carry that back and get a new court date and retry the whole thing at the Federal Court of Claims?

Stephen Bacon That’s right. So it will go back remanded. Is the legal term, remanded to the Court of Federal Claims to then decide those other allegations on the merits based on the administrative record before the court. And if the court rules in favor of the protester, then that typically kicks it back to the agency to then look at the court’s findings. And if the protester was correct, that may change the outcome of the new evaluation that the agency has to conduct to comply with the court’s ruling.

Tom Temin And how long could all that take? By the time T4NG two comes out?

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Stephen Bacon That’s one of the curious things about this case is they’re fighting over getting on the onramp on to the prior generation contract. And now there’s already been awards under the second generation T4NG contract. So it’s a little curious to wonder what what their real interest is in here. But I suppose there’s still some runway left on this first generation contract, and they’re hoping they can get on it. If the agency continues to award task orders.

Tom Temin In another domain of adjudicating cases, there is the concept of is this case precedential or is it simply routine application of what we already knew. Is this in some sense precedential?

Stephen Bacon Sure. Any time the Federal Circuit rules on a bid protest issue, I kind of think of them like the Supreme Court of government contracts in a sense. There’s very rarely does a bid protest go all the way up to the actual Supreme Court. So typically, the Federal Circuit is the court of last resort for government contracts. And so any time they rule on this kind of issue, it sets a precedent in this particular area. And here with the proliferation and importance of multiple award contracts, this does provide that helpful clarification that protesters really should have a right to go in and challenge awardees, even where there’s some flexibility that the agency has to make a particular number of awards.

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