Things have changed at the United States Court of Federal Claims! Effective December 31, 1996, the Administrative Dispute Resolution Act of 1996, Pub. L. No. 104-320, 110 Stat. 3870, has removed impediments to the court’s protest jurisdiction, granting it for the first time both pre and post award protest jurisdiction; removing the court’s former ground for limited protest jurisdiction, a breach of the implied contract of fair consideration of bids or proposals; and substituting in its place the familiar sort of violation of statute or regulation protest jurisdiction that has been in place at the United States General Accounting Office (GAO) since passage of the Competition in Contracting Act of 1984.
Just how these changes will affect the procurement process remains to be seen. At this writing (early March 1997) some four protests have been filed, and the court has ruled on the merits in one of them, denying a protest that had been previously denied by GAO. Here we’ll briefly present a history of the court’s protest jurisdiction and of the Administrative Dispute Resolution Act, we’ll examine the new statutory language and what little we have so far of the court’s interpretations of its invigorated protest authority, and we’ll conclude with a quick review of issues that remain to be resolved.
The Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25, created the United States Claims Court (now the United States Court of Federal Claims), and conferred on it the Tucker Act, 28 U.S.C. § 1491, jurisdiction of its predecessor, the United States Court of Claims. In the process, the Claims Court was given declaratory judgment and injunctive relief jurisdiction “on any contract claim brought before the contract is awarded,” 28 U.S.C. § 1491(a)(3). It was a mystery to many of us just what sort of contract claim could exist before contract award. There was language in the legislative history of the Federal Courts Improvement Act that suggested the intent had been to give the Claims Court the same powers previously exercised by the federal district courts under Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859, 866 (D.C. Cir. 1970), a case holding that vendors have standing to challenge procurements under the Administrative Procedures Act, 5 U.S.C. § 702.
But this was not to be. In United States v. John C. Grimberg Co., Inc., 702 F.2d 1362, 1366 (Fed. Cir. 1983), the United States Court of Appeals for the Federal Circuit ruled that the changes meant only that the Claims Court had an additional remedy, declaratory and injunctive relief, over the contract claims that the Court of Claims had previously considered, breaches of the implied-in-fact contract of fair and honest consideration of bids and competitive proposals. This resulted in Claims Court decisions that severely limited the court’s role in contested procurements. As an example, in Ingersoll-Rand Co. v. United States, 2 Cl. Ct. 373 (1983), the court announced it could have nothing to do with challenges to the terms of a solicitation:
The jurisdiction of the court . . . is limited to situations where a bid complies with the terms of a bid invitation but is, nevertheless, not fully and fairly considered. It is the plaintiff’s compliance with the solicitation that forms the consideration for the implied contract of fair dealing. This contractual right cannot entitle bidders to challenge the terms of the bid solicitation since the solicitation comes into existence before the implied contract and, in fact, forms the basis of that contract.
Id., at 376.
The Administrative Dispute Resolution Act started out as an attempt in the Senate to eliminate federal district court jurisdiction over protests under the Scanwell case. An earlier version of the bill that did not affect federal district court protest jurisdiction had already passed the House, but the bill that emerged from conference committee retained a provision added by the Senate, which would have eliminated Scanwell jurisdiction entirely, substituting a consolidated pre and post award protest jurisdiction in the United States Court of Federal Claims. The House then promptly passed a substitute bill that would have retained unrestricted federal district court Scanwell jurisdiction. Senator Cohen and others were insistent that federal district court protest jurisdiction needed to be reigned in, and the result was the Administrative Dispute Resolution Act, which continues federal district court Scanwell jurisdiction, but only until January 1, 2001, unless it is extended by Congress. Otherwise, the Administrative Dispute Resolution Act reflects the Senate’s initiatives. Thus the Administrative Dispute Resolution Act grants pre and post award jurisdiction to the United States Court of Federal Claims using language much like the language granting protest jurisdiction to GAO, and it imposes the same sort of scope of review as that which prevails in Scanwell cases, i.e., whether final agency action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, 5 U.S.C. § 706(2)(A).
Here are the new sections added to the Tucker Act with the Administrative Dispute Resolution Act:
(b)(1)Both the United States Court of Federal Claims and the district courts of the United States shall have jurisdiction to render judgments on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement. Both the United States Court of Federal Claims and the district courts of the United States shall have jurisdiction to entertain such an action without regard to whether suit is instituted before or after the contract is awarded.
(2) To afford relief in such an action, the courts may award any relief that the court considers proper, including declaratory and injunctive relief except that any monetary relief shall be limited to bid preparation and proposal costs.
(3) In exercising jurisdiction under this subsection, the courts shall give due regard to the interests of national defense and national security and the need for expeditious resolution of the action.
(4) In any action under this subsection, the courts shall review the agency’s decision pursuant to the standards set forth in section 706 of title 5.
Administrative Dispute Resolution Act, § 12(a), to be codified at 28 U.S.C. § 1491.
When the protest provisions of the Administrative Dispute Resolution Act are compared to the more comprehensive statutory provisions granting protest jurisdiction to GAO, two differences are significant: (a) there is no definition of just who might be an appropriate “interested party,” and (b) there is no grant of protest jurisdiction over so-called “reverse protests,” i.e., a challenge by a contract awardee to an agency’s termination of a contract based on perceived improprieties in the acquisition process. Missing from the Administrative Dispute Resolution Act is any coverage on just what happens to an ongoing procurement when a protest is filed with the court. Also missing are any provisions setting out just when a protest must be filed.
PROPER PARTIES
For GAO protests, 31 U.S.C. § 3551(2) defines an appropriate “interested party” as “an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract . . . .” It is likely that the court will give this provision great weight if it is called on to decide just what the term “interested party” might mean. Already the court has issued nonmandatory “Guidelines for Procurement Protest Cases,” and these guidelines refer to the statutory definition of “interested party” for GAO protests. Since federal district courts have already looked to this provision to decide the question just who is a proper party to file and pursue a challenge to agency action on a federal acquisition, see, e.g., Rapides Regional Medical Center v. Secretary, Department of Veterans’ Affairs, 974 F.2d 565, 569-71 (5th Cir. 1992); Phoenix Engineering, Inc. v. MK-Ferguson of Oak Ridge Corp., 966 F.2d 1513, 1525-26 (6th Cir. 1992), it is a good bet that the court will rule similarly.
REVERSE PROTESTS
Contrariwise, the jurisdictional issue raised by the absence, in the Administrative Dispute Resolution Act, of specific authority to consider reverse protests will not be so easily resolved. In 1994, both GAO and the General Services Administration Board of Contract Appeals (GSBCA) were given express statutory authority in section 1438 of the Federal Acquisition Streamlining Act (FASA), Pub. L. No. 103-355, 108 Stat. 3243, 3294 (1994), to consider these cases. For each of these tribunals, the definition of the term “protest” was expanded to include “a termination or cancellation of an award of such contract, if the written objection contains an allegation that the termination or cancellation is based in whole or in part on improprieties concerning the award of the contract.” 31 U.S.C. § 3551(1)(D); 40 U.S.C. § 759(f)(9)(A).
As it turned out, the GSBCA had asserted jurisdiction over a reverse protest just before this expansion of its protest jurisdiction came into effect, and its decision was appealed to the United States Court of Appeals for the Federal Circuit (the same court that reviews on appeal decisions from the United States Court of Federal Claims). The Federal Circuit vacated the GSBCA’s decision, holding that without the expanded definition of the term “protest” that went into effect after the filing of the case, the GSBCA lacked jurisdiction:
The Board’s jurisdiction under the Brooks Act provides redress for improper procurement practices by an agency. An attempt to seek affirmation of the procurement process or the award is not a “protest” as currently defined by the Brooks Act.
OAO Corp. v. Johnson, 49 F.3d 721, 725-26 (1995).
The difference between the protest jurisdiction conferred on the court by the Administrative Dispute Resolution Act and the former protest jurisdiction conferred on the GSBCA by the Brooks Act is that the GSBCA’s jurisdiction was tied to a specific definition of just what it was to decide, a “protest,” and before the term was expanded by FASA, it did not explicitly encompass reverse protests. The court could decide that its invigorated protest jurisdiction extends to reverse protests by noting this distinction and observing that its civil action jurisdiction under 28 U.S.C. § 1491(b)(1) now extends to “an action by an interested party objecting to . . . any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.”
STAYS
Also missing from the protest provisions of the Administrative Dispute Resolution Act are explicit provisions for staying (or not) a protested acquisition while the protest is being decided. Recall that 31 U.S.C. § 3553(c)(1) provides for an automatic stay of contract award while a preaward protest is pending, and that upon timely notice of a post award protest, i.e., notice received by the agency from GAO within 10 days after the date of contract award, or within 5 days after the offered debriefing date, then the contracting officer may not authorize contract performance, and if contract performance has begun, the contracting officer is to immediately direct the contractor to cease performance, 31 U.S.C. § 3553(d)(3)(A).
Recall also that where the head of a procuring agency can conclude that a contract award is likely to occur within 30 days, then upon a written finding that urgent and compelling circumstances which significantly affect interests of the United States will not permit waiting for a GAO decision, he can override the automatic stay, 31 U.S.C. § 3553(c)(2), and in a post award protest, that the head of a procuring agency can override the automatic stay on a written finding that contract performance is in the best interests of the United States, or, again, that urgent and compelling circumstances will not permit waiting for a decision, 31 U.S.C. § 3553(d)(3)(C).
Before the United States Court of Federal Claims, there is no automatic stay, nor an ability for an agency to override an automatic stay, and protesters are left to obtaining the equitable relief authorized by 28 U.S.C. § 1491(b)(2) by way of a temporary restraining order or a preliminary injunction. The procedures for obtaining such relief are set out in Rule 65 of the Rules of the Court of Federal Claims (RCFC). Generally, motions for a temporary restraining order or preliminary injunctive relief must be supported by an affidavit or a verified complaint that immediate and irreparable damage will result if injunctive relief is denied, RCFC 65(b), and, absent an agreement with Department of Justice attorneys to withhold award and/or contract performance, protesters must be ready to post a bond for payment of any costs or damages that might be incurred by any party later found to have been wrongfully enjoined or restrained, RCFC 65(c).
The factors that the court must consider in deciding whether to issue a restraining order or preliminary injunction are: (a) the degree of immediate irreparable harm to the protester, (b) the relative harm to the agency whose acquisition is at issue, (c) the interests of national defense and security, (d) the public’s interests in honest, open, and fair competition balanced against agency interests in being able to conduct expeditious procurements with as little judicial intrusion as possible, and (e) the likelihood of the protester’s ultimate success on the merits. Magellan Corp. v. United States, 27 Fed. Cl. 446, 447-48 (1993). Often, there is an agreement by Department of Justice attorneys to withhold further action pending a decision by the court, an agreement that the court facilitates by rendering prompt decisions.
As an example, the issue in Magellan was that vendor’s exclusion from the second round of a two-step acquisition of global positioning receivers. Magellan was notified that it would not be invited to submit a sealed bid on December 7, 1992. Bid opening was set for January 7, 1993. Magellan filed its protest with the court on December 22, 1992, and the parties agreed that the date set for bid opening would be extended through January 11, 1993. The court agreed to hold a hearing on Magellan’s motion for a preliminary injunction and to issue a decision on the motion before bid opening. The hearing was held on January 6 and 7, 1993, and the court issued an oral decision on January 8, 1993, that was reduced to writing on January 12, 1993. Id., at 446-47.
TIME LIMITS
31 U.S.C. § 3555(a) authorizes the Comptroller General to “prescribe procedures as may be necessary to the expeditious decision of protests,” and prescribe them he has, in 4 C.F.R. § 21.2(a), and in some detail as to the time limits for filing. Generally, the procurement community is well aware of the requirement to protest solicitation terms before bid opening or the date set for receipt of initial proposals, 4 C.F.R. § 21.2(a)(1); the express requirement to file protests after an award on competitive proposals within 10 days after the debriefing is held; and the general requirement that protests must be filed within 10 days after the basis for protest is known or should have been known, 4 C.F.R. § 21.2(a)(2). But what about protests filed with the court? What rules will be applied?
Generally, there is a six-year statute of limitation on civil actions to be filed against the United States. 28 U.S.C. § 2401(a). But it doesn’t take a rocket scientist to suppose that there won’t be much of a remedy for a protest filed six years after contract award. So is there another limitation? It turns out that we already have an answer, and that the answer has come to us in the court’s decision of February 25, 1997, in Cubic Applications, Inc. v. United States, No. 97-29C, the first decision issued by the court on the merits of a protest filed after its Administrative Dispute Resolution Act protest jurisdiction became effective.
The Cubic Applications protest was filed with GAO in September 1996, after the Army had awarded a support services contract to conduct computer-driven battle simulation exercises to another contractor. Cubic was the incumbent contractor, and because of its protest filing, Cubic’s contract, which was set to expire in October 1996, was extended through February 28, 1997. On January 2, 1997, GAO issued its decision denying Cubic’s post award protest, and on January 15, 1997, Cubic filed a protest with the court.
Before the court, Cubic raised an issue that it had not presented to GAO, that the contract award was void because the Army had failed to implement the multiple awards preference introduced with the Federal Acquisition Streamlining Act of 1994, 10 U.S.C. § 2304b(e). The multiple awards preference requires, under advisory and assistance services acquisitions with an estimated value greater than $10 million and for a period more than three years, that such acquisitions provide for multiple awards under task order contracts, i.e., service contracts awarded to multiple offerors under which each task is separately competed. In Nations, Incorporated, B-272455, Nov. 5, 1996, we were able to obtain a favorable decision for one of our clients on this issue, this because the Army, on another solicitation for computer training simulation support services, had failed to comprehend the new, broad definition of “advisory and assistance services” that are now subject to the multiple awards preference.
The court allowed Cubic to pursue this issue, noting that its review of protested procurements is not limited, in cases first before GAO, to the issues presented there, and that, as to the issues that come before it, its review is de novo:
The court agrees that these facts are relevant, but it does not agree that the result is waiver of the grounds for [failure to implement the multiple awards preference]. There are three independent reasons. The first is that, whatever GAO’s internal rules concerning assertion of claims, they cannot bind this court. Because this court does not sit in appellate review of GAO decisions, considerations that might otherwise be appropriate to an appellate court do not apply here. Second, the argument made is that the solicitation and subsequent award to Logicon are illegal, void, and unenforceable. In the court’s view, that contention is of such moment that it has to be considered, even if it was not raised at the GAO. Bid protesters, contrary to the Government’s argument,4 are not protecting merely their own interests in challenging illegal procurement activity. The public has an interest at stake as well, and the courts have recognized that protesters serve, in some respects, as private attorneys general. Finally, it is not unusual for parties to plead in the alternative, or to pursue remedies seriatim. In the absence of some clear precedent barring invocation of what would otherwise be this court’s de novo powers to review the award, the court will consider [the complaint about failure to implement the multiple awards preference].
Cubic Applications, slip op. at 7.
It turned out that Cubic had also competed for the award of the contract that was in issue in Nations, and that the contracting officer on that solicitation had notified Cubic and the other offerors of the Nations protest shortly after it was filed in July 1996, by sending them a copy of the protest filing. Cubic Applications, slip op. at 3. From Cubic’s silence on this issue until its filing an action, the court concluded that Cubic, like the Army, assumed that the multiple awards preference did not apply because the services to be delivered were not “advisory and assistance services.” Cubic Applications, slip op. at 12.
The court went on to hold that it was too late for Cubic to complain about this issue, that Cubic’s complaint was untimely:
The Nations case was decided on November 5, 1996, well before the GAO completed its work on Cubic’s appeal. Given Ms. Clary’s notification to Cubic, it is not inappropriate for the court to assume that Cubic knew about the decision shortly thereafter. When it appealed to the GAO, Cubic got a 100-day extension on its existing contract. As the incumbent contractor, in other words, Cubic received direct benefit from the extension granted by GAO. Only after losing on its effort to be the single awardee did Cubic argue in this court that the solicitation was void from the outset. In E. Walters & Co., Inc. v. United States, 217 Ct. Cl. 254, 264-65, 576 F.2d 362, 366-68 (1978), the court held that the protester waived the right to insist on adherence to certain procedural requirements by knowingly not asserting them at a time when they could have been corrected without prejudice. In the view of this court, the same result should obtain here. Cubic made no effort to assert the illegality of the solicitation during the GAO proceedings, preferring instead to pursue the single award. To obtain equity, Cubic had to do equity, and it did not.
Cubic Applications, slip op. at 12.
The lesson here is that there are no inflexible rules as to the time limits for filing a protest with the United States Court of Federal Claims. Nonetheless, protesters cannot expect that the absence of such rules will enable the assertion of any ground for protest, no matter how stale it may be. This court and its predecessor tribunals have long declined to provide remedies for claims that could have been avoided by speaking up sooner. E.g., S.O.G. of Arkansas v. United States, 546 F.2d 367, 370-71 (Ct. Cl. 1976) (“the rule that a contractor, before bidding, should attempt to have the Government resolve a patent ambiguity in the contract terms is a major device of preventive hygiene; it is designed to avoid just such post- award disputes as this . . . [and it] advances the goal of informed bidding and works toward putting all the bidders on an equal plane of understanding so that the bids are more likely to be truly comparable”).
SCOPE OF REVIEW
As we have pointed out, the Administrative Dispute Resolution Act provides that the court’s scope of review of challenged final agency procurement actions is the same as that provided in the federal district courts under Scanwell, i.e., whether final agency action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. A concomitant of this limited scope of review is that it is ordinarily limited to the record before the agency, and not some new record made in the court. Camp v. Pitts, 411 U.S. 138, 142 (1973). There are, of course, exceptions, e.g., Latecoere International, Inc. v. United States, 19 F.3d 1342, 1357 (11th Cir. 1994) (discovery allowed when a protester made a strong showing of bad faith or improper behavior), and thus the cases hold that a court may allow supplementation of an administrative record through depositions, discovery, documents, and viva voce testimony: (1) when agency action is not adequately explained in the record before the court, (2) when the agency failed to consider factors that are relevant to its final decision, (3) when an agency considered matters that it failed to include in the record, (4) when a case is so complex that the court needs more evidence to enable a clear understanding of the issues, (5) in cases where evidence arising after the final agency action shows whether the decision was correct or not, (6) in cases where agencies are sued for failure to take action, and (7) in cases where relief is at issue, especially at the preliminary injunction stage of a proceeding. Esch v. Yeutter, 876 F.2d 976, 991 (D.C. Cir. 1989) (quoting Stark & Wald, Setting No Records: The Failed Attempts to Limit the Record in Review of Administrative Action, 36 ADMIN. L. REV. 333, 345 (1984)).
In some respects, GAO applies similar limits to its reviews. As an example, GAO will sometimes grant protests challenging evaluations of competitive proposals where the agency has failed “to document its judgments in sufficient detail to show that they are not arbitrary.” TRESP Associates, Inc., B-258322.5, March 9, 1995, at 4-5. Generally, however, GAO allows free supplementation of the record:
In determining the rationality of an agency’s evaluation and award decision, we do not limit our review to contemporaneous evidence, but consider all the information provided, including the parties’ arguments, explanations, and hearing testimony. [citations omitted]. While we consider the entire record, including the parties’ later explanations and arguments, we accord greater weight to contemporaneous evaluation and source selection material than to arguments and documentation prepared in response to protest contentions. . . .
Southwest Marine, Inc., B-265865.3, Jan. 23, 1996, at 10. Here GAO denied a protest, although the Navy had destroyed evaluator’s notes and workpapers and the record did not adequately explain just why one proposal was technically superior, because it credited testimony from the evaluators and the source selection authority that it had received at hearing that explained the basis of the decision. Id., at 11.
The procurement community might have supposed that faithful adherence by the court to the Administrative Procedures Act scope of review that prevails in Scanwell cases would result in a dramatic increase in the number of protests granted. After all, many award decisions that result from formal source selection procedures are inadequately documented, and it is often only in the protest process before GAO, or formerly before the GSBCA under its Brooks Act protest jurisdiction, 40 U.S.C. § 759(f), that a record adequate to support the decision is completed.
It appears, from the decision in Cubic Applications, that this will not be the case, and that protests filed with the court will go on with much the same sort of post hoc rationalizations that occur before GAO. Consider again the issue there (untimely raised, as it turned out) of the Army’s failure to implement the multiple awards preference. Not only did the court admit an affidavit from the contracting officer under the Nations protest, but also it admitted testimony from another Army contracting officer, this about a determination made explicitly for purposes of the protest that would have exempted the acquisition from the multiple awards preference. The statute, 10 U.S.C. § 2304b(e)(3), provides that agencies can exempt particular acquisitions from the multiple awards preference, upon a written determination made before the solicitation is issued. In Cubic Applications, the determination was not made until after the protest was filed with the Court, long after the solicitation was issued, and after the contract had been awarded.
The court observed that the contracting officer was “remarkably limited in her ability to explain the [determination],” and that she “could add little to what is stated in the [determination] because she placed great reliance on the advice of others.” Nonetheless, the court observed that the process of deferring to others is not per se arbitrary, and the result is certainly not capricious. Cubic Applications, slip op. at 6. This persuaded the court that there would have been no ground for complaint had the determination been made when statute required it, before the solicitation was issued. Cubic Applications, slip op. at 7.
The post hoc rationalization did not discomfit the court:
[T]he primary focus of the court’s review should be the materials that were before the agency when it made its final decision. [citation omitted]. This is a presumption necessitated by the limited nature of the court’s inquiry. As a practical matter, however, in most bid protests, the “administrative record” is something of a fiction, and certainly cannot be viewed as rigidly as if the agency had made an adjudicative decision on a formal record that is then certified for court review. This is true in the contract award context if for no other reason than that, due to the absence of a formal record, the agency has to exercise some judgment in furnishing the court with the relevant documents. In order to preserve a meaningful judicial review, the parties must be able to suggest the need for other evidence, and possibly limited discovery, aimed at determining, for example, whether other materials were considered, or whether the record provides an adequate explanation to the protester or the court as to the basis of the agency action. . . .
Cubic Applications, slip op. at 3.
Agencies will find protests filed with the court to be less disruptive than those filed with GAO, at least in terms of the amount of time required for a decision. When GAO decides a protest on the merits, the matter takes some three months from filing to decision, this reflecting the requirement that GAO decide protests within 100 days from filing. 31 U.S.C. § 3554(a)(1). To date, the court has shown the ability to dispose of protests in less than half this time. On the other hand, agencies will find it far less easy to succeed before the court with a determination to proceed post award with contract performance, this because there is no statute allowing contract performance on a determination that doing so is in the best interests of the United States, 31 U.S.C. § 3553(d)(3)(C)(i)(I). Agencies will be left to persuading Department of Justice attorneys that there is something to be gained in contesting motions for a temporary restraining order or preliminary injunctive relief.
We’ll have to wait to see how the court will decide just what the term “interested party” might mean, whether the court will accept reverse protests, and, in contrast to the rigid timeliness rules imposed by GAO, just how the court will apply general requirements for a prompt filing when a protester seeks purely monetary, rather than equitable, relief, i.e., an award of bid or proposal preparation costs only.
And how will the mandatory stay imposed on acquisitions protested to GAO play out considering that to decide a protest it so far takes the court less than half the time it takes GAO? What will happen if a protest is filed post award with GAO, the agency suspends contract performance as it must, and the awardee, who has suffered final agency action by this stay, then files suit in the court asking the court to declare the stay unlawful because the contract award itself was proper? Will GAO then dismiss such a protest under its rule requiring dismissal of “any protest where the matter involved is the subject of litigation before a court of competent jurisdiction,” 4 C.F.R. § 21.11(b). Only time will tell.
— Cy Phillips
Copyright © 1997 Kilcullen, Wilson & Kilcullen. All rights reserved.