Bid protests

Army Lawyer, Jan-Feb, 2003

Jurisdiction

No Implied Contract Jurisdiction at COFC

Last year's Year in Review discussed how the Administrative Dispute Resolution Act of 1996 (1) (ADRA) ended district courts' bid protest jurisdiction on 1 January 2001. (2) The Court of Appeals for the Federal Circuit (CAFC) has since held that the ADRA requires courts to review an agency award decision under the standards set forth in the Administrative Procedure Act (APA). (3) From the perspective of protestors, the result was a more favorable standard of review on the issue of contractor "responsibility." The standard, which previously required a showing of fraud or bad faith, now requires a mere showing of a lack of rational basis or a violation of a regulation or procedure. (4)

In Lion Raisins, Inc. v. United States, (5) the Court of Federal Claims (COFC) applied this new reasoning when a protestor sought lost profits under an implied contract theory. The COFC had previously granted the protestor's summary judgment motion, holding that the United States Department of Agriculture's (USDA) decision to suspend the plaintiff, and thereby preclude it from bidding, was arbitrary, capricious, an abuse of discretion, and not in accordance with the law. (6) The protestor sued for lost profits, arguing that the ADRA did not relinquish the court's bid protest jurisdiction under the implied-contract theory. (7) The COFC disagreed, noting that the ADRA repealed the provision in the Tucker Act that previously granted bid protest jurisdiction under the implied-contract theory. (8) The provision was also replaced by another provision that limited monetary relief to "bid preparation and proposal costs." (9) The limit is identical to that imposed on district courts' bid protest jurisdiction exercised before the ADRA. The court's decision "establishe[s] that Congress expressly intended the ADRA to confer the Court of Federal Claims with the same power in bid protest actions that the district courts exercised under the APA." (10)

Not All Reviews Are the Same

The ADRA grants the COFC authority under the Tucker Act to review "any alleged violation of statute or regulation in connection with a procurement or a proposed procurement." (11) As Advance Construction Services, Inc. v. United States (Advance Construction) (12) illustrates, that authority is limited to a review of the agency's actions, not the GAO's decision. The plaintiff in Advance Construction, the awardee on a road upgrade contract, requested declaratory and injunctive relief on the eve of a GAO bid protest hearing initiated by the losing bidder. The plaintiff contended that the GAO violated several statutes and regulations governing GAO bid protests. (13) The COFC rejected the plaintiff's argument that the Tucker Act contemplated a review of GAO violations. (14) Citing the pertinent legislative history, the COFC held that its Tucker Act jurisdiction was limited to "agency" decisions and that it could not intrude upon the GAO's bid protest jurisdiction. (15) The COFC refused to extend its jurisdiction any further than the plain language of the statute allowed and dismissed the lawsuit. (16)

GAO's Jurisdictional Wings Grow Shorter

The GAO, like the COFC, also clipped its own jurisdictional wings in a number of cases. In Shinwha Electronics (17) the GAO announced that it would "no longer review, even under a limited standard, protests that an agency improperly suspended or debarred a contractor from receiving government contracts." (18) In the past, the GAO "generally declined to review protests of suspension or debarment decisions," but retained jurisdiction over protests alleging an improper suspension or debarment imposed "during the pendency of a procurement in which it was competing." (19) The Army notified Shinwha of its suspension from government contracting pending completion of a criminal fraud investigation. (20) Although the GAO denied the protest under the standard of review imposed in prior suspension-debarment cases, (21) it stated that it would no longer review such cases "[b]ecause the FAR sets forth specific procedures for both imposing and challenging a suspension or debarment action ... the appropriate forum for resolving such disputes is with the contracting agency." (22)

The jurisdiction noose grew even tighter in Champion Business Services, Inc., (23) when the GAO dismissed a protest alleging that the Defense Information Systems Agency, Defense Information Technology Contracting Organization (DISA/ DITCO) acted improperly by retaining Champion's proposal in the competitive range and inviting it to make an oral presentation. Champion alleged that the evaluation results prove that it had no chance for award. (24) The GAO held that the claim of an improper invitation to make an oral presentation did not come within the scope of its bid protest jurisdiction under the Competition in Contracting Act (CICA). (25)

The GAO will occasionally direct a protestor to the proper forum when it does not have jurisdiction. In Military Agency Services Pty., Ltd., (26) a protestor alleged that four separate orders for picket boat services in Singapore Harbor under a blanket purchase agreement breached the protestor's requirements contract for "ship husbanding services," which included a provision for picket boat services. (27) The GAO dismissed this part of the protest, reasoning that the allegation was a matter of contract administration for review "by a cognizant board of contract appeals or the Court of Federal Claims" under the Contract Disputes Act of 1978. (28)