Bid protests

Army Lawyer, Jan, 2007 by Mark A. Ries

Interested Party

The Court of Appeals for the Federal Circuit (CAFC) and the Court of Federal Claims (COFC) addressed protest standing issues in Fiscal Year 2006. The CAFC upheld the rule that post-award protesters must be actual bidders to be an interested party. The COFC overturned an agency attempt at depriving the COFC of jurisdiction post hoc.

Court of Appeals for the Federal Circuit

The CAFC affirmed a COFC finding that a protester that did not submit a bid does not have standing to pursue a bid protest before the COFC. (1) Prior to 2003, Rex Service Corporation (Rex) had supplied "thumbwheel switches" to the Defense Supply Center, Columbus (DSCC) as the sole approved source. (2) In 2003, the DSCC issued a request for proposals (RFP) for thumbwheel switches; the DSCC canceled this solicitation following an agency protest filed by Rex. (3) In 2004, the DSCC again issued an RFP for thumbwheels. (4) Rex again protested to the agency, but did not submit a proposal. (5) Rex's 2004 protest did not allege that any agency failure prevented Rex from submitting a proposal. (6) The DSCC denied Rex's 2004 protest in January 2005, and awarded the contract to a different contractor in February 2005. (7) Rex filed its protest with the COFC on 21 March 2005. (8)

The CAFC began by explaining the standard that standing to bring a protest before the court is based on a showing that the protester is an interested party as defined by the Competition in Contracting Act (CICA). (9) To meet this standard, the protester must show that it is an actual or prospective bidder whose direct economic interests are affected by the award or failure to award the contract. (10) Rex clearly did not submit a proposal, and is therefore not an actual bidder. (11) Rex argued that it was a prospective bidder because it filed an agency protest prior to the close of bidding and it was prejudiced, but not prevented, from bidding. (12)

The CAFC dispensed with Rex's argument, stating that "'in order to be eligible to protest, one who has not actually submitted an offer must be expecting to submit an offer prior to the closing date of the solicitation."' (13) The CAFC continued relying on MCI, (14) stating "'the opportunity to qualify as an actual or a prospective bidder ends when the proposal period ends.'" (15) While Rex relied on its pre-closing date agency protest to preserve its standing, the CAFC rejected this reasoning. (16) Standing requires a protester to be an actual or prospective bidder. (17) Once the closing date has arrived, generally only actual bidders are interested parties and have standing. (18) The CAFC expressly declined to address the situation in which the protester argues that the alleged agency violation prevented the protester from bidding. (19)

Court of Federal Claims

Systems Plus, Inc. protested a Department of Labor (DOL) procurement for network-infrastructure and operationssupport services. (20) Following dismissal by the Government Accountability Office (GAO) on timeliness grounds, Systems filed its protest with the COFC. (21) On the merits of the original protest claim, the COFC found for the government. (22) The interesting procedural aspect of the case involves agency action while the protest was pending.

After the protest was filed and proceedings had begun at the COFC, the contracting officer issued a Determination and Findings (D&F) that the protester "would be ineligible to compete in any corrective competition that might be ordered as a result of this case." (23) Based on the contracting officer's (KO's) disqualification of the protester, the government moved to dismiss the protest because Systems was no longer an interested party. (24)

The KO disqualified Systems because an appearance of impropriety had developed from the discovery of a document containing sensitive awardee information at Systems' office. (25) Systems' employees stated that the document was delivered to its office more than two weeks after it was notified of award. (26) The KO speculated that because the document was created before proposals were due, Systems could have had access to the information and used the information in formulating its proposal. (27)

The COFC set aside the KO's disqualification of Systems "on three separate and independent grounds--the disqualification was procedurally flawed, it lacked a rational basis, and it constituted an improper post hoc attempt to remove System Plus's protest from this court's jurisdiction and thus insulate DOL's procurement decision from review." (28) First, the disqualification was procedurally flawed because the KO did not afford Systems minimal due process, i.e., the opportunity to be heard on the issue. (29) Second, the disqualification lacked a rational basis because the KO based her decision on erroneous facts and speculation. (30) The COFC did not fully explain these errors, but provided one example that the KO accepted a statement by agency counsel that Systems' building was locked to non-employees on Saturdays. (31) However, several Systems' employees, including the president and CEO, and the property manager of the building, all stated that the building was open Saturday mornings. (32)