CHAPTER

17

PROTESTS

Not to put it too delicately, a protest is a fight by a loser to get the contract it lost. The protest rules are very precise and must be rigidly observed. In this chapter, we discuss where protests can be filed, the advantages of the various forums, and ways to avoid a costly, time-consuming protest.

    What are the chances of a company’s winning a protest?

The chances that a protesting company may win are surprisingly high. And the best results are not found at GAO. In fact, a very small percentage of protests resolved by GAO end up in a favorable decision for a contractor. The best results come from working directly with an agency. To understand why this is true, let’s take a look at the overall protest process.

There are three places a protester can go: the agency (the contracting officer (CO) or someone higher up in the agency), GAO, or the U.S. Court of Federal Claims. If the protest will be filed at the Court of Federal Claims, the submission will be very complicated and technical. It will be filed by a lawyer following the rules of the court. Protests to the court are rare, and therefore this chapter will not discuss them in detail. Most protests are filed at the contracting agency or at GAO.

Agency Protest

A protest to the agency simply involves writing a letter to either the CO or someone higher than the CO as provided in agency regulations. The company gets a response from the person the protest was addressed to—either the CO or someone higher than the CO. The agency’s response to the protest ends a protest to the agency.

A protest to the agency is often the first step a company takes. While most companies believe there’s no harm in seeing if the agency will reverse its decision, a protest to the agency has many limitations. And, unless the time limits are strictly observed, a protest to the agency could cause a follow-up protest to GAO to be late and therefore not considered.

GAO Protest

Protesting to GAO is more complicated. Obviously, the first step in the protest process is filing the protest. A protest to GAO, like a protest to the agency, can simply be a letter explaining why the losing company thinks it did not get a fair chance to win the solicitation. There need be nothing fancy about the protest letter. It simply has to identify what the company thinks went wrong with the solicitation and ask that the wrong be corrected. The company may also request specific documents.

A protest to GAO is only slightly more complicated than a protest to the agency. It’s more complicated only because GAO requires that a number of specific magic words and phrases be included in the protest. To its credit, GAO puts out a booklet, available at its website (www.gao.gov), describing in plain English what a protest to GAO must look like. As a result, it’s easy for the average businessperson to file a protest to GAO without a lawyer being involved.

The second step in the GAO protest process is the agency report. This is the agency’s answer to the company’s protest letter. It often includes documents as well as a statement by the CO and a memorandum of law from the agency’s lawyers.

The third step in a GAO protest is protester comments on the agency report. This is a rebuttal by the protester to the agency’s position. On occasion it serves another purpose. It can be used to raise new protest issues discovered only from the protester’s review of the agency documents in the agency report.

    What is the best approach for a company to take?

For a company, the best approach may well be to go to GAO and try to convince it that the company is correct. A side benefit is that this process also allows access to the agency’s lawyers. During the GAO protest process, a protester might convince the agency’s lawyers that the company did not get a fair deal. So the GAO process also provides an opportunity to convince the agency’s lawyers that the agency did not treat the company fairly.

    What are the advantages and disadvantages of filing a protest to the agency?

The big advantage is that it’s easy. A protest to the agency is simply a letter complaining about the treatment the company received during the solicitation process. And, because it’s easy, it’s cheap. Companies don’t necessarily need a lawyer to file a protest before the agency.

One of the big disadvantages, however, of filing a protest to the agency is the lack of any discovery. In other words, the losing company has no ability to rummage through the CO’s file to see if any (other) mistakes were made by the government during the solicitation process. GAO offers a better discovery alternative.

Another real disadvantage of going to the agency, or more specifically, to the CO, is that the protester is going back to the individual who denied it the contract in the first place. It seems unlikely that the CO, who refused to award the losing company the contract in the first place, is going to have any second thoughts about it later on.

A better approach might be going to the CO’s superior—an option the agencies offer. This alternative certainly has less CO “pride of authorship” or involvement in the solicitation.

    What are the advantages of filing a protest at GAO?

Better data are available through GAO’s discovery process. That’s the good news. The bad news is that only a lawyer can get much of this information. And the lawyer must not be on the company’s staff. The lawyer also must have no employment connection to, or business interest in, the losing company. So the only lawyers who can get this information are lawyers retained by this company.

The discovery process is limited primarily through what is called a “protective order.” The order gets its name from the fact that the government must release data to the company but the lawyer is ordered to protect any proprietary or source selection information from disclosure to the client. A lawyer under a protective order must not tell the client any proprietary or source selection information that the lawyer discovers through the process.

As a practical matter, the government prepares two sets of documents. One set of documents is for lawyers under a protective order. This set includes all sorts of raw data, such as the evaluations given the government by references from prior projects (with the names of the references disclosed) and the source selection plan the agency used (describing how a source selection panel evaluated proposals).

The second set of documents is for the client. This set includes all the documents given the lawyer under the protective order but with any proprietary or source selection information whited out.

Any protest, whether to the agency or to GAO, means a lot of work for the CO. And the work must be completed in a very short time, under the scrutiny of the CO’s supervisors and the agency’s lawyers.

A protest to GAO, however, is much more detailed and involved. Because protesters to GAO demand documents used in the solicitation process, it’s the CO’s job to collect the documents, copy the documents, index the documents, and ship them off to the agency lawyer. If the protest involves facts that are contested, the CO may have to testify in any fact-finding session presided over by GAO. Although these sessions are not formal trials, the CO will feel the pressure of the sessions as if it were a trial. In addition, such sessions require the CO to prepare to testify.

GAO sessions are generally informal, although lawyers are often involved on both sides. Each side presents evidence and cross examines the other side’s witnesses.

    What can a CO do to avoid a protest?

A CO can avoid a potential protest by providing the company a fair and exhaustive debriefing. If a company can walk away from a debriefing feeling that it was treated fairly during the solicitation process and simply lost the contract to a better proposal, the chances of the company’s filing a protest are reduced. On the other hand, to the extent that a company walks away from a debriefing feeling that the government was hiding something, the company may believe that a protest will be able to uncover additional information that could support the company’s (usually unfounded) belief that the government was hiding something.

Clearly, a CO cannot disclose proprietary or source selection information to a company at a debriefing. The CO should closely follow the FAR’s description of the “minimum” information he or she should disclose; however, this still allows the CO to disclose a wide range of information. Doing so should help a CO minimize the risks of receiving a protest.

    What are the disadvantages to a company protesting?

Suing customers is not smart business practice. Companies believe that filing protests will get them black-balled by the agency and a protest will mean that they will receive no future contracts from that agency. While that may be true in isolated instances, generally COs try to be fair in evaluating and awarding contracts. So while a company may think it is bad business to file a protest, as a practical matter it may not be. COs want good performers. Successful contractors will receive contracts, whether they file protests or not.

    Is it smart for a company to argue that the CO showed bad faith?

Arguing bad faith is a sure loser at GAO. GAO has defined bad faith out of existence. To GAO, bad faith is the specific and malicious intent to injure the protester. COs may dislike a particular company, but none has a specific and malicious intent to injure it. Over the years, protesters arguing bad faith on the part of the government have consistently lost the argument and the protest.

    What’s the worst thing a CO can do after getting a GAO protest that seems to have merit?

Dawdle, stall, delay. It may cost the government money. Here’s why. A protest that has merit can be remedied in several ways. The typical remedy is to put the protester back into the solicitation process and give the protester another chance to win the contract. A protester typically will not receive bid protest costs and attorneys’ fees if it gets another chance to win the contract.

Congress, however, anticipated that an agency, either out of negligence or out of malice, could decide to not let a company know the agency was going to let the company back into the solicitation process until the end of the process. The agency could drag out the protest process, intentionally or inadvertently, and cost the protester money with the only remedy being put back into the competitive range.

To discourage agencies from stalling or simply not seriously considering all of the protester’s arguments until the very end of the protest process, GAO may provide a successful protester with a double remedy: being put back into the solicitation process and providing bid protest costs and attorneys’ fees. This double hit was designed to spur agencies to seriously consider protests from the very beginning.

GAO may award attorneys’ fees as well as allow a protester back into the solicitation process when an agency unduly delays resolving a “clearly meritorious” protest. This double hit applies only if a protest was clearly meritorious. Often, a government agency will raise a good argument or the legal or factual issues involved are close questions. In these instances, agency delay is really extended consideration of a protest’s merits and will not cost the government bid protest costs and attorneys’ fees. The government has the right to give due deliberation to protests raising difficult issues.

    What is an automatic stay?

An automatic stay is an injunction that stops the government from any further work on the contract. It’s designed to ensure that if the protester wins, there’s something left of the contract to actually win.

Up until 1984, it was possible for a protester to win a protest, but only after the contract had been finished. Obviously, in those cases, there was nothing left for the protester to win. To make sure that there was something left to win, Congress in 1984 instituted a stay. The automatic stay was designed to automatically stop any work on the contract or, even before that, the award of any contract, if a protest was filed before the contract was awarded or within ten days after award of the contract had been made.

While the stay may be automatic, holding up the work is not. Congress made it easy not only for the contractor to invoke the automatic stay, but also for the government to override the automatic stay. Congress provided that an automatic stay could be overridden if the government could establish one of two huge loopholes: (1) continued performance was in the government’s best interest, or (2) there were urgent and compelling circumstances for continued performance of the contract.

One of the best examples of when the automatic stay can be easily overridden is at the start of a new fiscal year. If the building security contract is to take effect October 1, but a protest has been filed and the automatic stay has been imposed, the building still needs security. In that instance, it would be easy for the government to establish that “urgent and compelling circumstances” require continued performance of the contract while the protest proceeds.