The U.S. Court of Federal Claims recently issued a 2017 statistical report—covering the government’s fiscal year October 1, 2016 to September 30, 2017. During this time, 652 suits filed were filed at the Court and 1,035 suits disposed of within the 12 month period. Of the suits filed, over 42% were contract dispute or protest related, almost 15% taking cases, and 8% tax related. With the overall disposal rate of cases increasing by 82% over the previous year, the Court had its most productive year out the past 12 years. Plaintiffs seeking relief at the Court received around $1.3 billion in judgments and settlements—a nearly $500 million increase from 2016 and the largest amount since 2007. The government, on the other hand, was awarded only $4.3 million in counterclaims, sanctions or offsets.
Congress recently concluded the conference on the 2018 National Defense Authorization Act (NDAA), resolving the differences between the House and Senate versions of the FY18 NDAA passed earlier this year.
Pilot Program Will Require Contractors to Reimburse the Department of Defense for Protest Processing Costs
Among other significant procurement provisions in the bill that came out of conference, Section 827 of the 2018 NDAA includes a three-year pilot program that will require that large Department of Defense (DoD) contractors – those with revenue in excess of $250 million during the previous year in FY17 constant dollars – reimburse DoD for “costs incurred in processing covered protests” if a protest is “denied in an opinion” issued by the Government Accountability Office (GAO). This provision, which is similar to legislation proposed by the Senate last year, reflects Congress’ belief that contractors are taking advantage of the GAO protest system by filing frivolous protests that are delaying properly awarded contracts and imposing unnecessary costs on DoD. As it appears now, the provision will take effect two years after the bill is signed.
The U.S. Government Accountability Office (GAO) recently published four protest decisions that were all denied due to timeliness issues. This string of cases serves as a reminder that no matter how strong a protest’s basis may be, if it is not timely filed with GAO; then the protest will most likely be dismissed. GAO’s regulations set strict deadlines for filing protests at GAO. These rules reflect GAO’s dual requirements of
(1) giving parties a fair opportunity to present their cases
(2) resolving protests expeditiously without unduly disrupting or delaying the procurement process. GAO strictly enforces these requirements and will quickly dismiss a noncompliant protest, so contractors must be aware of these protest timeliness requirements.
As we previously reported here and here, between October 1 and December 14, 2016, the Government Accountability Office (GAO) lacked jurisdiction to hear most civilian agency task order protests (its jurisdiction over protest of Department of Defense (DoD) task order awards was unaffected by the lapse). On December 14, President Obama signed legislation reinstating GAO’s jurisdiction over protests of civilian task orders greater than $10 million. He subsequently signed the National Defense Authorization Act (NDAA) of 2017, which raised the threshold for DoD task order protests from $10 to $25 million.
On January 30, the U.S. Government Accountability Office (GAO) issued its decision denying Concurrent Technologies Corp.’s (CTC) protest of the U.S. Navy’s award of a support contract for the Navy Manufacturing Technology Metalworking Center of Excellence program to Advanced Technology International (ATI). CTC alleged that ATI had an organizational conflict of interest (OCI) which stemmed from ATI’s role as a contractor providing procurement support services for the Department of Defense. CTC argued that as part of ATI’s procurement support work, it had access to CTC’s proprietary information resulting in ATI having an unfair competitive advantage in the procurement.
GAO denied CTC’s protest, finding that the Navy’s actions were reasonable and the award to ATI was proper. However, it is the lengths taken by the Navy, and upheld by GAO, which makes this protest interesting and potentially dangerous to contractors.
In an article published by Law360, I provided insight examining the Government Accountability Office’s (GAO) rejection of bid protests questioning an unusual contracting model based on point-scoring that emphasized technical factors over cost. In this case, the General Services Administration (GSA) awarded a $65 billion IDIQ contract for IT services, Alliant II, to 60 of the highest rated offerors by first ranking offerors technically and then determining if the top 60 offerors’ prices were fair and reasonable. As I point out in the article, “[y]ou want companies that are on the cutting edge of IT services … you want the guys that really know their stuff. If you think about the fact that these providers on Alliant II are likely going to be called into agencies to help them deal with cybersecurity issues that go far beyond IT, into national security, we want the best IT service providers in the country to be on this contract.”
The full article, “GAO Opens Door For More Point-Scored Contracts,” was published by Law360 on January 30, 2017, and is available online (subscription required).
As we reported on December 14, 2016, on December 8, the Senate passed the National Defense Authorization Act (NDAA) of 2017, which calls for changes to the Government Accountability Office’s (GAO) jurisdiction over civilian agency and Department of Defense (DoD) task order protests. The President has yet to take action on the NDAA. Separate legislation has, however, already restored GAO’s protest jurisdiction over civilian task orders valued above $10 million, leaving only the issue of the threshold for DoD task order protests contingent on the fate of the 2017 NDAA.
On December 8, 2016, the Senate passed the National Defense Authorization Act (NDAA) of 2017 previously passed by the House, and the legislation is pending President Obama’s signature. Once signed, Section 835 of the NDAA will restore and make permanent the Government Accountability Office’s (GAO) jurisdiction to hear civilian agency task order protests. In addition, the NDAA will increase to $25 million the jurisdictional threshold for task orders issued by the Department of Defense (DoD).
From the enactment of the Federal Acquisition Streamlining Act in 1994 through 2008, jurisdiction over task order protests at the GAO and the Court of Federal Claims (COFC) was limited to allegations that a task order increased the scope, period or maximum value of the underlying contract. Responding in part to agencies’ increasing reliance on task orders, the 2008 NDAA extended GAO’s protest jurisdiction, but not COFC’s, to include protests of task orders awards over $10 million on other grounds, but provided that the subsection expired in May 2011. The 2012 NDAA extended the GAO’s jurisdiction over civilian agency task orders, but only through September 30, 2016.
On July 27, 2016, the U.S. Court of Federal Claims held that the U.S. Department of Health and Human Services (HHS) was unreasonable in cancelling its solicitation for on-site operational support for the HHS Unified Financial Managements System (UFMS). The decision, Starry Associates, Inc. v. United States, is unusual, given that the Government Accountability Office (GAO) and the Court of Federal Claims are typically reluctant to oppose an agency’s decision to cancel a solicitation. The decision serves as a useful reminder that such discretion is not unfettered and will be overturned where it is arbitrary and capricious.
In most federal procurements, regulations require procuring agencies to consider an offeror’s past performance in evaluating proposals. However, while the consideration of past performance may be a standard element of an evaluation, what an agency actually considers as part of that past performance evaluation is not set in stone. Agencies can consider different types of past performance, and weigh the importance of different elements of past performance in various ways, changing from procurement to procurement. Agencies have the discretion to choose the kinds of past performances it will review, which personnel are relevant to an evaluation, how many references should be provided, and the cut-off date for each past performance reference. As long as the evaluation is reasonable, it is generally acceptable. However, if the agency’s chosen method or execution of its past performance evaluation is ultimately unreasonable, a challenge to the evaluation may lead to a sustained protest.
Two recent U.S. Government Accountability Office (GAO) bid protest decisions help draw the line between reasonable and unreasonable past performance evaluations. The recent decision in Logistics Management International, Inc. demonstrates that it is permissible for an agency to ignore the past performances of key individual personnel, and instead only concentrate on a company’s previous performances as a whole. In denying that protest, GAO found that it is within an agency’s discretion to define the scope of its own past performance review. On the other hand, in the recent decision of Patricio Enterprises Inc., GAO decided it was unreasonable for the agency to essentially penalize an offeror simply because it provided more past performance references than the competing contractor.