Agency Protest Pros and Cons for Gov't Contractors

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In May 2018, the U.S. Government Accountability Office implemented a $350 filing fee for bid protests. There are differences of opinion regarding why the GAO implemented the fee. The GAO publicly states that the fee was implemented to cover the costs of its new electronic protest docket system, or EPDS. Many, however, believe the fee was implemented to deter the filing of frivolous protests.

Regardless, there “may” be an unintended consequence of the protest filing fee — an increase in agency-level protests. Recently, several agency contracting officers have stated that they are handling more agency protests, and, in their opinion, it is a direct result of the GAO’s protest filing fee. As a result, contractors should understand and be prepared to mitigate the risk of agency protests to protect their contracts and position themselves for new ones.

Pros and Cons of Agency Protests

Beyond not having to pay a filing fee, there are pros — and cons — to filing an agency protest as opposed to a protest at the GAO.

Unlike at the GAO, in agency protests, the agency is not required to file an agency report or produce documents; thus, there is no opportunity to review the agency’s decision-making process or file a supplemental agency protest. And, at the agency level, a protester does not get the opportunity to file comments — i.e., rebut the agency’s legal position — on the agency’s report like it would get at the GAO. As a result, a protester’s legal bills will be lower with an agency protest and you may receive an agency protest decision faster than at the GAO — 35 days vs. 100 days.

Also, some believe filing an agency protest is favorable in terms of client relations. When you file a protest you essentially are suing your client or potential client. An agency protest is not a public filing like a protest filed at the GAO. Thus, some believe a contractor benefits by filing an agency protest and not publicly airing an agency’s so-called dirty laundry at the GAO.

Finally, with one important caveat, an agency protest could be useful if a protester intends to elevate the protest to the GAO or the U.S. Court of Federal Claims. Federal Acquisition Regulation 33.103 requires an agency to provide agency-protest decisions that are “well-reasoned and explain the agency’s position.” If a protester receives an unfavorable agency-protest decision, the protester can use the information obtained from the decision to strengthen its arguments at the GAO or the Court of Federal Claims.

However, a contractor should keep in mind that, if its agency protest is unsuccessful, an automatic stay will not be available at the GAO.

There are cons associated with filing an agency protest as opposed to filing elsewhere. One potential concern is agency bias. Protests filed at the Court of Federal Claims or the GAO are decided by a judge or independent GAO attorney. An agency protest is decided by an agency employee — usually, the same contracting officer whose action is being protested.

A second concern is the loss of control. After filing an agency protest, a protester’s involvement is finished — no agency report to review, no potential supplemental protests and no opportunity to submit comments. An agency-level protester simply waits for a decision.

Concerns if Agency Protests are Becoming More Popular

If the GAO’s protest filing fee is causing an increase in agency protests, government contractors need to understand the potential ramifications. A, if not the, major concern with agency-level protests is lack of transparency. With the exception of certain confidential information, protest decisions at the GAO and the Court of Federal Claims are publicly available. This allows the public to see how the government is spending our tax dollars. Agency-protest decisions are not public documents. While agency-protest decisions can be obtained by submitting a Freedom of Information Act request, such a process is often incredibly slow. And, most agency FOIA officers do not have experience with such requests; thus, they are genuinely perplexed about whether agency-level protest decisions can be released. This increases the delay.

Perhaps a government contractor should consider itself lucky to even get to a FOIA request stage, because generally a contractor-awardee is not aware an agency-level protest was filed. An agency is not required to notify an awardee that their contract/award is the subject of an agency protest. Unlike at the GAO or the Court of Federal Claims, a contractor-awardee cannot intervene in an agency protest.

The only way an awardee knows an agency protest has been filed is purely by chance that a contracting officer tells them. Thus, an awardee usually does not know to file a FOIA request. Perhaps worse, an agency is not required to give the awardee a copy of the protest decision or otherwise make its protest decisions publicly available.

There is little to no publicly available data on agency protest statistics. Agencies are not required to report information regarding how many agency protests and/or decisions are issued during a government fiscal year. Thus, it should be no surprise that very few agencies report their protest statistics. As a result, we really do not know whether agency protests have increased as a result of the GAO’s protest filing fee.

Further, since such decisions are not published, there is no opportunity to review or assess whether an agency’s decision is rational, reasonable or consistent with government procurement statutes and regulations. Also, without the public availability of such decisions, awardees do not have the opportunity to confirm that decisions coming from different offices of the same agency are consistent and, even if they are, to cite to such decisions with regard to future protests.

What Should Contractors Do?

At a minimum, a contractor should periodically ask its contracting officer if any agency protests have been filed in connection with any of its contracts. Although not enforceable, a contractor should also ask its contracting officer to notify the contractor if an agency protest involving one of its contracts is filed in the future. Further, a contractor should consider periodically submitting FOIA requests to the agencies with which it has contracts. Absent implementing such procedures, a contractor cannot stay informed regarding agency-level protest activity involving its contracts.

"Agency Protest Pros and Cons for Gov't Contractors," by Merle M. DeLancey Jr. and Michael Joseph Montalbano was published in Law360 on July 26, 2019. Reprinted with permission. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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