Federal Circuit Affirms Blue & Gold Alive and Well, but that Timely Agency-Level Protests Might Change the Score

Obermayer Rebmann Maxwell & Hippel LLP

Obermayer Rebmann Maxwell & Hippel LLP

Welcome back, readers!  We hope that your 2022 is off to a great start. We’re starting this year off with some information about an important Federal Circuit case from late last year, which did not get the attention it should have, given everyone’s focus on the ongoing COVID-19 compliance saga. As experienced contractors know, it is big news whenever the Federal Circuit issues an opinion and even bigger news when it pertains to bid protest timeliness. That is exactly what Harmonia Holdings Grp., LLC v. United States was about – bid protest timeliness and, more specifically, the application of the Blue & Gold waiver rule relating to pre-award protests.

For those of you not familiar, the waiver rule established in Blue & Gold Fleet, L.P. v. United States provides that contractors need to challenge patent errors involving the solicitation before the close of bidding, or their protests will be barred as untimely at the Court of Federal Claims (“COFC”).  (Note that there are similar rules that apply to GAO protests.)  This is in stark contrast to post-award protest deadlines, which generally flow from the post-award notices received and/or the date of the subsequent debriefings. Confusing the deadlines for pre-award and post-award protests is one of the most common mistakes we see contractors make in terms of bid protests. This issue became an area of further interest in recent years due to a dissenting opinion that seemed to question whether Blue & Gold would continue to be applied.

Well, Harmonia is proof that Blue & Gold lives on.  Harmonia makes it clear that the principles set forth in Blue & Gold will continue to serve as the general rule relating to pre-award bid protest timeliness; but it also demonstrates that, in very limited circumstances, at least at COFC – there may be situations in which COFC protest rights are preserved even when a COFC protest is not itself filed before close of bidding.  The nuances are important here, so let’s take a look at Harmonia in detail.

Harmonia involved a U.S. Department of Homeland Security, Customs and Border Protection (“CBP” or “the Agency”) procurement for “application development and operation and maintenance support services.” The solicitation was originally issued on July 12, 2018. Over the next two months, the Agency issued eight amendments to the solicitation. In late September, the offerors (including Harmonia Holdings Group, LLC) submitted their initial proposals. However, subsequently, on October 26, 2018 and November 1, 2018, the Agency issued two more amendments (9 and 10, respectively) which added certain provisions and – according to Harmonia – necessitated substantial revision to the offerors’ proposals. The revised proposals were due on November 13, 2018, and the offerors were permitted to revise their proposals with respect to certain factor/subfactors only. On November 12th, 2018, Harmonia submitted an agency-level protest, asserting (among other things) that offerors should be able to revise their entire proposals in response to Amendments 9 and 10. The agency denied Harmonia’s protest on December 6, 2018. Meanwhile, source selection continued on, and CBP later informed Harmonia that its proposal was unsuccessful on April 25, 2019. 

Harmonia filed a bid protest with the COFC on May 7, 2019, five months after the Agency denied the agency-level protest, and about two weeks after Harmonia had been informed that it had not received the contract award. With regards to the grounds raised in Harmonia’s pre-award protest (specifically, the limitation on proposal revisions following Amendments 9 and 10), the COFC found Harmonia’s protest untimely. What is interesting, though, is WHY it came to this conclusion. Applying Blue & Gold in the most basic terms, COFC reasoned that Harmonia did not facially waive its challenge regarding Amendments 9 and 10, because it had previously articulated these same challenges in its pre-award agency protest. This was consistent with prior case law, which had implied that a timely pre-award agency or GAO protest may preserve a later challenge at COFC. However, that precedent, while suggesting a timely pre-award agency or GAO protest may preserve COFC protest rights, generally focused on the protestors’ diligence and speed in pursing their protests at COFC; a lack of such diligence could, itself, render a COFC protest untimely.  The COFC referenced previous case law, noting that a challenge to the solicitation should be brought prior to award where there is adequate time to do so. The COFC emphasized the fact that “[n]othing in the record or in plaintiff’s briefing meaningfully explains the five-month delay in Harmonia filing its pre-award protest with this Court,” or why the protestor waited until award was made to resurrect its protest at COFC. Accordingly, the COFC stated that it “[could]not conclude that Harmonia diligently or timely pursued its position.” On these grounds, the COFC found Harmonia’s protest to be untimely, even though it had timely filed a pre-award agency protest. The COFC explained its reasoning as follows:

“while Harmonia facially met the requirements under Blue & Gold, Harmonia nevertheless waived its right to bring those claims before this Court by failing to timely and diligently pursue its objections to Amendments 9 and 10.”

Harmonia appealed to the Federal Circuit, arguing that its timely agency protest should have preserved its COFC protest right, regardless of any perceived “diligence” (or lack thereof) relating to the speed with which a follow-up COFC protest was filed. The Federal Circuit agreed with Harmonia.  It examined its previous case law, reasoning that the Blue & Gold waiver rule was created to “prevent[] a bidder who is aware of a solicitation defect from waiting to bring its challenge after the award in an attempt to restart the bidding process, ‘perhaps with increased knowledge of its competitors.’ ” The idea was to “prevent[] contractors from taking advantage of the government and other bidders[] and avoids costly after-the-fact litigation.” Looking at prior cases dealing with the application of the Blue & Gold rule, the Court found that those cases applying the Blue & Gold rule “generally involve [the protestor’s] failure to timely object to a known, patent defect in the solicitation.” The Court acknowledged that the case law, as a whole “recognized that the Blue & Gold waiver rule is predicated not only on the notion of avoiding delay that could benefit the delaying party, but also on the notion of preserving challenges and providing notice to interested parties.” Because Harmonia had filed a timely, formal agency-level protest, providing notice of its protest grounds, the Court concluded that it was “not persuaded that [Federal Circuit] precedent supports applying the Blue & Gold waiver rule to this case.” 

Note, however, that Harmonia does not give protestors a right to wait indefinitely to re-litigate an unsuccessful agency (or GAO) protest at the COFC. The Federal Circuit expressly cautioned that Harmonia should not be read as “condoning delay” and warned contractors that “under certain circumstances, bidders may face adverse consequences” for such delay. In other words, in Harmonia, the Federal Circuit left open some questions relating to the timing of pre-award protests at COFC, and what will and will not be accepted. If nothing else, Harmonia demonstrates that the contractor could have likely avoided the COFC’s dismissal of its protest as untimely, and the related expense of litigating an appeal before the Federal Circuit, if it had not waited five months after the denial of its agency-level protest to file its bid protest at COFC.  The lesson here is that contractors should scrutinize solicitation terms and assert formal protests regarding defects in the solicitation before the end of bidding. If not successful at the agency or GAO level, contractors should promptly bring the protest to the COFC.

The Federal Circuit remanded Harmonia to the COFC, to rule on the original protest grounds concerning Amendments 9 and 10. It will be interesting to see how the COFC decides this protest.  GovCon Examiner will continue to monitor Harmonia on remand and other COFC and Federal Circuit rulings about the waiver rule. In the meantime, the Obermayer government contracting team is happy to assist you with any questions you have about pre-award protests and the waiver rule, or any other bid protest topic.

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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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