Securing Corrective Action May Raise Further Challenges

by PilieroMazza PLLC

According to the latest statistics available from the U.S. Government Accountability Office (GAO), roughly half of all bid protests filed at the GAO are dismissed within 30 days of filing. Of these, the majority of dismissals occur because the procuring agency takes corrective action in response to the protest. Corrective action often involves the agency agreeing to perform a reevaluation or make a new award determination. Corrective action can be an important early victory; it may provide a second bite at the apple for the contractor, and it can result in a contract award. That said, protesters should be prepared for some unique challenges they may face during and after the corrective action.

A corrective action generally permits the agency to go back and correct procedural errors in the evaluation record with an eye towards bolstering its award decision. If an agency is intent on sticking with the original awardee, the agency can use corrective action to “dot the ‘I’s” in its evaluation file, in order to better defend a second protest or to foreclose a protester’s potential grounds altogether. For instance, if a protester challenged the best value decision, the agency could do a more thorough tradeoff analysis and provide more documentation of that analysis. This type of procedural bulwarking can be very effective due to the difficulty involved in challenging the substance of an agency evaluation determination. While the GAO will often reverse an agency that has not followed the correct procedure in reaching a decision, it is generally reluctant to “second guess” the substance of the discretionary decision itself. Additionally, it is difficult for a protester to challenge the corrective action itself, as the GAO generally affords the agency with wide latitude to sculpt the corrective action it will take.

Another risk posed by corrective action is that it can dispense with one of the protester’s most effective weapons: the automatic stay of contract award. Under the Competition in Contracting Act, an agency is generally prohibited from proceeding with the performance of an awarded contract while that contract is being protested. This automatic stay is put in place if the protester files a protest within ten days of contract award or within five days of certain types of debriefings. However, in a recent case, Solutions by Design Alliant Joint Venture LLC v. United States, the Court of Federal Claims held that the automatic stay ends when the GAO protest is dismissed – regardless of whether that dismissal is due to the agency taking corrective action. While agencies will often keep the automatic stay in place while they take corrective action, they are not obligated to do so. And, if the agency chooses to end the automatic stay, this can mean the agency has little, if any, incentive to expeditiously proceed with the corrective action.

In one recent GAO case, an agency chose to take corrective action in response to a protest and then decided to end the automatic stay. Eight months later, the agency still had not completed its reevaluation and the protester was forced to file a second GAO protest to challenge the agency’s delay in completing the corrective action.

An additional risk posed by corrective actions can arise where a protester tries to bring new protest grounds following the agency’s corrective action. A corrective action usually does not prevent a protester from bringing another protest should it again lose out on an award. However, this is not always the case. In the case of DRS ICAS, LLC, the GAO dismissed as untimely a price analysis argument made in a follow-on protest, when the argument was based on an alleged error made by the agency in the prior evaluation. The GAO held that the agency’s corrective action and new source selection decision did not provide any basis for reviving an untimely issue, where it was clear that the challenged price calculation at issue was not affected by the agency’s corrective action. Thus, the mere fact that an agency took corrective action will not provide a basis for the protester to bring new protest arguments based on the prior evaluation, unless the corrective action directly affected the portion of the evaluation being challenged.

In summary, corrective action can often be an important initial success in the bid protest process. However, such an initial success is not a guarantee of final victory. Given how agencies can use the corrective action process to their advantage, protesters need to stay on guard and be mindful of the challenges that may lie ahead.


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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