Dr. Earl R. Smith II

Jennifer M. Miller and Anna G. Kizer

Wyrick Robbins Yates & Ponton LLP

Government Contracting Law Group

You spend an extraordinary amount of time and effort putting together an excellent proposal for the government.  You feel great about your changes of award.  But then . . . you receive notice that the contract was awarded to another company.  How do you decide whether you should challenge (or “protest”) the agency’s decision?

One of the most important decisions in deciding whether to protest an agency’s decision to award a contract to another company is determining whether you have a legitimate basis to protest the agency’s contract award.  All protests – and the possibility of succeeding on a protest – are extremely fact-specific; however, there are several protest arguments that tend to be more successful than others.

First, Some Facts and Figures

Have you ever wondered whether it is worth it to file a protest?  Doesn’t the government always win?  Aren’t you just throwing good money after bad to fight an award decision?  While protesters do have an uphill battle, the answers to these questions are not as clear cut as you might think.

In January of this year, the Government Accountability Office (“GAO”), which hears the bulk of bid protests, released its Bid Protest Statistics for Fiscal Years 2005-2009.  (http://www.gao.gov/special.pubs/bidpro09.pdf)  Of the 1,989 bid protests filed in Fiscal Year 2009, the protester received some form of relief in 45% of cases.  This includes cases where the agency voluntarily agreed to take corrective action in response to a protest, cases where GAO directed the agency to take corrective action, and cases where the agency agreed to take corrective action in order to resolve the protest without a decision by GAO on the merits.  Notably, the “effectiveness rate” of protests has risen over the last five years; in Fiscal Year 2005, the effectiveness rate was 37%.

So which arguments are more likely to result in a successful protest, and which arguments are likely to be a waste of your company’s time and resources?

Winning Protest Arguments

When a protest is filed with GAO, GAO will not reevaluate the proposals or make its own determination as to their acceptability or relative merits.  Instead, GAO will examine the record to determine whether the evaluation was fair, reasonable and consistent with the evaluation criteria.  Therefore, in order to succeed on a protest, you must show that the evaluation was flawed in one of these three ways.

Successful protest arguments in these areas include:  the agency failed to conduct meaningful discussions, the agency did not conduct a proper tradeoff, the agency did not apply the evaluation criteria in the solicitation, the agency identified weaknesses or deficiencies that did not exist, and the agency did not treat offerors equally.

The Agency Failed to Conduct Meaningful Discussions

If an agency holds discussions with offerors, the agency has to make sure that those discussions are “meaningful.”  This generally means that the agency must identify for you:  (1) significant weaknesses, (2) deficiencies, and (3) adverse past performance information to which you have not yet had an opportunity to respond.  If you learn during the debriefing that the agency did not select you for award based on its conclusion that your proposal contained a significant weakness or deficiency, or based on adverse past performance information, and the agency did not raise those issues with you during discussions, you may have a viable ground to protest the award decision.

The Agency Failed to Conduct a Proper Tradeoff or Failed to Properly Document a Tradeoff

An agency generally reserves the right to award a contract based on the “best value” to the government – meaning that the agency does not have to award the contract to the lowest-priced offeror if it believes that another offeror’s superior technical approach warrants the additional cost.  However, if the agency awards the contract to a higher-priced offeror, the agency must perform a tradeoff analysis that identifies what benefits the higher-priced proposal offers that justify the extra cost, and the agency must document this analysis.  If the awardee’s price is much higher than yours, but there is little technical difference (facts that you can learn during your debriefing), you may have an argument that the agency did not perform a proper price/technical tradeoff and could not have properly documented that tradeoff.

The Agency Did Not Apply the Evaluation Criteria in the Solicitation

It is a basic rule of government contract evaluations that the agency must evaluate proposals on the basis of the criteria set forth in the solicitation.  Therefore, if you learn at the debriefing that the agency rated your proposal poorly because you did not submit “x” with your proposal or because you did not propose to do “x” in your proposal – and “x” was not required by the solicitation – you likely have grounds to protest the award decision.

The Agency Identified Weaknesses or Deficiencies That Don’t Exist

Occasionally during a debriefing, the agency will identify a weakness or a deficiency in your proposal that you know is not accurate.  For example, the agency may say that you did not include a required résumé with your proposal when you did, or the agency may say you did not address a certain issue when you did.  You would be able to protest the agency’s faulty evaluation.

The Agency Did Not Treat Offerors Equally

In evaluating proposals, the agency has an obligation to treat offerors equally.  This means that if, for example, two offerors have similar past performance, they should receive a similar past performance evaluation.  If two offerors propose a similar approach, their approaches should be similarly evaluated.  If you and the awardee are similar in any given aspect but were not evaluated similarly by the agency, you may have grounds to protest.

As another example, the solicitation may have had a requirement that you know the awardee could not meet (for example, perhaps the solicitation required the awardee to have a bona fide place of business in a given state, and you know that the awardee does not meet this requirement).  If the agency waives a solicitation requirement for the awardee, it has not treated all offerors fairly (since other offerors were required to meet that requirement).  This too will give you grounds to protest the award.

Losing Protest Arguments

The Agency Should Have Recognized That My Company Is the Best

One commonly raised – but never successful – protest allegation is the protester’s insistence that it is simply better than the awardee.  The agency is entitled to a significant amount of discretion in evaluating proposals.  Simply disagreeing with the agency’s evaluation is the surest way to get your protest denied.

The Awardee Does Not Qualify As a Small Business, HUBZone, SDVO SBC or Other Required Preference Status

Many government contracts are “set aside” for competition among a certain type of business, such as small businesses, Historically Underutilized Business Zone (“HUBZone”) businesses, or Service-Disabled Veteran-Owned Small Business Concerns (“SDVO SBC”).  While you may believe that the contract awardee under one of these types of contracts does not qualify for the required status, a GAO protest is not the place to raise these types of challenges, and GAO will automatically dismiss these types of protests.  Each of these preference programs contains a set of regulations that govern protests, which generally must be filed with the contracting officer and will be considered by the U.S. Small Business Administration.

The Awardee’s Price Is Too Low

Where the contract is a firm-fixed price contract, protests claiming that the awardee’s price is “too low” are generally unsuccessful.  This is because there is no prohibition against a company submitting a low price – or even a below-cost price – in order to obtain a government contract.  One exception – although successful only in rare cases – is where the awardee’s price is so low that the awardee did not understand the full extent of the work specified in the solicitation and/or submitted a price proposal that did not take into account or reflect all of the contract requirements.

There Is a Problem with the Solicitation

The bid protest rules contain specific time limitations on when protests must be brought.  (See our article, “Bid Protests, Part I – What Losing (and Winning) Offerors Need to Know” for more information on the logistics of the protest process.)  While most protests cannot and should not be raised until after award (otherwise they will be “premature”), any protest challenging the terms of the solicitation must be brought before initial offers are submitted.  A protest challenging the terms of a solicitation after award will be dismissed.  Therefore, if you believe that the terms of a solicitation are unfair (“only one company could meet these requirements”) or unclear, you must raise those issues before submitting your initial offer; don’t wait until after contract award.

The Agency Was Biased or Prejudiced

While bias and prejudice (whether it is “the agency is out to get me” or “the agency went out of their way to award the contract to the awardee”) may seem like appealing arguments, they are very rarely – if ever – successful.  Government officials are presumed to act in good faith; therefore, bias or prejudice will never be found based on inference or speculation; a protester must provide credible evidence clearly demonstrating a bias against the protester or for the awardee.  This has proven to be a nearly insurmountable standard.

Any Protest Allegation That Would Not Impact the Ultimate Award Decision

In any protest, the protester not only needs to show that there was an error in the evaluation, but that the error could have impacted the ultimate award decision.  This means the protester has to show that, but for the agency’s actions, it would have had a substantial chance of receiving the award.  This often comes in to play in situations where the protester challenges a relatively minor error in the evaluation decision that would not have impacted the overall standings of the offerors, or where the protester challenges the evaluation of the awardee’s proposal, but there are one or more other companies in line for award before the protester.  If correcting an error would not change the award decision, your protest will not be successful.

Conclusion

Of course, there are numerous other protest allegations – successful and unsuccessful – that can be raised.  If you receive a notice of award stating that a contract has gone to your competitor instead of to you, consult with your legal counsel to develop questions that you can ask during your debriefing that might lead to viable protest grounds.  After the debriefing, good legal counsel with experience in government contract protests will advise you when you have a solid basis to protest – and when you do not.

Should your company have any questions regarding these issues, or regarding any other government contracting issues, please do not hesitate to contact Benjamin N. Thompson (bthompson@wyrick.com), Jennifer M. Miller (jmiller@wyrick.com), or Anna G. Kizer (akizer@wyrick.com) in our firm’s Government Contracts Group.

Benjamin N. Thompson
Jennifer M. Miller

Anna G. Kizer
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607
Telephone:  (919) 781-4000
Facsimile:  (919) 781-4865

NOT LEGAL ADVICE:  This publication is not to be considered specific legal advice and should not be relied upon in lieu of advice from an attorney.  Each client’s situation is unique, and if you have need for legal advice, you should seek advice from an attorney.

CIRCULAR 230 NOTICE:  Any information regarding any U.S. federal tax matters contained in this communication is not intended or written to be used, and cannot be used, as advice for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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