APMP BID & PROPOSAL CON 2015 | PAGE 1 The Sixty-Minute Guide to Government Protests May 27, 2015 Richard P. Rector

Why So Many Protests? The number of federal protests has grown steadily since 2001 At the U.S. Government Accountability Office (GAO), protests more than doubled from FY 2001 (1,146 protests filed) to FY 2010 (2,299 protests filed)... consistent with increases in annual procurement spending from $235 to $535 billion Growth in protests has also continued in recent years despite the decline in procurement spending –Since FY 2010, with the exception of a 2% drop in FY 2013, GAO protests have increased between 2% and 5% per year, with FY 2014 (2,561 protests filed) setting the record

Why So Many Protests? But deciding whether to file a bid protest can be difficult –Many companies are understandably reluctant to fight with a customer over a lost contract –And the payoff for a successful protest is not necessarily a contract award... usually it’s a “do over” Nonetheless, losing a strategically important competition... for reasons that are unclear or unfair... can be unacceptable to a company’s leaders and stakeholders, particularly in a declining market

Why So Many Protests? Protests are common on large and strategically important procurements –Significant B&P costs have already been sunk into the procurement –At GAO, there’s a 30% chance the agency will take “corrective action” of some type, and a 15-18% chance of prevailing if the case goes to a decision on the merits –So a protest is often a rational, next-step business decision Protests are also common on services procurements where incumbent can usually obtain 3+ months of additional performance Increase in protests is driven by heightened competition... the chance to snatch victory from the jaws of defeat

APMP BID & PROPOSAL CON 2015 | PAGE 5  Improper sole-source award  Contract modification exceeds scope of original contract  Unduly restrictive specifications or requirements  Ambiguous or unclear requirements  Organizational conflict of interest  Unequal access to information … Biased ground rules … Impaired objectivity  Use of unstated evaluation criterion  Acceptance of offer that fails to meet mandatory requirement  Unreasonable evaluation (technical, cost, etc.)  Lack of “meaningful discussions”  Unfair competitive advantage  Improper business conduct or representations  Unrealistic price or cost What Are The Most Common Protest Grounds?

APMP BID & PROPOSAL CON 2015 | PAGE 6  Meeting With Customer to Express Concern  Letter of Concern to Contracting Officer  Letter of Concern to Competition Advocate or Ombudsman _____  File protest with Agency  File protest with Government Accountability Office (GAO)  File protest with US Court of Federal Claims (COFC) What Are The Potential Remedies For A Disappointed Offeror?

APMP BID & PROPOSAL CON 2015 | PAGE 7  Agency Protest  Less public, less formal, faster  Less objective, less transparent, less effective  Can be good option for pre-award protest  Protest Procedures are Agency-specific:  Submit timely, written protest  Designate decision maker: Contracting Officer or Agency Protest Official  “Automatic Stay” of contract performance is provided... but can be overridden by the agency if in agency’s best interests or if there’s an urgent and compelling need to start performance  Agency makes “best efforts” to resolve agency protests within 35 days Where Can A Protest Be Filed?

APMP BID & PROPOSAL CON 2015 | PAGE 8  GAO Protest  Public  Somewhat burdensome on the agency “customer”  Less formal than COFC  Can trigger Automatic Stay of contract performance just by filing  Decision within 100 days  Review by “independent” GAO staff attorneys, with evidentiary hearing if needed  Attorneys for parties can review the full evaluation record  Prevailing protester can recover attorneys/consultants fees Where Can A Protest Be Filed?

APMP BID & PROPOSAL CON 2015 | PAGE 9  COFC Protest  No “Automatic Stay” -- must request Preliminary Injunction  No strict filing deadlines, except for solicitation challenges  No time limit to issue a decision  More formal and expensive litigation  DoJ lawyer (rather than agency lawyer) represents Govt  No recovery of attorneys/consultants fees (except small businesses under the Equal Access to Justice Act) Where Can A Protest Be Filed?

APMP BID & PROPOSAL CON 2015 | PAGE 10  “Interested party” who is “competitively prejudiced”  Interested Party: An actual or prospective offeror whose direct economic interest would be affected by the award of a contract or by the failure to award a contract  Includes losing offeror (protestor) and contract awardee (intervenor)  In pre-award protest, intervenors may also include offerors who appear to have a substantial prospect of receiving an award if the protest is denied  Subcontractor does not have standing to protest in most situations  Protester may not be an interested party where it chose not to submit a proposal  Competitive Prejudice: Protestor must demonstrate that, but for the agency’s actions, it would have a substantial chance of receiving award Who Can Participate In A Protest?

APMP BID & PROPOSAL CON 2015 | PAGE 11  Pre-Award Protest Deadlines  Protests based upon alleged improprieties in a solicitation shall be filed prior to submission of proposal.  Post-Award Protest Deadlines  Protests shall be filed not later than 10 days after the basis of protest is known or should have been known (whichever is earlier).  Each protest ground must be timely  Applies to Supplemental Protests as well  If a debriefing is requested and required:  Not later than 5 days after the debriefing to trigger the automatic stay  Otherwise, not later than 10 days after the debriefing to be timely  If an agency protest is denied (“adverse initial action”), not later than 10 days after the denial (4 CFR 21.2(a)(3)) When Must A Protest Be Filed To Be Timely?

APMP BID & PROPOSAL CON 2015 | PAGE 12  Automatic Stay:  If it receives notice of a timely protest, the Agency:  May not award a contract;  May not authorize performance of the contract while the protest is pending; or  If applicable, must direct the awardee to cease performance under the contract and suspend related activities  Should leave 24-hour buffer for notification (5 days after debriefing is ideally 4 days after debriefing)  Procuring agency head may override the stay and authorize award or performance upon a written determination and finding that “urgent and compelling circumstances” exist or the “best interests” of the United States require performance  Protestor may challenge the override by filing a COFC action When Must A Protest Be Filed To Obtain An “Automatic Stay” Of Contract Performance?

APMP BID & PROPOSAL CON 2015 | PAGE 13  Possible Outcomes  Summary Dismissal  Agency Corrective Action  Optional ADR Procedures... “outcome prediction” at GAO  Optional Hearings... less than 5% of cases at GAO  Merits Decision Based On The Parties’ Briefs... at GAO, protest must be denied or sustained within 100 days of filing  Motion for Reconsideration... don’t bother  Unsuccessful protestor at GAO can file identical protest in the Court of Federal Claims... case is re-litigated What Are The Possible Outcomes Of A Protest?

APMP BID & PROPOSAL CON 2015 | PAGE 14  Pre-Award Protests  Agency must cease violating procurement laws and regulations (e.g., amend solicitation, clarify requirements, cancel improper set-aside procurement)  GAO: Costs of filing and pursuing protest, including reasonable attorney and consultant fees  Post-Award Protests  Agency must “fix” the problem identified in the protest (e.g., amend solicitation, re-open discussions, allow new FPRs, re-evaluate proposals) and award contract consistent with procurement laws and regulations  GAO: Costs of filing and pursuing protest, including reasonable attorney and consultant fees What Happens If The Protestor Wins?

APMP BID & PROPOSAL CON 2015 | PAGE 15  GAO will make sure Agencies follow the proper procedures and adequately document the procurement process  On substantive issues, GAO will defer to the Agency as long as its evaluation was “reasonable”  If reasonable people can disagree with the Agency’s evaluation (and the Agency’s rationale was documented), GAO will not substitute its judgment for that of the Agency When Does GAO Typically Sustain A Protest?

Protest Checklist What are the potential protest grounds identified by the company to date? –Are they procedural or judgmental in nature? –Has there been competitive harm—or “prejudice”—to the company for each protest argument? –Does the company need to win more than one argument to prevail? Are there certain arguments that the company must win to prevail? –Does the company have sufficient evidence, based on the debriefing, to prove its arguments? Or does the company need to find additional evidence in the procurement record?

Protest Checklist What is the likelihood of success? –How often are protesters generally successful at the GAO and the COFC? Effectiveness Rate Decision on Merits –Is corrective action likely? –Given the protest arguments identified to date, what is our likelihood of success if the case proceeds to a decision on the merits? –Can the agency appeal or circumvent the decision if protester wins?

Protest Checklist What is the strategic importance of the procurement to the company’s business plans? Is the proposal/capture team objective about the loss? –Have they rationally judged the validity of the agency’s position? –Is their employment or compensation linked to winning the contract? Will a protest harm the company’s prospects of future work? –What is in the pipeline with this specific Government agency? –What kind of “tone” should be used in the protest pleadings?

Protest Checklist Are there any other risks of protesting that should be considered? –Risk of counter-allegations regarding the company’s compliance or integrity? –Commercial sensitivity to a published decision? Is the company the incumbent contractor? –If so, will the incumbent contract likely be extended in the event of a protest? –What is the impact to the company of extended performance?

Protest Checklist How much will a protest cost? –Legal Fees –Consultant Fees –Internal Costs and Resources Can protester recover its fees from the Government if it prevails? –GAO: partial recovery for large business, full recovery for small business –COFC: partial recovery for small business

APMP BID & PROPOSAL CON 2015 | PAGE 21 Questions? Richard P. Rector Chair, US Government Contracts DLA Piper LLP (US)