Domestic Review Mechanisms in Public Procurement January 17, 2003 Professor Steven L. Schooner George Washington University Washington, D.C., USA

Domestic Review Mechanisms Permit (both domestic and foreign) potential offerors (such as bidders) and disappointed offerors (contractors that compete unsuccessfully for the award of a contract) the opportunity to seek correction of anomalies or inequities in the contractor selection process.

Considerations Why invest in challenge mechanisms? What do they do? Who resolves challenges? How are challenges resolved?

Desiderata, Goals, Constraints? Transparency Integrity Competition Uniformity Risk Avoidance Wealth Distribution(*) Best value Efficiency (administrative) Customer Satisfaction Traditional? Transitional? Current?

Challenge Regime: Aspirations Synergy with other aspirations for procurement system (transparency, competition, integrity…..) Public Trust (non-economic issue) Credibility with both domestic and international communities Minimum standards for GPA Article XX (Challenge Procedures)

Protests and Disputes Solicitation defects Pre-award and Post-award Multiple parties Contractor selection process Disappointed offeror litigation Post-award Contracting Parties Contract Performance &/or Administration Contract interpretation Remedy granting clauses Different rules/fora

Why Bid Challenges or Protests? Partial Delegation of the Oversight Regime -- delegation by Government to Contractor Community

Private Attorneys General (Third-Party/ External Oversight) Conventional Procurement Oversight: Managers, Auditors, Inspectors General Supplemental Oversight: –Protests –Disputes –Fraud (whistle-blowers) –Media (Investigative Reporting) $$$?

People, Culture, Norms Perception of Rule of Law –Commitment to due process Respect for Courts, Judges, Administrative Tribunals Willingness to Litigate –avoid bite the hand… instinct –difficult hurdle (public confidence)

What do protests challenge? Pre-award –Lack of notice of solicitation –Overly restrictive solicitation –Ambiguous specifications –Exclusion from competition (interim) Post-award –Did not receive contract –Improper application of evaluation criteria –Anything learned during debriefing(***)

What are remedies? the stay or suspension re-solicit, re-compete issue new solicitation terminate awarded contract (T/C) direct award bid and proposal (B&P) costs attorneys fees re-open negotiations; re-evaluate offers refrain from exercising option lost profits?

Lessons from the US model? Large, developed, complicated procurement regime Broad industrial base Generally open to foreign contractors Fully evolved judicial regime (Relatively) litigious culture

Election of Forum Agency Administrative (quasi-judicial) Judicial no exhaustion requirement no entry fee (or nominal fee) Three (3) options – too many?

Three Options Individual Purchasing Agencies General Accounting Office (administrative) Judicial (Civil) U.S. Court of Federal Claims

Agency Protests Long, unimpressive history –Constant efforts to reform Most efficient (inexpensive) forum Obvious problem = objectivity

Administrative Protests (most popular option) U.S. General Accounting Office (GAO) Unique forum (legislative instrumentality)

GAO's role in government procurement Pre-award: ensure that agencies have not improperly restricted competition Award: ensure that the selection was reasonable and consistent with the solicitation criteria Post-award: does not consider challenges to contract administration Audit: all phases

Bid Protests at GAO function began in 1920s; codified in 1984 Competition in Contracting Act (CICA) mandate: independent, expeditious, and inexpensive resolution of protests decisions establish a uniform body of law relied on by Congress, the courts, contracting agencies, and the public Familiar rules -- 4 CFR 21

GAO strives for balance… need to hold agencies accountable and protect aggrieved offerors' due process rights …and… need to ensure that the government procurement process can proceed without undue disruption

General Accounting Office Automatic Stay cent injunction (letter, plus price of a stamp) Huge body of precedent Agency Report Sufficient, but limited, process –discovery –hearings (live witnesses) –counsel = optional (but typical)

Judicial Option U.S. Court of Federal Claims –In Washington, D.C. Willing to travel (but impractical) –High burden for temporary restraining order (TRO) or preliminary injunction (PI) versus automatic stay likelihood of success on merits –Low volume - Not a forum of choice

A Robust Challenge Regime Supports Key Elements of the Procurement Process Transparency Integrity Competition Uniformity Best Value Efficiency