Bid Protests

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GAO’s recent decision in HP Enterprise Services, LLC illustrates the challenges resulting from the recent changes to GAO’s task order protest jurisdiction. It also provides a useful overview of the current scope of GAO’s jurisdiction over such protests.  HP Enterprise Services, LLC—Reconsideration, B-413382.3 (January 26, 2017).

Here is a bit of background on the recent jurisdictional changes that led to the decision. GAO lost its jurisdiction over protests of civilian task and delivery orders valued at over $10 million on September 30, 2016. This was the “sunset date” established in the 2008 National Defense Authorization Act. GAO’s jurisdiction over such protests for military agencies or departments, or for protests alleging increased scope, period, or maximum value of the underlying contract, remained undisturbed in 2016.

For approximately three months, contractors had no forum (and therefore, no remedy) for protests of civilian task orders valued over $10 million. That changed on December 14, 2016, when the Government Accountability Office Civilian Task and Delivery Order Protest Authority Act of 2016 became law. See Public Law No. 114-779 (Dec. 14, 2016). This law restored GAO’s civilian task order protest jurisdiction to its pre-October 1, 2016 scope.

Less than two weeks later, the scope of GAO’s jurisdiction over task order protests changed yet again. On December 23, 2016, the 2017 National Defense Authorization Act became law. See Public Law No. 114-328 (Dec. 23, 2016). Although major changes aimed at limiting federal bid protests had been under discussion, most of the limiting provisions were not adopted. The 2017 NDAA did not change the $10 million threshold for protests of civilian agency task order awards. But it increased GAO’s jurisdictional threshold for military agency task order protests from $10 million to $25 million. Protests asserting that a task order award was improper because it exceeded the scope, the performance period, or the maximum value of the underlying contract can be filed without regard to the threshold.

HP gets caught in a jurisdictional trap

Like many government contractors, HP Enterprise Services was ensnared in these changes. On July 11, 2016, HP protested the award of a task order to CACI, Inc. The task order was issued by GSA, but it required the delivery of IT support services to DoD. GSA took corrective action soon thereafter, and the protest was dismissed as academic. Continue Reading When can a contractor protest a task order at GAO?

GAO has published its decision denying multiple protests of the Defense Health Agency’s decision to award the T-2017 managed care support contracts to Humana Government Business, Inc. and Health Net Federal Services, LLC. Humana won the TRICARE contract for the east region with a total evaluated price of $40.7 billion. Health Net won the west region contract with a total evaluated price of $17.7 billion.

The Atlanta Opera's 2011/2012 performance of The Golden Ticket
Photo: The Atlanta Opera

One of the key issues addressed in GAO’s decision was the challenge to Humana’s past performance rating. Anthem subsidiary WellPoint Military Care Corporation argued that DHA placed so much weight on prior experience as a TRICARE prime contractor that incumbency amounted to an unstated evaluation criterion. In WellPoint’s view, incumbency was the “golden ticket to attaining the highest Substantial Confidence rating.”

GAO found no merit to WellPoint’s argument. There was nothing in the record to suggest that DHA treated incumbency as an unstated evaluation criterion. Indeed, DHA considered WellPoint’s own past performance superior to that of two other incumbent TRICARE contractors—Health Net and UnitedHealth Military & Veterans Services, LLC.

GAO also rejected the legal basis for WellPoint’s argument. While incumbency is not necessarily a golden ticket, GAO also found that it was reasonable to give credit to Humana for its prior experience managing a large TRICARE regional contract. In GAO’s view, “it is not unreasonable for an agency to place particular emphasis on a firm’s performance as an incumbent contractor, since such performance may be reasonably viewed as a more accurate indication of likely future performance . . . .”

Incumbency is not necessarily a golden ticket, but it certainly can’t hurt.

Continue Reading Is incumbency a golden ticket to strong past performance? TRICARE’s $58 billion managed care support contracts

The Supreme Court’s June 2016 decision in Kingdomware Techs., Inc. v. United States, No. 14-916 (June 16, 2016), may significantly impact the meaning of the term “government contract” for years to come.

The case centered on a project for the Department of Veteran Affairs. When VA continually fell behind in achieving its three percent goal for contracting with service-disabled veteran-owned small businesses, Congress enacted the Veterans Benefits, Health Care, and Information Technology Act of 2006. See 38 U.S.C. §§ 8127 & 8128. The Act includes a mandatory set-aside provision that requires competition to be restricted to veteran-owned small businesses if the government contracting officer reasonably expects that at least two such businesses will submit offers and that the “award can be made at a fair and reasonable price that offers best value to the United States.” This is an iteration of the well-known “Rule of Two.”

When it published regulations implementing this statutory requirement, VA took the position that the set-aside requirements in § 8127 “do not apply to [Federal Supply Schedule] task or delivery orders.”  74 Fed. Reg. 64619, 64624 (2009). The Kingdomware case posed a direct challenge to this interpretation.

Continue Reading Kingdomware decision gives new meaning to the words “government contract”

Image by William Warby

GAO has announced a series of proposed amendments to its bid protest regulations. The changes are prompted by the Consolidated Appropriations Act for Fiscal Year 2014, one section of which required GAO to establish an electronic filing system. But the amendments are not limited to implementing electronic filing, and many of the other proposed adjustments warrant attention.

Electronic filing and new filing fee

Many of the proposed amendments address GAO’s proposed “Electronic Protest Docketing System,” or EPDS. Once adopted, EPDS will be the sole means for filing a bid protest at GAO, replacing the “protests@gao.gov” email method. Protests containing classified information will not use EPDS.

Some protest-related communications will also be required to be submitted through EPDS under the proposed amendment to Section 21.3(a). GAO has stated that it will post instructions on its website as to which communications should be submitted through EPDS and which will continue to be exchanged through email. While this guidance is not yet available, the text of the proposed rule does not suggest a substantive change in existing practice, under which certain communications are distributed to all parties (and GAO, but parties may also have separate contact about some protest-related issues.

A filing fee in the amount of $350—the first of its kind at GAO—will be imposed to cover the costs of supporting EPDS. The fee is to be paid by the protester upon initiating the protest. GAO has not addressed how the filing fee will be paid, a potentially important consideration in light of GAO’s short and strictly enforced filing deadlines.

Other important amendments

GAO’s proposed amendments include substantive changes unrelated to EPDS. Many, but not all, of these changes are intended to formally adopt rules announced in GAO’s decisions. Here are some of the signifcant changes. Continue Reading New bid protest procedures at GAO

GAO Headquarters in Washington, DC

The Government Accountability Office has been publishing its annual bid protest statistics report to Congress since fiscal year 1995. That year GAO received 2,334 new protests and closed 2,528. For FY 2015, GAO reports that it received 2,496 new protests and closed 2,647.

Given the changes in contract law and the significant increase in expenditures on federal contracts over the last 20 years, these figures are remarkably consistent.

For Fiscal Year 2015, GAO reports that protesters obtained some form of relief in 45 percent of cases closed, either as the result of an agency’s voluntary corrective action or a decision sustaining some or all of the protest grounds. This “effectiveness rate” is marginally higher than it has been in the previous several years, when it hovered between 42 percent and 43 percent.

Winning bases for bid protests

One interesting piece of data added to GAO’s annual report in the last couple of years is the summary of the “most prevalent grounds for sustaining protests.” This new data element is the result of a requirement in a 2013 amendment to the Competition in Contracting Act. See 31 U.S.C. § 3554(e)(2).

In FY 2015, GAO identified five grounds of protest as the most prevalent. Even though it is drawn from only a small subset of protests that are actually resolved on the merits, GAO’s list of reasons for sustaining protests provides a roadmap for future protesters. Here is GAO’s list, along with a brief summary of the decision that GAO cites to illustrate it. Continue Reading GAO’s guide to winning bid protests

HCR Seminar Postal Contracting Brochure 2016_3Unpaid for work you performed on your HCR contract?  Can’t agree with the Postal Service on a contract price adjustment?  Not given a chance to bid on new work in your area?

Learn about remedies for these problems at our new seminar, “Claims and Disagreements under Postal Service HCR contracts.”  Husch Blackwell partner David Hendel will present the seminar on January 19, 2016, at 9:00 – 10:30 a.m., at the Golden Nugget Hotel in Last Vegas, NV.

The seminar focuses on two areas where HCR contractors have substantial rights and remedies. First, we examine the claims process, which gives contractors the right to recover funds for various Postal Service actions – or inactions. We describe the activities that potentially generate claims, how to prepare a claim, when to bring a claim, and how claims are processed and resolved. We review actual claims that arose from service changes and describe how courts have ruled on them. We also provide a list of do’s and don’ts when preparing and submitting claims.

Second, we describe the “disagreement” process, which allows contractors to protest a Postal Service procurement action or award decision. We explain the grounds for bringing a disagreement, deadlines and filing requirements, and decisions by the USPS Supplier Disagreement Resolution Officer (SDRO).

The seminar is presented in conjunction with the Central/Western Area regional meeting of the National Star Route Mail Contractors Association. Separate registration is required. For Star Route Association members, the seminar fee is $195; for non-members, $295.  A $50 discount applies to each additional person who attends from the same company. Those wishing to register may go to https://www.regonline.com/hcr  or contact seminar coordinator Shana Hoy at  816.983.8809 at shana.hoy@huschblackwell.com.

HB Asbestos_Map_v4Contracts with Virginia agencies, counties, municipal governments, and school boards are governed by the Virginia Public Procurement Act. The Act requires the use of competitive procedures in the solicitation and award of public contracts. It also establishes a procedure for the submission and resolution of bid protests. See Va. Code Ann. § 2.2-4360(A).

How and when to protest a contract award decision

An actual or prospective bidder seeking to challenge the award of a Virginia government contract must submit a protest to the procuring agency or to an official designated by the agency. The protest must be submitted in writing. It must include the basis for the protest and the relief sought. A bid protest must be submitted no later than ten days after the award or the announcement of the decision to award, whichever occurs first. This deadline is extended if the protest depends on obtaining access to documents. In those situations, the protest must be submitted within ten days after the records are made available. The VPPA does not specifically allow for the submission of a pre-award protest that challenges the terms and conditions of a solicitation.

If a protest is timely filed, the award and performance of the contract is automatically stayed unless the agency determines in writing that “proceeding without delay is necessary to protect the public interest or unless that bid or offer would expire.”  Va. Code Ann. § 2.2-4362. Continue Reading Bid protests in Virginia

HB Asbestos_Map_v4The Colorado Procurement Code grants the right to submit a protest to “[a]ny actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or award of a contract.” Colo. Rev. Stat. § 24-109-102(1).

A protest must be submitted in writing within seven working days after the protester knew or should have known of the grounds for the protest, usually directly after the contract award decision by the agency issuing the solicitation or bid request. The protest must be submitted to the head of the agency or his designee, who is usually the purchasing agent for the agency.

The purchasing agent for the agency may settle and resolve protests concerning the solicitation and contract award. Absent a settlement, a written decision is required within seven working days after the protest is filed. This decision is to be based on and limited to the issues raised in the protest. It must explain each of the factors taken into account in reaching the determination and must advise the protester of its appeal rights. Colo. Rev. Stat. § 24-109-107. The protest decision must be mailed or otherwise furnished immediately to the protester and is final and conclusive unless the protester files a timely appeal or initiates a court proceeding to challenge the decision. Continue Reading Colorado bid protests

HB Asbestos_Map_v4Public procurement in Missouri is conducted according to statutes and the rules published by the Division of Purchasing and Materials Management within the Missouri Office of Administration. See Chapter 34, Revised Statutes of Missouri; Missouri Code of State Regulations, Title 1, Division 40, Chapter 1—Procurement [pdf]. Although many protesters opt to bring their protest actions directly in court, there are voluntary procedures for the submission and resolution of bid protests involving purchases by Missouri state government agencies in 1 Mo. CSR 40-1.050(9). Continue Reading Missouri bid protest procedures

Tennessee law explicitly provides interested parties the right to protest the terms of a solicitation for a contract with a state agency or the award or intended award of a state government contract. In each case, Tennessee’s procurement code and procurement regulations require the submission of a protest letter directed to the “Chief Procurement Officer” located in Nashville.

What is required to file a protest?

HB Asbestos_Map_v4Bid protests be submitted in writing and identify all of the reasons for the protest. They should be presented in the form of a letter that identifies the solicitation and the interested parties and summarizes the grounds for the protest. The specific grounds of protest that are available under Tennessee law are listed at Tenn. Comp. R. & Regs. 0690-03-01-.12(2)(a). Continue Reading The Tennessee bid protest process