Discovery and Agency Deference to Fact-Findings in Procurement-Related Claims

Federal procurement statutes and regulations—including the Competition in Contracting Act of 1984 (CICA) and the Federal Acquisition Regulation (FAR)—ensure that the acquisition of goods and services by executive agencies is conducted transparently and fairly. Carpenter & Schwartz, supra, at 1 (“The purpose of these [statutes and regulations] is to guide the acquisition system ‘to deliver on a timely basis the best value product or service to the [government], while maintaining the public’s trust and fulfilling public policy objectives,’ such as the promotion of competition.” (quoting 48 C.F.R. § 1.102 (2017))). Disappointed bidders may also challenge procurement procedures or decisions at the agency level. Congress authorizes bid protests in three separate forums: the COFC (28 U.S.C. § 1491(b)), the GAO (31 U.S.C. §§ 3551–57), and procuring agencies (48 C.F.R. §§ 33.102–103). Id. However, it is argued that certain bid protests may still be brought before federal district courts. See Peter Verchinski, “Are District Courts Still a Viable Forum for Bid Protests?,” 32 Pub. Cont. L.J. 393, 409 (2003). Despite the increase in protests, the rate of protests sustained is not encouraging. According to the RAND Report (at XV), the sustained rate of all DoD bid protest actions at the GAO, including task order protests, was 2.6 percent and 9 percent at the COFC. The report, however, further notes that the effectiveness rate of all actions at the GAO (i.e., the percentage of protests in which the protester obtains relief through either a favorable GAO decision or voluntary agency corrective action) was 41 percent. Yet, certain reports suggest that disappointed bidders may be likely to prevail before the COFC. Id.

Although parties may have a higher chance of prevailing in the COFC than in the GAO, the court is not well known in the legal community. As its name suggests, the COFC only hears claims against the United States. See Cox v. United States, 105 Fed. Cl. 213, 216 (2012) (stating that the United States is the only proper defendant in the COFC). The jurisdiction of the COFC, as a general rule, is “defined by the Tucker Act, which gives the court authority to render judgment on certain monetary claims against the United States.” See Solomson, supra, at 3-1 (quoting RadioShack Corp. v. United States, 566 F.3d 1358, 1360 (Fed. Cir. 2009)). Unlike federal district courts, which have the jurisdiction to decide what Europeans refer to as matters of private law and public law, the COFC only hears public law matters; that is to say, legal matters that concern the ensemble of legal rules that govern the relationship between private persons and the government, as opposed to between private persons alone. See Black’s Law Dictionary (9th ed. 2009) (defining “public law” as the “body of law dealing with the relations between private individuals and the government, and with the structure and operation of the government”). The distinction between public law and private law seems fundamental to continental European lawyers, whereas this distinction is not taken seriously in the United States and American law students are not taught about this division. See John Merryman, “The Public Law-Private Law Distinction in European and American Law,” 17 J. Pub. L. 3, 3–4 (1968).

This broad distinction between private and public rights, without more, adds very little to our understanding of the apparent disparity in the success rate of protests before the COFC, the GAO, or the various procuring agencies. The distinction, however, in certain regards, informs us of the origin of judicial deference to agency fact-findings. Cf. Evan D. Bernick, “Is Judicial Deference to Agency Fact-Finding Unlawful?,” 16 Geo. J. L. & Pub. Pol’y 27, 31–32, 59–60 (2018). Professor Bernick explains that judicial review and, ultimately, agency deference rest on the historical, but increasingly muddled, distinction between “public rights” and “private rights,” the core of the latter being the right to life, liberty, and property. As Professor Bernick notes, private rights were understood to derive from human nature and public rights were derived from government largesse; therefore, government burdens on private rights, such as the right of property, were guaranteed a day in court, whereas burdens on so-called public rights were not. Id. at 31–32. Professor Bernick, however, also states that the appellate model of review, as it applies to the judiciary-agency relationship, was justified by the Supreme Court upon an assessment of comparative institutional competence. Id. at 35 (citing Interstate Commerce Comm’n v. Union Pac. R.R. Co., 222 U.S. 541, 548 (1912)). These findings form the basis of the administrative record, which is the evidence that plays a determinative role in decisions by the GAO and the COFC. This deference, in turn, clouds the favorability with which discovery requests are received. Agencies have taken a variety of approaches to defining the administrative record in agency guidance documents, informational articles, and internal memoranda. Leland E. Beck, Agency Practices and Judicial Review of Administrative Records in Informal Rulemaking 28 (2013).

Increasingly, however, academics are starting to scrutinize the deference accorded to agency fact-findings. See Bernick, supra, at 29 (noting that aside from Philip Hamburger’s book, Is Administrative Law Unlawful? (2015), the issue of fact deference has generally been neglected). There is generally no right to compel discovery from procuring agencies. Similarly, the nature and scope of discovery before the GAO is quite narrow. See 48 C.F.R. § 33.103(g) (“To the extent permitted by law and regulation, the parties may exchange relevant information.”); see also Carpenter & Schwartz, supra, at 3, 11 (stating that agencies can voluntarily share certain information); Michael J. Schaengold, T. Michael Guiffré & Elizabeth M. Gill, “Choice of Forum for Federal Government Contract Bid Protests,” 18 Fed. Cir. B. J. 243, 273 (2009) (stating that some agency FAR supplements specifically state that their agency-level protest procedures do not provide for any discovery). Protesters before the COFC, on the other hand, may rely on the “duty to disclose” of Rule 26 of the Rules of the U.S. Court of Federal Claims (RCFC), which is modeled after the Federal Rules of Civil Procedure. See Dairyland Power Coop. v. United States, 79 Fed. Cl. 709, 714 n.6 (2007) (stating that COFC “has endeavored to create a set of rules that conforms to the Federal Rules of Civil Procedure to the extent practicable given differences in jurisdiction between the Court and the United States district courts. Consistent with this objective, case law and the Advisory Committee Notes accompanying the Federal Rules of Civil Procedure will guide the interpretation of the Rules of the Court of Federal Claims”).

Along with the fact-specific nature of each bid protest, there are several factors that could explain the inconstancy between protests in these various fora. See Schaengold et al., supra, at 270–74 (discussing advantages and disadvantages of agency-level bid protests). Short of resolving this matter, this article explores how differences in the scope of discovery in these fora, together with the growing scrutiny of deference to agency fact-findings, may combine to favor certain bid protests before the COFC.

An Overview of Discovery in Bid Protests Before the GAO and the COFC

The GAO is an independent and nonjudicial forum that is “overwhelmingly preferred” by disappointed bidders. Robert S. Metzger & Daniel A. Lyons, “A Critical Reassessment of the GAO Bid-Protest Mechanism,” 2007 Wis. L. Rev. 1225, 1234 (2007). This is due to its expertise, procedural process, and speed. Id. (stating that the GAO’s process is comparatively inexpensive and rapid). Yet, where a party before the GAO is denied relief, it may pursue its protests before the COFC. See 31 U.S.C. § 3556. Where a party pursues its protests at the COFC after filing its claim with the GAO, as opposed to filing directly before the COFC, the court’s review focuses on the agency’s decision, not that of the GAO. See Schaengold et al., supra, at 295 (“In a protest filed at the COFC after the issuance of a GAO decision on that same procurement, it is the agency contract award decision—not the GAO’s recommendation—that is subject to review by the COFC.”).

The COFC has jurisdiction over suits against the United States for monetary damages that are based on the Constitution, an act of Congress, a regulation of an executive department, or an express or implied-in-fact contract with the United States. 28 U.S.C. § 1491(a)(1). Congress created the COFC pursuant to Article I of the Constitution. 28 U.S.C. § 171(a). More specifically, the COFC has jurisdiction to render judgment on an “action by an interested party objecting to a solicitation by a [f]ederal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violations of statute or regulation in connection with a procurement or proposed procurement.” 28 U.S.C. § 1491(b).

In the context of bid protests, whether at the GAO or the COFC, the features that determine the necessity, and ultimately the scope, of discovery are the sufficiency of the administrative record and expeditious resolution of the dispute. Whether it is through interrogatories, depositions, or requests for production of documents, discovery is designed to provide disappointed bidders with all the relevant information to expedite resolution of their dispute. 23 Am. Jur. 2d Depositions and Discovery § 1 (2019). Both fora, indeed, require protests to be decided expeditiously: GAO generally requires 100 days and COFC requires 60 to 90 days. See Katie M. Manuel & Mosche Schwartz, Cong. Research Serv., R40228, Gao Bid Protests: An Overview of Time Frames and Procedures 9 (2016) (“GAO generally is required to issue its final decision on a bid protest within 100 calendar days of the protest’s filing. This time frame can be shortened to 65 calendar days if the GAO determines, either at the request of a party or upon its own initiative, that the protest should be treated under the ‘express option.’” (citing 31 U.S.C. § 3554(a)(2); 4 C.F.R. § 21.10(b)).

In many cases, judges on the Court of Federal Claims hold some sort of hearing on the merits within 60 to 90 days of the protest’s filing. The court does not always render its decision at the same time as the hearing, however. The decision could come weeks or months later. Before the COFC, however, the speed with which a decision is rendered depends on whether the court issues a stay or a preliminary injunction.

Id. at 7 n.51 (citing Metzger & Lyons, supra, at 1232).

Before the GAO, bid protest proceedings are governed by regulations codified in 4 C.F.R. §§ 21.0–21.14, which do not expressly employ the term “discovery.” See Schaengold et al., supra, at 273 (stating that protesters before the GAO have no right to discovery). However, section 21.3(d)—entitled “Notice of protest, communications among parties, submission of agency report, and time for filing of comments on report”—provides that the agency report

shall include the contracting officer’s statement of the relevant facts (including a best estimate of the contract value), a memorandum of law, and a list and a copy of all relevant documents, or portions of documents, not previously produced, including, as appropriate: the bid or proposal submitted by the protester; the bid or proposal of the firm which is being considered for award, or whose bid or proposal is being protested; all evaluation documents; the solicitation, including the specifications; the abstract of bids or offers; and any other relevant documents. In appropriate cases, a party may file a request that another party produce relevant documents, or portions of documents, that are not in the agency’s possession.

Bidders and the agency typically submit extra-record argumentative and evidentiary documents along with the administrative record to the GAO, such as post hoc explanations and information beyond that contained in the procurement record. Holloway & Co. v. United States, 87 Fed. Cl. 381, 392 (2009) (discussing bid protests before the GAO). In short, if the GAO receives the protest first, these additional documents must be included in the administrative record along with any agency decision, recommendation, report, and GAO-drafted memorandum sent to Congress to report an agency’s failure to implement a GAO recommendation. 31 U.S.C. § 3556. While GAO decisions are nonbinding recommendations, they are given “largely unquestioned deference,” and agencies “almost universally adopt” the GAO’s recommendations. See Metzger & Lyons, supra, at 1248, 1255, 1270 (discussing GAO bid protests). An agency may even adopt a recommendation in direct conflict with the agency’s original position. Honeywell, Inc. v. United States, 870 F.2d 644, 647 (Fed. Cir. 1989) (discussing GAO bid protests).

At the COFC, a court with no right to a jury trial, bid protest proceedings are governed by the RCFC and the standard of review set forth under the Administrative Procedure Act (APA), 5 U.S.C. § 706. See 28 U.S.C. § 1491(b)(4) (referring court to 5 U.S.C. § 706). The APA provides that the COFC shall hold as “unlawful and set aside agency findings and conclusions that are arbitrary, capricious, an abuse of discretion, or not in accordance with the law.” 5 U.S.C. § 706(2)(A). To make this showing, a protester must prove that the agency’s decision (1) lacked a rational basis or (2) involved a violation of regulation or procedure. Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332–33 (Fed. Cir. 2001) (stating that a protester bears a heavy burden and that the test on the first ground is to determine whether the agency provided a coherent and reasonable explanation of its exercise of discretion). Yet, with respect to fact-findings in formal adjudication, section 706(2)(E) provides that they may be overturned by the COFC only if an agency’s determinations are found to be unsupported by “substantial evidence.” Bernick, supra, at 30 (quoting § 706). Under the APA, there are two types of adjudications:

those which are subject to sections 554, 556, and 557 of Title 5 of the APA and those which are subject only to section 555. Sections 554, 556, and 557 detail procedures for what are known as “formal” adjudications—adjudications subject to section 555 are “informal” and the APA does not impose any particular procedural requirements upon them. Formal adjudications entail notice of the time, place, and nature of the hearing; the legal authority and jurisdiction for the hearing; and the matters of fact and law asserted. Parties are also entitled to submit facts, arguments, offers of settlement, and proposals for adjustment. They may present their case by oral or documentary evidence, submit rebuttal evidence, and conduct cross-examinations.

Id.

Professor Bernick further notes that “agencies are not required to make findings of fact in informal adjudication” and “that courts nominally use the arbitrary and capricious standard set forth in section 706(2)(A) to review any fact-finding conducted in informal adjudication—but some courts have equated the standards and stated that they perform the same function.” Id. at 39, 41.

The APA mandates that the COFC’s decision should be based on the administrative record. See Camp v. Pitts, 411 U.S. 138, 141–42 (1973) (“In applying [the APA standard of review], the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.”). But motions to compel discovery have been invoked before the COFC and understood as permissible. See Cubic Applications, Inc. v. United States, 37 Fed. Cl. 339, 342–44 (1997) (discussing what constitutes the administrative record and granting discovery); see, e.g., Fed. Acquisition Servs. Team, LLC v. United States, No. 15-78C, 2015 WL 892444, at *2–3 (Fed. Cl. Feb. 24, 2015) (requiring contracting officer to respond to limited interrogatories from protester); Midwest Tube Fabricators, Inc. v. United States, 104 Fed. Cl. 568, 574 (2012) (granting motion to supplement the administrative record by taking deposition of a contracting officer); Vanguard Recovery Assistance v. United States, 99 Fed. Cl. 81, 88, 99–100 (2011) (granting motion to supplement the administrative record by taking deposition of a contracting officer’s technical representative); Pitney Bowes Gov’t Sols., Inc. v. United States, 93 Fed. Cl. 327, 332–36 (2010) (granting motion to supplement the administrative record by taking deposition of a contracting officer and members of the technical evaluation panel).

The COFC has stated that

the primary focus of the court’s review should be the materials that were before the agency when it made its final decision. This is a presumption necessitated by the limited nature of the court’s inquiry. As a practical matter, however, in most bid protests, the ‘administrative record’ is something of a fiction, and certainly cannot be viewed as rigidly as if the agency had made an adjudicative decision on a formal record that is then certified for court review. . . . In order to preserve a meaningful judicial review, the parties must be able to suggest the need for other evidence, and possibly limited discovery, aimed at determining, for example, whether other materials were considered, or whether the record provides an adequate explanation to the protester or the court as to the basis of the agency action. It follows that discovery as well as the breadth of the court’s review has to be tailored in each case.

Cubic, 37 Fed. Cl. at 349–50 (citation omitted) (“Whether testimony is needed to frame the issues is likewise dependent on the particular circumstances. Consequently, this court has adopted a flexible approach both in putting together the evidence that will be considered and in discovery, balancing the limited nature of the court’s review with the competing need to recognize potential exceptions to treating the agency’s submission as the four corners of the inquiry.”).

Importantly, as the Court of Claims has incisively pointed out, “[a]lthough discovery may be appropriate as a necessary means to understanding the agency’s action, it normally would not be likely to lead to relevant evidence given the truncated nature of the court’s review.” See id. at 344 (discussing discovery in bid protests before the Court of Claims). The COFC has well-established case law that allows for supplementing the administrative record, which makes it clear that traditional discovery is rarely available; rather, the court may consider extra-record evidence when

(1) the agency’s action is not adequately explained in the record before the court; (2) when the agency failed to consider factors which are relevant to its final decision; (3) when an agency considered evidence which it failed to include in the record; (4) when a case is so complex that a court needs more evidence to enable it to understand the issues clearly; (5) in cases where evidence arising after the agency action shows whether the decision was correct or not; (6) in cases where agencies are sued for a failure to take action; (7) in cases arising under the National Environmental Policy Act; and (8) in cases where relief is at issue, especially at the preliminary injunction stage.

Schaengold et al., supra, at 307 (quoting Aero Corp., S.A. v. United States, 38 Fed. Cl. 408, 411 (1997)).

Yet, as intimated, there are certain bid protests before the COFC that may benefit from such discovery. Indeed, the COFC has held:

In the context of a bid protest, the court may permit discovery when “there has been a strong showing of bad faith or improper behavior,” such that “the administrative record cannot be trusted” absent discovery. “[A]llegations of bad faith must be based on hard facts,” especially when the procuring agency has given a reasonable explanation for its decision. The allegations cannot “rest merely on counsel’s argument, suspicion, or conjecture.” Because agency decisions are entitled to a presumption of regularity, discovery will not be permitted “unless that presumption has been rebutted by record evidence suggesting that the agency decision is arbitrary and capricious.” Ultimately, to supplement the record, the protester must “1) make a threshold showing of either a motivation for the [g]overnment employee to have acted in bad faith or of conduct that is hard to explain absent bad faith, and 2) persuade the [c]ourt that discovery could lead to evidence that would provide the level of proof sufficient to overcome the presumption of regularity and good faith.”

Jacobs Tech. Inc. v. United States, 131 Fed. Cl. 430, 450–51 (2017) (citations omitted) (discussing discovery in the bid protest context at the COFC).

Building on this overview of discovery, the following section assesses the critique surrounding deference to agency fact-findings and whether further scrutiny favors bid protesters at the COFC.

Deference to Agency Fact-Findings

Judicial deference to agency decisions interpreting statutes and regulations is embodied most notably through the broad deference available under Chevron U.S.A, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), which held that where legislative delegation to an agency on a particular question is implicit rather than explicit, a court may not substitute its own construction of the statutory provision for a reasonable interpretation made by the agency. That judicial deference has come under intense academic and judicial scrutiny.

Judicial deference to agency fact-findings, however, has avoided much of this examination. See Bernick, supra, at 27 (stating that fact deference has received little attention compared to deference to agency interpretation of statutes and regulations).  

Policy analysts, government officials, and pundits have become familiar with doctrines that require judges to defer to agency interpretations of statutes and regulations—doctrines that are associated with Chevron USA, Inc. v. Natural Resources Defense Council, Inc. and Auer v. Robbins, respectively. The same cannot be said for judicial deference to agency fact-finding—few today are familiar with Crowell v. Benson, Consolidated Edison Co. v. NLRB, FTC v. Cement Institute, or Universal Camera Corp. v. NLRB.

Bernick, supra, at 29 nn. 3–9.

In the context of bid protests, disappointed bidders seeking to scrutinize the administrative record to determine whether an agency’s decision was arbitrary, capricious, or against the law, potentially have access to broader discovery before the COFC than the GAO.

While agency deference has been constructed by the Supreme Court, see id. at 31–42 (discussing the origins, development, and present state of fact deference), both types of deference are crystallized in section 706(2) of the APA. 5 U.S.C. § 706(2)(A), (E). The APA provides that courts may overturn agency decisions that are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law or overturn factual findings where they are “unsupported by substantial evidence.” 5 U.S.C. § 706(2)(A), (E).

Deference to agency fact-findings is a widely unexamined doctrine of the modern administrative state. Facts, however, “can be determinative of the outcome of litigation.” And it has been noted that “[f]rom the perspective of those who stand to be deprived of what is rightfully theirs, accurate factual determinations are of urgent concern.” Bernick, supra, at 42. The core private rights of life and liberty remain protected by independent judicial review on matters of law and facts. See id. at 59 (stating that courts continue to apply the independent model of review in cases where core private rights to life and liberty are at stake). Property rights, however, do not receive the same type of treatment universally. Instead, an appellate model of judicial review has been established whereby courts defer to the factual record created by agencies but independently resolve questions of law. See id. at 35–36 (discussing appellate model of judicial review and stating that the Supreme Court had emphasized that it could not “‘under the guise of exerting judicial power, usurp merely administrative functions,’ reasoning that it lacked the institutional competence to determine ‘whether the administrative power has been wisely exercised’” (quoting Interstate Commerce Comm’n v. Ill. Cent. R.R. Co. (Illinois Central II), 215 U.S. 452, 470 (1910))). See also Philip Hamburger, Is Administrative Law Unlawful? 318–19 (2015) (an accurate description of agency fact-finding is that agencies serve as juries for the courts: “Instead of being candid about the displacement of juries, the courts engage in a sort of doublespeak. They speak of an appeal from the decision of an administrative judge, based on the record arising from his hearing. Such words dignify the administrative proceedings, but they cannot hide the reality that there is no underlying trial court, nor any court hearing, nor any final judgment, nor any court record, nor any judge or jury. Instead, there usually is mere deference—deference to the facts as declared by one party, the prosecuting party.”).

In Professor Bernick’s view, this status quo rests in part on a distinction, albeit increasingly muddled, between private and public rights. Understanding that the former was derived from human nature and that the latter was derived from government largesse, government burdens on private rights, such as the right of property, were guaranteed a day in court, whereas burdens on so-called public rights were not. See Bernick, supra, at 31–32.

Deference to agency fact-findings in the bid protest context, a priori, would tend to be situated on the public right dimension of the property right spectrum. See, e.g., Acceptance Ins. Co. v. United States, 583 F.3d 849, 857 (Fed. Cir. 2009) (holding that property rights that were the result of a federally regulated crop insurance program were not cognizable property rights under the Takings Clause of the Fifth Amendment). Indeed, whether pre-award or post-award, the rights acquired or soon to be acquired by bidders find their origin in the government’s solicitations. Yet, challenging a court’s deference to agency fact-findings relative to a solicitation, by compelling discovery, aligns with other aspects of Professor Bernick’s critique.

Professor Bernick’s critique, more fundamentally, rests on the premise that fact deference violates the Fifth Amendment’s Due Process Clause and Article III of the Constitution. Bernick, supra, at 30, 42. Because agencies need not allow discovery and enjoy the broadest possible discovery, id. at 41, 58, proponents of his critique conclude that the administrative treatment of discovery is unequal and a violation of due process. Cf. Hamburger, supra, at 249–50 (discussing administrative treatment of discovery). As for Article III, in his view, it divests courts of judicial power, which consists of a duty of independent judgment. See Bernick, supra, at 30, 46–47 (stating that the “judicial power authorized by Article III imposes upon Article III judges a duty of independent judgment—a duty on the part of judges to resist the distorting influence of will, understood as extralegal desires or beliefs” (i.e., pressures from external influences)). He posits that “[t]he determination of facts, no less than the interpretation of law, is part and parcel of the exercise of judicial power.” Id. at 46. Yet, his critique does not expound meaningfully on real concerns regarding potential costs, inefficiency, and courts’ lack of expertise to address these matters, if these pillars of administrative law were to be upended.

Conclusion

Professor Bernick’s critique may gain traction across the political spectrum and the judiciary. See, e.g., Alison Frankel, “Everybody hates Auer: Supreme Court challenge to agency deference draws 25 amicus briefs,” Reuters, Feb. 1, 2019 (stating that Supreme Court precedent that requires courts to defer to federal agencies’ interpretations of their own ambiguous regulations crosses ordinary ideological divides). If so, it may present an unexpected opportunity for bidders to expand their scrutiny of agency decisions. In most cases, the possibility of broad discovery is not a real advantage as the administrative records tend to be sufficient. See Cubic, 37 Fed. Cl. at 344 (stating that discovery “normally would not be likely to lead to relevant evidence given the truncated nature of the court’s review”). However, the dismantling of deference to agency fact-findings, coupled with the possibility of scrutinizing an agency’s decision through the discovery rights available under the RCFC, may combine to favor certain protesters at the COFC.

John Belinga and Colton D. Tully-Doyle are judicial law clerks to the Honorable Robert H. Hodges Jr., a senior judge at the Court of Federal Claims, and previously clerked and interned, respectively, with the Honorable J. Michelle Childs in the District of South Carolina. Colton will join the chambers of the Honorable J. Michelle Childs for the 2019–2020 term.

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