October 14, 2017 Procurement Lawyer

Corrective Action Update: The Expanding Universe of Possible Grounds to Protest Agency Corrective Action

by Stuart B. Nibley & Amy M. Conant

Stuart B. Nibley is a partner and government contracts practice chair with K&L Gates LLP, and, in addition to holding a number of current positions in the Section of Public Contract Law, is a past chair of the Section. Amy M. Conant is an associate with K&L Gates and holds a number of positions in the Section, including the Young Lawyer Council Member.

This article builds on an article we authored for The Procurement Lawyer in 2016. In our 2016 article, we addressed the topic of challenges of protesting agency corrective action that is taken in response to a bid protest: Corrective (Action) Lenses: Is 20/20 Hindsight Enough for Agencies When Taking Corrective Action in Response to a Protest? That article provided an overview of the primary considerations when a party pursues a protest challenging agency corrective action: jurisdiction, standing, timeliness, and protest grounds. In this update, we analyze the wide variety of issues that face protesters, awardees, and agencies when a party has protested agency corrective action. We examine how the U.S. Court of Federal Claims (the Court), the U.S. Court of Appeals for the Federal Circuit (the Federal Circuit), and the Government Accountability Office (GAO) have responded to the various types of issues. Our analysis revisits some decisions we discussed in our prior article and supplements the discussion with more recent decisions, and we offer new angles on the analysis. What grounds of protest are most likely to succeed at the GAO, and what grounds at the Court? What standards does each forum employ?

We begin by offering some comments about the broad topic of agency corrective action and its encroaching role into the federal procurement process. No bid protest issue seems to be more central and important to participants involved with a protested procurement than that of agency corrective action. The GAO announced in its year-end statistics that the effectiveness rate (sustained protests and protests in which an agency took corrective action in response to a protest) jumped to 46 percent in 2016, considerably the highest rate in recent history. In simplistic terms, “corrective action” involves an agency’s response to a bid protest when the agency, either at a bid protest forum’s prodding or on its own, decides or agrees to address perceived defects in a procurement by an agency. Corrective action is stimulated in three ways: (1) voluntarily by an agency, before any decision or recommendation is issued by the GAO or the Court; (2) in response to a GAO or Court decision sustaining all or a portion of a protest; or (3) in response to a GAO recommendation before the GAO has issued a decision, for example, following outcome prediction or an informal conference.

One of the authors of this article is currently reading a book about the formation of the universe (which is both fascinating and daunting). Accordingly, analogies that compare the evolution of principles that govern the implementation of corrective action to the expansion of the universe seem, if not appropriate, at least useful, at this moment. Prior to the Federal Circuit’s affirmation of the Court’s decision in the seminal case Systems Application & Technologies, Inc. v. United States (SA-Tech),1 participants in a bid protest lived in a dark, uncertain environment in which unannounced, sometimes random, actions could change the course of a procurement in seconds and plunge the procurement into a black hole for months, sometimes years. How? By invocation of the magic words “corrective action.” Prior to SA-Tech, the GAO, and usually the Court as well, required virtually no explanation from an agency as to why it was taking corrective action in response to a protest. Once an agency announced it would be taking “corrective action,” the GAO routinely ruled that the protest had been rendered academic and moot. The agency was free to take the procurement back, while the awardee(s) and protester(s) went back to their proposal rooms and speculated what might be happening, where the procurement might be going, and when that might occur. Agencies were not required to explain why they were taking corrective action, what procurement defects they perceived and intended to address, or how the corrective action proposed was designed to address the perceived procurement defects. And because agencies were not required to explain their plans when announcing they were taking back a procurement to implement “corrective action,” they were not tethered to a roadmap when they actually implemented corrective action. The agencies had explained nothing when the protests were dismissed — they could move in any direction once they pulled back a procurement, or move in no direction but merely reinstate the original award with a somewhat bolstered record. Offerors and bidders often thought this was unfair and inefficient. Offerors spend significant time, effort, and money preparing proposals, only to have to start over (many times) under unannounced rules. Agencies have been equally frustrated.

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