The Effect of the Court Of Federal Claims’ Decision in
Systems Application on Contracting Officer Discretion to
Take Corrective Action in Response to GAO Protests Before the GAO
By Jonathan L. Kang[*]
Table of Contents
I...... Introduction
II...... Corrective Action at the GAO
III...... The Systems Application Decision
IV. A Comparison of the Differing Perspectives of the GAO and the COFC on Corrective Action
A.Assumed Differences Between the Standards Applied by the COFC and the GAO Concerning Corrective Action.
B.Substantive Differences Between the GAO and the COFC Are Apparent in the COFC’s Ripeness Analysis.
C.Differences Between the GAO and the COFC in Regard to Supplementing the Administrative Record.
D.The Impact of the Apparent Degree of Scrutiny Applied By the COFC in Reviewing Corrective Action.
E.The Effect On Judicial Scrutiny of Agency Action Taken to Avoid an Adverse Ruling by the GAO.
F.The Agency May Be Required to Defend a Decision Before the COFC That it Originally Resisted Before the GAO.
V...... Conclusion
I.Introduction
Contracting oOfficers have broad discretion to take voluntary corrective action in response to a bid protests filed with the U.S. Government Accountability Office (GAO).[1] This article begins in Section II by addressing the scope of the GAO’s authority to issue advisory opinions, as well as discussing the way that the GAO views corrective action by an agency.
In Section III, this article addresses the way that the A recent decision by the U.S. Court of Federal Claims (COFC) reviews corrective agency action by looking at a recent case, , Systems Application & Technologies, Inc. v. United States;, that cases suggests, that the COFCcourt may have a somewhattakess a narrower view of a Ccontracting Oofficer’s discretion to take corrective action than does the GAO.[2] The court’s Systems Application decision, and the prospects for review of similar cases by the COFC, raisess several questions for Ccontracting Oofficers who must decide whether and how to take corrective action in response to a protest before the GAO protest.[3] As discussed in this article, an important lesson to be learned fromof Systems Application is that an agency will be in a better position to respond to litigation challenging a decision to take corrective action in response to a protest filed at the GAO if thate decision is supported by a well-documented rationale that explainings the basis for the cContracting officer’s Officer’s exercise of discretion.[4]
In Section IV, this article examines whether the COFC’s view regarding agency discretion in taking corrective action, as expressed in Systems Application, is consistent with the GAO’s view, and whether any differences between the two positions have practical effects on the discretion of a cContracting oOfficer.[5] This article focuses on six issues that underlie, or arise from, the Systems Application decision. Finally, this article concludes by enumerating the apparent differences between the manner in which the GAO and the COFC treat agency corrective action, and discusses the confusion that results for agencies.[6]
II.Corrective Action at the GAO
The Competition in Contracting Act of 1984 (CICA) authorizes the GAO to hear bid protests, which are either s--challenges to the terms of solicitations by prospective offerors, or challenges to awards of contracts by disappointed offerors.[7] The GAO is charged under the CICA with providing for the inexpensive and expeditious resolution of protests within 100 calendar days.[8] The GAO resolves protests by issuing a decision that either resolves the protest on the merits (i.e.,by either sustaining or denying the protest), or dismisses the protest on other grounds.[9] A protest may be dismissed for the following reasons: (1) a deficiency with the protest, such as untimeliness, lack of jurisdiction, or failure to state a valid basis of protest,; (2) voluntary withdrawal by the protester; or (3) voluntary corrective action taken by the procuring agency.[10] The vast majority of protests[11][ZP1] filed at the GAO result in dismissal of the protest; for example, in fiscal year 2011, the GAO received 2,353 protest filings and dismissed more than three quarters of those filings.[12]
Corrective action, as discussed herein, is a voluntary action by a procuring agency agency in response to a GAO protest that grants relief to the protester in a manner that the adjudicating forum considers appropriate to warrant dismissal of the protest.[13] For purposes of a bid a GAO protest at the GAO, corrective action taken before a protest is decided on the merits is defined as an action taken by the procuring agency that renders the protest “academic,” that is,in that the agency action makes the protest moot by grantings the protester the relief requested.[14]
The GAO takes a fairly broad view as to whether a protester has been granted the relief requested[KB2]. In this regard, The GAO’s case law holds that a contracting Contracting officer Officer may take corrective action in response to a protest that addresses some, but not all, of the protest grounds, provided there is a prospect for the protester to ultimately receive the requested relief--typically, the amendment of a solicitation or the award of the contract.[15] Agencies may also take corrective action that addresses a wider scope of issues than was identified in either the corrective action notice to the GAO, or otherwise raisedelsewhere in the protest.[16] Furthermore, it is not necessary for an agency to need not conclude that the protest is certain to be sustained before it may take corrective action.[17] In fact, an agency may take corrective action even where the underlying protest is dismissible, e.g.,, such as where the protest was is untimely filed filed in an untimely manner.[18]
InWhile litigating a GAO protests (as in any litigation)protest before the GAO, an agency may take corrective action, sua sponte, based on its independent review of the protest, or based on feedback from the GAO attorney assigned to the protest.[19] The fFeedback from the GAO attorney may range from informal comments to formal alternative dispute resolution (ADR).[20] The GAO regulations provide for the use of alternative dispute resolution (ADR) as a means to “resolv[e] cases expeditiously, without a written decision.”[21] As relevant here, the GAO’s use of ADR generally falls into two categories: (1) negotiation assistance, whereby the GAO attorney may facilitate a discussion between the parties to encourage a settlement; or (2) outcome prediction, whereby the GAO attorney provides his or her informal views about the merits of the protest.[22][ZP3]
In addition to hearing challenges to the terms of a solicitation or the award of a contract, the GAO will hear protests challenging an agency’s decision to take corrective action, or challenging the form or adequacy of the corrective action.[23] As a general rule, the GAO holds that agencies have broad discretion to take corrective action where they the agency hasve determined that such action is necessary to ensure fair and impartial competition.[24] The details ofagency’s implementation ofing the corrective action isare within the sound discretion and judgment of the agency, and the GAO will generally not object to any particular corrective action so long as that action is capable of appropriately remedying the protested agency conduct.[25] [ZP4]
The GAO’s positionview is that aof a Ccontracting Oofficer has r’s discretion to take corrective action when necessary[ZP5], even encompasses in situations where there has been or will be some competitive harm to the awardee.[26] For example, the GAO has held that the fact that an awardee’s cost or price has been revealed in the public announcement of the award is not a sufficient basis to preclude an agency from taking corrective action.[27] In this regard, the GAO has held that:[ZP6]
the [T]he possibility that a contract may not have been awarded based on a fair determination of the most advantageous proposal has a more harmful effect on the integrity of the competitive procurement system than does the possibility that the original awardee will be at a disadvantage in a reopened procurement because its price has been exposed.[28]
In rare cases, the GAO has held that an agency should not have taken corrective action where there was no underlying flaw in the procurement.[29] For example, In in Security Consultants Group, the Department of Homeland Security awarded a contract, and the award was protested to the GAO.[30] Although the the protest was dismissed by GAOGAO dismissed the action because the plaintiff for failingfailed to state a valid basis for the protest, the agency subsequently took voluntary corrective action, based on its independent conclusion that the solicitation had not disclosed the relative weights of the evaluation factors.[31] The In response to the agency’s corrective action, the awardee filed a protest with the GAO, arguing that there was no basis for the agency to take corrective action, as none of the offerors had been prejudiced by the flaw in the solicitationthe flaw in the solicitation had not prejudiced any of the offerors.[32] The GAO agreed, and recommended that the protester’s award be reinstated.[33] This The Security Consultants Group case, however, is an outlier, and is frequently distinguished as such in other decisions denying challenges to an agency’s decision to take corrective action.[34]
Additionally, while The GAO has issued numerous decisions addressing a challenges to an agency's decision to take corrective action, or the form of the corrective action taken by the agency; however,, the GAO has issued relatively few decisions in which it declineding to dismiss protests based on agency corrective action.[35] This is, in part, because, as a procedural matter, the GAO does not generally issue digested decisions denying an agency's requests for dismissal, as the denial of such a request is not a matter that would conclude or complete the protest.[36] Typically, Instead, iif the GAO finds that an agency’s corrective action does not render then the absence of corrective action that renders a protest academic, the protest would simply proceeds until it is otherwises resolvuted.ion[SJB7].[37][ZP8]
Returning to the issue of protest statistics at GAO, it is fair to saIy, in light of the large percentage of protests that are dismissed, it appears that voluntary corrective actions taken by litigating agencies is are an important part of the GAO’s ability to manage its protest caseload.[38][ZP9] The GAO’s generally permissive standardsperspective for finding that anin evaluating whether an agency’s proposed corrective action renders a protest academic can be seen as consistent with the GAO’s mandate under the CICA to provide for the inexpensive and expeditious resolution of protests;[ZP10] after all, there is little utility in continuing to develop a protest where the agency has proposed corrective action with the potential to grant the requested relief[KB11].
As a result of As shown, the GAO affords the broad discretion afforded to cContacting Oofficers broad discretion to take corrective action.[39], Because the GAO grants agencies broad discretion to take corrective action and reviews those corrective actions permissivelyand the generally permissive standards for finding a protest has been rendered academic, agencies often need not provide extensive statements or explanations concerning their basis for taking corrective action in order to secure dismissal of a protest at the GAO.[40] Consequently, in the author’s experience[KB12], agencies frequently do not voluntarily provide more detail than is strictly necessary.
Anecdotes from the author’s practice indicate that some agencies--and private parties--believe that corrective action in a GAO protestprotest before the GAO automatically results inis a pro forma matterdismissal of the matter; essentially, those parties believe, and that the phrase “corrective action” is enough to ensure dismissal of a protest. [ZP13]As discussed above, the standard for rendering a protest academic through corrective action is not a difficult one for an agency to meet: the agency must take some action which renders the protest academic by creating the possibility for that the protester will receive meaningful relief.[41] Nonetheless, a mere promise by an agency to take an unspecified future corrective action will not be sufficient to dismiss a protest--the agency must still identify actions which will grant the protester’s requested reliefcorrective action is not sufficient where the agency unduly or unjustifiably delays implementation of thate corrective action[KB14].[42] With the GAO’s practice outlined, we this article next turns to the COFC's decision in Systems Application.[43]
III.The Systems Application Decision
The COFC’s 2011 decision in Systems Application raises a number of questions concerning the COFC’s review of a contracting Contracting officer’s Officer’s decision to take voluntary corrective action in response to a GAO protest.[44] Review by the COFC of procurements that have previously been the subject of protests at the GAO can come in a number of forms. . ; TtThe two most familiar instances occur when either: (1) a disappointed offeror whose protest was denied at the GAO files a protest seeking de novo review of the procurement at the COFC;; or (2) a contractor whose award was successfully challenged at the GAO challenges the decision of the procuring agency’s decision to rely on the GAO’s decision sustaining the protest.[45][NAB15] The Systems Application decision addressed an unusual scenario where the COFC did not review a digested decision issued by the GAO, but instead reviewed an agency’s corrective action taken in response to feedback from an individual GAO attorney.[46]
The challenged contract at issue in the Systems Application case had was been awarded to Systems Application & Technologies, Inc. (SA-TECH) by the U.S. Army Aviation and Missile Life Cycle Management Command Contracting Center; the contract was for aerial target flight operations and maintenance services.[47] As relevant here, the Army selected SA-TECH based on the conclusion that there were no meaningful distinctions between the non-cost aspects of the offerors’ proposals, and that SA-TECH had proposed the lowest overall cost.[48]
The award was initially protested by Kratos Defense & Security Solutions, Inc. initially protested the award of the contract to the GAO to GAO on February 23, 2011.[49] Kratos’s protest to the GAO primarily argued that although the request for proposal (RFP) had been amended to require offerors to comply with a collective bargaining agreement (CBA), the Army had not evaluated whether the offerors’ proposed labor mixes complied with the CBA.[50]
Kratos subsequently raised a supplemental protest argument, alleging that the Army’s selection decision was unreasonable.[51] Kratos’s supplemental protest contended that, because the agency assigned each offeror’s proposal a rating of “outstanding,” without regard to differences in the offerors’ proposed and evaluated technical approaches, thereby the competition had been converteding the competition from a best-value basis to a lowest-cost, technically-acceptable basis.[52] The protester also challenged the basis for certain ratings assigned to SA-TECH’s proposal.[53]
On April 7, after the agency had provided its report on the protest and the parties had submitted their comments, the GAO attorney assigned to the protest advised the parties via e-mail that he had reviewed the record and the protester’s arguments;, the GAO attorney and stated that, “‘on the face of it, the protester offer[ed] a straight forward argument as to why the agency’s evaluation was unreasonable.’”[54] The GAO attorney also advised the parties that he was “‘interested in whether, in light of the protester’s challenges to the agency’s technical evaluation, the agency [was] more inclined to defend the protest or take corrective action.’”[55] The parties filed briefs in response to the supplemental protest, including arguments by SA-TECH that the supplemental protest was untimely filed.[56]
On April 20, following briefing by the parties in response to the supplemental protest issue, the GAO attorney advised via e-mailthe litigants that the Army’s evaluation of the awardee’s proposal under one of the evaluation factors “‘seems[ed] unreasonable.’”[57] He The GAO attorney further stated, however, that “‘[w]e need not resolve the issue of whether that evaluation was reasonable or whether the protester timely challenged it, given the deficiencies in the source selection decision memorandum.’”[58] In this regard, the GAO attorney stated that the selection decision did not acknowledge that the underlying evaluation record indicated that there were differences between the Kratos’s and SA-TECH’s technical proposal, and that the Army unreasonably ignored these distinctions in awarding the contract based on SA-TECH’s overall low cost.[59] The GAO attorney concluded that “‘[w]e would likely sustain the protest on that ground.’”[60]
On April 22, the Army advised the parties that it would take corrective action in response to the protest, as follows:
“After a review of the supplemental issues, the Army has determined that it is in its best interest to take corrective action. The Army intends to terminate the contract awarded to SA-TECH so that it can reopen the original solicitation. The solicitation will then be amended to explain the intention of providing Kratos’s CBA in the solicitation. If after the amendment is issued [and] the offerors wish to, they may revise their technical and cost proposals. The technical and cost proposals will be evaluated and, if necessary, the Agency reserves the right to conduct discussions. A new source selection decision will then be executed and announced.”[61]