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Anatomy of a Protest: A Little Knowledge Saves a Lot of Legal Fees

2009 saw two protests of billion-dollar contracts, resulting in billions of potential revenue changing hands.  First: the numerous protests surrounding the design/build contract for the Joint Light Tactical Vehicle (JLTV) which will replace the Humvee.

Reuters calls the JLTV contract a $10 billion contract, with a total potential value of $70 billion. Most media outlets quote a more conservative figure ($20 billion in value, spread over ten years), but that’s still more than a year’s revenue at Textron (NYSE: TXT), or almost a year’s revenue at General Dynamics (NYSE: GD).

Understandably, there was a major protest associated with this contract, filed by Northrop Grumman and Textron.  But how do you file a protest?

By law, a protest must be filed by an “interested party,” i.e. an actual or prospective bidder with a direct economic interest in the procurement. (4 C.F.R. § 21.0(a)) While practically everyone retains an attorney, you don’t have to hire one to file a protest.

The Government Accountability Office (GAO) last changed the rules for protesting a contract award in 1996.  The guidelines state that a company has ten days to file a protest after the cause for protest becomes known (or should have become known via due diligence). Also, the GAO employs a strict legal standard called “diligent pursuit” to determine whether or not to grant an extension, meaning protesters must request a prompt debriefing and doggedly pursue any relevant information (so you “should have learned” about the grounds for your protest the second they became available). In practical terms, it’s impossible to protest an award once the ten-day window has passed.

You can even e-mail a protest request by sending it to Protests@gao.gov. You’ll get an automatic reply that will tell you where you can find assignment and status information online at the Bid Protest Docket, accessible via the Legal Products link on GAO’s Internet home page, or by calling the protest status line at 202-512-5436. If you protest by e-mail and include attachments containing multiple documents, the attachments should include an index identifying the documents and their location in the attachment.

Keep in mind, though, that the protestor bears the risk of timely receipt, no matter which method you send it in by.  Remember diligent pursuit, if you don’t close the loop, legally speaking, it’s your problem, not the GAO’s.

Let’s say you dotted your is and crossed your ts.  Then you, the agency awarding the contract, and the awardee all produce documents to back their side of the story.  Produce your documents early, because the awardee is allowed to protest your information.  Once documents are posted, you have (once again) ten days to submit comments on them.  Remember that you’re not allowed to add claims to your protest when commenting on the documents, unless it hasn’t yet been ten days since you became aware of the grounds of your protest.

Then, the GAO conducts hearings, usually by phone, and always in the presence of an attorney.  If you haven’t retained a lawyer by now, you’d be smart to find one.  After the hearings, the GAO will hand down a decision based on its timetable.  There is something called Alternative Dispute Resolution (ADR) protocol, and it’s a little like settling a lawsuit. It’s rare because it typically means either the agency withdraws the award or you withdraw the protest (a little like settling your divorce out of court for everything your spouse asks for).

Now, it’s decision time.  The GAO will dismiss, deny, or sustain a protest within 100 days receiving it, unless it uses the expedited 65-day timetable for matters of extreme importance (i.e. wartime contracts). GAO normally sustains protests when it finds that the government agency violated procurement regulations. Where a protest is sustained, the GAO will recommend appropriate corrective action, taking into account the circumstances of the procurement, such as the agency’s stated need for the goods or services at issue and the extent to which the contract has been fulfilled (in post-award protests where performance has not been stayed), and similar factors. In appropriate circumstances, GAO will recommend that the agency terminate an improper award or, where this is not feasible, that the agency not exercise any renewal options in the improperly awarded contract. 4 C.F.R. § 21.8(a), (b).

If you lose, you have the option to appeal the decision. Any party who participated in the protest, including the protester, any intervenor, and the contracting agency, has standing to ask the GAO to reconsider a decision. 4 C.F.R. § 21.14(a). A request for reconsideration won’t stop the contract award or suspend a contract performance, though, so it’s rare because the cost frequently outweighs the dwindling benefit. 4 C.F.R. § 21.14(c). Like everything else with the GAO, you have ten days to file your request for reconsideration, and identify the factual and/or legal errors leading to the decision.

The GAO uses easy-to-read empirical assessments to justify its decisions (check out the decision in the Northrop Grumman/Textron case here.)  Also, the GAO handles a huge volume of protests, handing down 65 decisions in the last two months, so don’t be surprised if your protest takes the full hundred days to decide.

One recent successfully protest was the TSA IT outsourcing contract protested by General Dynamics One Source, LLC and Unisys.  The contract was awarded to CSC, in October 2009, but was protested successfully.  The decision was handed down January 21st, and forces the TSA to hold another re-compete for the contract.

Other major recent protests include Boeing’s protest of the Air Force’s mid-air refueling tanker contract award to Northrop Grumman, and Navistar and BAE’s protest of an award to Oshkosh for the Army’s new truck.

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