Amend Protest Rules

Amend Protest Rules

Background

Protests, both before and after contract award, are an important means
for objectively reviewing meritorious grievances of disappointed bidders
of government actions. Forcing a review of questionable or improper
actions strengthens the procurement system and maintains the integrity
and accountability of government. However, unless the protest is clearly
frivolous, and thus subject to summary dismissal, it delays further
action on the procurement no matter how likely it is that the
government's actions were correct. This delay can force all competitors
and the government to freeze their actions until the protest is resolved
unless the government can demonstrate that the acquisition is "urgent
and compelling." Even a frivolous protest can cause some delay and
additional workload prior to summary dismissal if the agency has to
notify all other competitors and the agency and interested competitors
have to respond as to whether the protest is frivolous.

In 1992, 3,200 protests were filed with the General Accounting Office
(GAO). Another 350 protests involving the acquisition of information
technology (IT) under the Brooks Act were filed with the General
Services Board of Contract Appeals (GSBCA).1 A protester can file a
protest under a solicitation with the contracting agency, GAO, the Court
of Federal Claims, District Courts, or the GSBCA (if IT is involved).
Protests submitted to the contracting officer at the contracting agency
are less costly and do not necessarily involve significant delays.2 The
various protest forums are set forth in Table 1.

Need for Change

People in industry and government believe that communication during the
procurement process has been curtailed because of the fear that a
statement by a government official will be misunderstood and will
inadvertently trigger a protest.3 This causes inadequate debriefings of
offerors, which in turn creates suspicion and can generate a protest
that could have otherwise been avoided. The procurement system cannot
improve without better channels of communication between buyers and
sellers.

In addition, fear of protests has had unintended adverse consequences on
the procurement system. Protests have caused procurement officers to
redirect their attention away from service to the customer to following
rules and procedures rigidly and compiling paperwork in an effort to
make their decisions "protestproof." This, of course, results in costly
additional paperwork, delays in procurements of goods and services
required to meet public needs, and greater administrative costs to the
government and taxpayer. Moreover, a highranking Treasury Department
Information Resources Management (IRM) official recently said, "The
internal costs of increased staff hours [to avert protests] may not be
immediately noticeable in the government's budget, but it does become
noticeable when the attention and energy of the IRM staffs are diverted
from implementing quality systems to merely managing the process."4

Table 1 Statutes Affected and Changes Proposed

Forum:  Contracting Agency         

Standard of Review:  Administrative review to ensure actions were in
keeping with policies, laws, and regulations.

Remarks:  Allows higher level management to have feedback on how
contracting officials are performing. May not be seen as objective.

Forum:  General Accounting Office       

Standard of Review:  Review to determine whether there is a violation of
law or regulation, with presumption of correctness of the agency action
and acceptance of agency's version of facts unless disproved.

Remarks:  GAO has moved toward more formal proceedings, with the
possibility of hearings.

Forum:  General Services Board of Contract Appeals          

Standard of Review:  Review to determine whether there is a violation of
law, regulation, or delegation of procurement authority. The GSBCA gives
due weight to the statutory goals of economic and efficient  procurement
with no presumption of correctness of the agency action (i.e., a de novo
review).

Remarks:  1) De novo review allows GSBCA to review entire record anew;
2) it allows the GSBCA to, in effect, substitute its judgment for that
of the contracting officer; 3) more effort is required to prepare and
defend such a case; and 4) suspension of procurement freezes parties in
place while GSBCA conducts its review.

Forum:  District Courts

Standard of Review:  Review to determine whether there was a clear
violation of applicable law or regulation or no rational basis for the
government action.

Remarks:  Protesters must show that the government violated a statute
that was created to protect their interests (e.g. Small Business Act).

Forum:  Court of Federal Claims

Standard of Review:  Review to determine whether there was a clear
violation of statute or regulation or whether there was no rational
basis for the government action.

Remarks:  Has nationwide jurisdiction, can conduct hearings around the
country, and is more experienced in government contract issues as a
result of its jurisdiction to resolve contract performance
controversies.

  End Table 1

A recent survey of over 1,000 line managers confirms these contentions.
Over 80 percent of federal managers surveyed believe that their
contracting officers cause delays by rigidly following procurement
rules, and over 60 percent believe that contracting officers are most
concerned about making awards protestproof.5

Evolution of Existing Systems. Prior to 1984, administrative protests
were an inexpensive administrative procedure for contractors to force an
objective review of contracting agency actions. The system became more
complex in 1984 when the Competition in Contracting Act (CICA) vested
both GAO and GSBCA with explicit statutory authority to undertake ever
more formal reviews using independent standards. Where company
presidents or marketing executives once argued their protest cases,
attorneys now usually do so. This is primarily because the GSBCA uses
more courtlike procedures such as discovery and fact finding and the
entire contract record is reviewed anew (or "de novo"). GAO has
indicated that if it too employed certain GSBCA practices, like allowing
depositions, it could lead to higher costs that could make the protest
system less accessible and affordable.6 However, through such practices,
the GSBCA, a quasiindependent body, can potentially substitute its
judgment for that of agency contracting officials. Many contractors
think this allows more effective review of agency actions as was
intended by CICA. Most procurement professionals and line managers,
however, believe GSBCA should use the same test used by the courts that
would protect contractors against abuses of discretion and not
secondguess agency judgments. The 1984 CICA changes were to be tested
for three years. However, after 18 months, the protest provisions became
permanent through other legislation.7

Administrative Protests. The vast majority of protests are filed in the
administrative forumsthe GAO or the GSBCA. If a protest is filed in the
agency before award, the government must suspend work on the procurement
except in urgent and compelling situations. A protest generally can be
filed at any time prior to the closing date for receipt of offers (e.g.,
challenging the fairness of a solicitation document) or within 10 days
of contract award (e.g., challenging the award). If the protester wins,
the government may be required to resolicit the requirement, reevaluate
the offers, cancel the contract (if already awarded), or take other
appropriate action. In many instances the protester is entitled to
recover his bid or proposal preparation costs, as well as attorney fees.

These abovecited remedies were intended to protect disappointed bidders,
but do so at the expense of the government. For example, while the
government can be directed to pay a protester's legal fees, a protester
cannot be assessed any penalty for delaying a government contract award
or for the government defense against a frivolous protest. Avoiding
delays in government programs is the current incentive for the
government to painstakingly document procurement conformance with the
many applicable statutes and regulations. However, this practice adds
time to the procurement process and ultimately delays contract awardand
the delivery of goods and services that line managers critically need.
Given the significant consequences of contracting officer decisions, a
uniform standard for judging the correctness of those decisions is
needed to ensure that accountable decisions are not secondguessed.

Further, the Report of the Acquisition Law Advisory Panel to the United
States Congress on Streamlining Defense Acquisition Law (Section 800
Panel) reviewed the protest process. A key recommendation of this panel
was that the Court of Federal Claims should be the single judicial forum
to consider all protests that now can be considered by any District
Court or the Court of Federal Claims.8 This change would allow expert
judges of the Court of Federal Claims to resolve these sometimes complex
contracting issues.

Endnotes

1. Section 111 of the Federal Property and Administrative Services Act
(40 U.S.C. 759 et seq.).

2. The Professional Services Council has noted that one clearly
objective agency protest system is the Headquarters Level Protest
Program of the Army Materiel Command (AMC). This alternative dispute
resolution program has been very successful as a highlevel agency review
of bid protests. The filing times and procedures used by AMC were
published in a set of AMC guidelines that are routinely included in AMC
procurements. The AMC Pilot Program resulted in effective relief for
protesters in approximately 20 percent of the cases filed. Only one AMC
decision has been overturned by GAO since initiation of the HQ, AMCLevel
Protest Program in April 1991. The Pilot Program has now been made
permanent. The AMC procedures provide for 10 working days to file a
protest from the date the affected offeror knew or should have known of
the grounds for the protest, per FAR 33.103(b)(2). A protester to AMC
also agrees not to file a protest at GAO, GSBCA, or any other forum
while the AMC protest is pending. AMC review of the protest is made at
the headquarters level and the decision is binding on the contracting
officer.

3. Interview with Council for Excellence in Government members, May 11,
1993.

4. Broadbent, Steven W., Deputy Assistant Secretary for Information
Systems, Department of the Treasury, "Urgent Need for ADP Procurement
Reform," Government Workplace Products and Services Report (Fall 1990).

5. U.S. Merit Systems Protection Board, "Workforce Quality and Federal
ProcurementAn Assessment," July 1992. This is the report of a followup
survey by the Merit Systems Protection Board and the Office of Federal
Procurement Policy of line managers on the federal procurement system.

6. Murphy, Robert, Senior Associate General Counsel for Procurement Law,
General Accounting Office, and Judge Stephen Daniels, Chair of the
General Services Board of Contract Appeals, speeches in the Daily Report
for Executives (Professional Services Council, July 28, 1993).

7. Section 961(c) of P.L. 99500. The Paperwork Reduction Reauthorization
Act amended the Competition in Contracting Act (P.L. 98369) to make the
GSBCA protest authority permanent.

8. Aquisition Law Advisory Panel to the United States Congress,
Streamlining Defense Aquisition Law (March 1993), pp. 1214.