United States: A Road Less Traveled: Agency-Level Protests

An agency just messed up a procurement, and you want to protest. Where do you go? The vast majority of bid protests are filed with the Government Accountability Office (GAO). A far smaller percentage of protests are brought as lawsuits before the Court of Federal Claims. It is easy to forget there is a third forum available for most protests of federal procurements—the procuring agency itself, which may be preferable to the GAO and the court in certain circumstances.

Agency-level protests are governed by Federal Acquisition Regulation (FAR) 33.103 and agency FAR supplements. In a nutshell, they are written complaints addressed to the contracting officer or another designated official requesting corrective action of some sort. FAR 33.103(d)(4) allows protesters to request review of the protest at a level above the contracting officer, which the agency may allow either as an alternative to review by the contracting officer, or as an appeal from his or her decision. As at the GAO, a protest to the agency ordinarily is timely if filed before bid opening or the date set for receipt of proposals (for solicitation improprieties) or no later than 10 days after the protest ground was known or should have been known (for all other grounds). FAR 33.103(e). The GAO's debriefing exception—allowing protests to be filed later than 10 days after a ground is known if filed within 10 days after a required and requested debriefing—does not apply to agency-level protests. See M2 Global Tech., Ltd., B-400946, Jan. 8, 2009, 2009 CPD ¶ 13 at 3. And, as at the GAO, timely receipt of a pre-award protest ordinarily stays the contract award, and timely receipt of a protest within 10 days after a contract award or five days after a required and requested debriefing ordinarily stays performance of an awarded contract. FAR 33.103(f)(1), (3).

Beyond these very basic rules, agencies are generally free to proceed as they see fit in accordance with internal agency policy. In agency-level protests, protesters lack the right to inspect the procurement record or to rebut agency legal arguments through additional briefing. As a result, the protester cannot scour the non-public record for supplemental protest grounds. Rather than a judge or GAO attorney, the official adjudicating the protest is one of the procuring agency's own employees. The protester simply makes the best argument it can and the agency issues its decision, ideally within 35 days. If the protester disagrees with the outcome, it is free to seek higher-level agency review (if that is available), or to file a protest with the GAO (within 10 days of adverse agency action) or the Court of Federal Claims. Although agencies may voluntarily agree to continue a stay during a subsequent protest at the GAO or court (and some regularly do so as a matter of policy), pursuing an agency-level protest does not extend the time for obtaining an automatic stay of performance at the GAO. So, given the GAO's general "10 days after award" rule for obtaining a stay, the 35-day timeline for an agency-level protest generally means there will be no automatic stay at the GAO if a firm files its post-award protest at the agency first.

Given these apparent disadvantages, why would anyone protest to the agency rather than directly to the GAO or the court?

Advantage #1: Let's Not Air the Dirty Laundry

As a matter of customer relations, some companies may not want publicly to accuse a government customer of botching a procurement. It can be awkward hauling one's customer before a GAO attorney or judge or compelling it to produce voluminous internal agency documents for third-party review. Unlike at the GAO or the court, there is no public docket of agency-level protests and no participation by outside agencies or other branches of government. Everything is addressed quietly.

In our experience, most agencies are sophisticated enough to see bid protests as an ordinary and beneficial part of the federal procurement system and do not let protests sour their business relationships. All else being equal though, agencies likely prefer to address procurement errors internally rather than before third parties. So, when there is little doubt that a prejudicial error has occurred, and the offeror is fairly confident the agency will do the right thing and fix the problem, an agency-level protest may make sense. This is especially true if the agency assigns the protest decision to a level above that of the contracting officer, which may be beneficial if the contracting officer is part of the problem.

Advantage #2: Speed, Simplicity, and Lower Attorneys' Fees

Agency-level protests are generally faster, simpler, and cheaper than protests at the GAO, and almost always more so than at the Court of Federal Claims. Agencies strive to render a decision within 35 days (versus the GAO's 100-day deadline or the court's indefinite timeline), charge no filing fees, impose very few procedural hurdles, and usually require no briefing beyond the initial protest letter. In exchange for that streamlining, however, the protester gives up the procedural protections, document production, supplemental protests, and disinterested outside oversight that are part and parcel of protests in the other fora. For very cost-sensitive companies or low-value procurements, that tradeoff may be attractive.

Advantage #3: No Intervenors

Unlike protests at the GAO or the court, agency-level protests do not have intervenors. This means your competitors ordinarily will not have the opportunity to weigh in on the merits of your protest or to supply the agency with ammunition to shoot it down. Indeed, unless the agency has to stay performance of an awarded contract or ask offerors to hold open their offers, other offerors are often completely unaware that an agency-level protest has even been filed. This may be attractive to protesters interested in keeping a dispute one-on-one with the agency.

Advantage #4: Few Downsides for Pre-Award Controversies

As discussed above, the GAO has tight filing timelines for receiving an automatic stay of performance in a post-award protest. Because it is very unlikely that an agency will issue a protest decision within 10 days of a contract award, if a company files a post-award protest with the agency and loses, it almost always will be too late to get an automatic stay of performance in a timely second-bite protest before the GAO.

For pre-award protests of the terms of a solicitation or exclusion from the competitive range, however, an agency-level protest decision may be issued quickly enough for the offeror to file a subsequent pre-award protest at the GAO and still get a stay of contract award. If a future GAO stay is not jeopardized, and if the offeror is not terribly interested in inspecting procurement documents, there may be little downside to filing a pre-award protest initially with the agency itself, particularly if the procurement error is evident and easy to correct. If the agency does not correct the perceived error, the protester may find it fairly simple to convert the agency-level protest letter into a GAO protest and still get the stay of award for the duration of the GAO protest period. Moreover, agencies may provide for voluntary stays to encourage protestors to come to them before the GAO; in those circumstances, even post-award agency-level protests may have few downsides.

Caveats

On the flip-side, agency-level protests pose unique dangers. The trickiest part is their effect on GAO timelines if a protester wants to go to the GAO following an unsatisfactory result before an agency. Given the Court of Federal Claims' more flexible timeliness rules, most of these caveats apply only to subsequent GAO protests and may have little or no effect on a protest before the court.

The first trap for the unwary is that a pending agency-level protest does not stop or extend the GAO's clock for a stay of contract performance. So, unless the agency agrees to a voluntary stay (which some do as a matter of course), a post-award agency-level protest may result in a forfeited stay of performance if the protester goes to the GAO at a later time.

Second, and perhaps more problematic, prior agency-level protests alter the rules for timeliness to bring a GAO protest. See 4 C.F.R. § 21.2(a)(3). Before it will consider a protest, the GAO generally requires (1) challenges to the terms of a solicitation to be filed before the date set for receipt of proposals and (2) all other protests to be filed within 10 days of when the protest ground is known or should have been known. The GAO's "debriefing exception" usually allows post-award protests to be brought either 10 days after notice of contract award or 10 days after a required and requested debriefing, whichever is later.

When an agency-level protest has been filed, however, the normal rules do not apply. Rather, once an agency takes "adverse action" on an agency-level protest, the protester then has 10 days in which to file at the GAO. Sometimes this rule benefits the protester—for example, by allowing the GAO to hear a protest of the terms of a solicitation filed with the GAO after receipt of proposals, but within 10 days of the agency's adverse action. At other times, the rule disadvantages the protester—for example, by eliminating the "debriefing exception" for post-award protests or by forcing a solicitation challenge to be filed within 10 days of the adverse agency action, even though the time set for receipt of proposals may be weeks or months away. See, e.g., RTI Techs., LLC, B-401075, Apr. 15, 2009, 2009 CPD ¶ 86 at 3 (GAO protest was untimely when filed within 10 days after a required and requested debriefing, but more than 10 days after denial of agency-level protest). And if the underlying agency-level protest itself was untimely, a subsequent GAO protest will be time-barred, even if filed within 10 days of the adverse agency action. 4 C.F.R. § 21.2(a)(3).

The third caveat is it is not always clear when there has been an agency-level protest. This uncertainty poses great risks given the effect of a prior agency-level protest on GAO protest timelines, and it is entirely possible for an offeror to trigger a protest clock "accidentally" without realizing it. The GAO has long held that an agency-level protest is a (1) written communication to the agency, (2) specifically expressing dissatisfaction, and (3) requesting corrective action. See Coulson Aviation (USA), Inc., B-411525; B-411525.2, Aug. 14, 2015, 2015 CPD ¶ 272 at 5-6. A writing may be a protest even if it is not expressly labeled as such. See Mackay Commc'ns—Recon., B-238926.2, Apr. 25, 1990, 90-1 CPD ¶ 426 at 1. A request for agency action without a corresponding expression of dissatisfaction, however, is not a protest. Fed. Marketing Office—Recon., B-249097.3, Jan. 5, 1993, 93-1 CPD ¶ 4 at 3-4. And an expression of dissatisfaction coupled with a mere suggestion, request for clarification, or an expressed hope or expectation of certain agency action is not an agency-level protest. Masai Techs. Corp., B-400106, May 27, 2008, 2008 CPD ¶ 100 at 3. But it is not always clear what the GAO will deem to be an expression of dissatisfaction or a request for corrective action. In one remarkable case, the GAO found an agency-level protest was filed when a bidder faxed a handwritten note to the agency on the day of bid opening, stating that the specifications seemed to be written around another vendor's product (deemed to be an expression of dissatisfaction) and asking the agency to "[p]lease advise me" (deemed to be a request for corrective action). Am. Material Handling, Inc., B-250963, Mar. 1, 1993, 93-1 CPD ¶ 183 at 2-3.

"Adverse action" is similarly fuzzy: It may be a written protest denial or simply some action or oral statement inconsistent with what the protester requested. In the American Material case, for example, the adverse action was the agency opening the bids after receipt of the protester's fax, thus giving the protester 10 days in which to file its pre-award protest with the GAO. In W.D. McCullough Constr. Co. & M&A Equipment and Constructors Inc., a Joint Venture—Recon., B-238460.2, Mar. 5, 1990, 90-1 CPD ¶ 252, the GAO found the adverse action to be a meeting with the contracting officer, during which the contracting officer orally informed an offeror with a pending agency-level protest that he "was abiding by his initial decision." Because the protester did not make it to the GAO within 10 days of that conversation, the GAO found its subsequent GAO protest to be untimely.

So, if an offeror sends the contracting officer a two-sentence email opining that a solicitation specification was not ideal and asking for it to be changed, an agency-level protest may just have been filed. If the contracting officer writes back, "Thanks, but I don't plan to change it," the offeror has 10 days to file a GAO protest or may be found to have waived its ability to raise that ground before the GAO—even if neither the offeror nor the contracting officer considered the email exchange to be a protest and adverse agency action, and even if initial proposals are not due for weeks. Thus, offerors should be careful about how they complain to agencies.

A final caveat is that it is unclear whether agencies have "jurisdiction" over protests of task or delivery orders. It is clear that some agencies take the position that only the GAO may consider such protests, unless the protest involves an increase in the scope, period, or maximum value of the contract under which the order is placed. See, e.g., Logis-Tech, Inc., B-407687, Jan. 24, 2013, 2013 CPD ¶ 41 at 4 (noting that the Marine Corps dismissed an agency-level task-order protest for lack of jurisdiction and holding that agency-level denials and dismissals are treated the same for purposes of timeliness before the GAO). It is also clear that some agencies have considered protests of task and delivery orders on the merits—including protests that the GAO itself cannot hear. See, e.g., Kevcon, Inc., B-406418, Mar. 7, 2012, 2012 CPD ¶ 108 at 2 (noting that the Department of Veterans Affairs issued a decision on the merits in a protest of a task order valued at under $10 million). Because agencies do not publish their own protest decisions, it is difficult to say what the majority approach is. At the end of the day, questions of "jurisdiction" are largely academic if an agency agrees with the protester on the merits, given the agency's discretion sua sponte to correct perceived procurement errors. If an agency does not want to act on a protest, however, it can dismiss the protest outright—with the same result as if it had denied the protest on the merits. The protester then must figure out whether the GAO has statutory jurisdiction over the protest, or whether a complaint to the agency's task and delivery order ombudsman may be its only remaining recourse. See FAR 16.505(b)(8).

In short, agency-level protests are an often-overlooked avenue for addressing procurement errors but are not without drawbacks and risks. Savvy government contracts counsel can help companies decide if an agency-level protest may be right for them.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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