United States: A New Bid Protest Timeliness Trap: Pre-Award Laches

Last Updated: May 24 2018
Article by Daniel E. Chudd and James A. Tucker

On this blog, we frequently discuss the various timeliness traps that can undermine bid protests at the Government Accountability Office (GAO). A recent bid protest decision from the Court of Federal Claims addresses a timeliness trap that is rare and has never before been spotted in the wild, but that could ensnare a protester under the right circumstances.

The Facts

Global Dynamics, LLC v. United States, 2018 WL 1312051 (Fed. Cl. March 14, 2018) followed a series of Small Business Administration, GAO, and Court of Federal Claims protests of an Army procurement of nursing services. As the heavily protested procurement was drawn out, the agency awarded sole-source bridge contracts to the incumbent contractor (itself an offeror as part of a joint venture) to continue essential services until a new contractor was chosen.

For our purposes, the most relevant prior protest was the GAO protest that directly preceded the Court of Federal Claims protest. Following earlier protests, the Army awarded the contract to Global Dynamics, and the incumbent's joint venture protested to the GAO. In November 2016, the GAO sustained the joint venture's protest on numerous grounds and recommended the Agency conduct and document a new evaluation of the awardee's existing proposal and prepare a new source selection decision. The following month, the Agency began its corrective action. Delays ensued, and the incumbent continued to perform under its bridge contract in the meantime. In September 2017, the Agency announced its intent to award the incumbent a fifth sole-source bridge contract while corrective action continued to be delayed. Then, in November 2017, the Agency announced it had decided to cancel the procurement altogether.

Soon thereafter, Global Dynamics filed suit at the Court of Federal Claims, challenging: (1) the cancellation of the procurement; (2) the fifth sole-source award to the incumbent; and (3) the rationality of the GAO's recommendation to reevaluate Global Dynamics' proposal and make a new award decision.

During the pendency of the protest, the Agency rescinded its cancellation decision, thus mooting the first protest ground. As to the second ground, the court determined that the procurement record failed to document why the sole-source contract was necessary when the facts seemed to indicate that the Agency had plenty of time to complete its corrective action in the many months since the GAO issued its recommendation. As a result, the court remanded that question to the agency to update its Justification and Approval with contemporaneous facts that might have been omitted. (In a later opinion, the court found the updated justification insufficient.) That left only the protest ground challenging the GAO's recommendation itself.

Timeliness and the Equitable Doctrine of Laches

The Court of Federal Claims lacks most of the strict timeliness rules that complicate protest filings at the GAO. At the court, there ordinarily are only two timeliness bars that come into play.

First, in the pre-award context, the familiar waiver doctrine set forth in Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007) and its progeny provides that, when a party is aware of a solicitation impropriety, that party must raise the issue "prior to the close of the bidding process," or else it waives its ability to protest the issue after award. This is analogous to the GAO's rule that challenges to apparent solicitation improprieties are untimely unless raised prior to the date set for submission of proposals. See 4 C.F.R. § 21.2(a)(1). The theory here is that, if you willingly choose to play a game despite thinking that the rules are bad, you forfeit the right to complain about the rules if you end up losing the game. The court treats corrective action following a bid protest as a pre-award scenario. See Sys. Applic. & Techs., Inc. v. United States, 691 F.3d 1374, 1382 (Fed. Cir. 2012); Square One Armoring Serv., Inc. v. United States, 123 Fed.Cl. 309, 327 (2015). This logically results in the Blue & Gold waiver doctrine requiring any objections to the corrective action to be lodged before revised proposals are submitted or (where proposal revisions are not requested) before contract award.

Second, in the post-award context, the court has no rules analogous to the GAO's rule that protest grounds not involving solicitation improprieties must be raised within 10 days after the time the protester knew or should have known of the basis of protest. See 4 C.F.R. § 21.2(a)(2). Instead, to dispense with woefully late protests, the court occasionally employs the ancient equitable doctrine of laches: Vigilantibus non dormientibus aequitas subvenit — equity comes to the aid of the vigilant, not to those who slumber. See Nat'l Telecommuting Inst., Inc. v. United States, 123 Fed. Cl. 595, 602 (2015) (holding that laches barred a protest filed six months after award where the delay was avoidable and caused the Government and the awardee economic prejudice). The court may employ the doctrine of laches when the defendant shows both (1) an unreasonable and unexcused delay by the plaintiff and (2) a resulting economic or defense prejudice to the defendant. Id. (citing JANA, Inc. v. United States, 936 F.2d 1265, 1269 (Fed. Cir. 1991); Hermes Consol., Inc. v. United States, 58 Fed.Cl. 3, 20 (2003)).

Pre-Award Laches

Global Dynamics is very unusual because the Government raised a laches defense in a pre-award protest — and even more unusual because the court upheld the defense. The Government argued that the protester's challenge to the rationality of the GAO findings and recommendation of corrective action was prejudicially delayed and therefore barred by laches. The protester countered that, because the court treats corrective action generally as a pre-award issue, and revised proposals were not requested, this protest ground was timely under Blue & Gold because it was filed prior to the new award decision.

The court acknowledged that it apparently had never upheld a defense of laches in a pre-award context before. But the court rejected the protester's suggestion that Blue & Gold established the only timeliness rule for pre-award protests. Just because a pre-award protest ground avoids waiver, the court reasoned, does not mean it necessarily will survive a laches defense, and nothing in Blue & Gold suggests that waiver is the only time-based defense available in a pre-award context.

Then, applying the customary laches analysis, the court found that the delay between the GAO decision (and beginning of corrective action the following month) and the filing of the protest a year later was an unreasonable and unexcused delay. As to prejudice, the court found that, while the protester delayed, the Agency incurred the costs of reevaluating the plaintiff's technical proposal and past performance as recommended by the GAO. That combination of delay and some degree of economic prejudice was sufficient for the court to bar the plaintiff's challenge to the GAO corrective-action recommendation under the doctrine of laches.

Takeaways

The court recognized that this protest presented "unique circumstances" justifying apparently the first-ever use of laches to bar a pre-award protest ground. This holding is unlikely to inspire a wave of dismissals of otherwise timely protests, both because of the "unique circumstances" of the case and because far more protests are filed at the GAO, where Global Dynamics' challenge to the recommended corrective action would have been untimely anyway under the GAO's 10-day rule.

For protests before the court, though, the relevant circumstances underlying the decision are not necessarily unique. It is not unheard-of for post-protest corrective action to be long and drawn-out. And, even outside the corrective action context, one can imagine other pre-award scenarios where a protester raises a challenge that passes muster under Blue & Gold, but might fall afoul of the laches doctrine articulated in Global Dynamics. For example, sometimes a protest ground comes to light during discussions, where the Government makes clear that its interpretation of the solicitation's evaluation scheme is different from the offeror's. If the protester delays its protest until after the agency has concluded lengthy discussions with multiple offerors, but before proposal revisions are due, could the Government invoke laches in an attempt to bar the protest by invoking the economic prejudice of all those discussions it conducted and potentially would have to re-do? At the GAO, almost certainly not. At the court now, who knows?

At the end of the day, Global Dynamics does not significantly alter protest timeliness rules, but it does add a new timeliness trap for protesters to be aware of.

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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