When and How Small Government Contractors Should Consider Filing a Bid Protest

Published by BradyRenner CPAs | September 7, 2017

One of the greatest challenges facing small government contractors is the inherent risk associated with each proposal being pursued. Typically, a small GovCon has an enormous amount of time, effort and money riding on each opportunity that it pursues. That means that, if you don’t win the award, you at least want to be confident that you were clearly informed as to how the award would be made; that other firms competed fairly; and that there was an even playing field, not a stacked one, for you to compete on.

But what do you do when you feel strongly that one or more of these conditions was not the case? Do you go chalk it up to ‘insider baseball’ and move to the next opportunity, or do you go through the effort to file a bid protest?

What is a Bid Protest?

In order to make that decision, we first have to be clear about what a bid protest is. In federal contracting, a bid protest is a written objection filed by an interested party to a federal procurement activity. The activity that could generate a bid protest could be the issuance or cancellation of a solicitation, award or proposed award; or the termination or cancellation of an award. Bid protests exist in two forms: pre-award (which is protesting the terms of a solicitation) or post-award (which is protesting the terms of a contact award or proposed award).

To be clear, a protest must meet very precise standards. Specifically, a bid protest must allege that the federal government itself violated a procurement law or regulation, either by an action that it took or an action that it did not take (inaction).

In addition, the alleged violation must have prejudiced the filing party (in plain English, this means that you have to be able to state that your company would be able to win a specific award (pre-award protest) or would have won a specific award (post-award protest), if it were not for the violation you allege. Finally, the party filing the protest must be an actual or prospective bidder (pre-award protest) or a party in line for or at least eligible for an award (post-award protest).

In summary, a valid bid protest must:

Be filed by a party with an actual defined interest in the bid.
Specify that the government violated its own procurement laws or regulations, either by a specific action or inaction.
Further demonstrate that the violation which is alleged directly resulted in a negative outcome for the interested party.

When Should I File a Bid Protest?

A bid protest must meet the conditions just discussed, and in so doing, it must be based upon clear grounds. The question of when you should file a protest can best be considered in light of two factors.

The first is the technical factor: Can you identify one or more aspects of the bidding or award process that meets the criteria for a valid bid protest? The second is the business factor: Is pursuing this protest valuable enough and likely enough to generate a fully or partially winning result that the time, money and risk involved is worth taking?

Let’s begin with the technical factor. Starting here is valuable because it forces you to set aside the emotional frustrations you may have experienced and focus on the facts. Consider some of these as possible grounds you could use to file a valid bid protest:

There was an improper technical evaluation.
There was an improper price evaluation.
Requirements stated in the RFP or RFQ were later relaxed or weakened.
The defined evaluation grounds were not followed fully.
Additional evaluation ground(s) were added and not disclosed.
The awardee’s high premium price is not justified by a proper cost-technical trade-off evaluation.
The awardee’s low-ball bid was accepted under false pretenses.
There were improper or incomplete discussions taking place during the process.
There are one or more identifiable conflicts of interest on an organizational or personal level.

There are other grounds that may be valid to consider, but which are only applicable if you file your bid protest though one of the available channels (i.e. not all channels accept all protest grounds). For example, bid protests concerning small business certification issues such as small business, SDVOSB, HUBZone or other requirements will not be accepted if your protest is filed with the U.S. Government Accounting Office (GAO).

What about the business factor? Making a decision to file a bid protest involves a lot of considerations even after you’ve determined that you have logistical technical grounds for pursuing one. These include:

Are you able to file a bid protest in a timely manner, ahead of or on the relevant deadlines?
Are you ready to hire appropriate legal counsel and invest time and money in the process to prove your point?
If the protest is built on solid technical grounds, how likely do you believe it is that your firm will win if it is re-competed?
Are there any aspects of your own competitive approach to this or other bids that could generate protest by other parties?
If you are an incumbent vendor, are you likely to benefit from a good faith protest because of the automatic stay of performance? (If so, this could give you a 4- to 6-month extension on the contract during the protest period).

It’s important to keep in mind that bid protests are a “two can play at that game” scenario. That is to say that you can find yourself on the receiving end of a protest just as easily as you can be on the pursuing end.

Statistically, it can be worth it to file a bid protest in many cases, as approximately 45% of all protests filed at the GAO result in some form of relief (although only 15-20% of claims typically are fully sustained).

Where Do I File a Bid Protest?

There are three options you can pursue for filing a bid protest. They are:

Agency Level Protest – Where the protesting party submits a formal written protest with the contracting officer directly.
GAO Protest – Where the protesting party submits a formal written protest directly to the Government Accountability Office (GAO).
Federal Claims Protest – Where the protesting party submits a formal written protest directly to the U.S. Court of Federal Claims.

Of these three options, the GAO Protest is the most commonly pursued option and the Agency Level Protest is the least used option, largely because filing a claim with the agency whose actions you are protesting is generally unlikely to result in a satisfactory resolution.

Keep in mind that all three approaches have different requirements, differing deadlines and varying approaches. It is essential to speak with your business attorney and review contracting regulations thoroughly before choosing the appropriate option for your bid protest.

What Happens Next?

What happens next depends largely upon which of the three options you pursue for filing your protest. Since the GAO Protest is the most commonly pursued approach, let’s consider things in that context for the purposes of discussion.

If the GAO sustains (agrees with) your protest, it will then recommend one or more remedies to correct the errors that the GAO confirms in its decision. These remedies could include:

Re-evaluation of existing proposals
Modifying the solicitation
Modifying the request for applicable final proposal submissions
Excluding the current awardee from eligibility or recommendation of award

The GAO can only recommend actions – it cannot enforce them directly. However, historically most federal agencies will follow GAO recommendations in a bid protest in nearly every case. Also, if your protest is sustained, the GAO will likely recommend that your attorney’s fees associated with the protest be partially or fully paid for.

If the GAO rejects (disagrees with) your protest, there is no technical means by which you can appeal a GAO decision. However, in many cases you may still be able to file a protest on the same grounds with the U.S. Court of Federal Claims, which would give you a second opportunity to pursue the matter. In addition, a bid protest filed with the Court of Federal Claims may be appealed, since it is a federal court decision.

How Do I Proceed?

If you feel that you have legitimate technical grounds and solid business reasons for pursuing a bid protest, the first thing you should pursue is a debriefing on the contract in question. A losing party to any bid is always entitled to a debriefing (but in most cases, you only have three days from the date you receive notice that you’ve lost the bid in order to request the debriefing).

The second thing to do is seek out professional government contracting counsel to review your situation and to advise you on both the technical and business factors involved in making a clear — and timely — decision on how to proceed.

Along with having a CPA firm with government contracting experience on your team, you also need a business attorney who brings similar knowledge to the table. Having the right advisors will give you confidence and technical clarity when difficult decisions arrive during the life of your small government contracting business.