Government Contracts Monitor

Faulty Corrective Action Triggers Government Liability for Protester’s Legal Fees

July 13, 2015

The Court of Federal Claims recently awarded legal fees to a protestor who successfully challenged the government’s irrational corrective action – action taken in connection with a prior protest – because the government’s position was not “substantially justified.” WHR Group Inc. Opinion.

As set out in WHR Group, Inc. v. United States, the FBI’s planned corrective action “took a wrong turn” when the FBI decided to award a contract to a prior protestor in order to resolve a GAO protest, notwithstanding that the prior protestor, Brookfield, was only the sixth-priced offeror in line for award. As the Court said, “It was naïve for the FBI to think that the passed-over offerors would not complain about the FBI’s apparent favoritism toward Brookfield.”

As the events played out, two passed-over offerors did file new bid protests at the GAO challenging the award to Brookfield. At this point, the FBI announced it would take new “corrective action”, to resolve the second protest, by cancelling all the awards and starting over with a new solicitation. The cancellation of all the BPAs went far beyond the permissible corrective action under the law and WHR protested.

An agency’s corrective action must be rationally related to some procurement defect. Here the Court could not see a rational reason for the FBI’s actions either in making an award to Brookfield, or in later cancelling all the BPA’s to resolve the subsequent protest.

[I]f the FBI’s “corrective action” in this case were not enjoined, it would signify that the government’s power to take “corrective action” is nigh unlimited. The requirement that corrective action be “targeted” or “rationally related” to an existing defect in the initial procurement is essential to the integrity of the procurement system. In this case it is clear that the “corrective action” was not targeted or rationally related to any actual defect and it is therefore crucial to the public interest that the FBI’s “corrective action” be enjoined.

In short, the protest of the corrective action was successful. WHR then moved the Court to recover its legal fees.

To be eligible to receive an award of attorneys’ fees under the Equal Access to Justice Act (EAJA), five conditions must be met: (1) the fee application must be timely filed and supported; (2) at the time the action was initiated, the applicant, if a corporation, must not have been valued at more than $7,000,000 in net worth or employed more than 500 employees; (3) the applicant must be the “prevailing party” in the civil action; (4) the Government’s position must not have been “substantially justified;” and (5) there cannot exist any special circumstances that would make an award unjust. 28 U.S.C. § 2412(d)(1)(A),(B).

Here the Government fell “well short of its burden of proof” and did not offer “any convincing arguments to show that its position was substantially justified”.

Attorneys

Lindsay Simmons