Government Contracts Monitor

Is Corrective Action Reviewable? Yes, Even Under the FAA’s AMS

July 15, 2013

Corrective action is reviewable, but it is not easy to overturn, as the Federal Aviation Administration (FAA) and Alutiiq Pacific LLC (Alutiiq), respectively, learned not too long ago, in Findings and Recommendations from FAA’s Office of Dispute Resolution for Acquisition (ODRA).

After Alutiiq initially won an FAA award, a disappointed offeror, American Eagle Protective Services (AEPS), protested. The FAA settled the protest by agreeing to take corrective action: termination of its award to Alutiiq and a directed award to AEPS.

Alutiiq protested the corrective action, arguing that AEPS, a small business, was not qualified to receive an award since its subcontractor arrangement with Paragon, a large business, violated the ostensible subcontractor rule. Under this rule a large business subcontractor is deemed affiliated with a small business offeror for purposes of the procurement, rendering the small business other than small and thus ineligible for a small business award.

The FAA countered Alutiiq’s protest by claiming that (i) Alutiiq “failed to satisfy the ‘higher’ burden of proof required when challenging the agency’s decision to enter into an ADR settlement based on litigative risk;” and (ii) the agency acted reasonably because the “Contracting Officer reasonably perceived ‘serious litigative risk’ based on the original protest of AEPS.”

The agency seemed to suggest that a contract award made pursuant to an ADR settlement is unreviewable, even in circumstances where the original protester (AEPS), might be ineligible, or its proposal nonresponsive. Not so. Accordingly, ODRA reaffirmed that “such an approach would actually subvert, rather than promote, the goals of ADR by allowing decisions made thereunder to be shielded from review.”

In reviewing an agency’s determination to settle a protest and take corrective action, ODRA considers–

First, whether the protester participated in the earlier proceeding;

Second, whether the agency had a rational basis to think the initial protest would be successful and, therefore, presented litigative risk; and

Finally, whether the corrective action has a rational basis and is consistent with the Acquisition Management System (AMS).

ODRA examined the corrective action here and found, using the criteria set out above, that (i) Alutiiq participated in the original protest, (ii) the agency rationally believed it had litigative risk insofar as AEPS failed to meet the Solicitation’s minimum eligibility requirements, and (iii) the end result of the corrective action taken in this case is consistent with the AMS and has a rational basis since AEPS is an
eligible offeror(i.e., Alutiiq did not demonstrate that AEPS’ use of Paragon created an ostensible subcontractor relationship).

In short, corrective action is reviewable. As a result, both parties – the original protestor and the agency – should make certain the action has a rational basis and is otherwise consistent with applicable law and regulation.

Lindsay Simmons is the attorney responsible for the content of this article.

Attorneys

Lindsay Simmons