Government Contracts Monitor

Recovering Protest Costs After Corrective Action Is Possible, But Don’t Hold Your Breath

November 4, 2014

By: Eric Whytsell

Protesting contractors sometimes prematurely interpret an agency’s decision to take corrective action as a tacit admission of their protest’s merits, only to be brought back to earth when that corrective action fails to “properly” resolve the issues (i.e. in their favor). This dynamic reflects the practical realities of corrective action, one of the most powerful tools in an agency’s protest response toolkit. An agency’s announcement of its intent to take “corrective action” almost always cuts a protest off at the knees and there’s often very little the protester can do in response. When all else fails, a protester facing corrective action prior to the due date for the agency’s report may be able to recover its protest costs, but only in the rarest of circumstances.

The recent decision by the Government Accountability Office (GAO) in A1C Partners, LLC –Costs, B-409189.3 (September 30, 2014) drives this point home. The case involved an attempt by A1C Partners, LLC (A1C) to recover costs for two related protests from the Department of Homeland Security (DHS).

The first protest challenged an award to Six3 Intelligence Solutions, Inc. (Six3), alleging the agency had improperly converted the solicitation criteria from best value to lowest price technically acceptable and did not conduct a proper price realism analysis. Prior to the agency’s deadline for filing its report with the GAO, DHS announced it would take corrective action consisting of reevaluating the proposals and making a new source selection decision. In response, GAO dismissed the protest as academic.

Months later, DHS informed A1C that its corrective action had again resulted in the selection of Six3 for award. After a debriefing, A1C filed a second protest, contending that DHS had failed to correct the errors identified in the initial protest and asserting additional protest grounds. One day before the agency’s report deadline, DHS again asked GAO to dismiss the protest, this time stating DHS would review whether its requirements had changed and then either (i) reevaluate the proposals again and make a new award decision or (ii) cancel the solicitation. DHS explained that a decision to reevaluate proposals might be coupled with an amendment to the solicitation or discussions with the offerors. A1C objected to the dismissal request, arguing that the proposed corrective action was not rationally related to the issues raised in the protest and asking GAO to address the issues on their merits.

Despite A1C’s arguments, GAO dismissed the second protest. It reasoned that, even if the agency’s proposed approach did not constitute corrective action addressing A1C’s protest issues, the protest would be rendered academic regardless of which path (reevaluation or cancellation) the agency ultimately took.

A1C then filed to recover its costs for both protests on the grounds that: (i) the agency failed to implement the corrective action promised in response to the first protest – forcing it to protest again on the same grounds; and (ii) the agency’s delay in announcing its corrective action in the second protest until after filing its document list forced A1C to expend unnecessary time and resources in the protest process.

GAO rejected both arguments.

As GAO explained, it may recommend reimbursement of protest costs where it determines, based on the circumstances of the case, that the agency has forced the protester to expend unnecessary time and resources in protest process by unduly delaying corrective action in the face of a clearly meritorious protest. As a practical matter, this means that cost recovery is limited to situations in which “an agency fails to implement the promised corrective action, or implements corrective action that fails to address a clearly meritorious issue raised in an initial protest, such that the protester is put to the expense of subsequently protesting the very same procurement deficiency” – in other words, where “the agency’s action has precluded the timely, economical resolution of the protest.”

Here, GAO found that A1C failed to make the required showing regarding the agency’s action. With respect to the first protest, there was no doubt that DHS took the promised corrective action – and the offerors’ proposal ratings changed as a result. Similarly, GAO rejected A1C’s arguments relating to the second protest, explaining that the agency’s announcement of its corrective action at the last moment -- after submitting its document list –was sufficiently prompt because it occurred before the deadline for submitting the agency report. GAO did not consider the fact that A1C felt compelled to object to DHS’ proposed document list relevant to the analysis.

The bottom line? Contractors need to be realistic about recovering protest costs when an agency decides to take corrective action prior to the filing deadline for its report. It can happen, but only in very limited circumstances.

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