Government Contracts Monitor

When a GAO Protest Decision Is Wrong the Court of Federal Claims Can Fix It – If You Protest

August 27, 2014

It does not happen very often, but in a recent post-award protest the Court of Federal Claims found an agency was arbitrary and capricious in implementing a United States Government Accountability Office (GAO) decision that recommended cancellation of a contract award. Rush Construction Inc. v. United States et al, COFC No. 14-202C, (Fed. Cl. July 15, 2014). According to the Court, GAO’s bid protest decision, which the agency relied on in cancelling Rush’s award, was irrational. In other words, a GAO protest that results in a decision to overturn an Agency award, when successfully challenged in the COFC by the awardee, can result in the awardee reclaiming its contract, as it did here.

Rush Construction, Inc. (Rush) was the low bidder on an Army Corps of Engineers (Corps or Agency) contract. C&D Construction, Inc. (C&D) was the second lowest bidder. There was a discrepancy in Rush’s bid schedule that the Contracting Officer waived as a minor informality. When the Agency awarded the contract to Rush, C&D successfully protested to the GAO. GAO found that the discrepancies in Rush’s bid should not have been waived and recommended that the Agency reject Rush’s bid as nonresponsive and terminate the contract. The Agency accepted this recommendation. Rush then protested to the COFC, arguing that (i) any errors in its bid schedule were minor informalities that could be waived and (ii) the Agency’s determination to award the contract to C&D was arbitrary, capricious and contrary to law.

At the outset the COFC stated that “[w]here an agency simply implements a GAO recommendation, the inquiry focuses on the rationality of that GAO recommendation, even though the actual decision before the court is the agency decision,” and “an inquiry into the rationality of the GAO decision is the same as an inquiry into whether the agency had a rational basis for its decision.” In this regard, the court’s review of GAO’s decision is limited to the question of whether or not the decision is a rational one. “Even if GAO’s decision is not a model of clarity, the court must stay its hand if GAO’s decisional path may be reasonably discerned.”

Here, however, the Court found that GAO relied on legal precedent without any “explanation as to how these legal principles support the decision it reached in this case.” Moreover, the Court found that three of the cases relied upon by GAO were “factually distinguishable from this one” and “fail to provide the requisite support for its decision.” In addition, the Court found that GAO’s focus on one fact—“without any apparent consideration of the four other facts that undercut GAO’s ultimate determination—is without rational explanation.”

In short, according to the COFC, GAO “premised its decision on inapposite case law, a narrow focus on one relevant fact … and a failure to consider a number of other relevant facts” and, accordingly, GAO’s decision was not rational. As a result, the Agency was arbitrary and capricious in implementing GAO’s irrational recommendation to cancel the contract award to Rush.

In this instance the awardee was wise not to sit back and accept GAO’s decision. Rush’s subsequent protest to the COFC paid big dividends: Rush ended up recovering its contract.

Attorneys

Lindsay Simmons