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GAO Protests: Will You Get Your Money Back?

 

As a government contractor, at one point or another you’ve probably encountered a bid protest. Maybe you missed out on an award and felt that the Government didn’t properly apply the terms of the solicitation. Maybe someone protested your socioeconomic status (such as if the contract was an SDVOSB set-aside). Or maybe you protested someone you suspected was ineligible.

Overall, protests are not fun. No one wants to be involved in one. They are, however, sometimes necessary, which is unfortunate given the time and money it would save if the government always properly evaluated proposals and only awarded contracts to eligible contractors.

One question I get a lot as a procurement law attorney is whether someone who brings a bid protest at the Government Accountability Office (“GAO”) can recover filing costs if they prevail. After all, if the government errs in evaluating a proposal, resulting in the time, stress, and money required to hire an attorney to pursue a contract, why should the contractor be penalized?

Long story short, the answer is a protestor is usually out the costs of protesting to the GAO. The bar is high, because the protestor has to show two things: one, that the protest was “clearly meritorious;” and two, that the agency unduly delayed in taking corrective action to remedy its mistake.

In other words, it’s not enough that source selection officials make a gross error in evaluating proposals; the contracting agency also has to drag its heels once the contractor files a protest to complain about the error.

A recent GAO decision illustrates this principle: in Cape Environmental Management, Inc., a protestor unsuccessfully attempted to recover its costs after an agency took corrective action. (B-412046.3, September 30, 2016). The GAO noted that a “clearly meritorious” protest is one where the issue is “not a close question” and the government has “no defensible legal position.” Because the GAO found that the protestor had not established this element, it didn’t reach the second element of undue delay. (As a note, there is generally no entitlement to fees if the agency takes corrective action prior to the due date of its agency report).

Basically, if you are considering protesting a lost contract to the GAO, know that it will involve a monetary investment. Absent fairly extraordinary circumstances, you won’t recover your filing fees.

As such, consider whether “going after the prize” is worth it to your business.

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veteran business issues at: http://www.legalmeetspractical.com.

 

3 Responses to “GAO Protests: Will You Get Your Money Back?”

  1. Makes me wonder whether or not the contracts worth the hassle?

  2. With all this hassle, and you assuming all of the risk, are government contracts even worth it for the little guy?

    • There are many businesses who make all of their revenue through set-aside contracts (a lot of these folks have good mentors and get help from the SBA, PTACs, and other organizations when they’re learning the ropes), and it’s certainly worth it for them.

      But it’s equally true that there are other contractors who derive most of their revenue from commercial contracts, decide to dip their toe into government water, and get scalded because they don’t know the rules (and breaking some rules, like the Service Contract Act – where you have to pay certain wages to non-professional employees – come with automatic harsh penalties).

      It depends. A big part of it is how willing you are to educate yourself and the amount of time and money you’ll invest to learn the ropes. (For instance, to receive these government contracts, it can take you 20 hours to put together your proposal/bid for it and the chance of receiving it is small).

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