The 3 Most Important Bid Protest Decisions Of 2018 - Law360

In 2018, three particularly important decisions were issued that will have a significant impact on bid protest law for years to come: Dell Federal Systems LP v. United States,[1] PDS Consultants Inc. v. United States,[2] and Oracle America Inc.[3] This article provides a brief overview of these three cases and provides insights on how they will shape the bid protest landscape going forward.

In Dell Federal, 21 unsuccessful offerors filed bid protests with the Government Accountability Office, challenging nine awards made by the U.S. Army in a $5 billion procurement for “commercial-off-the-shelf” computer hardware. In response to the GAO protests, the Army decided to take voluntary corrective action consisting of: “(1) opening discussions with all of the remaining offerors, including those who filed protests, (2) requesting final revised proposals and (3) issuing a new award decision.”

Two of the original awardees then filed suit at the U.S. Court of Federal Claims seeking to enjoin the Army’s corrective action as overly broad, and five of the original awardee’s intervened in the suit. The COFC found in favor of the protesters, holding that “[e]ven where an agency has rationally identified defects in its procurement, its corrective action must narrowly target the defects it is intended to remedy.” The COFC also found that “there is a more narrowly targeted post-award solution that the Army entirely failed to consider[,] clarifications and reevaluation … of proposals as a more natural expedient for the minor clerical errors it had identified.”

The government and certain of the original protesters then appealed the COFC’s decision to the U.S. Court of Appeals for the Federal Circuit, alleging that the COFC applied the wrong legal standard when reviewing the Army’s corrective action. The Federal Circuit held that the COFC did, in fact, apply the wrong standard:

The Court of Federal Claims summarized the question before it as 'whether holding post-award discussions is a rational remedy for failing to hold pre-award discussions.' ... It held that 'the Army’s corrective action is not rationally related to any procurement defects.' [] However, in so holding, the Court of Federal Claims applied a heightened standard, requiring that a reasonable 'corrective action must narrowly target the defects it is intended to remedy.' … The Court of Federal Claims based its decision on an error of law because corrective action only requires a rational basis for its implementation. … The rational basis test asks 'whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion.' … Asking whether a selected remedy is as narrowly targeted as possible to an identified error in the bidding process requires more than a finding of rationality or reasonableness; therefore the Court of Federal Claims improperly applied an overly stringent test for corrective action.

The Federal Circuit went on to “hold the Army’s original notice of corrective action was reasonable,” and should thus be “reinstate[d].”

In short, the Federal Circuit’s decision in Dell Federal will make it more difficult for COFC protesters to successfully challenge an agency’s corrective action. Previously, certain COFC cases applied a more “stringent” test, requiring that an agency’s corrective action “must narrowly target the defects it is intended to remedy.”[4] The Federal Circuit, in Dell Federal, rejected this “heightened” — or more “stringent” — test, and instead applied the more deferential Administrative Procedures Act test, which “only requires a rational basis” for the corrective action.

The Federal Circuit’s decision in Dell Federal, however, should not be read to give agencies unfettered discretion in the corrective action context. Indeed, the Federal Circuit’s decision makes clear that, under the APA, an agency still must both “[1] provide a reasonable corrective action and [2] adequately explain its reasoning for doing so.” Thus, even under the Dell Federal standard, an agency’s corrective action may be set aside if it is unreasonable and/or inadequately “explain[ed]” in the contemporaneous record.

Identified as a Government Contracts case to watch in 2018, the Federal Circuit’s decision in PDS Consultants effectively delivered the final word on how to construe the congressional mandate in the Veterans...