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By creating the Department of Homeland Security and raising defense spending, the government has signaled its intent to develop a larger, stronger technological and industrial base for the war on terrorism. Yet dollars alone will not sustain this expansion. Whether contractors, particularly those new to federal procurement, will invest in this market also depends on how the government resolves contract award disputes when they arise. Currently, there is no effective mechanism short of litigation for resolving many disputes. Bidders generally litigate their award-related claims before the General Accounting Office, which is headed by the comptroller general, or before the U.S. Court of Federal Claims. The bulk of such cases are filed at the GAO. Under the Competition in Contracting Act (CICA), the comptroller general is required to “provide for the inexpensive and expeditious resolution of protests.” In that regard, the litigation process developed at the GAO is generally better than the usual lawsuit experience. Nonetheless, the private sector has long recognized that alternative dispute resolution provides a superior alternative to litigation of commercial disputes. ADR measures are popular because they save appreciable time and money by cutting through procedural rules, and facilitate a mutually agreed-upon solution instead of forcing an outcome upon quarreling parties. Over the last decade, Congress and the executive branch have followed the private sector’s lead and sought to encourage ADR in federal procurement. After long experimentation, the GAO formally incorporated its use of ADR in regulations on Dec. 31, 2002. Yet this reform has not gone far enough. ADR at the GAO still does not generally mean an early or mutually acceptable resolution of protests. Holes in rules and practices allow buying agencies to avoid adverse decisions even if there are clear violations of procurement law, leaving protesters with scant meaningful relief. HOW A PROTEST GOES CICA requires the comptroller general to issue a decision on whether “the solicitation, proposed award, or award complies with statute and regulation” within 100 days after the filing of a protest. Since the GAO is an arm of Congress, the comptroller general’s decision is in the nature of findings and recommendations. Ultimately, the buying agencies are held accountable through congressional oversight of their practices. To that end, the GAO’s decisions and those instances where the agencies choose not to follow its recommendations are made public. A protester may challenge improprieties in the solicitation process prior to the award of a contract as well as improprieties in the evaluation of a bid after the award. Within 30 days following the filing of a protest, the buying agency must file a report containing the contracting officer’s statement of facts, all relevant documents related to the challenged procurement, an abstract of bids or offers, and a memorandum of law stating the agency’s position. (In the alternative, the agency may ask the GAO to dismiss the protest.) Comments on the report are due from the protester within 10 days. These deadlines may be extended upon request. Where complex technical issues are involved, protesters often seek to augment the agency’s report with affidavits or reports from specialists. Many aggrieved bidders also file supplemental protests based upon the facts revealed in the agency’s report. Another round of reports and comments follows. At the end of this process, the GAO may also convene an evidentiary hearing to resolve any outstanding factual issues and require further briefing. By now, barely a month remains before the comptroller general’s required decision date. It is at this late stage that the GAO usually conducts ADR. The financial stakes have risen significantly. The parties have already incurred nearly all their attorney fees and costs — although the GAO permits shifting of a protester’s fees and costs to the buying agency if the agency delayed concession until after the filing of its report. More importantly, the time elapsed in protesting may threaten the protester’s ability to receive the contract. The reason is that, while filing a GAO protest triggers a statutory stay of the award, the stay may be overridden by the agency. With an override, the contract may be near completion just as the briefing is finished. THE ADR OPTIONS Beginning in 1996, the GAO experimented with two forms of ADR: negotiation assistance and outcome prediction. Negotiation assistance is commonly employed in proceedings involving only two parties, such as a challenge to an overly restrictive solicitation or a claim for costs by a prevailing protester. Such proceedings are relatively infrequent, and so are opportunities to use negotiation assistance. The more widely used ADR technique is outcome prediction. It takes place after all the parties have thoroughly briefed the issues raised in the original and supplemental protests, the evidentiary hearing has taken place, and all that is left is the comptroller general’s decision. Outcome prediction typically involves a conference call convened by the GAO attorney handling the case. The purpose of the conference is to explain to the parties the likely success or failure of their legal arguments. Though prediction is not a formal opinion of the comptroller general, it is vetted up the ladder of authority within the GAO before being announced to the parties. What can a successful protester expect? Under CICA, once a violation of procurement statutes or regulations is found, the comptroller general “shall recommend” that the agency recompete the contract, forgo contract options, issue a new solicitation, make an award in accordance with law, terminate the contract, or “implement such other recommendation as the comptroller general determines to be necessary in order to promote compliance with procurement statutes and regulations.” These remedies, along with payment of attorney fees and costs, are called corrective actions. However, even if the buying agency loses on the law in outcome prediction, it still has one last card to play. If the agency concedes its legal error to the GAO (without necessarily agreeing to take any corrective action other than to pay the protester’s fees and costs), the case is dismissed as “academic.” Such dismissal is involuntary, and there are no published recommendations. Generally, a protest is deemed academic if its consideration has no implication for a particular procurement. This doctrine is a creation of the GAO. It is based on prudential concerns about moot cases, as well as on the GAO’s view that its bid protest jurisdiction is limited to particular procurements and not to abstract allegations about agency practices. IGNORING THE BIG PICTURE Herein lies a serious problem. Relying on the academic dismissal rule, the GAO over time has abandoned its statutory responsibility to make recommendations promoting compliance with procurement laws. As a result, an agency losing in ADR is permitted wide discretion to decide on the consequences of that loss for its procurement activities. The agency is free to propose some limited corrective action or even to argue that corrective action beyond payment of fees is impractical. Generally, agencies today do not promise to avoid the illegal practice again. Paradoxically, a protester prevailing in ADR lacks assurance that the challenged procurement violations will not be repeated. Thus, protests challenging the legality of corrective actions even if a protester gets a shot at the contract are not uncommon. And where the wrong awardee performs the contract, a winning protest can turn into an exercise in futility. Recommendations promoting compliance with procurement law are important because they ensure that illegal and unfair practices will be eradicated regardless of whether termination of an improper award is possible. In the immediate aftermath of CICA’s passage, the GAO viewed such remedies as perfectly consistent with its jurisdictional grant and with the obligations imposed upon the comptroller general. For example, the GAO’s Statutory Report to the President of the Senate (Jan. 31, 1986) listed nine decisions with recommendations affecting post-protest procurement practices. An agency’s quiet concession after litigation does not somehow make the protester’s grievances abstract. Far from it. As the GAO explained in Inter-Con Security Systems Inc.(March 14, 2001), “the willingness to provide an outcome prediction is generally an indication that the protest is viewed as clearly meritorious,” such that “a reasonable agency inquiry into the protest would show facts disclosing the absence of a defensible legal position.” This means that agency counsel should have reviewed the case, conceded violations, and settled the protest earlier. Dismissing the case after outcome prediction rewards delay at taxpayers’ expense and shields an agency from accountability. Congress did not intend such results in enacting CICA. An effective ADR process should empower protesters to insist on compliance with the law in a settlement agreement as a condition of abandoning the protest. Both sides would win, and the public interest would be served. GOOD GOVERNMENT Bid protest practices at the U.S. Court of Federal Claims and the Federal Aviation Administration provide useful alternatives to the GAO model. The key lesson is the importance of getting the parties together early in the process. Though ADR as such has yet to take hold in Court of Federal Claims bid protests, the judges convene status conferences shortly after filing. These conferences are frequently used to narrow issues and to collapse the briefing for temporary and permanent injunctive relief into one round. The FAA’s Office of Dispute Resolution for Acquisition, which operates as an exception to GAO jurisdiction, emphasizes early and cooperative ADR. The parties must meet within five days after protest filing to decide on the use of ADR. If it is chosen, ADR proceedings must be completed in 20 days, and they conclude with a settlement agreement. Only if ADR is not used or is unsuccessful does the agency file a product team response, which is analogous to the agency report under the GAO rules. Once the default process is commenced, proposed findings are ready within 30 days. The GAO’s process could be reformed along those lines. The success of ADR in GAO protests also depends on the internal cultures and attitudes of the buying agencies. At one end of the spectrum is the Department of Energy, which offers protesters a standard invitation to discuss the case. At the other end is the Defense Logistics Agency, which has a policy of litigating protests all the way to outcome prediction before considering any corrective action. The future of ADR at the Department of Homeland Security is unclear. So far, it has announced no uniform ADR standards. What is clear is that the GAO, the Department of Homeland Security, and all other buying agencies must work to improve the ADR process if the government is serious about attracting new segments of the private sector into the federal marketplace. William J. Spriggs is a founding partner and Max V. Kidalov is an associate at D.C.’s Spriggs & Hollingsworth. Spriggs practices in all areas of government contracts litigation and counseling. Kidalov concentrates in the areas of federal claims and government contracts. They can be reached at [email protected]and [email protected], respectively.

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