If the government makes a decision you don't agree with regarding a government contract, you have alternatives. A contractor can use disputes, protests and other forms of conflict resolution to settle the issue.
If the contracting officer or buying agency makes a decision that you (the contractor) don't agree with or that you believe is incorrect, what can you do? Government contracting regulations provide contractors with several remedies, all the way from filing a simple protest or dispute to taking the government to court.
Protest vs. Dispute
To begin our discussion, we need to distinguish terminology. Under government contract law, you have the right to "protest" and also the right to "dispute." While these terms seem very similar and are often used interchangeably in everyday language, government contracting regulations treat them differently.
Generally speaking, these rules give you the right to "protest" a defective bid or the award of a contract to another bidder. They also give you the right to "dispute" an issue or disagreement with the contracting officer that arises after you have won and been awarded a contract.
In addition, you may have other options as well.
There are three federal bid protest levels. In descending order of cost and how deep you’re going to get:
- Judicial action brought at the United States Court of Federal Claims (COFC).
- Protest filed with the (GAO) Government Accountability Office.
- Agency-Level protest filed with the agency conducting the procurement.
Ok, it’s not too soon to say it. timeliness is all-important. A protest must be filed no later than 10 days after the basis for the protest is known or should have been known. If you do not get it in by that time, you will not succeed, no matter what the reason. If you want to go on with a protest, you will have to go higher level of Protest (usually with the US Court of Federal Claims.)
Protesting a Bid or Award
By law, a protest must be filed by an "interested party," which means an actual or prospective bidder whose direct economic interest would be affected by the award of a contract or by the failure to award a contract. In challenges to the government's evaluation of proposals and the award of contracts, this generally means a bidder that would potentially be in line for award if the protest were sustained.
Although most protests challenge the acceptance or rejection of a bid or proposal, and the award or proposed award of a contract, defective solicitations or bids may also be the basis for a protest. Such bid defects include allegedly restrictive specifications, omission of a required provision, and ambiguous or indefinite evaluation factors. In addition, the termination of a contract may be protested if the protest alleges that the termination was based on improprieties in the award of the contract.
Therefore, in doing business with the government, you have a right to protest a bid or an award both before and after the award of a contract: You can protest the bid, you can protest an award, and you can protest termination of a contract.
Take the opportunity to respond to a negative performance assessment when it first arises. The time to manage performance issues is during performance, not during the next competition. And be on time with your protest; there are no exceptions for missed deadlines.
So, what are some of the common protest grounds for a "defective bid"?
- The bid is not detailed enough or vague: what do you want?
- It's too detailed: 38 pages of SOW?
- It's too restrictive: it used standards or specs that are not needed.
- There is more time needed to respond: respond in xx days.
- It's contains ambiguous statements: which do you want?
- There are many brand names or equal issues.
- There are small business issues:
- Wrong size standard
- HubZone issues
- "Failure" to set aside for small business
Reflecting the government's goal to ensure effective and efficient expenditure of public funds, and fair and expeditious resolution of protests to a solicitation or award of federal procurement contracts, as well as reduce cases outside the agency, the regulations direct that, prior to submission of a protest to the contracting agency, all parties use their best efforts to resolve concerns with agency contracting officers through open and frank discussions.
In cases where concerns cannot be resolved at this level and a protest is submitted to the agency, the agency is directed to provide for inexpensive, informal, procedurally simple, and expeditious resolution of protests and to use, where appropriate, alternative dispute resolution techniques, third-party neutrals, or even another agency's personnel.
If a protest is received before the award of the contract, the contract will not be awarded, pending a decision on the protest, unless the items or services are urgently needed, delivery or the performance will be unduly delayed, or the prompt award will otherwise be in the best interests of the government. If the protest is received within 10 days after the contract was award, performance of the contract will be suspended, pending resolution of the protest. The contracting officer must notify all other eligible offerors of the protest especially when the award will be suspended pending resolution of the protest. If a protest is received 10 days after award of the contract, the individual agency procedures will determine how the protest will be handled. The contract performance might not be suspended or terminated in these cases unless it is likely that the award will be invalidated and the delay will not be prejudicial to the government's interest.
Protesting Contract Decisions to GAO
Although the regulations encourage companies wishing to protest to seek resolution within the contracting agency before filing a protest with the General Accounting Office (GAO), the regulations do allow the party to file with GAO for resolution.
If you decide to bypass the contracting officer and buying agency and file your protest directly with the GAO, keep in mind that this is the end of the line for your protest. The GAO's decision is final, and you cannot appeal it anywhere.
In addition to keeping your avenues of protest and appeal open, protesting to the contracting officer or contracting agency instead of directly to the GAO has other advantages. The company protesting can often gain additional time to gather more information that will assist it if it later protests to another forum.
There are some matters that cannot be protested to GAO. Among these are:
- Contract administration — The administration of an existing contract is within the discretion of the contracting agency. Disputes between a contractor and the agency are resolved pursuant to the disputes clause of the contract and the Contract Disputes Act of 1978. 41 U.S.C. 601-613. In the same vein, GAO will not make decisions relative to 8(a) awards to minority or socially and economically disadvantages firms unless there is a possibility of bad faith on the part of the government or violation of the regulations.
- Small Business Administration issues — Among these issues are challenges of small business size standards and standard industrial classification, and issues relative to 8(a) awards to minority or socially and economically disadvantages firms, unless there is a showing of possible bad faith on the part of government officials or violation of the regulations.
- Affirmative determination of responsibility by the contracting officer — A determination that a bidder is capable of performing a contract will not be reviewed unless there is a showing of possible bad faith on the part of government officials or that definitive responsibility criteria in the solicitation were not met.
- Procurement integrity — GAO will not review a protest for a procurement integrity violation unless the interested party has reported the information it believed constituted evidence of the offense to the contracting agency responsible for the procurement within 14 days after it first discovered the possible violation.
- Protests not filed within the required time limits
- Protests that lack a detailed statement of the legal and factual grounds of protest or that fail to clearly state legally sufficient grounds of protest as required under the regulations
- Procurements by agencies not under the jurisdiction of the Federal Property and Administrative Services Act of 1949, 40 U.S.C. 472, such as the U.S. Postal Service and the Federal Deposit Insurance Corporation
- Subcontract protests — GAO will not consider subcontractor issues unless the agency has agreed in writing and the award is made by or for the government, such as when a contractor acts as a purchasing agent for the government.
Although many parties retain an attorney in order to benefit from the attorney's familiarity with GAO's bid protest process and with procurement statutes and regulations, an attorney is not required for purposes of filing a protest. Under current regulations, if you win your protest, the contracting agency will pay your attorney's fees, but there is a cap (currently $150 per hour). If fees exceed that amount, you will have to show special circumstances to justify a higher amount.
A protest to GAO must be filed within 10 working days of the protestor's learning of the initial adverse agency action. The GAO can then take up to 60 days to respond. If there is an adverse decision by GAO, the contractor can file a Notice of Appeal, which can add another 90 days, or file suit in the Court of Federal Claims, which can take up to another 12 months. Appeal by either party to the Court of Appeals for the Federal Circuit can take another 60 to 120 days. All in all, it may take up to four years to get a hearing on claims over $50,000, although trial stage has been reached
within two years in the Court of Federal Claims.
To Protest or Not to Protest?
What's our conclusion about protesting? Think very carefully before you protest. In the past, some companies would protest every contract that they lost, which can create an adversarial relationship that can work against you on current or future contracts. If you are going to protest, you must have a "real" reason (vs. just sour grapes) and you must have evidence to back up your claim.
If you do decide to protest, it is probably best to get some advice before you do anything. Consult with your local PTAC to get started in the process and/or seek legal counsel. You also should familiarize yourself with all requirements and procedures as well as your rights under Part 33.1 of the FAR.
Let's take a look at what your chances are. In fiscal year 2008 there were 1,652 protests filed. Of those, there was a 42 percent effectiveness rate, which is the percentage of cases where the protester received some relief from the agency. This is a 4 percent increase over FY2007. Remember that the stronger your protest is, the greater the advantage with the buyer and the agency. One thing to remember is that, if you do decide to protest, it's in your best interest to call counsel as soon has possible. When you're putting your proposal together, if you feel there might be a situation relating to the contracts, consult with your legal counsel. Contract law is complex and you should not tread lightly therein without someone to guide you through the legal process.
Dispute Procedures for Common Contract Issues
Let's turn our attention to the matter of "disputes," which is very different from a protest. As a government contractor, you have the right to "dispute" all material disagreements or issues in controversy that relate to a contract and to file a claim.
According to the regulations, a "claim" means a written demand or assertion by one of the contracting parties seeking, as a matter of right, the payment of money; the adjustment or interpretation of contract terms, including the period of performance; or other relief arising under or relating to the contract. A voucher, invoice, or other routine request for payment or equitable adjustment that is not in dispute when submitted is not considered a claim. The submission may be converted to a claim, by written notice to the contracting officer if it is disputed either as to liability or amount, or is not acted upon in a reasonable time.
Only a contractor, as a party to a federal government contract, is allowed to file a dispute claim. This intentionally excludes a subcontractor from being able to enter into the disputes process.
What kinds of issues do contractors typically dispute? Contractors dispute any number of things, including defective specifications, changing delivery dates, failure by the government to supply a contractor with what he/she needs to fulfill a contract, or any other "event" that would keep a contractor from completing the contract or from being able to perform the contract. The dispute is triggered when one of these events occurs and all informal attempts to resolve the issue fail.
A contractor who wants to dispute an action or issue is required to submit the claim in writing to the contracting officer. In it, the contractor should describe the situation, state what action it is asking for, and request a final decision. After the contracting officer receives the contractor's written notice, he/she will have up to 60 days to respond. If the contractor does not hear from the contracting officer within that 60-day period, the contractor may consider its request denied.
If the contracting officer denies the action, the contractor can file a written "Notice of Appeal" with the Contracts Appeals Board and send a copy to the contracting officer. The contractor has only 90 days to do this.
If your claim is denied by the Contracting Officer and you decide to pursue your claim with the Contracts Appeals Board, carefully consider all the facts and document everything. Do not try to overstate or exaggerate the facts to win your case. If you are found to have misrepresented a fact with intent to deceive or mislead, your claim will be found to be fraudulent and you might have to pay a civil penalty. Whatever else happens, your days of doing business with the government will be over forever.
If the contracting officer denies your action, you also have the option of applying directly to the Court of Federal Claims instead of going through the Notice of Appeal process. This court is authorized by the Contracts Disputes Act to hear and decide an appeal of a contracting officer's final decision, but it can take up to a year before you receive a decision.
One major consideration is time. Claims under $100,000 tend to move through the system faster then a claim over that amount. This is because the Board of Contract Appeals is mandated to make a decision within 60 to 120 days, respectively. The smaller claims will take priority and the board will postpone an appeal concerning a larger dollar contract. The Court of Federal Claims could take up to a year or more just to reach the trial stage. If the dollar amount of the contract is large enough, the dispute could conceivably go to the U.S. Supreme Court.
If you decide to go through the dispute process, you can probably do most of the work yourself in the early stages if you read the FAR, follow the rules, and/or get help from a PTAC. However, if your claim is denied by the Contracting Officer and you want to appeal the adverse decision, you will need legal assistance in these later appeals. For information, check out the GAO's Bid Protest site .
Resolving Government Contract Conflicts Out of Court
While we want to let you know about your right to dispute and appeal, we also want to make you aware that the government's stated policy is to try to resolve all contractual issues in controversy by mutual agreement at the contracting officer's level. Government rules state that reasonable efforts should be made to resolve controversies, prior to the submission of a claim. And where appropriate, agencies are encouraged to use ADR procedures to the maximum extent.
Traditionally, contracting parties have relied on claims and litigation to resolve disputes. In the interest of economy and efficiency and achieving a "win/win" situation for both agencies and contractors, less confrontational resolution procedures are being utilized more and more often. Communication and openness throughout the procurement process greatly reduce conflicts. The Office of Federal Procurement Policy has recognized the value of such procedures by including an agency commitment to institute an informal, timely conflict resolution mechanism for resolving pre- and post-award issues. Three techniques that are being used are partnering, ombudsman, and alternative dispute resolutiion.
This is a technique for preventing disputes from occurring. Under this concept, the agency and contractor, perhaps along with a facilitator, meet after a contract is awarded to discuss their mutual expectations. The parties mutually develop performance goals, identify potential sources of conflict, and establish cooperative ways to resolve any problems that may arise during contract performance.
Creating a partnership agreement signed by all parties (i.e. contracting officer, quality assurance evaluator, program office, and contractor) creates a "buy in" to the overall goal of satisfactory performance on time, within budget, and without claims.
Both contractors and contracting agencies, including DOD's Army Corps of Engineers, that have participated in partnering have experienced positive results: more timely performance, better cost control, significant reductions in paperwork, professional vs. adversarial relationship/attitude, and fewer disputes.
This procedure can be used at any stage of the contracting process. Some agencies have established an ombudsman to help resolve concerns or disputes that arise during the acquisition process. Typically, an ombudsman investigates selected complaints and issues nonbinding reports, with recommendations addressing problems and future improvements.
The Army Materiel Command (AMC), including all of the subordinate AMC buying commands, has an agency ombudsman that helps companies resolve problems they encounter on existing AMC contracts. The ombudsman, which can cut through any government "red tape," investigates reported complaints or requests for assistance from business/industry and ensures that proper action is taken.
The AMC-wide ombudsman program has been a positive force in the timely resolution of problems presented by contractors. It results in the solution of most problems presented without the need for expensive and time-consuming litigation.
NASA also established an ombudsman program to improve communication between the agency and interested parties. The NASA ombudsman hears and works to resolve concerns from actual and potential offerors, as well as contractors, during the pre- and post-award acquisition phases.
Alternative Dispute Resolution (ADR)
This means any procedure, or combination of procedures, used voluntarily to resolve controversies without resorting to litigation. Examples of ADR include conciliation, facilitation, mediation, and mini-trials.
ADR can provide an effective and less expensive method for resolving contract disputes, and many agencies include an agreement to utilize ADR in their contracts.
The Navy, which has used ADR techniques since 1982, has been able to resolve issues and controversies in almost 99 percent of the cases in which ADR was used. Recently, the Navy used ADR to resolve a $1.1 million dispute. The hearing on this matter was completed within six hours, and a decision was rendered the next day.
There is no single correct method for conducting ADR. Each situation is different, and the ADR technique and procedures must be tailored to a particular situation and the needs of the parties.
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