CBP’s late-stage solicitation change sparks bid protest

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When it comes to protesting flaws in solicitations, timing is everything. U.S. Customs and Border Protection amended a solicitation after receiving offers. And that gave bidders very little time to make revisions. This sparked a protest that ended in the United States Court of Appeals. Smith Pachter McWhorter’s procurement attorney, Joe Petrillo, had the details on the Federal Drive with Tom Temin.

Tom Temin: And it’s kind of a picky case, but with so many solicitations being protested these days even before the award, I think it’s relevant. So what happened?

Joseph Petrillo: You know, there are tight deadlines for protests – or particularly tight deadlines for protests – at the Government Accountability Office. This case is about time limits for contesting the Federal Claims Court, which has a different set of rules. And as you mentioned, it stemmed from a contract that Customs and Border Patrol made for a computer services contract to run their automated system for United States shipment processing, clearance, and valuation tariffs on these shipments. As you can imagine, there’s a lot of stuff coming into the country, so it’s a large and important system. The solicitation provided for the acquisition of best value, and factors other than price had to be more important than price. And of these non-price factors, technique was the most important, although management, quality assurance and past performance were also assessed. There was therefore a fairly significant solicitation and a large number of proposals that were issued. And finally, the acquisition was happening under the GSA’s computer program, under the federal procurement program. So there was going to be a task order assignment to companies with contracts with the GSA under that schedule, and procurement was limited to small companies. So in this situation, as you mentioned, initial proposals were submitted. After that period, there were two fairly substantial revisions to the solicitation made by CBP.

Tom Temin: So basically CBP is returning the offers.

Joseph Petrillo: Indeed, having said that, yes, you need to modify some of the requirements, and we want to see revisions to the proposal. What was strange was that the revisions to the proposals were limited to the headcount and key personnel section and the price. Other parts of the proposal were not meant to be changed, although the revisions to the solicitation were quite significant. Harmonia, which believed it needed to make changes to other parts of its proposal, submitted an agency-level protest on November 12, the day before the revised proposals’ November 13 deadline.

Tom Temin: In other words, they were protesting against the limitations of revisions.

Joseph Petrillo: Exactly. They wanted to be able to change other parts of their proposal and not be eliminated, and CBP went ahead, received revised proposals, and then dismissed the agency-level protest on December 6. Now, at this point, it would have been too late under the GAO. submission protest rules to protest denial of agency level protest. But Harmonia did not go ahead and protested at this point to the Federal Court of Claims. The procurement continued and eventually CBP awarded the contract towards the end of April. At this point, Harmonia considered its options, decided it didn’t like the situation it found itself in, and protested the award decision, including CBP’s refusal to allow further reviews of proposal. Now, as I mentioned, you have a different set of rules regarding timeliness in court. There is a limitation period, but it is six years. There is also a problem that arises when you seek an injunction that you cannot sleep on your rights. You need to act fast enough to enforce your rights to get an injunction, which of course most people file a bid protest with. [They] want a re-rating or another round of betting. In this particular case, there is also a rule made by the judges, which the court of appeals – the federal circuit – had developed some time ago in a case called Blue and Golden Fleet. Under the blue and gold rule, if there is any lack of solicitation, and it is possible to protest that before the proposals are submitted, the doctrine is to object, otherwise the bidder waives his right to object at some later date after award.

Tom Temin: We were talking with Joe Petrillo. He is a procurement attorney at Smith, Pachter McWhorter. So it looks like Harmonia met those criteria, and then protested if only for a day, but still before the offers were due.

Joseph Petrillo: Well, the government didn’t think so. The government said Harmonia should not only protest at the agency level, but go ahead and file its protest in court after the agency’s protest was dismissed. And there’s enough time between that in the sentence that he could have filed a protest in Federal Claims Court. He made that argument in the Court of Federal Claims, and the lower court accepted the government’s argument and dismissed the protest for not filing soon enough. Harmonia, again, disagreed with this. And so the case went all the way to the federal circuit. And there, the Federal Circuit had to determine how far this waiver doctrine went. What happens when an agency-level protest is filed, denied, but the protester does not move forward and promptly take that protest to court, waits to see what the outcome of the decision is attribution? There had been a previous decision in the Federal Circuit in which an agency amended the RFP after the deadline for proposals and did not allow revisions to proposals. And in this case, a company that did not protest until after the award was deemed too late. So we wondered if Harmonia was on one side or the other of the fence. In this case, the Federal Circuit decided that since Harmonia had filed an agency-level protest, it satisfied that requirement and did not require Harmonia to go ahead and file the protest with the court immediately after the denial of protest at agency level. Harmonia therefore has the right to move forward and be heard to make its case in court. What they left open to the federal circuit, which will be interesting to see in the next phase, is what the outcome of the cure is if it is successful. If Harmonia is successful in its protest, the court may fashion various types of relief. Perhaps he will say that Harmonia waited too long and is therefore not entitled to an injunction. And in that case, he’ll get something like a proposal preparation fee, which isn’t really what you’re looking for in bid protests.

Tom Temin: Law. But the court did not decide whether the limitations of the modifications made to the solicitation at the beginning, whether these were valid or not.

Joseph Petrillo: All of this was sent back to the trial court. You know, what the court of appeal does in this case is decide whether the case should go ahead, it will not then decide on the merits. It is up to the court to do so in the first instance.

Tom Temin: And so it’s back to the lower court, then, at this point.

Joseph Petrillo: Alright Alright. The lesson here for people considering protesting is that an agency-level protest will preserve your right to move forward in Federal Court of Claims given this precedent, but it’s not clear, you know, you’re still going to be able to get the kind of relief you want.

Tom Temin: I get it. In the meantime, has work progressed with the winning bidder, non-hormonia? Or do we not know yet?

Joseph Petrillo: I’m sure someone was doing this most important job. I don’t know if it was as part of the original award or if there was an extension of the incumbent’s contract. But I can’t imagine other courts have left Customs and Border Patrol without a system to understand how shipments enter the country. We have enough problems in this regard now.

Tom Temin: Indeed, we are. Joe Petrillo is a procurement attorney at Smith Pachter McWhorter. Thanks very much.

Joseph Petrillo: Thanks Tom.

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