Frivolous Bid Protests Come with Risks
Moorhouse, Richard L., Jack, William M., National Defense
* The great jurist Oliver Wendell Holmes Jr. once wrote that those who contract with the federal government should expect to have to "turn square corners" in their dealings.
Many procurement laws and regulations that govern government contracts, such as the Procurement Integrity Act, the False Claims Acts, and the recently enacted mandatory disclosure rules, ultimately focus upon contractor ethics and integrity. Before an award can be made, the contracting agency must determine that contractor's "responsibility," not just its technical and financial capabilities and capacities to perform successfully, but also whether it has a satisfactory record of business ethics and integrity.
But what of government contracting personnel? Do the same requirements for ethics and integrity apply in procurement dealings? The FAR [section] 3.101-1 sets forth the general principle that all, "Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none."
The official conduct of government contracting personnel must withstand the "Washington Post Test"; i.e., that conduct "must, in addition, be such that they would have no reluctance to make a full public disclosure of their actions."
Government contracting personnel can never act in bad faith against a contractor with the "specific and malicious intent" of harm, or otherwise act in such a grossly negligent manner as to constitute constructive bad faith. Government contracting personnel are presumed to act in good faith, so a very high standard of proof is needed to establish that an agency's procurement actions were undertaken in bad faith.
Other principles of law, however, provide contractors the right to challenge government procurement actions that were not "above reproach," without having to prove bad faith. At the same time, contractors seeking to challenge procurement actions are expected to act with ethics and integrity and not pursue frivolous actions calculated simply to delay procurements and procurement decisions.
The Court of Federal Claims has long bound the government to an implicit contract of "fair and honest dealing" in accepting bids and proposals, ruling that breaches of this contract warrant the grant of protest relief This principle has been expanded by additional laws strengthening the court's authority to review contested procurement actions for government conduct alleged to be "arbitrary and capricious, or an abuse of discretion."
That said, contractors who pursue frivolous actions before the court are subject to sanctions and the dismissal of the action with prejudice.
The Government Accountability Office has heard bid protests since 1919. The Competition In Contracting Act of 1984 empowered GAO to decide bid protest cases and gave contractors a powerful tool--the automatic stay. As well as requiring "full and open" competition--with seven exceptions--a major purpose of CICA was to empower contractors essentially as "private attorneys general" to police the government's procurement actions.
For that reason. GAO is relatively lenient in hearing cases that appear to lack merit on their face and will not summarily dismiss on the government's request before the record is fully developed; that leniency, however, does not extend to patently frivolous actions. …