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GAO Confirms Limitations on Protestor’s Ability to Recover Costs Following Agency Corrective Action

| Sep 22, 2020 | Government Contracts

Under GAO’s Bid Protest Regulations, “[i]f the agency decides to take corrective action in response to a protest, GAO may recommend that the agency pay the protester the reasonable costs of filing and pursuing the protest, including attorneys’ fees and consultant and expert witness fees.” 4 C.F.R. § 21.8(e). GAO does not recommend reimbursement of protest costs in every instance where the agency takes corrective action, but rather limits it to those situations where the agency’s corrective action is unduly delayed in the face of a clearly meritorious protest and, in some instances, where an agency does not timely implement the promised corrective action.

GAO recently issued two decisions that addressed these limitations on a protestor’s ability to recover costs following agency corrective action.

In C.I. Lovell, Inc., B-418935.2, the protestor had first filed an agency-level bid protest, challenging the Army Corps of Engineers (Corps) to exclude its quotation from consideration for award. When the Corps did not take corrective action in response to the agency-level protest, C.I. Lovell then filed a bid protest with GAO raising the same challenges. The Corps submitted a notice of corrective action five days after the GAO protest was filed.

C.I. Lovell sought reimbursement of its costs following the Corps’ corrective action, arguing that it should recover its costs because the agency refused to take corrective action in response to the agency-level protest. GAO denied this C.I. Lovell’s request, stating that it found no reason to depart from its standard that “a protester should be reimbursed its costs where an agency unduly delayed its decision to take corrective action in the face of a clearly meritorious protest.” GAO noted that “[t]he provisions in our Bid Protest Regulations providing for the possibility of a recommendation that costs be reimbursed where an agency takes corrective action in response to a protest with our Office are not intended to ensure the fairness of agency level processes occurring prior to the protest filing at GAO; rather, those provisions are intended to ensure fair treatment of protesters who make substantial investments of time and resources to pursue clearly meritorious protests in this forum.” Here, because the agency took prompt corrective action once the protest was filed with GAO and C.I. Lovell did not have to expend costs in preparing comments to the agency report, reimbursement of costs was not warranted.

In ORBIS Sibro, Inc., B-418165.4, the protestor had filed a GAO protest, challenging the Navy’s cost realism analysis, past performance evaluation, and source selection decision on October 15, 2019. Approximately two weeks after the protest was filed, and prior to the due date for the agency report, the Navy filed a notice with GAO stating that it would take corrective action. GAO dismissed the protest as academic on November 7, 2019.

On July 15, 2020, ORBIS filed a request for reimbursement of costs, arguing that the Navy had unreasonably delayed the implementation of the proposed corrective action that led to GAO’s dismissal of the protest 8 months earlier. The Navy responded that it disagreed with ORBIS’s position that it had unreasonably delayed the implementation of corrective action, explaining that it had begun implementing its corrective action plan on November 12, 2019 – 5 days after the protest was dismissed. The Navy explained that their corrective action plan included performing a new evaluation of all proposals, which required reconvening its evaluation team and identifying a new source selection authority. The Navy further stated that the corrective action was delayed by personnel changes and then the move of most of the agency’s workforce to full-time telework as a result of COVID-19.

GAO found that the Navy’s corrective action process began promptly after dismissal of the protest and that the delays were not unreasonable under the circumstances, and thus concluded that ORBIS was not entitled to recover its costs. GAO distinguished this from cases were it awarded costs, based on an agency’s unreasonable and an unexplained delay in even beginning the corrective action process.

Stephanie Wilson is a Partner and Co-Director of Government Contracts at Berenzweig Leonard. She can be reached at [email protected]

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