For contractors who are concerned that filing a bid protest in the Government Accountability Office or Court of Federal Claims may alienate their customer, agency-level protests are a welcome, less-confrontational alternative that allows them to raise their concerns in a discreet, non-public fashion.  But as shown by GAO’s recent decision in GovSmart, Inc. – Protest and Costs, B-415871.3 et al., Apr. 19, 2018, 2018 CPD ¶ __, an agency-level protest of a proposed purchase order or other time-sensitive contract may ultimately preclude an offeror from obtaining meaningful relief in a subsequent GAO protest of that same procurement.

In late December 2017, the Navy was negotiating with Crown Point Systems for the issuance of a sole-source purchase order to renew firmware/software licenses and hardware maintenance subscriptions from numerous vendors on behalf of the agency.  Under the contemplated contract, Crown Point would purchase the licenses and subscriptions and sell them to the Navy, resulting in an agreement between the original equipment manufacturers and the agency.

Incumbent GovSmart, Inc. filed a pre-award agency protest on December 23, 2017, alleging that Navy officials had acted in bad faith during prior negotiations with GovSmart, and had violated the Procurement Integrity Act.  That protest triggered a stay of award during the pendency of the protest pursuant to Federal Acquisition Regulation 33.103(f)(1).  The Navy denied GovSmart’s protest on December 29 and, minutes later, awarded the purchase order to Crown Point.  GovSmart filed a GAO protest later that afternoon, thereby triggering the Competition in Contracting Act’s automatic stay of performance.  See 31 U.S.C. § 3553(d)(3)(A).

The Navy contacted Crown Point on December 29 to discuss suspending performance and was told that Crown Point had fulfilled most of the purchase order within an hour of award.  By the time the Navy formally directed Crown Point to stop performance on the following business day (i.e., January 2), all but one of the 38 line items had been purchased.

The Navy advised GAO on January 12 that it intended to take corrective action by terminating the unperformed portion of Crown Point’s purchase order — a single line item valued at approximately $5,000.

GovSmart then filed a supplemental protest challenging the scope of that corrective action, contending that the agency should, in effect, reverse delivery of the licenses and subscriptions that had been obtained through Crown Point and conduct a new competition.  It also argued that the Navy should have immediately stopped or discontinued any order that had been processed as soon as it received GovSmart’s protest on December 29.  GovSmart sought to recover its protest costs as well.

GAO dismissed GovSmart’s supplemental protest in part and denied the remainder of it.  GAO refused to entertain GovSmart’s challenge to the Navy’s failure to implement the automatic stay in a timely fashion, explaining that “an agency’s failure to adhere to the stay is not a valid basis of protest.”  GAO also concluded that the corrective action was within the Navy’s sound discretion and judgment, explaining that it found nothing objectionable about the agency’s refusal to reverse the renewals which purportedly would have resulted in significant penalties.  And because the Navy agency took corrective action before filing the agency report, GAO did not award protest costs to GovSmart.  Thus, despite its successful initial GAO protest, GovSmart will, at best, have an opportunity to compete for a $5,000 purchase order.

GovSmart shows that when challenging purchase orders or other contracts that can be substantially or completely performed in a matter of hours or days, the safest course of action is generally to protest — whether pre-award or post-award — at GAO in the first instance, and not to file an agency-level protest.  Had GovSmart done so, the Navy would almost certainly have given its claims more rigorous consideration from the outset, and its voluntary corrective action would have provided GovSmart an opportunity to compete for the whole purchase order.  Instead, the Navy apparently synchronized the award to Crown Point with the denial of GovSmart’s agency-level protest, thereby ensuring that the contract was almost fully performed by the time GovSmart protested at GAO later that afternoon.

Finally, it is worth noting that the Court of Federal Claims would probably have been a more hospitable forum for GovSmart’s supplemental protest than GAO.  Unlike GAO, the Court will entertain challenges to an agency’s implementation of the automatic stay.  See, e.g., Favor TechConsulting, LLC v. United States, 129 Fed. Cl. 208 (2016).  Similarly, the Court has sustained a number of protests challenging the scope of agency corrective action over the last several years, suggesting that it may be less deferential to agency corrective action decisions than GAO.  See, e.g., Dell Federal Systems, L.P. v. United States, 133 Fed. Cl. 92 (2017); Macaulay-Brown, Inc. v. United States, 125 Fed. Cl. 591 (2016).

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Photo of Hunter Bennett Hunter Bennett

Hunter Bennett regularly represents government contractors in bid protests before the Government Accountability Office and the U.S. Court of Federal Claims. He also counsels clients in a wide range of formation and disputes issues. Prior to entering private practice, he served as a…

Hunter Bennett regularly represents government contractors in bid protests before the Government Accountability Office and the U.S. Court of Federal Claims. He also counsels clients in a wide range of formation and disputes issues. Prior to entering private practice, he served as a Trial Attorney with the U.S. Department of Justice, where he was a member of the Department’s Bid Protest Team and frequently defended the United States against bid protests filed in the Court of Federal Claims.

During his tenure at the Department of Justice, Hunter served as lead counsel for the United States in dozens of cases involving complex commercial disputes. He also oversaw the litigation of all habeas corpus cases filed by Guantanamo Bay detainees that were pending before the Honorable Gladys Kessler in the United States District Court for the District of Columbia, and personally tried five detainee habeas cases. Additionally, Hunter briefed and/or argued more than 20 cases in the United States Court of Appeals for the Federal Circuit.

Hunter began his career as a prosecutor in the Philadelphia District Attorney’s Office, where he served as lead counsel in over 200 habeas corpus cases filed in the United States District Court for the Eastern District of Pennsylvania, and successfully briefed and/or argued multiple cases in the United States Court of Appeals for the Third Circuit.

In his spare time, Hunter plays bass guitar in the band Dot Dash, whose song “Shopworn Excuse” was dubbed “a jangly piece of heaven” by USA Today.

Photo of Evan R. Sherwood Evan R. Sherwood

Evan Sherwood counsels federal contractors on Contract Disputes Act (CDA) claims, the cost accounting standards (CAS), cost allowability, requests for equitable adjustment (REAs), contract terminations for convenience / default, and related audits, litigations, and investigations. He also advises on contract compliance and formation…

Evan Sherwood counsels federal contractors on Contract Disputes Act (CDA) claims, the cost accounting standards (CAS), cost allowability, requests for equitable adjustment (REAs), contract terminations for convenience / default, and related audits, litigations, and investigations. He also advises on contract compliance and formation issues, including TINA / defective pricing, data rights, mandatory disclosure rules, ethics, conflicts of interest, teaming arrangements, and other transaction agreements (OTAs). He has litigated matters before the Court of Federal Claims, the Armed Services Board of Contract Appeals, and the Government Accountability Office. Evan was partially seconded to Northrop Grumman from 2019 to 2022 as business unit counsel.

In his work for defense and civilian agency contractors, Evan:

  • Prepares CDA claims and REAs;
  • Litigates and counsels on matters involving CAS compliance, cost accounting practice changes, and cost allowability under the FAR and agency supplements;
  • Defends contractors during audits and investigations involving the Defense Contract Audit Agency (DCAA), Defense Contract Management Agency (DCMA), and the Office of the Inspector General (OIG);
  • Advises on constructive changes, work delays, defective specifications, stop-work orders, government-furnished property, CPARS, warranty matters, data rights, and quality controls;
  • Counsels on disputes between primes and subcontractors, including teaming disputes;
  • Conducts internal investigations and defends clients in federal investigations involving whistleblower allegations and retaliation claims.

Evan is a Vice Chair of the ABA Public Contract Law Section’s Contract Claims & Disputes Resolution Committee. He routinely writes and speaks about legal issues in federal contracting.