Domestic Review Mechanismsin Public ProcurementJanuary 17, 2003

Professor Steven L. SchoonerGeorge Washington University

Washington, D.C., USA

www.law.gwu.edu/facweb/sschooner

sschooner@law.gwu.edu

Domestic Review Mechanisms

Permit (both domestic and foreign) potential offerors (such as bidders) and disappointed offerors (contractors that compete unsuccessfully for the award of a contract) the opportunity to seek correction of anomalies or inequities in the contractor selection process.

Considerations

• Why invest in challenge mechanisms?

• What do they do?

• Who resolves challenges?

• How are challenges resolved?

Desiderata, Goals, Constraints?• Transparency• Integrity• Competition• Uniformity• Risk Avoidance• Wealth Distribution(*)• Best value• Efficiency (administrative)• Customer Satisfaction

Traditional?

Transitional?

Current?

Challenge Regime: Aspirations

• Synergy with other aspirations for procurement system (transparency, competition, integrity…..)

• Public Trust (non-economic issue)• Credibility with both domestic and

international communities• Minimum standards for GPA Article

XX (Challenge Procedures)

Protests and Disputes• Solicitation defects• Pre-award and

Post-award• Multiple parties• Contractor

selection process• Disappointed

offeror litigation

• Post-award• Contracting Parties• Contract Performance

&/or Administration• Contract interpretation• Remedy granting

clauses• Different rules/fora

Why Bid Challenges or Protests?

Partial Delegation of the Oversight Regime --

delegation by Government to Contractor Community

“Private Attorneys General”(Third-Party/ External Oversight)

Conventional Procurement Oversight: Managers, Auditors, Inspectors General

Supplemental Oversight:– Protests

– Disputes

– Fraud (whistle-blowers)

– Media (Investigative Reporting)

$$$?

People, Culture, Norms

• Perception of Rule of Law– Commitment to due process

• Respect for Courts, Judges, Administrative Tribunals

• Willingness to Litigate– avoid “bite the hand…” instinct

– difficult hurdle (public confidence)

What do protests challenge?• Pre-award

– Lack of notice of solicitation– Overly restrictive solicitation– Ambiguous specifications– Exclusion from competition (interim)

• Post-award– Did not receive contract– Improper application of evaluation criteria– Anything learned during debriefing(***)

What are remedies?

• the stay or suspension

• re-solicit, re-compete

• issue new solicitation

• terminate awarded contract (T/C)

• direct award

• bid and proposal (B&P) costs

• attorney’s fees

• re-open negotiations; re-evaluate offers

• refrain from exercising option

• lost profits?

Lessons from the US model?

• Large, developed, complicated procurement regime

• Broad industrial base• Generally open to foreign

contractors• Fully evolved judicial regime• (Relatively) litigious culture

Election of Forum

• Agency

• Administrative (quasi-judicial)

• Judicial

•no exhaustion requirement

•no entry fee (or nominal fee)

•Three (3) options – too many?

Three Options

• Individual Purchasing Agencies

• General Accounting Office (administrative)

• Judicial (Civil) U.S. Court of Federal Claims

Agency Protests• Long, unimpressive history

–Constant efforts to reform

• Most “efficient” (inexpensive) forum

• Obvious problem = objectivity

Administrative Protests(most popular option)

U.S. General Accounting Office (GAO)

Unique forum

(legislative instrumentality)

GAO's role in government procurement

• Pre-award: ensure that agencies have not improperly restricted competition

• Award: ensure that the selection was reasonable and consistent with the solicitation criteria

• Post-award: does not consider challenges to contract administration

• Audit: all phases

Bid Protests at GAO• function began in 1920s; codified in 1984

Competition in Contracting Act (CICA)

• mandate: independent, expeditious, and inexpensive resolution of protests

• decisions establish a uniform body of law relied on by Congress, the courts, contracting agencies, and the public

• Familiar rules -- 4 CFR 21

GAO strives for balance…

need to hold agencies accountable and protect aggrieved offerors' due process rights

…and…

need to ensure that the government procurement process can proceed without undue disruption

General Accounting Office• Automatic Stay -- 37 cent injunction

(letter, plus price of a stamp)• Huge body of precedent• Agency Report• Sufficient, but limited, process

– discovery– hearings (live witnesses)– counsel = optional (but typical)

Judicial Option

• U.S. Court of Federal Claims– In Washington, D.C.

• Willing to travel (but impractical)

– High burden for temporary restraining order (TRO) or preliminary injunction (PI) versus automatic stay• “likelihood of success on merits”

– Low volume - Not a forum of choice

A Robust Challenge Regime Supports Key Elements of the

Procurement Process• Transparency• Integrity• Competition• Uniformity• Best Value• Efficiency