GAO Orders Reimbursement of Contractors' Costs and Fees in Meritorious Bid Protests

5.20.2011 - Posted in E&B Alerts - Government Contracts

This week the Government Accountability Office (GAO) issued two decisions dealing with a disappointed bidder's right to recover its costs - including attorneys' fees - when it prevails in a bid protest action. Under the GAO's Bid Protest Regulations at 4 C.F.R. § 21.8(e), the GAO may recommend that an agency pay a prospective contractor the reasonable costs of filing and pursuing a protest where the agency decides to take corrective action in response to the protest. The decisions issued this week affirmed the general rule that the GAO will recommend that the agency reimburse the protester for its costs only where the record shows that (1) the agency took some corrective action in response to the protest, and (2) the agency unduly delayed taking corrective action in the face of a clearly meritorious protest, thereby causing a protester to expend unnecessary time and resources in order to obtain relief. It is important to note in applying this standard that "corrective action" may include a cancellation of or change to the solicitation in a pre-award bid protest or the cancellation of an award in a post-award protest. In addition, the GAO considers a protest to be "clearly meritorious" when a reasonable agency inquiry into the protester's allegations would have shown that the agency lacked a defensible legal position, as explained more fully below.

In Symvionics, Inc.-Costs, B-403230.6 (May 16, 2011), the protester alleged that the Air Force had not properly evaluated Symvionics' past performance in awarding the contract. After the Government submitted the agency report and the protester filed its comments, a GAO attorney advised the Air Force in ADR proceedings that the protest would likely be sustained. In evaluating the contractor's claim for cost reimbursement, the GAO found that the agency's final rating was inconsistent with the solicitation and that a reasonable inquiry would have demonstrated the absence of a defensible legal position. As such, and given the agency's unreasonable delay in correcting the action, the GAO recommended that the Air Force reimburse the costs and fees Symvionics incurred in pursuing the protest.

Similarly, in Greentree Transportation Company, Inc.-Costs , B-403556.4 (May 16, 2011), the protester alleged that a solicitation for transportation services was ambiguous because one section stated that award would be made on a "best value" basis and another provided that the lowest priced technically acceptable proposal would be selected. The Army issued an agency report, received comments from the protester, and was advised in an ADR proceeding that the GAO likely would sustain the protest. In recommending the reimbursement of protest costs, the GAO agreed with Greentree's claim that the solicitation was ambiguous and found that corrective action was unduly delayed in that the Army should have recognized and addressed the ambiguity earlier.

The Federal procurement system's bid protest procedures play an important role in ensuring the fairness and efficiency of government contracting processes and award decisions. Basic fairness requires that a contractor be reimbursed for its costs in pursuing a meritorious case. These decisions show how a well-taken bid protest can result in both a re-solicitation of the government requirement and reimbursement for costs incurred by the protestor in pursuing the protest. For further information regarding these decisions, or advice regarding a potential bid protest, please contact Mark Blando at (612) 236-0160 or [email protected].