In 1997 the Court of Federal Claims became a new option for disappointed bidders seeking a forum to resolve disputed contract awards. See Administrative Dispute Resolution Act of 1996, P.L.104-320, 28 U.S.C. Û 1491(b)(1). In the short period that the Court has received this new jurisdiction over post-award protests, it has promulgated a set of specific procedural rules governing bid protests and has published a number of significant opinions governing both procedural and substantive aspects of bid protest litigation. As a result, a number of factors have emerged that may help a government contractor decide whether to file a post-award protest in the Court of Federal Claims or at the General Accounting Office (GAO). This article briefly describes the rules governing protests filed at the Court of Federal Claims and explores some of the principal factors that may influence a choice of forum decision.

I.    COURT OF FEDERAL CLAIMS BID PROTEST PROCEDURES

By issuance of General Order No. 38 issued on May 7, 1998, the Court of Federal Claims adopted specific procedures for the disposition of both pre-award and post-award protest cases. See R. Ct. Fed. Cl. Gen. Order 38 (available at www.contracts.ogc.doc.gov/fedcl/docs/order38.html). These procedures supplement the Rules of the Court of Federal Claims, which are based upon the Federal Rules of Civil Procedure and otherwise remain fully applicable to bid protest cases. See Gen. Order 38 App. I õ 1; see also R. Ct. Fed. Cl. 1.

The basic procedural progression of a Court of Federal Claims bid protest is as follows:

(1) the protester provides at least 24 hour prior notice of filing to the Department of Justice Commercial Litigation Branch, the clerk of the Court of Federal Claims, the procuring agency contracting officer, and the apparently successful bidder or offeror (Gen. Order 38 App. I õõ 2 &3);

(2) a complaint is filed together with motions for (a) leave to file under seal, (b) a protective order, (c) and temporary restraining order and preliminary injunction (all of which should be accompanied by supporting papers and redacted copies) (Gen. Order 38 App. I õõ 4, 9, 12);

(3) the Court holds an initial status conference "as soon as practicable after the filing of the Complaint" to address "relevant issues including, but not limited to, the following: (a) Identification of the interested parties; (b) Requests for temporary or preliminary injunctive relief, if filed . . .; (c) The content of a protective order, if requested by one or more of the parties; (d) The content and time for filing of the administrative record; (e) Whether it may be appropriate to supplement the administrative record; and (f) The nature of and schedule for further proceedings." (Gen. Order 38 õ 8);

(4) the parties engage in discovery and motion practice, such as motions to dismiss for lack of jurisdiction, insufficiency of process, or failure to state claim upon which relief can be granted; motions to intervene; and motions to be admitted to a protective order; and

(5) the case is resolved by summary judgement or an adjudication on the merits.

This brief summary shows that the procedure for bid protests conducted by the Court of Federal Claims is largely regulated by the Court following filing of the complaint. The resolution on the merits is reached pursuant to a time frame determined by the court and the complexity of the issues involved in the protest. In contrast, the GAO's bid protest procedures are described in much greater detail in GAO's regulations, see 41 C.F.R. Part 21, and the GAO must issue a decision within 100 days of receiving a timely protest, 31 U.S.C. Û 3554(a)(1). Relative to the GAO, at the Court of Federal Claims it is more difficult to predict with certainty either the schedule or the precise scope of the process that will be followed at the Court.

II.   TIME FOR FILING BID PROTESTS

Unlike the GAO, which has very strict -- and short -- time deadlines for filing a protest (see 4 CFR Û 21.2(a)), the Court of Federal Claims has no specific time limit for filing post-award claims for relief. Thus, the Court of Federal Claims provides more time for a protester to file a post-award protest than does the GAO. However, a protester should never unduly delay filing a protest at the Court of Federal Claims, since the later a protester files, the smaller are the protester's chances of getting a temporary restraining order or a preliminary injunction. See Ralph C. Nash, et al., Competitive Negotiation: The Source Selection Process 874 (2nd ed. 1999).

III.   SUSPENSION OF THE AWARD AND CONTRACT PERFORMANCE

By statute (31 U.S.C. Û 3553) and regulation (FAR 33.104(c)), the procuring agency is required to suspend or terminate the awarded contract if a protest is filed at the GAO within the time limits prescribed. The agency may override a "stay" if the requisite findings are made. See FAR 33.104(c)(2). At the Court of Federal Claims, a stay is by no means "automatic." More effort is required in the Court of Federal Claims than in the GAO to obtain a stay of the procurement.

The Rules of the Court of Federal Claims require a party to file a motion for a temporary restraining order and preliminary injunction along with the complaint to obtain a stay of contract performance. In ruling on these motions, the Court of Federal Claims will examine the following factors:

(1) the likelihood of plaintiff's success on the merits of its complaint; (2) whether plaintiff will suffer irreparable harm if the procurement is not enjoined; (3) whether the balance of hardships tips in the plaintiff's favor; and (4) whether a preliminary injunction will be contrary to the public interest.

DSD Laboratories, Inc. v. United States, 46 Fed. Cl. 467, 480 (2000). When a stay of the procurement is sought, the Court will address a number of issues at the initial status conference. These include:

(a) Whether and to what extent, absent temporary or preliminary injunctive relief, the Court's ability to afford effective final relief is likely to be prejudiced;

(b) If a temporary restraining order has been requested, whether the government will agree to withhold award or suspend performance pending a hearing on the motion for preliminary injunction;

(c) If a preliminary injunction has been requested, whether the government will agree to withhold award or suspend performance pending a final decision on the merits;

(d) An appropriate schedule for completion of the briefing on any motion for a preliminary injunction;

(e) The security requirements of Rule 65(c); and

(f) Whether the hearing on the preliminary injunction should be consolidated with a final hearing on the merits.

Gen. Order 38 õ 10. Although the Court of Federal Claims is not subject to the GAO's mandatory stay provision, it has recently assumed a role in interpreting that provision. When a procuring agency elects to override the mandatory stay at the GAO, the protester may challenge that override by seeking injunctive relief at the Court of Federal Claims. Ramcor Services Group, Inc. v. United States, 185 F.3d 1286 (Fed. Cir. 1999).

IV.   PROTECTION OF PROPRIETARY MATERIALS

The Court of Federal Claims requires a motion for a protective order before it will prevent the public release of proprietary materials involved in a protest. A simple request is all that is necessary at the GAO, which also may issue a protective order on its own initiative. 4 CFR Û 21.4. At the Court, a motion must be filed with the complaint, along with a redacted version of all papers and a motion for leave to file under seal should the moving papers themselves contain sensitive information. The motion will be addressed at the Court's initial status conference. Gen. Order 38 õ 8(c). The decision whether or not to issue a protective order is within the Court's discretion. Gen. Order 38 õ 12(a). Although the Court of Federal Claims provides a sample protective order, the Bid Protest Procedures warn that individual judges and the parties themselves may want to amend the sample order to suit the needs of specific cases or their individual preferences. Gen. Order 38 õ 12(b).

The GAO generally respects the wishes of the parties with respect to proposal information deemed to be proprietary. In contrast, a bid protester at the Court of Federal Claims must be aware of the strong public policy in favor of making all proceedings before the Court of Federal Claims open to the public. One of the statutes establishing the Court of Federal Claims provides that "[a]ll decisions of the Court of Federal Claims shall be preserved and open to inspection." 28 U.S.C. Û 174(b). Indeed, in one decision the Court ordered -- over the unanimous objections of the parties -- proprietary and source selection sensitive information previously filed under a protective order to be included in the public file. In Modern Technologies Corp. v. United States, 44 Fed. Cl. 319 (1998), a multiple contract award was made to five awardees that would then compete for subsequent task orders. The award took place fourteen months before the Court's decision to move the documents to the public file. The Court held that because future task order negotiations would reflect current conditions, rather than those when the award was announced, the information covered by the protective order had minimal current value and could be publicly released. Id. at 326. Thus, parties that participate in a bid protest before the Court of Federal Claims face a risk that proprietary information will ultimately be disclosed to their competitors.

V.   DISCOVERY

The Court of Federal Claims provides an opportunity for discovery that does not exist at the GAO. Like the GAO, the Court requires the Government to prepare and produce the administrative record without a specific request from the protester. The Court directs the government to not only "identify and provide (or make available for inspection) the administrative record" by a date set at the initial status conference, but also "produce the core documents . . . as promptly as the circumstances will permit." Gen. Order 38 õ 16. General Order No. 38 provides a list of potential "core documents," but the list is neither exhaustive nor mandatory. Gen. Order 38 õ 17. The General Order makes clear that the required content of the administrative record should be decided by the Court on a case-by-case basis. See Gen. Order 38 õ 19 annotation.

At the GAO, discovery is strictly limited to production of documents. Although a party may request that the GAO review an agency's decision to include or exclude certain documents from the record, see 4 C.F.R. Û 21.3 (c), (g) and (h), no further discovery is permissible. The Court of Federal Claims, in contrast, has adopted the discovery standards used in Administrative Procedure Act cases, such as Esch v. Yeutter, 876 F.2d 976 (D.C. Cir. 1989), which permit discovery beyond the administrative record compiled by the Government in any of the following circumstances:

(1) when agency action is not adequately explained in the record before the court; (2) when the agency failed to consider factors which are relevant to its final decision; (3) when an agency considered evidence which it failed to include in the record; (4) when a case is so complex that a court needs more evidence to enable it to understand the issues clearly; (5) in cases where evidence arising after the agency action shows whether the decision was correct or not; (6) in cases where agencies are sued for failure to take action; (7) in cases arising using the National Environmental Policy Act; and (8) in cases where relief is at issue, especially at the preliminary injunction stage.

876 F.2d at 991. See Marine Hydraulics Int'l, Inc. v. United States, 43 Fed. Cl. 664, 670-71 (1999).

To ensure the "whole" administrative record is properly reviewed, the Court of Federal Claims has permitted the parties to take depositions of the contracting officer. See Cubic Applications, Inc. v. United States, 37 Fed. Cl. 339 (1997) (permitting consideration of the contracting officer's post-award comments as "argument"). Furthermore, in MVM, Inc. v. United States, 46 Fed. Cl. 126, 133-35 (2000), the Court of Federal Claims allowed expert testimony to be admitted in order to resolve a factual dispute regarding whether failure to amend the contract improperly affected the pricing of the protester's proposal. While supplementation of the record by the agency and experts regularly occurs in GAO protests, there are no formal discovery procedures apart from the production of records as part of the "agency report" and documents requested by the protester. See 4 C.F.R. Û 21.3(c), (g), (h).

VI.   STANDARD OF REVIEW

The Court of Federal Claims applies the standard of review for agency action set forth in the Administrative Procedure Act, 5 U.S.C. Û 706. See 28 U.S.C. Û 1491(b)(4). A procurement decision will be set aside only if the protester proves that the decision was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. Û 706(2)(A); see, e.g., Advanced Data Concepts, Inc. v. United States, 43 Fed. Cl. 410, 416 (1999).

Recently, however, the Court of Appeals for the Federal Circuit clarified that to prevail in a bid protest at the Court of Federal Claims, the protester must also show that it was significantly prejudiced. Earlier cases had suggested that if an agency's action was arbitrary and capricious, or an abuse of discretion, then no showing of prejudice was required. According to these cases, prejudice was required to be shown only if the plaintiff alleged the agency's actions violated a procurement statute or regulation. See Alfa Laval Separation, Inc. v. United States, 47 Fed. Cl. 305, 308 n.1 (2000). However, the Federal Circuit has now stated without equivocation that "[t]o prevail in a bid protest, a protester must show a significant, prejudicial error in the procurement process." Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (1999). To establish prejudice, the protester must show that, but for the procurement error, there was a "substantial chance that [it] would receive an award." Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996); see CACI, Inc.-Fed. v. United States, 719 F.2d 1567 (1574-75 (Fed. Cir. 1983).

There is somewhat less certainty at the Court of Federal Claims because its judges are not required to follow their fellow judges' decisions. Compare Day & Zimmermann Services v. United States, 38 Fed. Cl. 591 (1997) (Gibson, J.) (requiring "clear and convincing evidence" of (1) a decision without rational basis, or (2) a clear and prejudicial violation of applicable statutes or regulations), with R.R. Donnelly & Sons, Co. v. United States, 38 Fed. Cl. 518 (1997) (Miller, J.) (rejecting the convincing standard in favor of requiring a post-award protester to meet a "high" burden of proof). See L. Kennedy & C. Yukins, A Year of Progress: The New Federal Court Bid Protest Jurisdiction, 40 Government Contractor õ 40 (1998) at 3. In contrast, the standards of review are more well-established at the GAO, even if the application of those standards may vary among the Office of General Counsel "writing" attorneys who prepare the initial drafts of the GAO's bid protest decisions.

VII.   RECOVERY OF BID AND PROPOSAL COSTS

A post-award protester at the Court of Federal Claims must be careful to make a claim for recovery of bid and proposal costs separate and apart from its claim for injunctive relief seeking to overturn the award. The Court recently explained why:

         A claim for proposal preparation costs is not a measure of damages for an unlawful procurement, but, rather, an independent cause of action with a different burden of proof. Plaintiff's position fails to recognize that the legal standards for injunctive relieve and proposal preparation costs are not identical. For injunctive relief plaintiff must demonstrate arbitrary, capricious, or unreasonable action by the agency or action that is in violation of a procurement statute or regulation that substantially prejudices the offeror. See, e.g., Ellsworth Assocs., Inc. v. United States, 45 Fed. Cl. 388, 392 (1999) (citing cases). The use of the disjunctive "or" is of import. For recovery of proposal preparation costs, plaintiff must demonstrate arbitrary, capricious, or unreasonable actions. See E.W. Bliss Co. v. United States, 77 F.3d 445, 447 (Fed. Cir. 1996).

Alfa Laval Separation, Inc. v. United States, 47 Fed. Cl. 305, 311 (2000). In Alfa Laval, the protester failed to include a claim for bid and proposal costs in its original complaint, but sought them after the Federal Circuit had reversed and remanded the Court of Federal Claims' initial decision denying the protest. The Court of Federal Claims held that it was too late to seek bid and proposal costs, because the protester had only proven that the agency's action was in violation of procurement regulations, but had not shown it to be arbitrary, capricious, or unreasonable. Id. at 311-14.

In contrast, at the GAO, award of bid and proposal preparation costs may be made when a violation of procurement statutes or regulations has been found, the protester was unreasonably excluded from the competition and no other remedy is appropriate. See Nash, supra at 854. This often occurs when contract performance has not been suspended, or if the procurement is canceled by the agency. 4 CFR Û 21.8(d)(2).

VIII.   RECOVERY OF ATTORNEYS' FEES

The Court of Federal Claims may only grant attorney's fees pursuant to the Equal Access to Justice Act. See Dubinsky v. United States, 44 Fed. Cl. 360 (1999). Accordingly, attorney's fees will only be available in actions filed in the Court of Federal Claims if the prevailing party is an individual with net assets of less than 2 million dollars or a firm with net assets of less than 7 million and 500 employees. See Nash, supra at 891. The GAO may award any successful protester the costs incurred in pursuing the protest, including reasonable attorneys' fees. 4 C.F.R. Û 21.8(d). Protest costs are also recoverable at the GAO if the agency takes corrective action in response to a protest and no decision on the merits is issued by the GAO. See 4 C.F.R. Û 21.8(e).

IX.   CONCLUSION

The Court of Federal Claims has provided new opportunities for a post-award protester to file a protest after the short period for filing at GAO expires. A protest action at the Court of Federal Claims is also available after the GAO has issued a decision on the protest, at which time the protester may obtain additional discovery from the agency. These additional discovery opportunities are especially valuable because they can be used after the protester has had time to fully review the administrative record produced by the agency during GAO protester. Although the Court of Federal Claims gives deference to the GAO's decision, see Advanced Data Concepts, Inc. v. United States, 43 Fed. Cl. 410, 416 (1999), the opportunity for additional discovery and further refinement of a protester's case make the Court of Federal Claims a valuable forum in the appropriate case.

ABOUT THE AUTHORS

Allen Samelson is a shareholder in the Government Contracts Practice Group and David Innis is special counsel at Rogers, Joseph, O'Donnell & Quinn, San Francisco, California.

Copyright © Rogers, Joseph, O'Donnell & Quinn, October 2000