Agencies Must Not Delay Evaluating the Merits of Protests, Says GAO

It is decently well established that GAO will recommend protesters be reimbursed for protest related costs when an agency unduly delays in taking prompt corrective action. In a recent GAO decision, however, the Navy argued the question of undue delay should be evaluated from the time the Navy fully understood the extent of its error, not the initiation of the protest.

GAO was not convinced.

Valkyrie Enterprises, LLC—Costs, B-415633.2 (Comp. Gen. October 29, 2018), involved the protest of a Navy task order for integrated logistic support services. Valkyrie, an unsuccessful offeror, timely filed a protest with GAO challenging the Navy’s award decision. In accordance with GAO procedure, the Navy filed an Agency Report with GAO answering to the protest allegations. In response, Valkyrie filed Comments on the Agency Report reiterating the alleged errors in the Navy’s evaluation. Eleven days later, after reviewing Valkyrie’s Comments on the Agency Report, the Navy notified the parties of its intent to take corrective action.

Following corrective action, Valkyrie requested it be reimbursed the litigation costs it incurred during the protest. As a general matter, GAO will recommend cost reimbursement when the agency unduly delays taking corrective action in the face of a clearly meritorious protest. Since the Navy took corrective action after it filed its Agency Report, Valkyrie argued the Navy had unduly delayed in taking corrective action. As such, Valkyrie was entitled to recover its costs.

While the Navy conceded the clear merits of Valkyrie’s protest, the Navy defended the speed with which it took corrective action. GAO summarized the Navy’s argument as follows:

[D]espite the fact that Valkyrie’s protest described various errors in the agency’s analysis, it was only when the protester cited to one of [GAO’s] decisions in its comments that the agency was able to recognize these errors. . . . The agency argues that it “should not be penalized for the timing of its determination to take corrective action” because its corrective action “came relatively quickly after the SSA [source selection authority] fully understood the extent of his error. . . .” As such, the Navy argued its remedial actions came promptly after it determined an error had occurred.

GAO concluded Valkyrie had the better of the argument. With respect to delay, GAO explained that “[it will] generally consider corrective action to be prompt if it is taken before the due date for the agency report responding to the protest, but not prompt where it is taken after that date.” Turning to the Navy’s arguments, GAO was not impressed. As GAO explained:

Our Office does not use the date when the agency “fully understood the extent of [its] error” as the starting point for calculating undue delay. Instead, we examine whether the agency’s actions caused the protester to expend unnecessary time and resources. . . . Nothing prevented the agency from reviewing our prior decisions . . . prior to submitting its agency report.

As such, GAO concluded the Navy had unduly delayed taking corrective action.

As we note with some frequency on the blog, GAO often places litigation responsibilities on the shoulders of protesters to timely file and establish the basis for a case. GAO’s decision in Valkyrie represents an instance where GAO placed the onus on agencies to evaluate the merits of protests before submitting an Agency Report, or risk being liable to reimburse protest costs.