GAO: No Attorneys’ Fees When Arguing that Corrective Action is a Ruse

When pursuing a bid protest before the Government Accountability Office, it is never a good idea to presume that you’ll get your attorneys’ fees paid by the agency.

If you are fortunate enough to recover attorneys’ fees, GAO’s general standard is to recommend paying the fees associated with all the protest grounds being pursued, whether or not they were meritorious. But although this is the general posture, it is not always the case.

For example, in CSRA LLC-Costs, B-415171.3 (Aug. 27, 2018), the protester’s initial key argument was that the awardee had proposed to use incumbent workers who had not given their permission to be included in the proposal. The agency took corrective action and GAO dismissed the protest.

But, the protester, CSRA LLC, of San Diego, Calif., evidently believed that the corrective action was too restrictive. The agency’s corrective action was to discuss staffing, but it refused to allow offerors to make other changes to their proposals (another of GAO’s longstanding rules is that when opening discussions, in general, offerors should be permitted to make whatever changes to which they see fit).

CSRA protested the corrective action arguing that its terms were too restrictive and that it was mere pretext to avoid a GAO decision on the merits.

Rather than take corrective action again, the agency filed a report arguing that it had the discretion to take corrective action as it saw fit and that it was not a pretext to avoid a decision on the merits.

A month passed and the agency suddenly changed its mind to take corrective action again. It said it would allow offerors to revise other aspects of their proposals.

The protester asked GAO to recommend the agency pay the costs associated with pursuing the second protest. CSRA explained that it had prepared its proposal based on the individuals’ capabilities named in the staffing plan, and that changes to the staffing plan would have a ripple effect through the whole proposal.

GAO agreed and said that the agency should have allowed offerors to revise other parts for their proposals as well. But, as to the pretext argument, GAO would not bite.

CSRA had cited a case saying “where a protester alleges that the agency’s rationale for cancellation [of a solicitation] is a pretext, that is, that the agency’s actual motivation is to avoid awarding a contract on a competitive basis or to avoid the issuance of a decision by [GAO] on the merits of the protest, we will closely examine the reasonableness of the agency’s actions in canceling the acquisition.”

GAO said that that case was distinguishable because here the solicitation was not cancelled. Therefore, GAO said that the argument was not “clearly meritorious” and is severable from the clearly meritorious argument about the scope of proposal revisions. GAO did not recommend paying fees associated with the second issue.

So, why did GAO depart from the general rule that protesters should be reimbursed for all arguments made, not only the successful ones?

Well, for one thing, neither of the protests were sustained. Both ended when the agency voluntarily chose to take corrective action. GAO will still sometimes award fees after corrective action, but only when the agency unduly delays taking corrective action in the face of a “clearly meritorious” protest.

The test for delay is generally whether the agency took corrective action before or after the agency report. If the corrective action comes before the agency report, usually GAO will not find that the agency delayed. Here, because the agency waited to take corrective action until after it argued against the protest in the agency report, it delayed.

So, the question then became whether the delay was in the face of a clearly meritorious protest. One could argue that if a protest includes one obviously meritorious protest ground, that makes it a clearly meritorious protest. But that is not what GAO decided here. It decided it would only grant relief (i.e., recommend paying fees) for the clearly meritorious grounds included in the second protest.

The nature of the second argument may have played a role in GAO’s decision not to award fees for it as well. The protester allegation was essentially one of bad faith. It had argued that the first corrective action was essentially a ruse. But government officials are presumed to act in good faith. GAO may not have wanted to send the message that it was rewarding a protester for an allegation of bad faith on the part of the agency.

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