GAO’s Alternative Dispute Resolution Conference – Too Little, Too Late

The costs of filing a bid protest can dissuade some protesters from submitting bid protests. One silver lining for protesters is a recommendation for reimbursement of costs upon a sustained decision. However, even when GAO says a protest is “clearly meritorious”, the protest may still be dismissed prior to GAO issuing a decision.

What happens when an agency takes corrective action in the face of a likely sustained GAO decision? One protester recently found out.

Iron Mountain Information Management, LLC—Costs, B-418797.4, arose from a Department of Veteran’s Affairs (VA) request for quotations (RFQ) No. 36C10E20Q0090, for records management services issued on April 24, 2020. Iron Mountain was one of two offerors who submitted proposals on May 22, 2020. After reviewing the proposals, the VA awarded a task order to Sourcecorp on November 18, 2020.

This is where things get interesting. On December 3, 2020, the GSA FSS schedule contract was novated (meaning another party assumed the contract responsibilities) from Sourcecorp’s parent corporation to Retrievex on December 3, 2020. Notably, in July 2020, after Sourcecorp submitted its proposal, but prior to award, nearly all of Sourcecorp’s assets were sold to Retrievex. The VA learned of the sale on December 14, 2020, after Iron Mountain submitted its protest the same day.

Iron Mountain’s protest alleged nine total grounds for protest. The agency submitted an agency report, supplemental agency report, and responded to GAO’s request for additional information. Iron Mountain for its’ part, submitted the initial protest and a supplemental protest.

After receiving all the filings, GAO asked the parties to participate in an alternative dispute resolution conference. During the conference, GAO advised it would likely sustain Iron Mountain’s protest on two grounds. First, Iron Mountain’s argument that in evaluating Sourcecorp’s quotation the agency failed to consider the impact of Sourcecorp’s sale to Retrievex, and that Exela or Sourcecorp should have informed the agency of this transaction. Second, Iron Mountain’s challenge to the evaluation of Sourcecorp’s proposed plan for document destruction. GAO advised it would dismiss all other grounds.

Two days later, the agency advised it would take corrective action. The agency advised it would either hold discussions with offerors, solicit revised quotations, and issue a new award decision, or issue a revised RFQ. The protest was dismissed as academic six days later.

This can be a tough pill to swallow for the protester. Here are all the likely steps the protester had to take: First, time and labor costs to draft its proposal; second, preparing its initial protest; third, reviewing and submitting a supplemental protest on the initial agency report; fourth, reviewing and likely commenting upon the supplemental agency report; fifth, GAO likely had issues with the agency’s explanations and requested additional information. Even after many rounds of filings, the agency was clearly not going to take voluntary corrective action.

Enter GAO with a request for an alternative dispute resolution conference. The protester was likely met with a good news and bad news scenario. The good news: after rounds and rounds of argument, GAO found the protest clearly meritorious. The bad news is that the agency just got another way out of avoiding a sustained decision. Had GAO not intervened with the conference request, the agency would not have taken corrective action. This frustrates the process for protesters, and likely incentivizes agencies to draw out the bid protest process.

GAO should, instead, issue sustained decisions clearly outlining the guardrails meant to ensure a more refined procurement process. GAO’s alternative dispute resolution conferences would be more meaningful if they occurred earlier in the bid protest process. Having such conferences after all filings are submitted adds more steps to the process, instead of streamlining the process. Agencies and protesters alike should be put on notice regarding what a clearly meritorious protest looks like.

Establishing precedent to discourage agency actions that go outside the bounds of the regulatory framework should be GAO’s goal. Having clear GAO interpretations of regulations is invaluable to the bid protest process. This information provides contracting officers with clearly defined guideposts, and protesters with rational expectations. For attorneys, having guidance as to GAO’s interpretation of regulations allows for more meaningful client consultations, and a more focused bid protest process.

GAO should consider scheduling the alternative dispute resolution stage either before or immediately after the submission of the agency report. Once the parties have submitted all expected responses, GAO should only seek clarifications and documentation necessary for drafting its decision.

Because of this end-stage corrective action, Iron Mountain then had to file a request for a recommendation on reimbursement of costs. GAO’s precedent provides: “When a procuring agency takes corrective action in response to a protest, our Office may recommend reimbursement of protest costs if, based on the circumstances of the case, we determine that the agency unduly delayed taking corrective action in the face of a clearly meritorious protest.” 4 C.F.R. § 21.8(e).  A protest is clearly meritorious where a reasonable agency inquiry into the protest allegations would have shown facts disclosing the absence of a defensible legal position.  

GAO recommended that the agency reimburse Iron Mountain for its costs associated with the clearly meritorious portions of the protest. Within 60 days of the decision, Iron Mountain was directed to submit its certified claim on those issues only.

Moving forward, I hope GAO takes into consideration the burden upon protesters when addressing flawed procurements processes. Moving up alternative dispute resolution conferences to nearer in time to the agency report phase of the bid protest process would be a good first step. Postponing the time for filing comments to allow GAO to decide if the protest is clearly meritorious at this stage would likely be welcomed by most protesters. Once comments are submitted, and any subsequent documentation is filed, the parties can then prepare for a decision on the merits.

I have my fingers crossed we see GAO reevaluate this process.

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