71. Protest Of Contract Awards

The Administrative Dispute Resolution Act of 1996 (ADRA), Pub. L. 104-320, § 12, 110 Stat. 3870, 3874 (1996) grants the Court of Federal Claims exclusive jurisdiction over procurement protests (i.e., protests that relate to the Government's acquisition of goods and services). See Resource Conservation Group, LLC v. United States, 597 F.3d 1238 (Fed. Cir. 2010); Emery W.W. Airlines, Inc. v. United States, 264 F.3d 1071, 1078-79 (Fed. Cir. 2001); see also Rothe Dev., Inc. v. United States, 666 F.3d 336 (5th Cir. 2011); Vero Technical Support, Inc. v. United States, 437 Fed. Appx. 766 (11th Cir. 2011). The Federal Circuit has held that the ADRA does not affect the jurisdiction of the Court of Federal Claims with respect to non-procurement protests (e.g., protests that relate to the Government's acquisition of land). Id.

The Court of Federal Claims has prescribed procedural guidance specifically tailored for bid protest litigation to enhance the overall effectiveness of protest resolution. See Appendix C of the Rules of the Court of Federal Claims (RCFC).

Standing

Standing to bring a bid protest "is framed by 28 U.S.C. § 1491(b)(1), which ... imposes more stringent standing requirements than Article III." Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009). A litigant must be an "interested party," 28 U.S.C. § 1491(b)(1), which in this context, requires the protestor to establish that it: "(1) is an actual or prospective bidder and (2) possesses the requisite direct economic interest." Id.; see also Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 1996). To satisfy the first factor, the courts will consider a protester to be an actual bidder if it submitted an offer in response to the relevant solicitation. See Rex Serv., 448 F.3d at 1307 ("[the protester] did not bid, and therefore, it is not an 'actual bidder.'"). To satisfy the second prong, the "direct economic interest" requirement, in a post-award protest, a plaintiff "must show that there was a substantial chance it would have received the contract award but for the alleged error in the procurement process." Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003). In other words, the protester must show that the Government's error prejudiced it. Labatt Food Serv. v. United States, 577 F.3d 1375, 1378 (Fed. Cir. 2009); see also Myers Investigative & Sec. Servs. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002) ("In fact, prejudice (or injury) is a necessary element of standing."). In pre-award bid protests, the Federal Circuit has held that a prospective offeror may establish prejudice by demonstrating it has suffered a "non-trivial competitive injury which can be redressed by judicial relief." Weeks Marine, 575 F.3d at 1363.

Standard of Review

The proper standard of review in a bid protest is whether the agency action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 28 U.S.C. § 1491(b)(4); 5 U.S.C. § 706(2)(A); Glenn Defense Marine (Asia) PTE, Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir. 2013) ("In a bid protest case, the inquiry is whether the agency's action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law and, if so, whether the error is prejudicial"); Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332 (Fed. Cir. 2001); see also Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), overruled on other grounds, Califano v. Sanders, 430 U.S. 99 (1977). When a challenge is brought on the theory that the agency lacked a rational basis for its decision, "the test is whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion." Banknote Corp. of Am., Inc. v. United States, 365 F.3d 1345, 1351 (Fed. Cir. 2004) (internal quotation omitted); see Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1058 (Fed. Cir. 2000) ("This standard requires a reviewing court to sustain an agency action evincing rational reasoning and consideration of relevant factors.") (citation omitted).

An agency's decision lacks a rational basis if the contracting officer "entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). A disappointed bidder bears a heavy burden of showing that an agency's decision lacked a rational basis. Banknote, 365 F.3d at 1351; Impresa, 238 F.3d at 1332-33. This burden "is not met by reliance on [the] pleadings alone, or by conclusory allegations and generalities." Bromley Contracting Co. v. United States, 15 Cl. Ct. 100, 105 (1988); see also Campbell v. United States, 2 Cl. Ct. 247, 249 (1983).

The rational basis standard of review is highly deferential, PAI Corp. v. United States, 614 F.3d 1347, 1351 (Fed. Cir. 2010), and an agency's decision must be sustained if it has a rational basis, Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43. In reviewing the agency's procurement decisions, the court should recognize that the decision is entitled to a "presumption of regularity," Citizens to Preserve Overton Park, 401 U.S. at 415 (citations omitted), and that the reviewing court may not substitute its judgment for that of the agency. Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43. The court need not consider whether the agency is correct or whether the court would have reached the same decision as the agency, but whether there was a reasonable basis for the agency's actions. Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989) ("If the court finds a reasonable basis for the agency's action, the court should stay its hand even though it might, as an original proposition, have reached a different conclusion as to the proper administration and application of the procurement regulations." (internal quotation omitted)).

Finally, even if the protestor can demonstrate errors in the procurement process, the protestor must then show that it was "significantly prejudiced" by those errors. Bannum, 404 F.3d at 1357. To establish significant prejudice, the protestor must show that "there was a 'substantial chance' it would have received the contract award but for the [agency] errors in the bid process." Id. at 1358 (citations omitted).

Record Review

Judicial review of the government's action in a bid protest is not a de novo preceding. Rather, the scope of review is limited to the administrative record. Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1379 (Fed. Cir. 2009) ("[T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.") (quoting Camp v. Pitts, 411 U.S. 138, 142 (1973)). In cases decided pursuant to the court's bid protest jurisdiction, 28 U.S.C. § 1491(b)(1), the court is required by statute to apply the standard of review from the Administrative Procedure Act (APA). See 28 U.S.C. § 1491(b)(4) ("In any action under this subsection, the courts shall review the agency's decision pursuant to the standards set forth in section 706 of title 5."). Accordingly, the "task of the reviewing court is to apply the appropriate APA standard of review, 5 U.S.C. § 706, to the agency decision based on the record the agency presents to the reviewing court." Axiom, 564 F.3d at 1379 (quoting Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985)) (emphasis added by Federal Circuit).

"The purpose of limiting review to the record actually before the agency is to guard against courts using new evidence to 'convert the 'arbitrary and capricious' standard into effectively de novo review.'" Id. at 1380 (citation omitted). Accordingly, "supplementation of the record should be limited to cases in which 'the omission of extra-record evidence precludes effective judicial review'" and the court must decide "whether supplementation of the record [is] necessary in order not 'to frustrate effective judicial review.'" Id. at 1381 (citations omitted); see also Murakami v. United States, 46 Fed. Cl. 731, 735 (2000), aff'd, 398 F.3d 1342 (Fed. Cir. 2005). The administrative record "should be supplemented only if the existing record is insufficient to permit meaningful review consistent with the APA." Axiom, 564 F.3d at 1381 (emphasis added).

In sum, a "court that orders an administrative agency to supplement the record of its decision is a rare bird." Marcum v. Salazar, 751 F. Supp. 2d 74, 78 (D.D.C. 2010).

Type of relief

The plain language of 28 U.S.C. § 1491(b)(2) provides that "the courts may award any relief that the court considers proper, including declaratory and injunctive relief except that any monetary relief shall be limited to bid preparation and proposal costs." We maintain that a successful bid protest plaintiff may receive its bid and proposal preparation costs or injunctive relief, but not both.

Protesters usually seek injunctive relief. The Supreme Court has held that an "injunction is a drastic and extraordinary remedy, which should not be granted as a matter of course." Monsanto Co. v. Geertson Seed Farms, 130 S.Ct. 2743, 2761 (2010) (citation omitted). Accordingly, even if a plaintiff were to succeed upon the merits of its case, the court must also consider three additional criteria before ordering a permanent injunction: 1) "whether the plaintiff will suffer irreparable harm if the court withholds injunctive relief"; 2) "whether the balance of hardships to the respective parties favors the grant of injunctive relief"; and 3) "whether it is in the public interest to grant injunctive relief." PGBA, LLC v. United States, 389 F.3d 1219, 1228-29 (2004) (citations omitted). The plaintiff must establish an entitlement to injunctive relief by clear and convincing evidence. Baird Corp. v. United States, 1 Cl. Ct. 662, 664 (1983) ("Where injunctive relief is sought, which relief is deemed drastic in nature, the court must exercise great caution and even then, the aggrieved bidder should be made to establish its right to such drastic relief by means of clear and convincing evidence.") (citation omitted).

If a plaintiff does not demonstrate irreparable harm, then the court must deny its request for a permanent injunction. See eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006); cf. Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001) ("a movant cannot be granted a preliminary injunction unless it establishes both of the first two factors, i.e., likelihood of success on the merits and irreparable harm.") (emphasis in original).

The court may award attorney's fees and protest costs pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(A). Crux Computer Corp. v. United States, 24 Cl. Ct. 223 (1991); Bailey v. United States, 1 Cl. Ct. 69 (1983).

Appeals

Appeals from decisions of the court are taken to the Federal Circuit. 28 U.S.C. § 1295(a)(3).

[updated September 2013; cited in JM 4-4.420]