Bid protests are not as routine a part of major government procurements in most states as they are in the federal system. But there are good reasons why contractors that have not seriously thought about challenging state award decisions in the past should consider using the state protest process.
Largely because they provide for a more neutral evaluation of award decisions, protests have emerged as a staple of federal government contracting. In 2011, 2,353 cases were filed in the Government Accountability Office alone, an increase of more than 100% from ten years earlier. For most experienced contractors, an adverse award decision in a significant procurement almost always results at least in a conversation about whether to protest. When competing for state contracts, however, considering a possible protest is not yet second nature for most contractors. Even among established firms, some might not know that states even have their own bid protest processes. Just as at the federal level, there is little reason to pass up the opportunity for a second opinion on the propriety of a procurement without due consideration.
Historically, paying little attention to state protest processes may have been a reasonable decision. That is because protesting at the state level typically was seen as a fool’s errand, with little chance of changing an award decision. Two recent developments have changed that. First, competition for state contracts — and the overall desirability of state contracts — has significantly increased as federal cutbacks have forced contractors to diversify their income base and state cutbacks have narrowed the range of opportunities. Second, the tighter fiscal climate at the state level has brought with it more public scrutiny of state contracting practices, resulting in stronger efforts by state governments to minimize the potential for waste and abuse that result from a lack of contracting oversight.
In response to an increase in interest and the public’s desire for transparency, state protest processes have become more sophisticated. Consequently, in many states, the agencies designated to hear bid protests appear to be getting at least a little closer to what the GAO and the Court of Federal Claims do for federal contracts — providing a real check on flawed or anti-competitive awards.
At the same time, the states remain laboratories of democracy and have developed a wide variety of protest procedures. The most important thing to realize about state level protests is that no two systems are exactly the same. As a result, it is impossible to provide a one size fits all guide to state protests. There are, however, a number of areas where state protest practice in general diverges from, for example, protests before the GAO that may constitute traps for the unwary. Based on our experience, contractors need to be particularly careful in the following areas:
Do not sit on your rights. In the federal system, post-award protests must be filed within ten days after notice of award or, if the protestor is entitled to and requests a debriefing, after the debriefing takes place. The filing must be made within five days to obtain a stay of contract performance. In many states, however, a protest filed just 24 hours after final award would be untimely. That is because many states use a two-step process where one body recommends award to a specific firm and then another body makes the final award decision. This final award sometimes can come 60 or 90 days after the recommendation is made. In states that use this system, protests typically are due from the point the other offerors receive notice of the recommended award. As a result, waiting for a final award can be fatal to your protest. Note also that, although many states provide debriefings, not all will toll the protest filing period until after the debriefing is provided. The simple lesson is not to wait to consult with counsel until after a debriefing or final award. Instead, consider whether to protest from the moment you receive notice of a recommended award to another party.
One other timing point is worth making. Federal contractors are used to using calendar days for the timing of required filings. Many states, however, use business days. As a result, you may have more time than you think to polish a state protest filing. On the other hand, you may have to wait quite a while for the agency’s response.
Like the federal system, state systems often provide for both protests filed with the contracting agency and protests seeking review by an outside body. Unlike the federal system, however, states rarely offer protestors a choice about how to proceed through the different available forums.
When challenging a federal contract award, a protestor typically will have a choice of where to file. The protestor can pursue an agency-level protest or can proceed directly to the GAO or the Court of Federal Claims. Strategic considerations regarding timing, available relief, and likelihood of success will guide the decision about where to file.
Many states, however, require an agency-level protest – generally in front the same contracting officer that made the award – as a prerequisite to seeking relief from an outside body. In those states, a protestor must file with the contracting agency and wait to receive a decision before considering whether to pursue further review. If the protestor later uncovers new protest grounds that still can be timely raised (as noted below, some states do not allow supplemental protests at all), the protestor often must file yet another agency-level protest including those grounds, even if its initial protest before the agency has been denied. This can lead to the cumbersome scenario of maintaining parallel proceedings before the contracting officer (addressing supplemental grounds) and before an outside body (addressing the original protest grounds). There are exceptions to this rule – New York and the District of Columbia, for example, provide for centralized executive review of protests without requiring an agency protest first – but state protesters should not assume they can immediately file in state court or at a GAO-like auditing agency.
Filings and Development of the Record
At the GAO and the Court of Federal Claims, protesters can expect more than one bite at the apple. Whether they anticipate comments on the agency report or a reply brief, protesters know that they will be afforded an opportunity to sharpen their arguments and respond to the agency. That is not the case in many states. Unless a state’s procedures provide for multiple rounds of briefing, a protestor should anticipate that the first filing in its protest will be its last before an appeal. As a result, the initial protest must be more than a notice pleading or a filing based on information and belief; it should include the strongest argument and evidence the protestor can assemble, including all critical pieces of evidence as attachments.
Thus, to assemble a winning protest, it behooves a state protester to use any and all available sources to support its protest, including public sources of information about the procurement and the recommended awardee, direct citations to its proposal to rebut agency criticisms, and detailed refutation of the agency’s award rationale as reflected in a debriefing if one was offered. In addition, state protesters should not count on the later development of supplemental protest grounds to win the day; many states have no provision for supplemental protests. For these reasons, the single-filing systems that exist in some states make it even more important to engage counsel as soon as a recommended award is announced.
This situation becomes even trickier when the various state discovery rules are considered. At the GAO and Court of Federal Claims, a protester is provided with an agency record containing documents that are relevant to the award. Some states have no comparable rule, offering a protestor no expectation that it will get a record on which to evaluate the agency’s award recommendation after filing a protest. And although other states do have rules requiring production of relevant documents to the protestor, these rules are rarely followed as fastidiously as they are in the federal system. State protesters should expect that they will have to put significant effort into obtaining the documents necessary to a fair consideration of their protests, either by applying and maintaining continuous pressure on agencies to produce the relevant documents or pursuing requests under state freedom of information laws.
The incentives for unsuccessful bidders for state government contracts to consider bid protests are greater than ever. Financial constraints have increased competition for state awards while at the same time increasing the pressure on contractors to pursue all available options to keep or acquire significant opportunities. States, recognizing the waste and abuse that results when agencies receive unchecked discretion to make contract awards, have stepped up supervision of the contracting process. In light of these incentives, it is critical for contractors to consider state bid protests – and to understand, and seek early advice about, the pitfalls in state bid protest processes.