Will Federal Circuit Decision Impact Whether Contractors Have Their Day In Court?
The Federal Circuit’s recently published decision in Orion Technology v. United States, No. 2012-5062 (Jan. 14, 2013) addresses how the Court of Federal Claims (“COFC”) should assess whether a protester has standing to pursue a protest after proposal submission but before award. The decision hopefully will improve the consistency of the legal standard that COFC applies to pre-award standing questions, which often arise in litigation involving a government agency’s decision to find an offeror’s proposal unacceptable or to exclude an offeror from the competitive range for a particular procurement, or other “down select” procedures.
Orion Technology, the plaintiff and appellant in the case, filed and pursued several rounds of protests at the Army, the GAO (decision), and the COFC (decision), challenging the Army’s decision to exclude its proposal from consideration before fully evaluating it. The Army did so because Orion allegedly had failed to submit detailed pricing information from its teaming partners, which the solicitation required. When Orion eventually filed its protest at the COFC, the Government moved to dismiss, arguing that Orion did not have standing because the company had submitted an incomplete proposal.
To establish standing at the COFC, a protester generally must demonstrate that (a) it is an actual or prospective bidder or offeror, and (b) it has a direct economic interest in the procurement. In this case, the COFC recognized that its prior decisions did not use a uniform standard for applying the second part of this standing test—i.e., the direct economic interest analysis. While some of the prior decisions required the protester to show a “substantial chance” of receiving the award but for the procurement errors alleged, other decisions imposed a different standard, requiring that that the protester allege a “non-trivial competitive injury” that would be addressable by judicial relief. Ultimately, the COFC did not decide which of these tests—“substantial chance” or “non-trivial competitive injury”—was the proper standard for pre-award protests because it did not need to reach that issue. The COFC held that Orion would not have standing to pursue its protest under either test.
On appeal, the Federal Circuit ruled that the “non-trivial competitive injury” test only applies to pre-award protests that arise before proposal submission. For pre-award protests that arise after proposal submission, the Federal Circuit ruled that the “substantial chance” standard should be used. Applying the “substantial chance” standard, because Orion had protested after it submitted its proposal, the Federal Circuit held that Orion had standing to bring its protest. It based this holding on finding that the solicitation did not require the Army to reject the Orion proposal. In other words, Orion’s submission of a proposal that was not per se ineligible for award—a fairly low standard—gave it a “substantial chance” to secure the award. In the end, the Federal Circuit upheld the COFC’s decision by ruling that the Army’s exclusion of Orion was reasonable and conformed to the ground rules provided in the solicitation. While Orion had standing to protest, it lost on the merits.
What are the key implications of the Federal Circuit’s decision in Orion Technology for government contractors? The answer to that question remains to be seen. The decision indicates that protesters filing pre-award protests after proposal submission at the COFC likely will be expected to demonstrate that they have a “substantial chance” for award if the Government challenges their standing. Yet while the “substantial chance” standard may appear at first blush to be more stringent than the “non-trivial competitive injury” test that the COFC has applied in some prior decisions, it is unclear whether the Federal Circuit decision means that the COFC will apply a higher bar for these types of protests, and in turn, dismiss a higher percentage of them. If the COFC follows the holding in Orion, which found a substantial chance for award where a proposal could be deemed acceptable, the Orion decision may not present much of a barrier to litigating these types of protests, including challenges to exclusions from the competitive range.
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Stacy Hadeka and Allison Bender also contributed to this report.19 May 2016