OCTOBER 15, 2012 n VOLUME 26 n ISSUE 12 | 3© 2012 Thomson Reuters

COMMENTARY

State bid protests: New incentives and traps for the unwaryBy Jay Cox, Esq., and Damien C. Specht, Esq. Jenner & Block

In most states bid protests are not as routine a part of major government procurements as they are in the federal system. However, 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. 

Protests have emerged as a staple of federal government contracting largely because they provide for a more neutral evaluation of award decisions.  In 2011, 2,353 cases were filed in the Government Accountability Office alone, an increase of more than 100 percent from 10 years earlier. (see Comptroller General Bid Protest Statistics, 1997-2011, availableat http://www.wifcon.com/protestsgaostat.htm.) 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 has not become second nature for most contractors.  Even among established firms, some might not even know that states 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.  

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 anticompetitive 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

Jay Cox (L) is an associate in the Washington office of Jenner & Block, where he concentrates his practice on litigation relating to government contracts. He has significant experience in federal and state courts, representing clients in the defense, aerospace and health care industries at the trial and appellate levels. He can be reached at jamescox@jenner.com. Damien C. Specht (R) is an associate in the firm’s government contracts practice, where he handles the preparation of subcontracts and teaming agreements, contract disputes, and both pre- and post-award bid protests. He can be reached at dspecht@jenner.com.

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 their overall desirability, has significantly

Protests have emerged as a staple of federal government contracting largely because they provide for

a more neutral evaluation of award decisions.

increased as federal cutbacks have forced contractors to diversify their income base and as 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 contracting practices, resulting in stronger efforts by state governments to minimize the potential for waste and abuse arising 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

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, and these areas may constitute traps for the unwary.  Based on our experience, contractors need to be particularly careful in the areas discussed below.

TIMING

Do not sit on your rights.  In the federal system, post-award protests must be filed within 10 days after notice of an 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 a final award would be untimely.  That is because many states use a two-step process where one body recommends an 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 are due typically from the point when the offerers 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. 

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The simple lesson is not to wait until after a debriefing or final award to consult with counsel.  Instead, consider whether to protest from the moment you receive notice of a recommended award to another party.

One additional point on timing is worth making.  Federal contractors use 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 state agency’s response.

FORUM

Like the federal system, state systems often provide for 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.

all), the protestor often must file another agency-level protest that including those grounds, even if the 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

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 as many states do not provide 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 the 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 and offer a protestor no expectation that it will get a record on which to evaluate the agency’s award recommendation.  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 for a fair consideration of their protests, either by applying and maintaining continuous pressure on agencies to produce the relevant documents, or by pursuing requests under state freedom-of-information laws.

CONCLUSION

Unsuccessful bidders for state government contracts have greater incentive than ever to consider bid protests. Financial constraints have increased competition for state awards while 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 their 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. WJ

Competition for state contracts, and their overall desirability, has significantly increased as federal cutbacks have forced

contractors to diversify their income base.

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 to the U.S. Court of Federal Claims.  Strategic considerations regarding timing, available relief and the likelihood of success will guide the decision about where to file.

Many states, however, require an agency-level protest (generally in front of 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 grounds for protest that can still be raised on a timely basis (as noted below, some states do not allow supplemental protests at

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. This 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 the 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 and include 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