Pillsbury Winthrop Shaw Pittman

US: corrective action catch 22 — Court of Federal Claims holds agency action must be rational even if GAO protest decision was not

By C Joël Van Over and Alexander B Ginsberg

The US Court of Federal Claims’ 15 July 2014 decision in RUSH Construction, Inc v United States reflects the unusual circumstance in which the court effectively sat in appellate review of an earlier bid protest decision by the Government Accountability Office (GAO) after the US Army Corps of Engineers followed GAO’s recommendation in that decision. The court ultimately overruled GAO when it found that it was arbitrary and capricious for the agency to follow GAO’s irrational recommendation. In so doing, the court cited numerous flaws in GAO’s reasoning and its reliance on inapposite case law. The RUSH decision, authored by the Court of Federal Claims’ new chief judge, may foretell greater judicial scrutiny of agency corrective action and a shift at the court away from deference to GAO’s bid protest recommendations.

Federal government contractors familiar with the bid protest process know that, in addition to challenging an agency’s procurement decision at the agency itself, they have the options of protesting before both GAO and the Court of Federal Claims. GAO has long been the most common destination for protests, in part because contractors and their counsel know that they can get ‘two bites at the apple’ — i.e. that filing a protest at GAO does not preclude the contractor from filing later with the court in the event of an adverse GAO decision. A common misconception, however, is that GAO decisions may be appealed to the Court of Federal Claims. On the contrary, the court generally does not sit in appellate review of a GAO decision. Rather, the court’s inquiry in each protest brought before it — whether or not that protest started at GAO — is whether the agency in question acted rationally or whether the agency decision was ‘arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law’. See Administrative Procedure Act, 5 USC § 706(2)(A) (2012). The court serves as the initial trier of fact and conducts a de novo review of the record. Thus, because the Court of Federal Claims is charged with evaluating the actions of the agency, rarely has the court had cause or otherwise opted to critique GAO’s preceding decision in a protest involving the same procurement where the agency followed a GAO recommendation. Indeed, where the court has discussed such decisions, typically it has deferred to GAO. RUSH in no way embodies this typical result…

Click on the link below to read the rest of the Pillsbury briefing.

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