Federal Court Slams Down Army for Following Informal Advice of GAO Lawyer on Corrective Actions in a Bid Protest

When the Government Accountability Office (“GAO”) recommends that a government agency take “corrective action” in procurement by making changes to its selection criteria or process, the Court of Federal Claims will routinely adjudicate challenges to the proposed corrective action.  But, what if the agency takes corrective action in response to a GAO attorney’s informal advice that doing so was necessary and not in response to a formal GAO decision?

The Court of Federal Claims, in a case of first impression, held that the federal court could review a GAO attorney’s informal advice.  The case is Systems Application & Technologies, Inc. v. United States, 2011 U.S. Claims LEXIS 1784 (2011).  It sustained a bid protest and ordered that the contract go to the protestor.

In SA-TECH, the United States Army Aviation and Missile Life Cycle Management Command Contracting Center awarded a contract for aerial target flight operations and maintenance services to SA-TECH, unseating the incumbent contractor, Madison Research Corporation (owned by Kratos Defense & Security Solutions, Inc. (“Kratos”)).

Upset at being unseated, Kratos filed a GAO protest.  A GAO attorney, reviewing Kratos’s claims, believed that Kratos had a point.  In an e-mail to the agency, the lawyer (1) opined that the agency didn’t need to be concerned that Kratos allegedly missed an important filing deadline and (2) that the GAO would likely sustain Kratos’s protest due to deficiencies in the source selection decision.  Based on this e-mail, the Army decided to take corrective action by terminating the contract to SA-TECH, reopening the original solicitation, and amending the solicitation.  After the amendments, offerors would be permitted to revise their technical and cost proposals.  It was a new source selection procedure.

Now, SA-TECH was upset and filed a bid protest to the Court of Federal Claims arguing that the Army’s decision to take corrective action was arbitrary, capricious, and unreasonable because the GAO’s attorney’s e-mail message to do so was itself unreasonable.  It also asserted that the corrective action, standing on its own, lacked a rational basis and involves a violation of law, regulation or procedure.

The Court agreed and held that it did have jurisdiction to adjudicate this claim based on informal advice of the GAO lawyer even though the GAO hadn’t made a formal decision.  Therefore, it was appropriate for SA-TECH to protest the proposed corrective action. Since there was no basis for downplaying the filing deadline issue or considering the source selection decision deficient, the Court ordered that the Army award the contract to SA-TECH.   The bid protester won.