Government Contracting Database
Bid Protests – Standard of Review
The Administrative Dispute Resolution Act of 1996, Pub. L. No. 104-320, § 12(a), 12(b), 110 Stat. 3870, 3874 (1996), amended the Tucker Act and also provided the United States Court of Federal Claims with post-award bid protest jurisdiction for actions filed on or after December 31, 1996. See 28 U.S.C. § 1491(b)(1)-(4) (1994 & Supp. 111996). The statute provides that post-award protests of agency procurement decisions are to be reviewed under the Administrative Procedure Act (APA) standards, making the standards outlined in Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970) and the line of cases following that decision applicable. lmpresa Costruzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332 (Fed. Cir. 2001). Banknote Corp. of Am., Inc. v. United States, 365 F.3d 1345, 1350 (Fed.Cir. 2004) (“Among the various APA standards of review in section 706, the proper standard to be applied in bid protest cases is provided by 5 U.S.C. § 706(2)(A)….”); see also lmpresa Costruzioni Geom. Domenico Garufi v. U.S., 238 F.3d 1324, 1332 (Fed.Cir. 2001). Under the APA standards, agency action will be set aside if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” 5 U.S.C. § 706(2)(A), In other words, “a bid award may be set aside if either: (1) the procurement official’s decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure.” lmpresa Costruzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332 (Fed.Cir. 2001).
“The arbitrary and capricious standard … is highly deferential. This standard requires a reviewing court to sustain an agency action evincing rational reasoning and consideration of relevant factors.” Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1058 (Fed.Cir.2000). If an award is challenged on the ground that the procurement official’s decision lacked a rational basis, the Court must determine whether the agency provided a “coherent and reasonable explanation of its exercise of discretion,” lmpresa Costruzioni , 238 F.3d at 1333. When the plaintiff challenges the solicitation on the ground that it was in violation of regulation or procedure, the plaintiff must show a “clear and prejudicial violation of applicable statutes or regulations.” Kentron Hawaii, Ltd. v. Warner, 480 F.2d 1166, 1169 (D.C.Cir. 1973)).
In determining whether the agency decision was arbitrary or capricious, the Court must evaluate four factors: whether “(1) there was subjective bad faith on the part of the procuring officials; (2) there was a reasonable basis for the procurement decision; (3) the procuring officials abused their discretion; and (4) pertinent statutes or regulations were violated.” United Int’l Investigative Servs. v. United States, 41 Fed.Cl. 312, 318 (1998). See also Keco Indus., Inc. v. United States, 203 Ct.Cl. 566, 574, 492 F.2d 1200, 1203 (1974)). There is, however, no “requirement or implication … that each of the factors must be present to establish arbitrary and capricious action by the government.” Prineville Sawmill Co. v. United States, 859 F.2d 905, 911 (Fed.Cir.1988).
To overturn the agency decision, the plaintiff bears the burden of showing “a significant, prejudicial error in the procurement process.” Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed.Cir. 1999). In order to show it was significantly prejudiced, plaintiff does not have to show that, but for the error, the plaintiff would have been awarded the contract. Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed.Cir. 1996). However, the plaintiff must show that there was a ‘substantial chance’ it would have received the contract award” absent the challenged agency action. Bannum, Inc. v. United States, 404 F.3d 1346, 1353 (Fed.Cir. 2005). Where the plaintiff demonstrates that the contracting officer’s rationale for rejecting the bid was unreasonable and that the plaintiff was prejudiced as a result of the rejection, “the contracting officer’s decision will not stand.” Hawaiian Dredging Constr. Co. v. United States, 59 Fed.Cl. 305, 316 (2004).
In an ordinary post-award protest, the plaintiff must demonstrate “substantial prejudice” by showing that there was a “substantial chance” it would have been awarded the contract but for the agency’s error. Bannum, Inc. v. United States, 404 F.3d 1346, 1353 (Fed.Cir. 2005). This standard, however, cannot be applied in the context of a solicitation-based protest because the offerors have yet to submit proposals to the agency. In the context of a solicitation-based protest, the plaintiff may satisfy the prejudice requirement by showing that an unreasonable agency decision “created a non-trivial competitive injury which can be redressed by judicial relief.” Winstar Comm. Inc. v. United States, 41 Fed.Cl. 748, 763 n.9 (1998). In a recent decision, the Court held that a party that brings a protest challenging the terms of a solicitation need not satisfy the “substantial chance for award” test, but rather need only identify a non-trivial competitive injury. Weeks Marine, Inc. v. United States, 2007 WL 3277260, Fed.Cl., November 06, 2007.
Updated: May 24, 2018