Each year, the U.S. Government Accountability Office (“GAO”) releases a report summarizing data on bid protests before the GAO for the past fiscal year. This information, required by law in the form of a report to Congress, also provides helpful insight for government contractors on trends regarding bid protests. In addition to releasing data, the GAO report also addresses instances in which federal agencies decline to implement GAO recommendations. With respect to this latter point, construction firms seeking diplomatic construction contracts through the U.S. Department of State (“State Department”) should take note, as the GAO recommended to Congress that it clarify federal requirements for contractor qualification. This article will first address the State Department’s declination to implement a GAO recommendation. It will then briefly address the trends reported by the GAO in bid protest filings for fiscal year 2015.

 

Agency Failure To Implement GAO Recommendation

 

The GAO bid protest decision in Caddell Construction Co. Inc. involved the construction of a U.S. embassy complex in Mozambique, with an estimated minimum value of $160 million. Pursuant to the requirements of the Omnibus Diplomatic Security and Antiterrorism Act of 1986 (“Security Act”), applicable to construction projects exceeding $10 million, the State Department had solicited prequalification applications from potential offerors for the embassy’s construction. Among other conditions, the Security Act requires firms to achieve a minimum business volume “equal to or greater than the value of the project being bid in 3 years of the 5-year period” before the issuance date of the invitation for bids or request for proposals. 22 U.S.C.A. § 4852. The interpretation of this requirement was the basis for both the protest as well as the split in opinions between the GAO and the State Department.

 

The GAO interpreted this section as requiring the contractor to have achieved business volume equal to or exceeding the value of the project being solicited in each of three years of the five- year period prior to issuance of solicitation. It accordingly found that two firms the Department prequalified had not, in fact, met the Security Act’s requirement, and recommended that the State Department change its determination and reimburse the protestor the cost of protesting. The State Department declined, citing a decision by the Court of Federal Claims holding that the Security Act allows aggregation of an offeror’s business volume in any three of the previous five years in order to achieve the minimum required volume.

 

This split in interpretation continues to exist due to the fact that GAO decisions are not binding on the Court of Federal Claims, and vice versa. The GAO has recommended to Congress that it revisit the language of the Security Act and provide clearer guidance on how the Department should determine contractor qualification. Until such a date, contractors bidding on State Department diplomatic construction contracts should be aware that the agency will continue to certify firms that can establish that their highest annual revenue was valued at at least one-third of the project’s value in three of the five years preceding the bid invitation.

 

Summary Of Bid Protest Filings

 

The GAO received 2,639 cases—including bid protests, cost claims and requests for reconsideration—in fiscal year 2015. This was up 3% from the previous year. In fact, the general trend over the past five years has been for a gradual increase in filings, with fiscal year 2013 being the one exception.

 

Of the protests resolved on the merits last year, 12% were sustained. The most prevalent reasons for sustaining protests were: (1) unreasonable cost or price evaluation; (2) unreasonable past performance evaluation; (3) failure by agency to follow evaluation criteria; (4) inadequate documentation of the record; and (5) unreasonable technical evaluation. Note, however, that few protests—about 22% last year—ever reach a decision on the merits. Often times, agencies take voluntary action in response to the protest, data on which is not collected.