In WHR Group, Inc. v. United States,¹ the United States Court of Federal Claims found that the FBI’s “corrective action” of canceling validly awarded BPAs and resoliciting was inappropriate because it lacked a rational basis. This case will be of interest to any protester or protested awardee who wants to challenge an agency’s exercise of its discretion in taking corrective action to moot a GAO protest.²

Background

As the court noted, “[t]he case is procedurally convoluted.” Prior to suit being brought at the court, the incumbent, Brookfield, had been providing relocation services for the FBI under a task order that had expired on Sept. 30, 2012. It was not until Jan. 22, 2013, that the FBI issued a solicitation seeking to re-procure these services under Blanket Purchase Agreements (BPAs). The FBI evaluated proposals, finding seven that satisfied the technical requirements. The three lowest priced offerors were awarded BPAs. Brookfield, the incumbent, had the sixth highest price of the seven acceptable offerors; it did not receive a BPA.

Brookfield filed a protest challenging the FBI’s award to the three BPA recipients. As a result of “outcome prediction” ADR at the GAO, on June 7, 2013, Brookfield entered into a settlement agreement in which the FBI agreed to award a fourth BPA to Brookfield. On June 17, the fourth lowest acceptable offeror filed a protest challenging the award to Brookfield, as Brookfield was not next in line. On June 24, TRC, the highest priced acceptable offeror, filed a similar protest. The FBI issued stop work orders to all four BPA holders, although the only award being challenged was the BPA to Brookfield.

On July 16, the FBI informed the BPA awardees that it intended to cancel all four BPA’s as a “corrective action.” The basis for this decision was outlined in two “notes to file.” The FBI’s reasons for cancelling the BPAs were to resolve the outstanding protest and to revise the BPA procurement because of what it considered to be errors based on “new information” and a decision to change other criterion for award.

On July 26 and August 5, two of the three BPA awardees filed complaints at the Court of Federal Claims.³ Then, Brookfield and two other disappointed bidders intervened on behalf of the FBI. On August 6, the FBI issued a solicitation calling for revised offers by August 13. At that point, the plaintiffs moved for a temporary restraining order to stop the re-solicitation. The court enjoined the FBI from proceeding with the new procurement and accepted the FBI’s representations that it would not cancel the existing BPAs until the court had ruled on the motion for a preliminary injunction. 

The Court’s Analysis

The plaintiffs specifically sought to prevent the FBI taking from three actions: “(1) cancelling the awarded BPAs, (2) conducting a new procurement pursuant to the revised solicitation, and (3) extending the Brookfield task order during the pendency of this litigation.” The court, exercising its bid protest jurisdiction, considered whether the FBI’s corrective action lacked a rational basis or violated regulation or procedure. It considered several cases to be instructive with regard to the discretion afforded to agencies in the context of corrective action. The general rule taken from these cases was that corrective action must be targeted to the defect identified, and corrective action does not include unlimited discretion to resolicit proposals.

Applying that case law to the FBI’s corrective action, the court held that the FBI failed to state a rational basis for its decision to cancel the three validly awarded contracts, finding that some of the FBI’s asserted bases were no more than “bald assertions.” Because only the BPA awarded to Brookfield was being protested and the FBI’s other concerns were not sufficient to merit re-solicitation, the plaintiffs established that the FBI’s corrective action was insufficiently targeted to resolve the defect identified.

The court next considered whether injunctive relief was appropriate. It concluded that:

It is also worth adding as a final point that if the FBI’s “corrective action” in this case were not enjoined, it would signify that the government’s power to take “corrective action” is nigh unlimited.  The requirement that corrective action be “targeted” or “rationally related” to an existing defect in the initial procurement is essential to the integrity of the procurement system.  In this case, it is clear that the “corrective action” was not targeted or rationally related to any actual defect and it is therefore crucial to the public interest that the FBI’s “corrective action” be enjoined.

Finally, the court considered whether it should prevent the FBI from continuing to extend Brookfield’s non-competitively awarded task order, which had expired in September 2012. Given that the contracting officer’s determination to continue to extend the Brookfield contract was based on the assumption that it was to be used for a “short interim period,” the court found no basis to allow the FBI to continue using Brookfield’s extended task order ad infinitum where, as here, it could use the competitively-awarded BPAs.

Conclusion

This case is an excellent example of the court requiring an agency to justify its corrective actions, even when it was entitled to discretion. It is a victory for both successful awardees whose notice-to-proceed is delayed by protests unrelated to its award and protestors who have succeeded on the merits only to be frustrated by the agency’s decision to take corrective action wholly unrelated to the protest grounds. While it is understandably tempting for an agency plagued by multiple protests to wipe the slate clean and start over, this court has made it clear that an agency does not have unfettered discretion to do so without a rational basis.

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¹ WHR Group, Inc. v. United States, No. 13-515C, 2014 WL 1377819 (Fed. Cl. March 21, 2014). The decision was publicly released on April 8, 2014.
² Whenever an agency takes corrective action after a GAO protest is filed, the GAO dismisses the protest as moot.
³ These two protests were consolidated at the court.