A Recent Federal Circuit Case Highlights the Perils of Not Intervening in a Bid Protest and Raises Issues Caused by a Party’s Failure To File a Redacted Pleading

A federal contractor whose contract award is challenged in a bid protest often faces a dilemma: whether to intervene and participate in the litigation. Intervention generally requires an awardee to retain counsel who can be admitted under a protective order at the U.S. Government Accountability Office (GAO) or the U.S. Court of Federal Claims (COFC)—which... Continue Reading

A federal contractor whose contract award is challenged in a bid protest often faces a dilemma: whether to intervene and participate in the litigation. Intervention generally requires an awardee to retain counsel who can be admitted under a protective order at the U.S. Government Accountability Office (GAO) or the U.S. Court of Federal Claims (COFC)—which can be resource-intensive. However, failing to have counsel advocating for the awardee results in government counsel alone defending the procurement process and any allegations that arise with respect to the awardee’s proposal. Although an awardee’s interests are often consistent with the agency’s, they can sometimes diverge sharply—and an awardee’s failure to have an advocate admitted under the protective order and in the fight can result in a lost award.

There are no guarantees that an awardee’s intervention can save a protested contract award, as GAO, COFC, and agency corrective action decisions often turn on the issues related to the quality of the agency’s evaluation or award process that are outside the awardee’s control. That said, a recent and ongoing Federal Circuit appeal, Global K9 Protection Group LLC v. U.S., illustrates that choosing not to intervene can result in other parties litigating with respect to the awardee’s interests with the awardee being absent in the litigation. Among other things, such an absence from bid protest litigation can cost the awardee a lost contract award, potential termination(s) of other contracts held by the awardee, and harm to the awardee’s business reputation.

Background

The Global K9 Protection Group LLC (Global K9) protest involves a U.S. Postal Service (USPS) “procurement for Third-Party Canine-Mail Screening with Real-Time X-ray Analysis and interpretation.” The agency’s evaluation and award process were subjected to a series of protests and corrective actions, most of which are not relevant (or discussed) here. Ultimately, USPS awarded clusters of service areas to two offerors: American K-9 Detection Services, LLC was awarded four clusters, and K2 Solutions, Inc. (K2) was awarded seven clusters. Global K9 protested the evaluation and award decision.[1](#_ftn1)

At the COFC, K2 received a redacted copy of Global K9’s initial bid protest. Because the protest grounds shown in the redacted protest did not appear to attack K2’s proposal, K2 chose not to intervene and, instead, relied on the agency’s and U.S. Department of Justice’s (DOJ) defense of the agency’s evaluation and award decision.

After production of the agency record at COFC, Global K9 filed an amended complaint that, among other things, attacked K2’s proposal as containing misrepresentations regarding K2’s past performance. Contrary to the requirements of paragraph 12 of the court’s protective order, Global K9 did not file a redacted copy of its amended complaint. Although K2 was monitoring theprotest docket at COFC, it apparently did not appreciate the risk presented by an amended complaint as it did not seek or otherwise receive a copy of the redacted version of the amended complaint from the agency (or the court). As a result, K2 was unaware that its proposal and past performance had become important issues in the protest.

The parties to the protest (without K2) briefed and argued the issues raised by Global K9’s amended complaint and the record. Among other things, the COFC found that K2’s proposal made a series of intentional material misrepresentations regarding its past performance on which the evaluators and agency relied. Accordingly, the trial court granted the plaintiff’s motion for an injunction regarding the award decision and disqualified K2 from performance of the challenged award.

When K2 learned what had occurred at the COFC, including the judicial findings and injunction, K2 belatedly moved to intervene in the bid protest proceedings. The court denied K2’s motion as moot and untimely. To compound K2’s problems, during the trial court proceedings, the agency apparently recognized issues with K2’s performance and initiated termination proceedings on an existing contract, which later resulted in a termination for default.

Key Takeaways for Contractors

K2’s reliance on the agency and DOJ to litigate the bid protest in a way that also protected its interests proved to be a critical error. This case raises important issues and potential problems that government contractors must understand and guard against.

Government and Intervenor Interests Can Diverge

Although an awardee’s interests in defending an award decision are generally similar to the government’s, the government’s interests are not identical. Agency and DOJ counsel are required to balance defending the agency’s decision-making in a specific protest with protecting the government’s interests in the integrity of public procurement. Simply put, agency counsel do not represent an awardee and cannot be relied on to focus on what is best for the awardee.

Redaction Requirements and Transparency Rules Are Different at GAO and COFC and Are Not Always Strictly Enforced

In a bid protest at GAO, the protester must file a redacted version of its protest within one day of the original filing (4 C.F.R. § 21.1(g)). The rule does not specify the deadline for redacted supplemental protests, which are subject to agreement among the parties. Importantly, GAO’s electronic docket is only accessible to parties, and a non-intervening awardee must request information regarding filings (and redacted filings) from the agency during the bid protest. If no party (or GAO) requests preparation of a redacted version of a filing, such a redaction likely will not be prepared. As a result, the only way for an awardee to ensure it receives all permissible information regarding an ongoing protest regarding its awarded contract is to retain counsel and intervene.

The COFC has a different rule regarding redactions. Paragraph 12 of the court’s standard protective order requires any party filing a sealed document to “promptly” serve on the other parties a proposed redacted version. Once all parties agree, the redacted version is supposed to be filed publicly. But as shown in the Global K9 case, parties do not always prepare public, redacted copies, and there is no strict enforcement mechanism that consistently enforces this rule. As a result, a non-intervening awardee may (like K2) not learn about critical issues until it is too late.

Ways To Intervene and Reduce Resource Requirements

Finally, it is important to know that an awardee can retain outside counsel to intervene and protect its interests without devoting the level of resources necessary to engage in all-out litigation. Instead, an intervenor can work with counsel to participate with the understanding that counsel will primarily rely on government counsel’s briefing. Under such an approach, the intervenor can focus primarily on analyzing supplemental protest grounds or amended complaints and inform the awardee’s/intervenor’s personnel of the issues and risks (to the extent permissible under the protective order) and brief issues only to the extent necessary to defend the intervenor’s award.

The Global K9 Appeal

We refer to the appeal as Global K9 because that party appears first in the Federal Circuit caption. However, Global K9, the government, and the other protester from the COFC proceeding are all appellees at the Federal Circuit. Only K2, which was not a party at the trial court (given COFC’s denial of K2’s intervention motion), is appealing to the Federal Circuit, and K2’s appeal necessarily focuses primarily on the denial of its motion. As noted above, the appeal is still pending.

During the oral argument, the appeals court panel raised a series of interesting issues regarding K2’s failure to pursue and obtain a redacted copy of the amended complaint. In addition, the panel addressed several problematic aspects of Global K9’s failure to comply with the protective order’s requirements and prepare and file on the public docket a redacted copy of the amended complaint. The Federal Circuit traditionally (and appropriately) has expressed concern regarding judicial transparency that is compromised when materials are excessively redacted or (as here) when no redacted copies of filings in a judicial proceeding are made available to the public.

At bottom, K2 lost the contract it was awarded and more when the protester failed to file a redacted copy of the amended complaint (and K2 failed to seek such a copy then intervene in a timely manner)—and the parties litigated and resolved K2’s “misrepresentation” and problematic performance issues without K2 receiving clear notice or presenting a timely defense in response to those attacks in the litigation. Although K2’s problems were, in part, its own fault as it chose not to intervene and actively protect its interests, there are substantial fairness concerns raised by the impact of Global K9’s failure to comply with COFC’s redaction rules and the fact that none of the parties to the protest did anything to timely inform K2 that its proposal and past performance had become substantial issues in the protest. These are some of the issues the Federal Circuit may address in its decision, and we will follow and discuss these matters when the appeal is resolved.

[1](#_ftnref1) A second disappointed offeror protested its non-selection based on a previous determination that it had failed to mitigate an organizational conflict of interest, but its grounds are not relevant to this post and are not discussed further.