I sat down last week with Scott Flesch, probably the most experienced bid-protest lawyer ever. Scott was the Chief Trial Attorney for the Army, where he worked on over 2,000 bid protests. He is now a member at Miller & Chevalier, a D.C. law firm. Our conversation started with the most recent Executive Order mandating fixed price contracting, and moved into the risks that contractors face from the FAR’s new class deviations implementing the DEI Executive Order. Scott also discussed the importance of intervening in protests, the differences between GAO and the Court of Federal Claims, and how small-business issues have come up in some recent cases.
Links discussed
Scott Flesch bio (Miller & Chevalier)
Intervention Download: Why Offerors Must Prepare for Bid Protests
Executive Order: Promoting Efficiency, Accountability, and Performance in Federal Contracting
FAR Council Memo: Agency Implementation of Executive Order 14398, Addressing DEI Discrimination by Federal Contractors
Life Sciences Logistics LLC v. United States (Court of Appeals for the Federal Circuit)
Global Connections to Employment, Inc. v. United States (Court of Federal Claims)
Noblis MSD, LLC v. United States (Court of Federal Claims)
Revelations Counseling and Consulting LLC v. United States (Court of Federal Claims)
CSlope Solutions LLC (GAO)
Timestamps
Introduction and the Value of the ABA Public Contract Law Section 00:00:00
The Shift Toward Fixed-Price Contracts 00:03:20
Dealing with Ambiguous Requirements and Bid Protests 00:09:58
Navigating the DEI Executive Order and False Claims Act Risks 00:14:37
Understanding CICA Stays at the GAO 00:23:27
CICA Stay Overrides 00:29:33
Procedures at the Court of Federal Claims 00:38:28
The Role of Intervenor’s Counsel in Bid Protests 00:41:12
The Noblis Case and Pleading for Injunctive Relief 00:50:32
Choosing Between the GAO and the Court of Federal Claims 00:53:21
The Revelations Case and Limitations on Subcontracting 01:00:44
The Certificate of Competency (COC) Process 01:05:23
Conclusion and Contact Information 01:10:20
Transcript
Introduction and the Value of the ABA Public Contract Law Section
Sam: Welcome back to GovCon Intelligence. My guest today is Scott Flesch. Scott, welcome to the program.
Scott: Sam, it’s a pleasure to be here. Good to actually sit down with a friend. I do consider Sam a friend. I knew him when he was in the Small Business Administration when I was in the Army. You’ll hear a little bit about that. But it’s personally rewarding and professionally rewarding to keep in touch with Sam. He is brilliant on small business issues, and I have gone to him several times.
Sam: That’s very nice of you. Yes, we’ve had great collaborations. Scott is a member at Miller & Chevalier in Washington, D.C. He’s a longtime government contracts litigator—one of the best, if not the best, I would say. Former bid protest chief and then chief trial attorney for the Army. He advised the Army and several DOD contracting entities on contract matters, policy, and litigation. Scott was a former adjunct professor at Catholic University’s Columbus School of Law. He’s a U.S. Army veteran who served on active duty in a reserve capacity and as a government civilian attorney for the Army for over 25 years. And you’re now the current secretary of the Public Contract Law Section for the American Bar Association, and that means you’re going to be president soon, right?
Scott: A couple of years. My sentence is over in about four years.
Sam: How’s it looking so far?
Scott: Oh, it’s fun. For those folks that know a little bit about the American Bar Association, it is a valued asset. It is a collegial space for attorneys, especially in the procurement sectors, to get together, compare ideas, utilize each other for expertise referrals at times, but just to comfortably get together and talk about the hard issues. And this past year has been chock-full of significant changes that really drive the conversation for us to help our clients, but also compare ideas. It’s definitely like a box of chocolates every week. And the one thing that our clients do want is consistency in our advice. The problem is keeping tabs on all the changes in order to give them competent advice of the day and how that translates into their long-term strategic plans, their budgeting, and their business development goals. And we’re going to talk a little bit about an executive order and a FAR deviation that could impact whether or not they choose to get into the federal side or continue to, because it is challenging.
It can also be rewarding. Government contracts help serve a number of purposes. I’ll get on my high horse a little bit about just federal procurement law. But you want to distribute wealth, and that is federal government contracts. The wealth is distributed not only to larger businesses, but small. And the more diverse, in fact, that the contractor base is, the healthier the economy is. The healthier the industrial base is, the more capability it gives to the Department of War or Department of Defense. And so you do want to encourage businesses to participate in the federal procurement system, and you do that through transparency, through fairness, and predictability, and that leads to increased competition, lower prices, and better quality. It’s when that entire process gets disrupted that lawyers, unfortunately, have to get involved for these clients. They have to spend money at times, and it can chill their interest in proceeding and taking on risk. So that’s going to permeate some of the discussion today, I think.
The Shift Toward Fixed-Price Contracts
Sam: That’s a really good and important point about the business aspects of government contracting. There are some companies that are 100 percent government contracting, and they know the game very well. But what the government really wants are companies that might be in the commercial space and coming into government and finding a welcoming environment there. So on that note, we saw an executive order come out at the end of last week—I think it might’ve been on Friday of last week—about mandating fixed-price contracts and preferencing fixed-price contracts. Agencies have to write a justification if they move away from that, either to time and materials, labor hour, or cost reimbursement. What are the legal issues in that executive order? And then how do you think it’ll affect this welcoming environment for commercial contractors?
Scott: I think the best term of art I’ve heard, and I use too, is that it was a little bit of a nothing burger. The federal government has always consistently preferred fixed-price contracting, and that is an allocation of risk. On a firm-fixed-price contract, the government is able to offload substantially the amount of risk towards performance and cost to a contractor. At the same time, a contractor doesn’t want to absorb all the risk, and they like those sorts of contracts at times, if in fact the requirement and the facts call for it, to structure it to shift that risk back to the government.
This is a criticism of mostly cost reimbursement type contracts. Cost contracts are usually very large in dollars and in complexity. But the reason it normally is a cost contract is because it’s hard to define the exact requirements as well as all those factors that are influencing the requirement and the ability to perform. Think war zone, contingency operations, research and development. And so in order to incentivize those contractors from getting into that space and participating and making the investment, the government takes on a little more risk on cost contracts. They’re going to pay all reasonable, allocable, allowable costs, plus a fee. And so the government usually pays more and takes on more risk. The contractor’s risk is minimized.
But the government’s trying to get away from that because these contracts are extremely costly and burdensome to administer because there’s a lot of cost accounting that goes into them. They take years to close out. They’re complex. And that’s why you don’t see a lot of small businesses in the cost space—because they don’t have the infrastructure for it. They don’t have certified cost and pricing teams and auditors, and they don’t want to be in that business. They want to be more commercial-like.
And so this is consistent. It’s a nothing burger really, because the government’s just reinforcing the preference towards fixed-price contracts. That’s where commercial vendors reside mostly. And the risk is on the contractor to keep quality up but prices down. That’s what the government wants. And they don’t have to take on all the overhead of cost and accounting teams and certified pricing and costing data. It keeps it simple.
However, there’s another piece of that preference to fixed-price contracts in the executive order that I don’t know if it’s been fully thought through yet, and we’re going to see when the DFARS provision gets issued how it’s going to be implemented, and that is firm-fixed-price contracts or performance-based metrics type contracts.
Sam: What does that mean?
Scott: Good question. We’re going to see in the DFARS provision. But what it normally means—FAR Part 6 lists out all these different types of contracts. Firm-fixed-price is in there, cost is in there, but also incentive-based contracts. Even incentive-based firm-fixed-price contracts. And what it is, is just you have the firm-fixed-price, but you add another element to it that if a contractor—it could be goals, performance; it’s very subjective, but you lay that out in the actual contract, in the agreement with the parties—achieves those milestones, they’re owed an additional fee.
With that comes surveillance, potentially submission of a request for the incentive fee, proof that you’ve earned it, and possibly a fight and dispute. And that can be quarterly, that could be annually. It’s dependent on how the contract is structured. So if you really want to get away from complex contracting and go back to firm-fixed-price, but then you have this other potential of performance-based metrics type contracts, it’s not really simplifying at all.
Another example is award fee type contracts. Award fees, those are, again, you’ve got a fixed price that a company will perform for, but then the ability to effectively earn more if they achieve certain metrics. There’s an award fee plan. There’s administering that plan. There’s submission that I achieved these goals and a fight over that. And again, it could be quarterly or whatever the contract is agreed to. That is very administratively burdensome and not simplified.
I understand shifting the risk to firm-fixed-price contracts. The administration is all about making contracts more commercial-like, and that is a good goal. You want to make the contracting process easy and familiar, especially to small companies and vendors. You want them to participate to, again, control costs and improve competition. But at the same time, if the company’s risk is higher because they’re not sure they’re going to actually meet those performance-based metrics and take a loss, it could be a disincentive for some, it could be an incentive for others, but it’s not simplified.
Sam: Yeah. When I was in government, we didn’t do many incentive-based contracts because you’re working off of annual appropriations, and you have to obligate that at the time that you award the contract. So when you get down to the point of providing that incentive, the government has a big encouragement to provide the incentive, because otherwise they can’t take it back. It’s not like a private company where you can take the money back and shift it over to another contract. You’ve already obligated that ahead of time. So I wonder if they solve that issue as they come through, that if you deny them the incentive, what are you going to do with that money? You can’t go back and obligate it on another contract.
Scott: The interpretation of fiscal rules these days, we know, are under stress, for lack of a better term. But you’re right. Those types of contracts, they do have to obligate, but they’re always going to have it being subject to the availability of funds clause. And so a contractor is not going to go into that sort of contract knowing that all dollars will be available throughout the period of performance, and so it increases their risk.
Dealing with Ambiguous Requirements and Bid Protests
Sam: The other thought on fixed-price contracting, you mentioned this with the cost reimbursement, is for those cost reimbursement contracts, they’re not particularly well-defined. So if the government really is going to shift cost reimbursement to fixed-price or time and materials, labor hour to fixed-price, they have to define the requirements better than what they’ve been doing. And that’s difficult to do when you have a contracting workforce that has left because of DRP or has just undergone attrition. What is a contractor to do when it gets a fixed-price solicitation and doesn’t understand what the requirements are?
Scott: This is definitely a two-part problem. One is literally in the bidding stage, the formation of the contract. And we’ll talk about existing contracts that may be converted in a moment because that’s another issue. So at the formation stage, when a business is looking at a solicitation, it’s structured as a firm-fixed-price opportunity. And they’re reading the requirements and the statement of work, whatever it’s called. Agencies call them different things. But those are the requirements, right? It specifies literally what you have to do. It should tell you what the limitations are. It should say what the government’s expectations are as well.
And if there’s ambiguity in what the government’s even asking for, how do you price that? How do you build a team? How do you recruit personnel? How do you potentially get financing for it? Because some of these are privately financed, and companies may not have that kind of capital. And that is going to be difficult when you do have a lot of the infrastructure on the acquisition side that has eroded over the years, this year especially, and they’re not putting forth very clear, concise, measurable, and achievable requirements. Number one, it’s a disincentive for businesses to step in to the extent that maybe the government’s asking for too much and/or too much risk to be absorbed by a contractor.
Contractors these days should be very loath to just assume, “I’m going to make it up on the back end.” Especially if the requirements are crystal clear what they had to do. It’s that ambiguity that becomes a problem. If you don’t know what the government is actually asking for, what the expectations are, what you have to do to perform and succeed, you’ve got a couple of choices. You can take on that risk and assume you’re going to perform well and the government’s going to like it. Some businesses may assume that they’ll make it up through change orders and requests for equitable adjustment later if the government issues directions that change the requirement, but then you maybe have a fight over whether there’s a change.
But what you can do upfront, and what I advise businesses do all the time, is if there is a clear ambiguity, we call that a patent ambiguity. That is something that on the surface a reasonable contractor would see as a disconnect from the requirement, something that’s fuzzy, they can’t tell what it means. They have to, and should, take advantage of the bid protest process and issue an agency-level protest, a protest at the GAO, or you could go to the Court of Federal Claims. But you see a lot of solicitation challenges at the Government Accountability Office (GAO).
And the timing on that is very important. You’ve got to submit that protest, even just seeking clarity if the agency’s refusing to clarify via the Q&A system, or their response is just a disconnect from what the requirement actually says, which happens sometimes too. You’ve got to submit that protest before the deadline for receipt of bids and proposals. If you wait past that, you’re going to be untimely at the GAO, you’re going to be untimely at the agency, and you’re likely to be untimely at the Court of Federal Claims.
Sam: And we see that a lot with post-award protests too, where the GAO says, “Oh, you should have... This was a patent ambiguity. You should have protested it back before bids were due during the solicitation stage.”
Scott: Yeah. The only ambiguities that can be raised in a timely fashion at the GAO and the courts is a latent ambiguity, something you could not have reasonably anticipated until another issue pops up. The agency said something more. There’s a post-award direction that makes you say, “Wait a minute. This is different than what I understood, and I could not have reasonably anticipated the agency’s reasoning. They didn’t elaborate in a Q&A. They didn’t tell us otherwise. This has created what we see to be now an ambiguity in the solicitation that is latent, not patent.” I didn’t know, I didn’t have a reasonable expectation, or I could not reasonably see that there was vagueness or ambiguity in the solicitation terms. You can raise that, but you better raise it within 10 days of when you knew or should have known. Else you’re also going to be untimely at the GAO.
Navigating the DEI Executive Order and False Claims Act Risks
Sam: Speaking of ambiguities, I think there’s an ambiguity here in the executive order that came out on racial discrimination in government contracting. The deviation has now come out from the FAR Council. They did it in less than thirty days. They had thirty days to do it. They beat that, which was surprising. And then agencies presumably will start implementing that deviation into their contracts soon. And then they’re supposed to go back and modify previous contracts. There’s a whole schedule for that. But there’s this question, if you have this clause in your prime contract of what to do with subcontractors. So tell me a bit about that, about this reasonably knowable standard that they have for subcontractors, and what is a prime contractor expected to do to oversee its subcontractor’s compliance with that new FAR deviation clause?
Scott: I think this leads us to go back in time a little bit, about a month from now, roughly. On March 31st, 2026, President Trump issued a new diversity, equity, inclusion related executive order titled Addressing DEI Discrimination by Federal Contractors. This follows a number of other executive orders in play addressing what the government believes to be illegal DEI. This one clarified it a little bit more and talked about the illegal activity, as applied to contracts, which is racially discriminatory DEI activities in a very broad sense. But it does go further and define racial discriminatory DEI activities as disparate based on race or ethnicity in the recruitment, employment, meaning hire and promotions, contracting, program participation or allocation, or deployment of an entity’s resources.
It goes a little further to define program participation as membership or participation in, or access or admission to, training, mentoring or leadership development programs, educational opportunities, clubs, associations, or similar opportunities that are sponsored or established by the contractor or subcontractor. And so it raises a whole host of questions about, okay, we now have a definition, but that is extending to the company’s activities, programs, clubs, and associations. Okay, what does that mean? It’s where they expend resources, okay? Program participation is a little bit broader. If the company actually spends its resources on those that meet that definition, it could effectively violate this executive order, not that it’s criminal or civil in and by its nature. But now we’ve got these deviations which are going to implement these new clauses in contracts.
Originally, the executive order talked about contracts in the future, new contracts. However, we now have guidance and a deviation that’s going to implement it in existing contracts by the end of the year, and a FAR clause that’s going to be in all new contracts within the next thirty days. And this flows down. This creates an obligation for the primes to monitor their subs, and for the subs to also follow this new deviation via contract. And why it’s also significant is it’s going to require the companies to acknowledge that the government’s payment on the contract is tied to this. And if a company violates it or doesn’t report it or spends resources in violation of it, it literally could be a false claim because they’re certifying compliance with it. False claim liability now because of DEI programs and companies spending resources on clubs, associations, training resources, the whole laundry list.
Sam: That false claim could mean that it’s subject to the whole value of the contract?
Scott: Oh, it could be more than that. Treble damages. Yeah. It literally could be a company termination clause, effectively. Because companies that go through the false claims process effectively, especially small to mid, that’s it. It literally could be that meaningful. And that’s why at the beginning of this discussion, we talked about chilling effects on entering the federal government workspace and procurement in general. This one, I see this as certainly having a chilling effect because it is hard to know how the government’s going to interpret this. Illegal participation, whether it violates the DEI itself, what is racially discriminatory DEI activities? And that is really subject to interpretation. The government has done a little bit better job of telling contractors what it believes it would be. But again, there’s a lot of open questions here.
Sam: Yeah. It’s almost purposefully ambiguous. It’s all-encompassing, first of all. At least they did not include sex or gender in it, so you have that clarified. But that whole list that you just read, that’s a lot of activities, and it could include things that if the contractor is participating in both state and federal or local and federal, that they might be required to do under one set of procedures and then prohibited under another set. So what do you choose in that situation?
Scott: I can’t tell you on this podcast because it takes an analysis, right? It depends on the specific state. It depends on your contract. It depends what the activity is that’s in question. Miller & Chevalier has an entire team in our workplace culture practice group that does this and advises companies, and it has to literally meet with a company to understand what the raised activity is, what their concerns are, an analysis of where they practice, and the state laws that are applicable. It’s an issue. It is very complicated for businesses. This is not self-promotion, but if they’re not consulting their in-house counsel or outside counsel to help them interpret this as applied to their activities or what their subcontractors are doing, especially with this new false claim threat that’s tied to this illegal DEI activity, they are endangering their very existence.
Sam: What would be the challenge that the government would run into in trying to bring the False Claims Act case under this? They had the settlement with IBM, seventeen million dollars, so it seems like there’s risk for companies out there. But usually, don’t you need some sort of scienter in a False Claims Act case? You’d have to have some knowing violation. How hard is it to bring this case from the government’s side?
Scott: I think you need to ask a little different question. I think all these cases are going to be hard for the federal government, right? Because you’re going to have a judicial system that is going to help interpret the laws objectively and they’ll apply their own objective judgment to it. It’s whether the DOJ is going to bring cases even though they have not the strongest case in order to encourage those companies to settle. I don’t think this is all about the government punishing anybody. It’s about setting incentives in place that don’t do anything that even looks, smells, or tastes like it’s DEI as it applies to race.
The DOJ, this is personal opinion, is not my firm’s opinion, is probably going to be bringing certain cases, and you mentioned one, and likely bring other cases in fact for the sole purpose of bringing the business to the table. And send messages to others that they shouldn’t even get close to the third rail on this, even if it looks, smells, or anything that could be interpreted as racially discriminatory DEI activities that judges say no to, right? That appears to be the message the administration is taking. That is not from a legal standpoint, I am not talking cultural, moral, or ethical. From a straight-up legal perspective and a risk perspective, companies really need to think twice about doing anything that even comes close to what may be interpreted by the DOJ or even your contracting officer to be racially discriminatory DEI activities.
Sam: Sure. We’ve seen it with universities, we’ve seen it with law firms, and varying outcomes in both of those areas.
Scott: And that’s difficult for businesses because they have codes of conduct and internal policies that for decades have promoted certain socially important policies to implement various aspects, either—I’m not saying curing racial discrimination—but at least providing opportunities, right? This sets a bar that’s pretty darn high as far as the level of scrutiny on those companies now to not even come close to implementing those policies or keeping those policies. So it is back to chilling potentially the process for government contractors. If you are new to the space, you should go in with eyes wide open and have a full review of your internal policies, codes of conduct, HR, everything that you do before you engage in this space so that you’re not setting yourself up or the prime for failure. Because this is a prime and sub-issue.
Understanding CICA Stays at the GAO
Sam: A lot to think about with that, and the DOJ is going to be very busy on the civil rights end and the contracting end. I’m very lucky to have you on the program as probably the most seasoned bid protest attorney potentially of all time. How many bid protests have you done? A thousand at this point?
Scott: Seasoned is the word.
Sam: Yeah. We worked on a few when we were in government together, and then now you’ve gone out and been very successful in private practice. One of the reasons to go and protest is to get a stay of performance, the CICA stay, and there’s been an important case that’s come out recently from the Federal Circuit about CICA stays. So before we get into the case, could you just explain what a CICA stay is and how that comes about when someone goes to protest at the GAO?
Scott: Sure. This is a very complex topic with really arcane timeliness rules, and I’m going to try to simplify it for the audience as much as possible. So when you say CICA stay, we’re talking GAO protests. Protests filed to the GAO. And why we say CICA is it’s a statute, your Competition in Contracting Act. You find it at 31 USC 3551 and on to two and three. But the provisions related to the stay and an override of a stay, which is a new term of art, you’re going to find at 3553.
Here’s what it is. For a GAO protest, as soon as an agency receives notification of the protest from the GAO, that’s different, it’s not the filing, it’s a notification of the protest from the GAO. If the agency has not made an award of that contract yet, full stop by statute, they cannot make an award. That’s a simple rule. That’s the easy one. If it’s an agency protest, there are agency rules in play that also apply that, really by regulation. But when you say CICA stay, it is a pure GAO protest. You can still get a stay if you file at the agency on a protest level via their regulations, but CICA stays are pure GAO.
In a post-award scenario, this is where it gets interesting. It’s a general rule of 10. And the GAO rules to file track with the timeliness to get a CICA stay, except for one small issue. The general rule is a rule of 10 days. You have to protest something within 10 days of when you knew or should have known the basis for protest. That adverse action, right? And so if, in fact, you file your protest and the agency gets notification of that protest within 10 days of the award happening, the statute applies, and the agency now has to stop performance. So you made the award, the contract has been awarded. The awardee may or may not be on the ground running and hustling, who the heck knows at that point, but they have to stop. They actually issue a stop work order by statute that they cannot proceed with work.
And if you’re the awardee at this point, this stinks because you just got awarded a contract, and all of a sudden you’re told to stop work and you’re in limbo a little bit. And one thing that’s important to remember is that a GAO protest, the shelf life is 100 days by statute. From the day it’s filed to the day it must be decided by statute, with some unique exceptions like shutdowns and things like that, you’re going to get a decision. But that stay will apply for that full 100 days or the day that the GAO closes the case and issues the decision. It could be day 90, 80, whatever it is. If a case is dismissed at day 20, the CICA stay goes away. So if in fact the protest is alive at the GAO, it could go to 100 days. The stop on performance is going to continue. Same thing with the pre-award protest. They can’t make an award while the protest is active.
For those sorts of acquisitions that have a required debrief as part of it, not just any debrief. Number one, it has to be the type of procurement that allows for a required debrief if asked for within a certain window of time by the offeror, the interested party. The agency gives that debrief, and then if it’s civilian, you’re going to have five days before you have to file that protest and the GAO gives notification to that agency, right? That has to occur in the five days after the debrief is closed for a CICA stay to apply. You can still file a protest, you’ve got 10 days, but if you want a CICA stay to apply in a post-award scenario in a civilian agency, you’ve got five days.
Sam: So it’s a faster timeline, but potentially not applicable to task orders or GSA schedules because of the required debrief.
Scott: You’ve got to look at it closely. What if the GSA is doing the procurement for them? Technically, the contracting rules apply to the GSA. But yes, it is quicker, but again, you’ve got the debriefing period. It extends it out a little bit, right? It’s not 10 days from award anymore. It’s five days from the date that the debriefing closed that you have to file a protest in a post-award scenario for that CICA stay to apply. If you’re a Department of War agency for certain acquisitions valued at certain levels, and there’s a few, right? You may actually have an enhanced debriefing, meaning that it’s required, and then after you receive the initial debriefing, you have the opportunity to ask follow-on questions. You have to ask for those follow-on questions within a specific period of time, in two days. Then once the agency answers those questions, you have five days to file. So you have that 10/10/5 rule.
And so you’ve got to really know, number one, who’s conducting the procurement. Is it a civilian agency or a Department of War agency? What is the value of the procurement? Is it going to have a required debrief? And does it also have an enhanced debriefing component? But yeah, required debriefs are only for those procurements that are negotiated where you have a comparative evaluation of offers. It gets... This is why bid protest attorneys do this full-time because it is nuanced, right? But yeah, if it’s a GSA schedule contract, you’re not going to have a required debrief technically, unless it’s built into the solicitation.
Sam: Ah.
Scott: Agencies can agree to it and it may be required by that means, right?
CICA Stay Overrides
Sam: So let’s talk overrides. That’s where this case comes out. And you and I both dealt with overrides when we were in government. What is an override and has that changed?
Scott: Okay. So we talked about a CICA stay being in place and remember, the agency can’t make an award or it may have had to order the stop performance via stop work order to the awarded contractor. But stuff’s important. The requirement doesn’t go away. Maybe for troops that need to be fed or transported. It could have literally an urgent and compelling nature to it, or it could be in the best interest of the United States that in fact the agency proceeds or overrides the CICA stay. Again, we’re talking GAO protests, alright?
So again, back to the Competition in Contracting Act, it allows the head of the procurement activity to authorize performance to actually proceed notwithstanding the stay, or for an award to go forward notwithstanding the stay based on really either the best interests of the United States or because there’s an urgent and compelling nature of the requirement that justifies not following the statute. And the agency has to document those reasons and it’s got to do it contemporaneously, right? And then it has to provide notice of that override to the GAO before the override becomes effective. And so that override, the agency can override these CICA stays even though they’re in place by operation of law because again, best interest, urgent compelling reasons, what have you.
That override can be challenged. Okay? And so the override itself is, again, you have a separate D&F. It’s a separate procurement action. It’s a standalone issue. So you’re saying, wait a minute. Scott, you’re telling me I’ve got to fight the protest and spend legal fees on that, and if the agency overrides it, I’ve got to fight that too? Yeah, it’s worse than that.
Challenging CICA Stay Overrides at the Court of Federal Claims
Sam: And do you go back to the GAO?
Scott: No. Yeah. One thing the GAO does not have jurisdiction over is CICA. In fact, they don’t have jurisdiction over CICA stays. If an agency’s not even choosing to apply it illegally, the GAO has no jurisdiction over it, and they’ve said so in their decisions. You have to go to the Court of Federal Claims that has exclusive jurisdiction over CICA stay overrides. So now, yeah, you may have a literally bifurcated fight. The merits of a protest are being fought literally at the GAO, and you’re over at the Court of Federal Claims fighting a different acquisition decision, the reason for the basis to override that stay.
And it used to be, until this case, we’re going to talk about Life Science Logistics which was issued by the Federal Circuit on April 15th of 2026. It used to be that even the underlying merits of a protest as it related to prejudice were important for the court to adjudicate, and you had literally split operations. You had to fight the fight and fight against the agency’s determination of best interest or urgent and compelling basis at the Court of Federal Claims. It’s a little simpler now. Still, you have to do it. You have to go to the court but there’s no obligation anymore under this recent clarification by the Federal Circuit to literally demonstrate the prejudice per se. All you really got to do is identify that the agency’s decision was arbitrary and capricious itself.
Let me stop there for a second. So this case simplified the fight as it relates only to the overrides. Previously, there was a four-factor test that the agencies and Court of Federal Claims followed at times, and the DOJ struggled over what actual four-part test was at play in order to challenge these overrides. But the Federal Circuit took exception to the DOJ, and honestly, the court’s previous interpretation of the four-part test in order to show that the obligation for protesters and plaintiffs in the Court of Federal Claims to demonstrate that the agency’s override was arbitrary and capricious.
There used to be an obligation to demonstrate the likelihood of success on the merits like we just talked about. They also had to show that there was irreparable harm literally staying the procurement to the plaintiff. Then they had to evaluate a balance of equities. In fact, it was in its favor because agencies do get a lot of discretion. If it’s the Department of War and because of the national security requirement in the Tucker Act to give deference to agencies, especially if national security is in play, it was hard to get over. And then there was another aspect of showing the benefit to the public. All those things were necessary to demonstrate to the Court of Federal Claims in previous override decisions, but no longer.
In fact, the Federal Circuit cleaned this up a bit to focus everybody on only that the decision itself was arbitrary and capricious. And that, in fact, this scheme that had been developed by the courts over time was not required by statute. In fact, it was created by the courts and went far beyond what was necessary for a protester that’s litigating something at the GAO to then move over to the Court of Federal Claims and now it’s just a straight-up arbitrary and capricious analysis. You still have standing, you have to be an interested party, but you don’t have to prove the prejudice per se. You don’t have to show, in fact, doing a weighing of the public interest. You don’t have to show irreparable harm. You just go up and attack the decision.
Sam: You don’t have to do a whole protest at court in addition to a GAO.
Scott: Right, which saves costs. They already have businesses that aren’t even going to consider doing this because they can’t wait for the 100 days and that, they could do it for a variety of reasons. We’ll talk about that too. But it makes it a little bit cheaper because the focus is the fight, right? If in fact you want an agency’s CICA stay override to effectively be nullified by the court, you want the status quo from your perspective. The government wants its own status quo. You don’t want the government too far down the lane where, in fact, it becomes almost impossible to undo contract performance. Key personnel are being recruited. It could be that they’re being swapped from literally the incumbent to the new awardee, and these employees are moving. It could be assets, it could be supplies. Whatever the nature, the prejudice does not get better with time, usually for the losing party. It’s going to get worse with time for the losing party if performance is allowed to continue.
Sam: So this case is good for protesters. It makes it somewhat easier for protesters to keep the CICA stay going, and particularly good for incumbents because they can keep their people on if there’s a stay, they can maybe get an extension of performance.
Scott: Yeah. I mean, your viewpoint is going to change if you are literally the incumbent. If you’re the intervener, the awardee, you’re going to likely intervene in the CICA stay override challenge. If you’re a protester, you just don’t want the train to leave the station. You don’t want award to be made, you don’t want performance to continue, because it’s going to get much harder to get back in. And you got to remember also, except for task order procurements, right? If you start a protest at the GAO, you can bring it, after that’s done, if you lose to the Court of Federal Claims. You’re not prohibited from doing so. And so what you don’t want to do is also have the Court of Federal Claims judge the underlying merits of your GAO protest before you even get there.
This also may impact the override, the ability to challenge where you bring a protest initially too, because protests are expensive for a reason. The record can be voluminous at the Court of Federal Claims. It’s more limited at the GAO, but there’s a lot of litigation and pleadings and potential motions getting into the record. And there are other reasons why sometimes companies protest, right? It could be the incumbent. Usually they believe they’re wrong, there was an evaluation challenge or something. But the government believes sometimes protesters will just protest to get a bridge contract extension, and that may be true. But you have to have a good basis and a reasonable basis to even bring a protest to the GAO and not get it dismissed. You’ve got to have evidence.
Procedures at the Court of Federal Claims
Sam: The pleading standard has changed.
Scott: Yeah, it has changed. I wouldn’t say changed. It’s been clarified. It was always there. You always had to present a prima facie case that, in fact, the government violated procurement statute or regulation. You had to bring some sort of evidence, just not your belief, information and belief. You’ve had to present something. But I think what’s clarified is the GAO believes and expects that a protester is going to bring some evidence, declaration, documentation to show in fact that there’s more likely than not an error had occurred even at the beginning stages of a protest.
Sam: Let’s get more into the Court of Federal Claims, because there have been a couple of cases about procedure in front of the Court of Federal Claims, something that I know you first of all know a lot about, but you are passionate about as well, getting the procedure right. There was one case where there was significant criticism of the government, and then another case where there was significant criticism of protester’s counsel, a position that you’ve been in several times. Let’s start with the government criticism. What happened there in the Global Connections case?
Scott: Yeah. So Global Connections to Employment Incorporated, this decision was originally issued on April 2nd, reissued on April 13th, and that’s not uncommon. But it really simply had to do with delay, effectively. What this court, I think Judge Solomson, is the current chief of the Court of Federal Claims. He likes to run a tight ship, doesn’t hide it. And he has set a tone where protester’s counsel and government counsel will sufficiently plead, will not hide facts from the court. Not that that happens, but maybe just through mistake or resources, they don’t have an ability to literally process cases as quickly as possible.
The other thing is, the DOJ is in a tough spot with their more limited resources these days at the attorney level and their support staff. But the records are getting smaller. And why that’s important is at the Court of Federal Claims, its entire administrative record under the Administrative Procedures Act that is arguably produced to the court, and that includes all proposals, all evaluation records, can include drafts, emails, even for a protest. And so the DOJ has to take all of that, process that, package it. It’s not that easy, because first they have to get it from the agency, make sure it’s relevant, talk to the other side about what goes in the administrative record, and file it. And it takes an enormous amount of administrative burden.
And I can’t get behind the reasons or basis for the government in this Global Connections case to what in the judge’s eyes here, and this was Judge Tapp effectively, be dilatory in its processing and not stay on the agreed-upon schedule between the parties. But it did raise to such a level that, in fact, he thought that it was flagrant and it amounted to unapologetic disregard for the court’s order and counsel’s time. In this case, Judge Tapp ordered the DOJ to show cause why it shouldn’t even bear the reasonable costs associated with drafting and submitting the plaintiff’s response in this case to a motion.
Sam: It’ll be interesting to find out what happened. Did the government actually have to pay for plaintiff’s reasonable costs?
Scott: I do not know. A lot of people might be... a lot of these cases, almost all the protests, are sealed.
The Role of Intervenor’s Counsel in Bid Protests
Scott: I think that does... Maybe it’s a good segue to talk just about intervention for a second. One thing we understand as attorneys is companies do not want to pay unnecessary legal fees, right? It’s a huge expense, and normally it is unrecoverable. But if you just won a contract and it’s a significant value, the one thing you don’t want to do is have a protest be filed against the government’s decision. It’s not technically your win they’re protesting. It’s the government’s decision to award you the contract and the underlying record and the judgments that are made that are usually being attacked. It could be some aspect of your proposal, but it’s that the government didn’t catch it or that their judgment related to it is arbitrary and capricious or unreasonable.
So all of that analysis and criticism relates to proprietary and source selection information. You’re talking proposals, evaluation records, source selection decisions, all that. You’re not going to get access as a company, okay? You’re going to get a debriefing, and hopefully it’s helpful. But when a protest is filed, those records become relevant all of a sudden, and you’re still not going to get access because what happens at the GAO and the court is a protective order is issued. And the protective order covers all records that are filed in the court or the GAO, and only those parties, the counsel usually, are admitted for access to see those records. In-house counsel, I wouldn’t say they never get admitted to protective orders, but there’s another layer of scrutiny for them.
Sam: Participating in competitive decision-making.
Scott: Yeah. There’s a case called US Steel that effectively scrutinizes the access to proprietary and source selection information for those that are involved in the competitive decision-making process. So that’s why in-house counsel, unless literally the structure allows for them to be somewhat insulated, will not get access. And so you have to basically hire outside counsel.
And if you are the awardee, again your award is potentially being attacked, you want to protect your interest. And what that really means, it really means you want to defend and protect the government’s decision because that’s what’s getting attacked. And so it’s important to have counsel know, number one, you won the award if you have counsel already, but two, to plan ahead for this. The one thing that’s really interesting, we’ve had a few massive size protests at the Court of Federal Claims recently with 20, 30 different parties, is each one of those has to have their own counsel. Counsel has to be admitted to the protective order. That counsel had to have been vetted via conflicts, meaning that their existing clients don’t have existing conflicts with representing you as a company.
That process is not quick, and so if you are a company going into a competition you think is going to be pretty litigious, and if you think you’re going to potentially win, otherwise you wouldn’t bid anyway, you probably want to line up outside counsel in advance. It doesn’t mean you’re going to have substantial litigation fees. It means you’ve done the administrative processing and they have them ready to go basically, your assault team. And that takes a little bit of time in processing. You get the conflict review, getting the attorney knowledgeable about the procurement so they can hit the ground running.
Why is this quick? We just talked about a CICA stay, okay? If it’s pre-award, it’s instant, and again, if the agency gets notice from the GAO in a certain window of time, they have to automatically stop performance. So when that happens, the agency’s getting attacked, their acquisition record’s getting scrutinized, and they’re starting to make decisions. And sometimes agencies will hit the easy button, right? What is the easy button?
So there’s something called corrective action in protests. An agency, if in fact has a reasonable basis to do so, believes it can cure an administrative defect in the source selection paperwork, the evaluation, some aspect of the procurement violated procurement statute or regulation, or was inconsistent with the terms of the solicitation. So they can fix it, and they get basically a do-over. Corrective action. And again, agencies are under extreme stress these days with limited resources.
So setting that stage and talking about how quick it is and why you want your interests represented immediately: as an intervenor, you may not get notification of the protest the same day. Things are already going down the track. You’ve got to monitor it. The agency is supposed to provide you notification of the protest within one day, it should, pursuant to the FAR, but that doesn’t always happen. And so this is why having counsel already locked in, conflict-free, ready to proceed in order to jump into an active protest once you find out about it, is critical, because the agency’s starting to make judgment calls, evaluating its own record, looking at the easy button.
And if you can come in there and help them, because that’s the goal, help them see if their decision is defensible, and sometimes it’s not. But you can also help them shape the corrective action to fix it if you can engage with the agency right away. An intervenor’s counsel, that’s what it’s called, a counsel that’s representing the awardee, can come in, not only represent their client’s interests, but help the agency evaluate the protest grounds in almost like a common interest type scenario. So you can assist the agency.
Sam: So you can have a seat at the table through this intervenor’s counsel to potentially shape corrective action or decide whether to take corrective action.
Scott: Absolutely. And you can also pressure test certain arguments. You can help them draft or at least identify potential motions. You can point out where we think you’re going to lose, even if the agency believes they’re going to win. You come in subjectively objective, but a seasoned protest counsel will come in and know likely what the GAO is going to see and how they’re going to react and how they’re going to evaluate a certain issue once you’ve looked at the record real quick.
So you want to basically get those interests projected immediately so you can help shape a little bit, influence, but also help the agency make the right call. Because again, you come in too late, those decisions are made, you’re reactive. You may turn into the protester instead of the intervenor. And that is not only at the GAO, it’s actually even more important for protests filed to the Court of Federal Claims. They go faster.
And here’s why. Under the rules of the court—and those rules may be adapting over the next year a little bit—protesters have to provide pre-filing notice to the DOJ that in fact they’re considering protests. They also have to identify likely intervenors, interested parties. The DOJ should reach out to those parties if they know who their counsel are, so should the agency, but it doesn’t always happen. But what does happen is the DOJ getting involved right away, they’re evaluating the case from a third-party neutral stance.
They represent the government, they assist the agency. And again, conclusions are being drawn. It could be that voluntary stays are being decided. It could be that corrective action is being advised even before you get a seat at the table. And this, again, 24-hour pre-filing notice, you’re going to have the calls between the DOJ in that window between the agency, and then you have a complaint filed, and things are rolling down the track, judges are asking for status conferences right away. And if you’re not even going to have a seat at the table, you get no say.
And so my advice for businesses that are in a procurement, you’ve invested lots of BD money, your capture teams really think they’re right, they win an award from the intervener standpoint and it’s defensible, you’ve got to have somebody with a seat at the table. Same thing on the protest side. If you’re going to protest, you’ve got to have somebody with a seat and knowledgeable and educated because the timeliness rules for protests can be very dicey, and having a relationship with a firm is extremely important, whoever that firm is.
Sam: And it doesn’t hurt to have the experience as a government counsel, because on the protest side, you’re dealing with government counsel, and you want to have those good relationships with the counsel that’s facing you.
Scott: Absolutely. Sam, you have keen insight into the Small Business Administration and all the agencies that you dealt with. My experience with the Army, I think, is very valuable to my clients. Another good thing about my past job is I worked with a lot of Department of War agencies, not just the Army. And so we did training for a lot of attorneys within the federal government on bid protests and appeals and all that. So yeah, our insight, I think, into how agencies think, who the right person is to contact, how to contact them is not usually readily accessible. But knowing how agencies may react, and some of that stuff changes with time.
Being seasoned is an asset and a detriment because you’re not there at the agency, but you keep tabs on things at the agency to benefit your clients. And honestly, again, if you’re an intervenor’s counsel, you’re helping the agency. My experience since leaving the government is every time I’ve been an intervenor’s counsel, it was a huge collaborative effort with agency counsel, DOJ counsel working together to help defend the decision. And yeah, that costs your client money, but it’s going to save them money in the end.
Sam: From the agency counsel, it’s probably old times for them working with Scott Flesch again.
Scott: It is rewarding professionally and personally to know both sides of it and the people I work with.
The Noblis Case and Pleading for Injunctive Relief
Sam: Terrific. You mentioned Judge Solomson a moment ago, and Judge Solomson issued this Noblis case that came out that made a big splash. It was about a $100 million contract for systems engineering issued by the Navy. And Noblis showed that the Navy committed prejudicial error, but then it looks like they ultimately lost the case. What did Judge Solomson decide in that case?
Scott: In the Noblis case, it was a Navy procurement. Noblis came in and made various counts. They call them counts in a complaint at the Court of Federal Claims. And all were dispensed by the judge except for one. Judge Solomson did find that the Navy’s evaluation on past performance was arbitrary and capricious. Judge Solomson has a knack for writing and likes to instruct both practitioners and companies on the nuances of the federal procurement rules and regulations. His decisions are very entertaining.
However, even though he found this error, he points out the defects in the process. And although the error was found, he found that Noblis itself waived any entitlement to injunctive relief, and that’s what the court gives, is Court of Federal Claims gives injunctions. The GAO gives recommendations. That’s another story why, because they’re not a court. They’re part of the legislative branch, but it has teeth. But the court issues federal court injunctions, and it prevents an agency from acting in a certain way. They’re not going to direct awards. They’re not going to flip an award. They’re going to basically send it back to the agency to redo their judgment.
And here they found Noblis was not entitled to any injunctive relief because first, Noblis’ original complaint did not ask the court to enjoin the government or Solis’ performance of the awarded contract. Noblis only asked this court to declare the award to Solis be unlawful pursuant to APA standards. Noblis repeated the prayer for relief almost verbatim in the MJAR in a perfunctory conclusion. And Noblis did not brief any of their prerequisite injunctive relief factors, and those are exhaustive.
The pleading requirements at the Court of Federal Claims are actually pretty onerous. It is a federal court which comes with not only pleading requirements but necessary standing, prejudice, injunctive relief factors at every stage. It could be a preliminary injunctive relief, a TRO fight, as well as the permanent injunctive relief that’s always sought in the end, that’s the merits. But yeah, he found effectively that the way Noblis had pled its arguments and what it had asked for as far as the remedy was nothing the court could really provide. And effectively, even though they found error, he denied a number of things, but most importantly, their motion for judgment on the administrative record, in fact, because of these defects.
Choosing Between the GAO and the Court of Federal Claims
Sam: So this points out a difference between practicing at the Court of Federal Claims and at the GAO. You have to check more boxes, it sounds like.
Scott: Yeah. The Court of Federal Claims is a heavier lift. It’s definitely more expensive. The pleading requirements are more onerous. The processing, the record, the procedures, it is all record-based. There is, in some cases, potential for discovery, but very limited discovery. But it’s administratively burdensome, which means extra cost for clients. And so that’s why the GAO has historically—not only because of the CICA stay, that’s reason number one, but number two, the GAO has been the first stop you normally go to because the cost disparity has been so great. That disparity has been narrowed, though.
Sam: Oh, interesting. What’s the reason for that?
Scott: A number of reasons. Part of it’s resource-based. So the DOJ, whether you fault it or you pat them on the back for doing so, is doing an excellent job at vetting cases upon pre-filing.
Sam: Oh, okay.
Scott: And so what used to be, I think more than 10 years ago, the cases would just develop and the DOJ would not get into the record too deeply at the outset. Now, what you’re having and you’re finding is the DOJ is getting a limited record, engaging with counsel right away, getting into the weeds within the first twenty-four hours, and making calls on, number one, whether there’s a voluntary stay, because again, there’s no CICA stay anymore, it doesn’t apply to the Court of Federal Claims. Two, what is potentially defective in the agency’s record and what the protester is likely to bring in the complaint, because you don’t have a complaint most times, and they’re making judgment calls earlier.
And so cases seem to be actually being adjudicated earlier. They’re getting to, in some cases, more limited records pursuant to agreement of the parties on what’s relevant, and they’re getting resolved. In fact, there was a stat I heard a couple of weeks ago I can’t repeat, but a significant percentage of cases never even make it out of the pre-filing stage because the DOJ is coming in and evaluating, talking to the agency, and in a lot of cases, fixing things.
So the DOJ is not involved in GAO protests. It’s the agency counsel, and a lot of times that counsel has been involved in actually the acquisition. They take on a little more ownership. It’s a little more personal. I think there’s a little less objectivity in some agencies because, again, that attorney advised the procurement, and now there’s a defect that’s alleged. Yeah, and that’s human nature, right? But when you add a third-party objective body like the DOJ in a protest setting until they decide to defend it, it definitely helps sort out those cases that should go forward and those that are not, and a huge portion are not even going forward.
Sam: So that may be one reason to go to the court, that now you have this third party, the DOJ, that gets involved, might be able to solve the case early in pre-filing. Another consideration is, do I have a better chance of winning at the Court of Federal Claims? And some of these statistics that we’ve seen out of the GAO indicate that they are not sustaining as many protests. Have you seen that in your practice?
Scott: Yeah. We’ll see what the end of the year numbers bring. They come in surges; we have seen a number of sustains from the GAO over the last couple of months. I don’t think there’s a trend yet. It’s too early to tell. But again, the key difference is only 2%, roughly, of GAO protests are ever going to have a hearing where parties can argue. Okay? There are written submissions, there are no witnesses interviewed normally. There are on occasion a hearing at the GAO where the GAO will adjudicate an adversarial proceeding, and witnesses will be asked questions by the GAO, possibly the attorneys, depending upon what the GAO attorney will allow. But that’s just infrequent, so there’s less room to advocate. You just do it on paper.
You’re going to have an oral hearing at the Court of Federal Claims to help draw the attention of the judge to specific aspects of the record that are in line with your party’s interests. You’re going to have numerous pleadings and motions and development. There could be supplementation of the record. And again, that record is extremely broad already, the entire acquisition. By default, it can be shaped down, but if you are truly litigating a protest at the Court of Federal Claims, you’re going to see the entire record and potentially even identify additional errors and defects.
At the GAO, the difference is the agency is only required to produce relevant records, and relevancy is usually defined by the issues raised in the protest. For instance, if you’re going to be attacking the evaluation of your proposal, that’s your protest. You’re more likely not going to get access to the proposals or evaluation records related to the other offerors. It’s going to be redacted out or you’re not even going to get it. And so your ability to look at other records and find other defects is very limited at the GAO.
At the court, everything’s in the record, you’re going to find it. The question is whether you’re an interested party to allege it, right? But if you see your entire record and you see other things that are, again, a violation of procurement statute or regulation, you can ask to amend your complaint. In fact, you can amend your complaint by rights within a certain window of time. So you have more ability and opportunities to advocate. You have access to more records. And again, you have an objective body, at least at the outset, the DOJ, that’s coming in and looking at the agency’s decision.
And a lot of this is also practical, right? The DOJ will come in and just tell the agency, “Okay, this is this widget that you want. How important is it? And do you really want to go six, nine, 12 months for a Court of Federal Claims protest when I think you’re going to lose and not be able to get that widget, or do you want to fix it now?”
Sam: Yeah.
Scott: And in some cases, they’ll even settle and create a creative solution through the consent of the parties where everybody’s happy. It happens from time to time. Because if a federal court has the case, blesses off on that action, and it’s adopted via court order, what’s the violation? Okay? You had litigation. No one’s going to come in absent an appeal to the Federal Circuit and tell the court it was wrong. But somebody’s got to appeal that. So there are a lot of reasons, those are some of them, to go to the Court of Federal Claims first these days.
But back to a comment we made earlier, the type of procurement, it may limit you in where you can go. A task order procurement, meaning the award or anything in relation to the issuance of a task order, by statute can only go to the Government Accountability Office (GAO).
Only over certain values. Yeah, which is raised year by year. In fact, the last threshold was raised a bit for the Department of Defense. Civil agencies are a little bit less. Talk to your counsel about your specific circumstances. If it’s pre-award, what is the value? Again, the record may help you through independent government assessments, if you have that, or maybe the value of the proposal. All these little pieces may actually have an impact on your ability to protest the jurisdiction and whether you can even protest a task order.
Sam: Okay. And that came up a lot when we were working on the Rule of Two, whether you could protest the Rule of Two at the task order level. And the FAR overhaul says you cannot do it. You cannot protest the Rule of Two at the task order.
The Revelations Case and Limitations on Subcontracting
Sam: I don’t want to let you go without asking you about a couple of small business cases that have come out recently. There’s one called Revelations out of the Court of Federal Claims. It’s about the limitations on subcontracting. This was a good case for companies that work at the VA, Veterans Affairs, because there’s a special VA requirement that companies certify to the limitations on subcontracting with their offer. It’s a particular statute for the VA. We’ve talked about limitations on subcontracting on this show several times. And in this case, the SDVOSB went after a VA set-aside, and in the VA’s view, did not comply with that special certification. They tried to argue that it had been considered to be certified. What happened in that case? Why did the business end up losing in that decision?
Scott: In the end, it is pretty simple, right? We talked about, and I think in reference to, ground rules for a competition. What does that mean? It means when an agency issues a solicitation and it talks about what it expects in a solicitation—the requirements, right? And I mean the proposal requirements: what goes in a proposal, the content, the forms, the information you are required to put in. It also specifies how an agency says it’s going to evaluate offers; it sets up that scheme. That together becomes the ground rules for the competition, okay? Not only is the agency bound by that, but offerors are bound by that. That is the ground rules for that competition. And if an offeror does not comply 100% with a solicitation requirement—and by the way, if they didn’t agree with it, what they should have done, Sam, if they didn’t...
Sam: So it’s going back to what you said before. There are pre-award protests. You could have looked at that as a patent ambiguity.
Complying with Solicitation Ground Rules
Scott: Patent ambiguity, latent ambiguity... again, protest when you knew about it. But if you don’t believe that it is necessary—this is where businesses get in trouble, right? Small and big, by the way. “We know better, okay? We know better because the agency doesn’t really want that. The requirements don’t really say that, but we know what they want. We’re the incumbent. We’ve been doing this for 20 years. I don’t care that this solicitation requirement says X, we’re going to do Y. We’re not going to comply 100% with that solicitation requirement.” They don’t fill out a form. That’s where you get in trouble because the ground rules for the competition—that box, right? You need to stay within the four corners of that box. It’s an artificial box, but it is there for a reason.
So, back to what we first started this discussion with: offerors want to know they’re going to get a fair shake. Things are transparent, right? The agency is going to apply the rules, be fair and equal to everybody. If you don’t stay in that box and apply the ground rules for the competition—both the agency and the offerors—that’s when the system fails. That’s where people feel aggrieved. That’s where they think they’ve been disparately treated.
In this one case, in Revelations, they didn’t do the certification right. At least in Judge Solomon’s eyes, they did not comply with the ground rules for the competition. In fact, Judge Solomon says, “Because Revelations did not comply with the solicitation’s explicit instructions, including FAR clause 852.219-75 certification requirements, the VA did not act arbitrarily and capriciously in eliminating Revelations‘ proposal from consideration.”
Again, this decision is 27 pages. You could say this in two sentences: Read the ground rules and comply with the ground rules. And if you don’t want to do it, you better protest because you’re going to get excluded. Or here, you’re going to spend thousands of dollars and hear from the judge exactly what you could have known going in. If you think you know better, you’ve already started on the wrong foot. Just play in the box.
Sam: There were a couple of cases that came out from the Court of Federal Claims at the same time—I was looking to see if it was in here—that said exactly what you just said, which is, “You have to turn square corners.” That was the phrase. Absolutely. You have to check every box. You’ve got to make sure that you know what the ground rules are, and if it tells you to sign on this dotted line, you need to sign on that dotted line.
Scott: Yeah. It is artificial. You know better, and a lot of times businesses do. They know better than the government. But you’ve got to play along. You want to win the contract. If you want to talk to the agency about in-scope changes later on, fine. But play in the box now, or else those thousands, sometimes millions of dollars that your capture teams are spending on proposals, and the employees you’re recruiting because you “know better”—that is a false premise. It’s a waste of money and resources, and you’re setting your company up for failure.
The Certificate of Competency (COC) Process
Sam: One more case I wanted to bring up with you. This one is out of GAO, and this is a case that hits close to home because it involves the Small Business Administration. The SBA comes in to represent its position from the Office of General Counsel. They’re actually listed in the representative box on the decision. And this is a case about the Certificate of Competency requirement. This trips up agencies all the time. They probably haven’t even heard about it. But the rule is, if you eliminate a small business for responsibility reasons, you must send that elimination to the SBA for consideration under the COC procedure.
So, if a small business company has been eliminated for responsibility, the SBA has the chance to allow that company to appeal, and it used to be that the SBA would tell the agency that it has to make an award to that company. SBA OGC said, “Yes, we agree with the small business that it should have been referred to the SBA for a COC,” but GAO does not agree with the SBA. What happened in that case?
Scott: Yeah, so the Certificate of Competency issue is one that has actually raised some of the most substantial legal quandaries, especially for the Department of Defense, over the years. In fact, I think I first met you when we were debating whether or not that was extraterritorial, meaning that the COC and responsibility issues applied worldwide, because the Department of Defense is just not a US-based business. They operate in the strangest and most remote of locations. And if you’re dealing with a US small business, you have to start with that premise, right? Otherwise, the SBA is not going to play here.
But if you take an action which can be interpreted as an objective decision that they’re not responsible, that kicks in the requirements where the SBA’s judgment, by statute—and even the FAR references it—is reserved for the SBA. Contracting Officers cannot declare a small business not responsible without referring to the SBA. Now, KOs can advocate to the SBA and actually be a party to the SBA on why they should agree they’re not responsible, and the SBA will give them deference. But it’s that processing piece that KOs trip up all the time.
But here, when you say “responsibility determination,” what do you mean? It’s not usually a piece of paper saying they’re not responsible. It can be criteria in the evaluation scheme which looks and smells like they’re evaluating their capacity to perform, right? That is responsibility if it’s a pass/fail type evaluation criteria. But in this case, this had an evaluative nature. They were comparing. They had ratings; there were subjective calls. And that does not amount to a responsibility determination in GAO’s eyes because it was not check-the-box. It was not pass/fail. You’re responsible or not responsible.
It could even be past performance, right? Where it’s “Five years or you’re out.” Technically, that could be a pass/fail, right?
Sam: Sure.
Scott: But here the agency actually had ratings in their evaluation scheme where they objectively applied criteria and evaluated and rated the company under what appears to be responsibility, but allowed the agency some discretion in evaluatively rating and evaluating this proposal under that evaluation factor. Not pass/fail. So, not responsibility.
And even though the SBA, I understand, wanted to broaden—I wouldn’t say broaden their authority, but they have a much more global look at responsibility—it’s not a surprise that the SBA came down this way. I’ve had that happen before where GAO and the SBA have disagreed. Sometimes the agencies and the SBA will disagree; that has happened too. GAO applied its historic rules of, if in fact it’s an evaluative process...
Sam: So in CSlope, the SBA comes in and says the COC process should apply, but GAO and the agency ultimately win out. What happens there? What’s the reason for that?
Scott: Facts sometimes get in the way, right? In CSlope, the past performance evaluation of the protester got a satisfactory rating. They wanted higher, but the facts alone demonstrate it wasn’t pass/fail; it was gradations of ratings, which does not amount to a responsibility analysis. And if it was pass/fail or go/no-go, that would potentially amount to a responsibility determination where a KO must refer to the Small Business Administration before excluding them from the competition.
You know, simply wanting more is not enough. The agency complied with the evaluation criteria, it was reasonable, and it didn’t violate the SBA’s Certificate of Competency requirements.
Conclusion and Contact Information
Sam: I feel bad for the SBA, but I lost a lot of cases when I was there too, so it’s somebody else’s turn to come in and lose at GAO. COC, the Rule of Two—those things come up a lot for the SBA at GAO. Scott Flesch, how do people find you?
Scott: Easy. They can find me on the website. My email address is SFlesch@milchev.com (C-H-E-V). Also, feel free to contact me via LinkedIn. I have prospective clients contacting me all the time. I’m the only Scott Flesch out there practicing contract law; type Scott, Army, government contracts, and you’re bound to find me. I am more than happy to help businesses. My clients are all over the map, which is exciting with my new entry into private practice.
Two and a half years now. It has been a fun ride, especially when I come in to help businesses reach their goals and understand what’s important to them, how they’re structured, and interpret this pretty volatile time in government contracts that continues to change by the day. I look forward to working with you, and of course, on small business issues, Sam is an expert. I think the world of him, so definitely reach out to Sam as well. Look out for our podcasts. Absolutely. There’s a lot to discuss in this space. Look out for client alerts from Miller & Chevalier; we issue them all the time. You can get on our distro list pretty easily. But I appreciate the time and consideration being here on this podcast. It is one that’s very thoughtful. I think it’s helpful for both small and large businesses, and it provides great content.
Sam: Best bid protest lawyer out there. Thanks, appreciate it.
With 20 years of Federal legal experience, Sam Le counsels small businesses through government contracting matters, including bid protests, contract compliance, small business certifications, and procurement disputes. Sam obtained his law degree from the University of Virginia and formerly served as SBA’s director of procurement policy. His website is www.samlelaw.com.
This video is for informational purposes only and does not constitute legal advice.
