Appeal of a COFC decision denying a protest is vacated. The protester alleged that the agency had disclosed competitively sensitive information to some offerors, which resulted in unequal treatment and created a conflict of interest. The COFC found that the protester had not been prejudiced by the error. On appeal, however, the Federal Circuit did not consider the conflict, disparate treatment, or prejudice issues. Rather, the Federal Circuit held that the protester knew the agency had disclosed the information before the close of bidding. Under the Federal Circuit’s Blue & Gold rule, the court concluded, the protester had waived its protest by not filing until after award. Because the COFC decision was not premised on the Blue & Gold rule, the Federal Circuit vacated it. A judge on the Federal Circuit panel, however, dissented, arguing that in light of recent U.S. Supreme Court precedent, the Blue & Gold waiver rule was no longer viable.
The Defense Information Systems Agency (DISA) posted a solicitation seeking information technology services for the Department of Defense and other agencies. The solicitation contemplated the award of multiple IDIQ contracts. The procurement was divided into two tracks: (1) an unrestricted track for businesses of any size, and (2) a restricted track set aside for small businesses. The solicitation provided that offerors could submit proposals in both tracks. Additionally, the solicitation also allowed offerors to submit proposals as partnerships or joint ventures. Thus, for example, a company could submit a bid in the small business track while simultaneously submit a bid in the unrestricted track as part of a joint venture.
As DISA evaluated proposals, the timing for the two tracks diverged. DISA announced awards and conducted debriefings for the unrestricted track in November 2017. But DISA was still accepting proposal revisions in the small business track in April 2018. DISA did not make award to the small business offerors until September 2018.
Inserso Corporation had submitted a proposal as part of the small business competition but was not selected for award. Inserso filed a protest with the Court of Federal Claims challenging the way DISA had conducted the procurement. DISA had made awards and held debriefings in the unrestricted competition almost a year before the awards to small businesses. Thus, offerors that submitted proposals in the unrestricted track learned of the prices of the awardees and some information concerning DISA’s evaluation methodology during debriefings. As noted, however, some of the offerors in the unrestricted competition had also submitted proposals in the small business competition. This meant that they knew the awardees’ prices and DISA’s evaluation methodology before final proposals were due in the small business competition. Inserso alleged, that this disclosure of information created a conflict of interest and resulted in disparate treatment of offerors.
The COFC denied Inserso’s protest, finding that even if DISA had improperly disclosed information to the small business offerors, it had not prejudiced Inserso. Inserso appealed to the Federal Circuit.
On appeal, Inserso again argued that the disclosure of information had created a conflict resulted in unequal treatment. The Federal Circuit, however, did not even reach those issues; instead, it found that Inserso’s protest was time-barred.
The court noted that under Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007), a party objecting to the terms of a solicitation that contains a patent error must file a protest before the close of bidding or its protest is waived. Applying this rule, the court reasoned that Inserso should have filed its protest before the deadline for final proposal revisions because it knew, or should have known, that DISA had disclosed information to offerors in the unrestricted competition.
The court noted that offerors in a government solicitation are charged with knowledge of law and fact appropriate to the subject matter. Here that knowledge included knowing that the unrestricted competition had been concluded in November 2017. That knowledge also included (1) knowing that prices and DISA’s evaluation methodology had been disclosed to offerors in the unrestricted competition, and (2) knowing—through the express terms of the solicitation—that some offerors had submitted bids in both the unrestricted and small business competition. The court reasoned that if Inserso had taken reasonable care, it would have known that some offerors in the small business competition had received competitively useful information from the unrestricted competition. Thus, knowing the basis of its protest, Inserso should have filed a protest before the deadline for proposal revisions in the small business competition.
Inserso argued that it could not have known that DISA would debrief bidders in theunrestricted competition while small business offerors were revising their proposals. But the court found that it was unreasonable for Inserso to think DISA would delay debriefing in the unrestricted competition for months. Indeed, the FAR provides that a debriefing should be held within five days of a written request. Moreover, the court continued, Inserso should have known, based on publicly available protests filed at GAO, that offerors in the unrestricted competition had in fact received debriefings.
The court concluded by noting that the policy behind the Blue & Gold rule is to reduce inefficient and costly protests brought after the agency has expended time and effort evaluating proposal submitted in response to an allegedly defective solicitation. The court found that the policy was served in this case. Inserso was seeking relief that it could have received from DISA earlier before DISA spent time evaluating proposals.
Because the COFC decided the case on an issue—prejudice—that the Federal Circuit did not address, the court vacated the COFC judgment and remanded for entry of judgment on waiver grounds.
But another judge on the Federal Circuit panel—Judge Reyna—dissented. First, Judge Reyna argued, in light of recent U.S. Supreme Court precedent, it was not clear that Blue & Gold was still valid. In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017), the Supreme Court held that a court cannot rely on the doctrine of laches, an equitable doctrine, to preclude a claim that is filed within the time prescribed by a statute of limitations. Judge Reyna reasoned that Congress had provided for a six-year statute of limitation for protests. Given this, it not clear that the Blue & Gold rule, which is a court-created equitable waiver rule, can curtail a congressional directive.
Second, Judge Reyna argued that the majority had shoehorned Inserso’s claim into Blue & Gold. The Blue & Gold time bar only applies to challenges to patent errors in a solicitation. Inserso’s claim, however, did not involve a patent error in the solicitation. Its claim concerned the disclosure of information that resulted because of a divergence in the timing of evaluations. That timing discrepancy had nothing to do with the solicitation.
Finally, Judge Reyna questioned whether the majority should have even resolved the case under Blue & Gold. Generally, appellate courts do not consider issues that were not ruled upon the by the trial court. Here, the COFC denied Inserso’s protest on the basis of prejudice, not under the Blue & Gold waiver rule. Judge Reyna believed that the Federal Circuit should not have considered the Blue & Gold issue; instead, the court the court should have considered the merits of Inserso’s claims.
Inserso is represented by Richard P. Rector, Dawn Stern, and Carl Bradford Jorgensen of DLA Piper LLP. The government is represented by Anthony F. Schiavetti, Joseph H. Hunt, Robert E. Kirschman, Jr., and Douglas K. Mickle of the Department of Justice.
