What is the Standard of Review for Your Bid Protest at the Federal Claims Court?
On December 12, 2013, the United States Federal Claims Court issued a decision on a pre-award bid protest filed by Eco Tours. The 61 page decision offers a great deal of material useful for litigating federal bid protests. This post will deal with just one section dealing with the standard of review for bid protests. According to the Court, the standard of review for the typical bid protest is "whether the agency action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." (the Administrative Procedure Act standard). 28 U.S.C. § 1491(b)(4) (incorporating the APA standard set forth in 5 U.S.C. § 706 (2012)); Banknote Corp of America Inc v US, 1350-51 (Fed. Cir. 2004) (citing Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057-58 (Fed. Cir. 2000)). Also, the Court remarked that "a procurement decision may be set aside if it lacks a rational basis or if the agency’s decision-making involved a clear and prejudicial violation of statute or regulation."
The Court indicated in their decision that the standard of review is “highly deferential.” It offered examples of arbitrary and capricious actions such as “when the agency ‘entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or [the decision] is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.’” Ala. Aircraft Indus., Inc.-Birmingham v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009) (quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)) (alteration in original). The court will, however, “uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.” Bowman Transp., Inc. v. Arkansas-Best Freight Sys.,Inc., 419 U.S. 281, 286 (1974) (citation omitted).
“‘If the court finds a reasonable basis for the agency’s action, the court should stay its hand even though it might, as an original proposition, have reached a different conclusion as to the proper administration and application of the procurement regulations.’” Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1301 (D.C. Cir. 1971)). If, on the other hand, the protester has shown a significant error in the procurement process, the court must determine as a factual matter whether that error prejudiced the protester, because both error and prejudice are required for the protester to prevail. Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996) (citing Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir. 1996)).
The decision makes it clear that the burden rests on the protestor to establish prejudice. Bannum, 404 F.3d at 1358. The protester must demonstrate a high likelihood it would have received the contract, if the agency hadn't erred. Bannum, 404 F.3d at 1353; Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999); Data Gen. Corp., 78 F.3d at 1562. It articulated a two prong standard of review. First, did the protester, Eco Tours, have standing to bring the suit; and two, was it substantially prejudices by the agency's errors. The Court decided the "standing" issue in favor of Eco Tours based on the fact that received the highest cumulitive scores in its proposal. This was particularly salient in the satisfying the standard of review for bid protests. We will continue to blog on this case as it is valuable in unpacking your firm's chances of winning a pre-award protest against the National Park Service.