Latest Bid Protest Decision From Court of Federal Claims is Anything But Routine
On October 8, 2015, the Court of Federal Claims (COFC) released a decision, Crowley Technical Management, Inc. v. U.S. The decision by Judge Block denied a bid protest by Crowley that challenged the award of a $165 million contract by the U.S. Navy to Maersk Line, Limited. The competition was a lowest-price, technically acceptable procurement for modification and charter of a Maritime Support Vessel that would be used by the U.S. Special Operations Command. The vessel would launch, recover, refuel and resupply small crafts, provide force protection, launch and recover manned and unmanned rotary wing aircraft and have the capacity to host up to 209 military personnel. The Navy found all offerors to be acceptable and awarded the contract to Maersk, the low offeror. This may all sound routine but upon further review, this case provides several important takeaways for government contractors and the bid protest bar.
The Navy selected Maersk on November 12, 2013. Crowley filed a protest at the Government Accountability Office (GAO) on November 22, 2013. Crowley argued that Maersk’s fuel calculations contained flaws that resulted in an understatement of Maersk’s proposed costs. The Navy agreed to take corrective action to conduct a cost realism analysis of the fuel calculations. That analysis led the Navy to increase Maersk’s costs slightly, and the Navy again selected Maersk as the lowest priced bidder after the analysis was completed.
Crowley filed another protest at GAO, challenging the Navy’s cost realism analysis. GAO denied that protest on September 25, 2014. Then Crowley turned to the COFC for relief.
First takeaway: It’s all about the prejudice!
Crowley made some good arguments. It appears that Maersk made mistakes in its cost calculations. It also looks like the Navy made some mistakes in evaluating Maersk’s proposed costs. But there was a missing ingredient in Crowley’s protest. Crowley could not show that it was substantially prejudiced. The Court explained that Crowley was required to show that but for the Navy’s errors in evaluating costs, “there is a ‘substantial chance’ that it would have been awarded the contract instead of Maersk.”
The Court held that Crowley did not show substantial prejudice “because a downward adjustment of Crowley’s price by $1,103,469 is not sufficient to trump Maersk’s status as the lowest priced technically acceptable offeror.” Prejudice is a constant theme in GAO and COFC decisions. It also is a missing element in many bid protests. Good facts and arguments are an important and necessary component of a successful bid protest. But without prejudice, they are not sufficient. Good protest arguments without prejudice lead to denied protests. That was Crowley’s fate here.
Second takeaway: National security interests trump all!
This case had another important ingredient: a strong public interest in national security. As noted above, this procurement involved U.S. Special Operations Command (USSOCOM). The Court pointed to a declaration of the Chief of Staff of USSOCOM that “any delay will have a significant and negative impact on National Defense by depriving USSOCOM of access to a vital asset necessary to perform classified missions.” The Court held that: “In light of the gravity of the national security interest, the court requires less evidence from the government to defeat a motion seeking injunctive relief.” This language suggests that the Court may have rejected Crowley’s protest even if Crowley had shown that it was prejudiced by the Navy’s errors in evaluating costs. The bottom line is that national security interests tilt the balance in favor of the government and make challenges to contract awards involving national security extremely difficult.
Third takeaway: The delayed decision here did not serve anyone’s interests.
You know what they say about justice delayed. Crowley filed its protest at the Court on October 22, 2014 and an initial status conference was held on October 27, 2014. Briefing was completed in November 2014. Oral argument was held on December 4, 2014. But the sealed decision was not issued until September 21, 2015 (and a redacted version was published on October 8, 2015). That was almost 11 months after Crowley came to Court. The reasons for the delay are not apparent on the face of the decision. Courts and counsel must do a better job, however. Lengthy delays in bid protests do not serve the public interest and here did not serve the protester’s. The delay in resolution of this case was all the more egregious in light of USSOCOM’s statement that any delay would have a significant and negative impact on National Defense.
These takeaways establish that Crowley is anything but routine.