By: Jonathan Brittin  [8/5/22]

Corrective Action After A Bid Protest Is Filed: The Court of Federal Claims (COFC) May Apply More Scrutiny Than The Government Accountability Office (GAO)

During the course of a bid protest filed at the Government Accountability Office (GAO) or the Court of Federal Claims (COFC), the government agency may decide to take “corrective action.” [1] This means the agency will go back and re-do all or part of a procurement and potentially grant some relief to the protestor before a decision has been issued or opinion has been rendered on the merits. [2] Consequentially, the agency’s decision to take “corrective action,” effectively takes the protest away from the GAO or the COFC and renders the underlying protest academic or moot.  

The GAO and COFC will review an agency’s corrective action under the Administrative Procedure Act’s (APA) highly deferential “rational basis” standard. The rational basis test asks whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion. However, the COFC has applied greater scrutiny to corrective actions than is typically the case at the GAO.

The GAO will not object to the specific corrective action, so long as it is reasonable and appropriate to address a legitimate procurement defect. An agency’s discretion when taking corrective action also extends to the scope and specificity of any proposal revisions. Where an agency has reasonable concerns that there were errors in the procurement, “corrective action” may be appropriate to include: reopening discussions, requesting revised proposals, reevaluating proposals, and making a new award decision. For example, the Federal Circuit upheld the agency’s “corrective action” where it was “rationally related to the undisputed procurement defect of originally failing to conduct pre-award discussions, as reasonably interpreted by the agency to be required by the applicable regulations, in the first instance.” [3]

While an agency maintains broad discretion about taking corrective action in response to a bid protest, its actions are not unchecked. There are many substantive aspects of “corrective action” that agencies and other parties must carefully consider. As such, the agency’s decision to take corrective action could result in a protest of the corrective action. For example, the protester may protest the corrective action because it does not go far enough or does not address the issues protested. Then, the original awardee may argue that the corrective action goes too far or isn’t required at all. Thus, the reasonableness and scope of an agency’s corrective action can lead to protests because it can potentially impact the actions of other parties and the underlying procurement process.

The COFC has made clear that the agency is “not insulated from review merely because an agency cloaks it in corrective action clothes.” [4] That said, this result serves as a cautionary tale for agencies implementing corrective action. Thus, while the agency maintains broad discretion at the GAO, the COFC may be a more viable option for challenging an agency’s corrective action to resolve protests and resolve alleged defects in procurements where a decision on the merits looms.

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[1] According to the GAO Bid Protest Annual Report to Congress, agencies took corrective action approximately 51% of the 2149 bid protests filed in FY 2020. See, GAO Bid Protest Annual Report to Congress for Fiscal Year 2020.

[2] Dellew Corp. v. United States, 855 F.3d 1375, 1378 n.2 (Fed. Cir. 2017)(“[C]orrective action in the bid protest context” is an “agency action, usually taken after a protest has been initiated, to correct a perceived prior error in the procurement process, or, in the absence of error, to act to improve the competitive process.”)

[3] Dell Fed. Sys., L.P. v. United States, 906 F.3d 982 (Fed. Cir. 2018)

[4] WaveLink, Inc. v. United States, No. 20-749C, 2021 U.S. Claims LEXIS 1287 (Fed. Cl. June 24, 2021)

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Posted in: Government Contracts

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