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Friday, March 6, 2015

There's prejudice, and then there's prejudice

A few posts back, I reported on a Federal Court of Claims case, Universal Marine Co., K.S.C., v U.S, that held a protestor lacked standing if it could not support a claim of economic interest in a solicitation if it did not provide at least some facts alleging injury to itself from the mishandling of a solicitation, or as it is known, "prejudice". 

As the Court in that case concluded, "even though “proving prejudice for purposes of standing merely requires ‘allegational prejudice,’” Universal Marine has not alleged facts that, if true, would create a “substantial chance” that it would be awarded the contract."

Lawyers Alex D. Tomaszczuk and Alexander B. Ginsberg, from the firm Pillsbury Winthrop Shaw Pittman LLP, have expanded on the lessons from Universal Marine, in an article on the Lexology.com website, which I think you will find edifying. 

The lesson added is this: It's one thing to claim prejudice, and another to prove it.

As they put it:
It is important to note that the “allegational prejudice” relevant in Universal Marine is distinct from, but often confused with, a second variety of prejudice necessary for a protester ultimately to prevail on the merits of its protest. This second variety of prejudice—often referred to as “APA [Administrative Procedure Act] prejudice”—requires a protester to demonstrate that, but for any errors it identifies during the protest, it had a “substantial chance” of receiving the award. See Linc Govt. Servs., LLC v. United States, 96 Fed. Cl. 672, 695-96 (2010). (“In order to prevail in a bid protest, however, a plaintiff must satisfy a second type of prejudice requirement, one that has caused a good deal of confusion because it is often mistaken for its standing doctrinal fraternal twin. ...

The need for this second showing of prejudice is captured in section 10(e) of the Administrative Procedure Act. ... In particular, the APA instructs that ‘due account shall be taken of the rule of prejudicial error’ when determining whether to set aside any unlawful agency decision.”) Thus, the first variety of prejudice — that discussed in Universal Marine — relates to the protest as alleged, while the second variety of prejudice examines the effect of errors actually demonstrated on the merits. See USfalcon, Inc. v. United States, 92 Fed Cl. 436, 450 (2010). (“Since the prejudice determination for purposes of standing necessarily occurs before the merits of a protest are reached, the Court must accept the well-pled allegations of agency error to be true. ... Normally, if the protester's case rests on just one allegedly irrational action, or just one purported violation of a law or regulation, the finding of prejudice in the standing context will be replicated on the merits, once the asserted error is confirmed. But a different outcome is possible if more than one ground is raised, as multiple errors might cumulatively establish prejudice, but not a smaller combination of them.”)

Thus, a protester ultimately must show both types of prejudice for its protest to succeed. The Court, however, will never reach consideration of “APA prejudice” if the protester fails to allege—as Universal Marine failed to allege—that it is an interested party.

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