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Monday, April 27, 2015

Clean audit doesn't reveal dirty procurement management laundry

House HS Subcommittee Takes Hard Look at DHS's Procurement Processes
DHS achieved a much sought-after clean audit of its financial statements by independent auditor KPMG. The audit found DHS’s financial statements were in order. The auditors certified they had “reasonable assurance that what they saw on” DHS’s books “is correct,” said Chip Fulghum, DHS’s chief financial officer and acting undersecretary of management.

“I am pleased to announce that for the second year in a row, our audit firm KPMG, working in conjunction with our Office of Inspector General, has issued the Department of Homeland Security an unqualified audit opinion -- essentially a reasonable assurance from our outside auditors and the department’s Inspector General that our financial statements are accurate,” Fulghum said, adding that, “For the third largest department of our government … consisting of 22 components, 240,000 personnel, a 60 billion dollar budget and six core financial systems and hundreds of feeder systems, I consider this a remarkable achievement.

However, the chairman of House Committee on Homeland Security Subcommittee on Oversight and Management Efficiency harshly criticized the Department of Homeland Security’s (DHS) department-wide acquisition processes last week during an acquisition oversight hearing on how effectively DHS is safeguarding taxpayer dollars. “A broken acquisition process delivers tools that are late, cost more and do less than anticipated. Watchdogs continue to find failures in DHS’s management of its acquisitions, which is unacceptable and puts taxpayer dollars at risk," said subcommittee chairman Scott Perry (R-Pa.).

“Each year, DHS invests billions of dollars in its major acquisition programs to help execute its many critical missions. In fiscal year 2014 alone, DHS planned to spend almost $11 billion on these acquisition programs, and the department expects it will ultimately invest more than $200 billion in them,” said Michele Mackin, director of Acquisition and Sourcing Management at the Government Accountability Office (GAO).

“Each of DHS’s major acquisition programs generally costs $300 million or more and can span many years,” she explained to the subcommittee, noting that, “We have reported that DHS’s acquisition policy is generally sound, in that it reflects key program management practices,” but, “Due to shortfalls in executing the policy, we have highlighted DHS acquisition management issues on our high-risk list and made numerous recommendations to improve acquisition management practices.” Mackin said, “many of our recommendations have not yet been implemented, including that DHS ensure all major acquisition programs fully comply with DHS acquisition policy.”

Mackin told lawmakers that, “In its April 2015 report, GAO reviewed 22 major programs at DHS and found that [only] two of them were on track to meet schedule and cost parameters." However, she said, “GAO was unable to assess six programs—four of which are in Customs and Border Protection—because DHS leadership had not yet approved baselines establishing their schedules and cost estimates as required by DHS policy. The remaining 14 programs had experienced schedule slips, or schedule slips and cost growth. On average, these program milestones slipped more than three-and-a-half years, and their life-cycle cost estimates increased by $9.7 billion, or 18 percent.”

Mackin said, "DHS lacks key information necessary to manage its programs. For example, GAO found ambiguity across DHS testing assessments in that they did not always clearly identify whether the systems tested met all of their key performance parameters (that is, the capability or system attributes that are required to successfully meet the DHS mission).” “In addition,” Mackin explained, “DHS’s official system for acquisition program reporting—which feeds into required congressional reports—is hampered by data problems, such as inaccurate lifecycle cost estimates.

“Finally,” Mackin told the subcommittee, “DHS does not have information on operations and maintenance costs for 42 operational programs for which the normal documentation requirements were waived in 2013. GAO found that only one of these 42 programs has an approved life-cycle cost estimate. Operations and maintenance costs—which can account for more than 80 percent of program lifecycle costs—could run in the billions of dollars for these 42 programs." In Fiscal Year 2014, DHS still “lack[ed] written guidance for a consistent approach to day-to-day oversight,” according to an earlier GAO audit, which stated, “Federal standards for internal control call for organizations to define and document key areas of responsibility in order to effectively plan, direct and control operations to achieve agency objectives."

Sustainment costs can account for more than 80 percent of total costs, but all but one of these programs lack an approved cost estimate. GAO said “cost estimates are necessary to support decisions about program funding and resources.”

Sen. Tom Carper (D-Del.), former chairman and now ranking member of the Senate Committee on Homeland Security and Governmental Affairs, was especially incensed about GAO having found that DHS “needs to develop more realistic baselines for the cost and schedules of major acquisitions, improve testing and ensure that senior DHS leaders and Congress have complete and reliable data on the status of major acquisitions.

DHS needs people to effectively carry out everything that is on paper (rules, guidelines, etc.),” Homeland Security Today was told by former DHS Chief Procurement Officer Dr. Nick Nayak, who along with former DHS procurement ombudsman Jose Arrieta, wrote their report, Partnering with Industry is Key to Improving Acquisition Outcomes, in the Aug./Sept. 2014 issue of Homeland Security Today. Nayak explained that, “There simply are not enough cost estimators or program management people to carry out the oversight everyone wants.”

“DHS programs are large and complex, much like DoD, and they simply do not have the capability (through people) to get every single thing done,” Nayak said, emphasizing that, “The limited people in place perform heroically -- because they are mission driven to protect the country – [but] they are stretched so far that it is humanly impossible to sustain that level of performance over time.” And it all leads “to another problem,” Nayak said, which is “employee burnout, low morale and ultimately high turnover.”

Nayak and Arrieta wrote,“DHS has developed a unique way to train its acquisition workforce to be smarter and faster. DHS has developed an innovative approach to fill a gap in acquisition training that has existed forever across government agencies - lack of industry understanding." According to Nayak and Arrieta, “Today, DHS is spending 17 billion more a year teaching acquisition professionals about how industry does business, including concepts such as how companies determine to bid on a requirement, the best approach to minimizing proposal costs in order to maximize competition, and how to minimize or eliminate protests through effective communication.”

They added that, “DHS has been able to address the systematic and market convergence pressures immediately by partnering with industry associations to develop industry led seminars for the workforce – the cost is almost zero, and the impact is immediate. The seminars,” they explained, “focus on developing DHS acquisition professionals’ understanding of the marketplace and create a safe environment outside the acquisition process for contracting professionals to learn about their potential industry partners and to gain valuable experience before ever soliciting them for a requirement. They are even frank discussions about contracting and acquisition issues that nobody typically talks about until they are adverse in nature.

Further, Nayak and Arrieta said there's also a problem with government acquisition “brain drain.” They noted that, “In every magazine, newspaper and blog on federal contracting, you will find an article about transforming the acquisition workforce. Why? Because acquisition professionals are important. The federal acquisition process is a business executed and managed by people. Annually, the federal government spends $500 billion through the acquisition process. In total, across the federal government, there are 40,000 contracting professionals, about 30 percent of whom are eligible to retire in five years."

Meanwhile, 30 percent of the acquisition workforce has less than five years of work experience. Furthermore, it takes about five years to provide adequate training and experience to develop a competent contracting professional.
There is much, much more in the article, which you should read in full at the link above.

Saturday, April 25, 2015

Honolulu rail behind schedule and over budget -- because of protest?

Rail contract award protest creates delays
The Honolulu Authority for Rapid Transportation’s plan to save money on the over-budget rail project is leading to even longer delays. HART initially wanted separate contracts to build each of the first nine rail stations on Oahu. But plans were scrapped last year when the bids came in much higher than expected. So to save money, HART combined the jobs. Companies bid on a contract covering multiple rail stations along Farrington Highway.

But there was a bid protest by the second lowest bidder. HART denied the contractor’s protest and the bidder filed an appeal. The bad news is we’ve already lost a month of time when we wanted to award and now we’re going to lose another month and a half.

But, that’s not the only delay.

KHON2 looked at the monthly report by the Federal Transit Administration consultant who’s overseeing rail, and learned the contract for part of the first segment, West Oahu/Farrington Highway, is four months behind. Part of the second segment, the Kamehameha Highway guideway, is seven months behind, and then there’s the previously mentioned delay for the three Farrington Highway stations. “Unfortunately, these three stations are really critical to keep us on schedule.

HART must also come up with a new financial plan. Taxes collected for rail are well below expectations. While the tax revenue for rail was about $9 million above projections for this past quarter, and even though HART has collected nearly $1.47 billion in local revenue, overall funding is still $30 million below projections.

So officials will need to address the shortfall and come up with alternate funding in an updated plan.
A failure of market (pricing) research and planning is obvious. The protest is only a side show that someone is holding up to hide behind. Happens all the time.

Thursday, April 23, 2015

How to distinguish a cooperative contract from a procurement contract in US federal law

The US Court of Appeals for the Federal Circuit case CMS Contract Mgmt. Servs. v. Mass. Hous. Fin. Agency 2013-5093 (Fed. Cir. Mar 25, 2014) is final; the US Supreme Court Petition for Certiorari was denied on April 20, 2015.  

The gist of this case, as I see it, is that an agency relationship created by the federal government and a third party to deliver the government's services to its clients is not a procurement contract; but, a contractor relationship created to enable the third party to assist the government to perform its task of serving its clients is a procurement contract.  Feel free to correct me if this interpretation is wrong.

As usual, you cannot rely on the rendition here; read the decision at the link if you really need to know about it.
The Federal Grant and Cooperative Agreement Act (FGCAA) sets forth the type of legal instrument an executive agency must use when awarding a federal grant or contract. 31 U.S.C. § 6301. In pertinent part, "[a]n executive agency shall use a procurement contract as the legal instrument . . . when . . . the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States government." 31 U.S.C. § 6303. When using a procurement contract, an agency must adhere to federal procurement laws, including the Competition in Contracting Act (CICA), 41 U.S.C. § 3301, as well as the Federal Acquisition Regulation (FAR).

In contrast, an "agency shall use a cooperative agreement as the legal instrument . . . when . . . the principal purpose of the relationship is to transfer a thing of value to the [recipient] to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring . . . property or services." 31 U.S.C. § 6305. The FGCAA notes that "substantial involvement is expected between the executive agency and the [recipient] when carrying out the activity contemplated in the [cooperative] agreement." 31 U.S.C. § 6305(2). When using a cooperative agreement, agencies escape the requirements of federal procurement law.

Section 8 of the Housing Act of 1937 authorized HUD to provide rental assistance benefits to low-income families and individuals. These benefits included payments to owners of privately-owned dwellings (project owners) to subsidize the cost of rent. Traditionally, HUD entered into Housing Assistance Program contracts (HAP contracts) directly with project owners and paid the subsidies directly. However, the 1974 amendment to the Housing Act gave HUD a second option—to enter into an Annual Contributions contract (ACC) with a Public Housing Agency (PHA). The PHA would then enter into HAP contracts with project owners. HUD provided the PHAs funds to pay the subsidies to the project owners.

In 1997, when many of the HAP contracts under the 1974 amendment were beginning to expire, Congress enacted the Multifamily Assisted Housing Reform and Affordability Act (MAHRA), which permitted HUD to renew existing HAP contracts. MAHRA defined "renewal" as the "replacement of an expiring Federal rental contract with a new contract." MAHRA was enacted at a time when HUD was facing extensive budget cuts.

It had just announced a plan to reduce staff by one-third by the end 2000. MAHRA's "Findings and Purposes" noted that HUD "lacks the ability to ensure the continued economic and physical well-being of the stock of federally insured and assisted multifamily housing projects." Thus the 1997 Act addressed this problem through "reforms that transfer and share many of the loan and contract administration functions and responsibilities of the Secretary to and with capable State, local, and other entities." MAHRA § 511(11)(C).

Accordingly, HUD began to outsource certain contract administration services. While outsourcing these services, HUD still had the obligation under the 1983 amendment to engage a PHA for any new HAP contracts. Thus, on May 19, 1999, HUD initiated a nationwide competition to award an ACC to a PHA. The ACCs were performance-based; that is, in addition to "basic" administrative fees, PHAs could earn "incentive" fees by entering into HAP contracts beyond the number specified in their contract. With existing HAP contracts, HUD's Request for Proposals (RFP) stated that it would assign such contracts to the PHA, and that "the PHA [would] assume[] all contractual rights and responsibilities of HUD pursuant to such HAP contracts."

The RFP stated that "[t]his solicitation is not a formal procurement within the meaning of the Federal Acquisition Regulations (FAR) but will follow many of those principles."

In response to the 1999 competition, HUD awarded 37 of the PBACCs. PBACCs were awarded in the remaining jurisdictions through later competitions. PHAs administering these PBACCs assumed the title of Performance-Based Contract Administrators (PBCAs).

On February 25, 2011, HUD chose to re-compete the PBACCs to ensure that the "Government was getting the best value." Many PBCAs adamantly opposed HUD's decision to re-compete and requested that, at a minimum, incumbent PBCAs get priority consideration. HUD denied this request on the ground that stricter competition would lead to greater savings for the government. In July 2011, HUD announced awards for all jurisdictions and stated that its decision to re-compete the PBACCs saved HUD more than $100 million per year.

Appellants were awarded multiple contracts in multiple states; however, a number of other PBCAs and PHAs were not as fortunate. This led to a total of 66 post-award protests being filed with the Government Accountability Office (GAO). Among other things, protestors argued that the PBACCs were procurement contracts and that HUD had not complied with federal procurement laws.

On March 9, 2012, HUD re-issued its solicitation for competition. However, for the first time, HUD expressly characterized the PBACCs as cooperative agreements, and thus, outside the scope of federal procurement law. HUD also announced that it was choosing not to allow PBCAs (including Appellants) to compete for PBACCs outside their home states. This change in policy excluded from consideration many applicants, including Appellants, who HUD previously determined in 2011 provided the government the best value.

Appellants filed pre-award protests with the GAO, arguing that the PBACCs under the NOFA are procurement contracts and thus subject to federal procurement laws.

The GAO agreed with Appellants that the PBACCs are procurement contracts. It rejected HUD's argument that the PBACCs "transfer a thing of value" under 31 U.S.C. § 6305 merely because HUD is required to provide funds to the PHAs to make subsidy payments to project owners. The GAO found that, although the payments are made through a depository account to the PBCAs, the PBCAs have no rights to, or control over, the payments and that any excess funds and interest earned on those funds must be remitted to HUD or invested on its behalf.

The GAO also rejected HUD's argument that the administrative fees paid to the PBCAs qualify as a "transfer [of] a thing of value." The GAO found that the purpose of the fee was not to assist the PHAs in carrying out a public purpose. "Rather, . . . the  administrative fees are paid to the PHAs as compensation for . . . administering the HAP contracts." In other words, the fees merely cover the PHAs' operating expenses.

The GAO determined that "the circumstances here most closely resemble the intermediary or third party situation, ... where the recipient of an award [i.e., a PBCA] is not receiving assistance from the federal agency but is merely used to provide a service to another entity which is eligible for assistance." As such, the principal purpose of the NOFA and ACCs to be awarded under the NOFA is for HUD's direct benefit and use. Thus, the GAO held that the PBACCs are procurement contracts. Specifically, these agreements procure the contract administration services of the PBCAs.

However, on December 3, 2012, HUD announced on its website that "[t]he Department has decided to move forward with the 2012 PBCA NOFA and plans to announce awards on December 14, 2012." An agency's decision to disregard a GAO recommendation is exceedingly rare. The Court of Federal Claims has explained that it "give[s] due weight and deference" to GAO recommendations "given the GAO's long experience and special expertise in such bid protest matters."

Soon after HUD's announcement, Appellants filed pre-award protests in the Court of Federal Claims asking it to enjoin HUD from proceeding with the NOFA. Appellants argued that the PBACCs under the NOFA are procurement contracts.

The Court of Federal Claims ruled in favor of HUD.   Appellants appealed.

This court agrees with Appellants that the PBAACs are procurement contracts and not cooperative agreements. Based on this record, the primary purpose of the PBACCs is to procure the services of the PBCAs to support HUD's staff and provide assistance to HUD with the oversight and monitoring of Section 8 housing assistance. HUD acknowledged its intention "to procure the services of contract administrators to assume many of these specific duties, in order to release HUD staff for those duties that only government can perform and to increase accountability for subsidy payments." HUD sought new ways to conduct its business[,] such as the Request for Proposals for outside contractors to administer HUD's portfolio of Section 8 contract[s]." HUD has also consistently described the role of the PBCAs as "support" for HUD's Field Staff.

The record belies HUD's argument that the housing assistance payments it makes to the PBCAs are a "thing of a value" within the ambit of 31 U.S.C. § 6305. HUD has a legal obligation to provide project owners with housing assistance payments under the HAP contracts. Transferring funds to the PBCAs to transfer to the project owners is not conferring anything of value on the PBCAs, especially where the PBCAs have no rights to, or control over, those funds. Likewise, the administrative fee paid to the PBCAs do not constitute a "thing of value" either. While money can be a "thing of value" under 31 U.S.C. § 6305 in certain circumstances, the administrative fee here appears only to cover the operating expenses of administering HAP contracts on behalf of HUD.

At most, HUD has merely created an intermediary relationship with the PBCAs "[w]here the [PBCAs are] not receiving assistance from the federal agency but [are] merely used to provide a service to another entity which is eligible for assistance." "The fact that the product or service produced by the intermediary may benefit another party is irrelevant." In the case of an intermediary relationship, "the proper instrument is a procurement contract."

Because the PBACCs at issue are procurement contracts, and because HUD concedes it did not comply with federal procurement laws, the decision of the Court of Federal Claims must be reversed and remanded for disposition consistent with this opinion.

Saturday, April 18, 2015

Apples don't fall far from the tree

Mexico awards road project to sons of banned contractor (Read the whole story at the link.)
Mexico has awarded a $75mn highway contract to a company closely linked to a contractor that was banned from government work after botching two projects, including a job on the same highway.

Mexico’s Federal Audit Office in 2012 found that Gutsa bungled a $30mn Pemex contract to build a monument to mark the bicentennial of Mexican independence. Gutsa did not finish the monument, known as the Estela de Luz, in time for the anniversary, and the costs ballooned to more than $90mn, the office found. Investigators later found that Gutsa won the monument contract by taking advantage of a regulatory loophole. The company received that contract while it was appealing a previous ban over shoddy work on the Mexico City-Acapulco highway.

Epccor is owned by the sons of Juan Diego Gutierrez Cortina, who controls a company that is on the government’s list of banned businesses. Among the ties between the two companies, one of the sons serves as a director of both firms, a public filing shows. Epccor itself hasn’t been banned.

Gutsa and Epccor “are completely different companies,” said Epccor vice president Adolfo Gomez. He said Gutsa was a major construction firm with many employees, and it is only natural that some should have joined Epccor. Gomez himself once worked at Gutsa.

One of Gutierrez Cortina’s sons, Ignacio Gutierrez Sainz, is a director of both Epccor and Gutsa, according to a public financial document from last year. Gutierrez Sainz and two of Gutierrez Cortina’s other sons are shareholders in Epccor.
Epccor has shared an office address and a legal representative with Gutsa, according to documents reviewed by Reuters. Six Epccor employees on the website LinkedIn list Gutsa as their previous employer.

A Reuters investigation earlier this year found Gutierrez Cortina’s company, Gutsa Infraestructura, is among dozens of contractors that have won work with state oil company Pemex even after being barred from contracting by the public administration ministry. Some banned companies have changed their names and shareholders in order to win new contracts.

Mexican law prohibits government entities from contracting with companies that have shareholders directly or indirectly in common with banned contractors. A spokesman for the transport ministry said it does not sign contracts with banned companies.

Mexico’s public administration ministry, which maintains the list of banned contractors, said in a written statement that an independent auditor oversaw the bid process for the Cuernavaca bypass. The independent auditor who reviewed the highway contract recently won by Epccor did not find any irregularities in the process of awarding the deal. But he warned the transport ministry of potential problems, noting that there was confusion in the contract proposal over the degree to which the road was to be widened.

“This bid process is happening without the certainty that it can be completed in the time and within the originally considered budget,” he added.
This case does not illustrate a conflict of interest, as that is defined in the usual US law. See, Organizational Conflicts of Interest: A Growing Integrity Challenge.

Rather, this illustrates the requirement that a government should not do business with a non-responsible contractor. See, Agility Defense & Government Services v. U.S. Department of Defense, No. 13-10757 (11th Cir. Dec. 31, 2013); also, GAO Decision in Matter of: USS Chartering, LLC, B-407601 January 15, 2013.

Stefani Bonato provides a useful discussion of this topic in Death by Affiliation: The FAR Reach of Suspension and Debarment.

Wednesday, April 1, 2015

Protests are meant to be pushy, not polite

Hattip to Federal Circuit Invokes Blue & Gold to Affirm Dismissal of Two Protests re: Government Contracts written by attorneys Lily Rudy and Scott A. Freling of the firm Covington & Burling LLP, published online by The National Law Review, for pointing out the following case from the US Court of Appeals for the Federal Circuit. 

This case decides an appeal from a protest in the Court of Federal Claims trial court, and is interesting for its split of the hairs: it reached the same result but on different grounds. 

As usual, when cases or articles or other sources are cited, do not rely on my version as authoritative or accurate; I cut, paste, rearrange, edit, paraphrase, leave out essential information and otherwise adapt the subject matter to suit myself, and that may not suit you or the original author(s) at all. Read all sources at their link.

Bannum, Inc. v U.S., March 12, 2015, No. 2014-5085
Bannum, Inc. protests decisions of the Bureau of Prisons of the United States Department of Justice to award two contracts to other bidders. In two actions brought in the Court of Federal Claims, Bannum complained that the awards were improper, alleging a common defect in the terms of the solicitations and, also, problems in the evaluation of competing bids. In each case, the Court of Federal Claims dismissed Bannum’s suit.

Finding that Bannum’s proposal, by failing to commit Bannum to a fixed price, was materially out of compliance with the terms of the solicitation, the court concluded that Bannum was not an “interested party” entitled to bring its protest.

We affirm the dismissals of Bannum’s suits, but on a different basis. We conclude that, because Bannum did not adequately present its objection to the solicitations before the awards, Bannum waived its ability to challenge the solicitations in the Court of Federal Claims. We also conclude that, on appeal, Bannum failed to preserve its separate challenges to the bid evaluations.

We do not reach the “interested party” ground of the Court of Federal Claims’ decisions.

After the RFP was issued and attracted two bidders, the government sent notices to the two bidders altering the contract requirements and requesting updated proposals, adding a requirement that the facility be operated in compliance with the Prison Rape Elimination Act of 2003 (PREA). The government asked both bidders to sign the amendment and submit a final proposal revision, including any necessary changes in price.

Bannum responded with a six-page letter labeled “Final Proposal Revision #3 and AGENCY PROTEST,” in which it restated its earlier price proposal and noted that those prices “do not, and cannot, reflect any consideration for the effects of Amendment 5” because of the “enormous amount of information [that] is required prior to pricing this new contract requirement.” Bannum attached a signed copy of Amendment No. 5, placing an asterisk next to the term requiring PREA compliance and stating: “Subject to and limited by Bannum’s response to [Final Proposal] #3 . . . submitted herewith; also, subject to Bannum’s reservation of all rights and protests.”

Bannum did not get the award. After the award, Bannum filed a protest with the Government Accountability Office (GAO), alleging defects in the government’s evaluation of the proposals. When its GAO protest failed, Bannum filed suit in the Court of Federal Claims. When its Court of Federal Claims appeal failed, it filed this appeal.

In the courts, Bannum challenged the bid evaluation as flawed and added a new allegation that the solicitation itself was “materially defective” because of the PREA-compliance requirement and the government’s refusal to provide pricing guidance. The Claims Court dismissed that appeal, concluding that Bannum was not an “interested party” under § 1491(b) because it submitted a bid that was materially out of compliance with the terms of the solicitation, thus depriving the court of jurisdiction to hear the appeal.

Because Bannum’s two distinct grounds for protesting the awards — (a) a defect in the solicitations and (b) defects in the bid-evaluation process — entail different remedies and are subject to different legal standards, we address them separately.

A bidder that challenges the terms of a solicitation in the Court of Federal Claims generally must demonstrate that it objected to those terms “prior to the close of the bidding process.” It is undisputed that the government received notice of Bannum’s dissatisfaction with the PREA-compliance requirement before awards were made. We conclude, however, that mere notice of dissatisfaction or objection is insufficient to preserve Bannum’s defective-solicitation challenge.

The solicitations at issue and the governing regulations put Bannum on notice of the formal requirements for filing a “protest” that would trigger an agency obligation of response and prompt resolution. Bannum did not comply with those requirements; nor did it pursue other available means of formal protest (e.g., to the GAO or the Court of Federal Claims) until after the awards. In these circumstances, it waived its solicitation challenges.

A waiver rule implements this statutory mandate by reducing the need for the “inefficient and costly” process of agency rebidding “after offerors and the agency ha[ve] expended considerable time and effort submitting or evaluating proposals in response to a defective solicitation.”

We have previously suggested that filing a formal, agency- level protest before the award would likely preserve a protestor’s post-award challenge to a solicitation as might a pre-award protest filed with the GAO.

Bidders that file a formal protest are entitled to a scheduling conference within five days of filing, an automatic stay of the award pending disposition of the dispute, and a guarantee of prompt resolution of the protest. The Justice Department’s acquisition regulations, promulgated in 1998 after an executive order directed agency heads to “provide for inexpensive, informal, procedurally simple, and expeditious resolution of protests,” Exec. Order No. 12979, 60 Fed. Reg. 55171 (Oct. 25, 1995). In the GAO, the act of filing a protest generally triggers an automatic stay of any award of the contract and requires the GAO to issue a decision within 100 days.

Bannum does not contend that its objections amounted to a formal protest. Bannum also has not asserted that there was good cause for excusing its failure to comply with them. See COMINT, 700 F.3d at 1382 (failure to mount a pre-award protest may be excusable where doing so “is not practicable”).

We therefore need not address whether, regarding its solicitation challenge, Bannum is an “interested party” under our case law, which itself has taken into account, in certain circumstances, whether a party has timely presented and diligently pressed its protest.

In its complaints, Bannum pleaded grounds for protest that fall into two categories: a defect in the solicitations; and defects in the bid-evaluation processes. As the government agreed at oral argument, at least as a general matter, a bidder cannot be expected to challenge an agency’s evaluation of bids, in contrast to the terms of solicitation, until the evaluation occurs. Nevertheless, we need not address Bannum’s bid-evaluation challenges, because we conclude that Bannum has failed to preserve those challenges on appeal.

In its arguments and briefs before this court, Bannum has not contended that it has standing independent of the resolicitation remedy it seeks or that resolicitation would be the result of a successful challenge to the evaluation processes. It has focused entirely on the solicitation challenge and has not asserted that, even if it cannot press that challenge, it nevertheless is entitled to reversal of the denial of standing to press its evaluation challenges. “An issue that falls within the scope of the judgment appealed from but is not raised by the appellant in its opening brief on appeal” may properly be deemed waived. We see no reason to depart from that practice here.
See also Firstdigital Telecom LLC v. Procurement Policy Board, Court of Appeals of Utah, No. 20130899–CA February 26, 2015, as another illustration of the failure of a putative protestor to step up to the plate with a formal protest. There, by
email, the subject of which was identified as “Proposed meeting to discuss.” McDougal stated, “We configured our proposal based on your current set up and usage. We are not sure you or other competitors fully understood the services you are receiving,” and complained that the Board did not correctly compare certain technical areas in evaluating the proposals. Finally, McDougal proposed to meet with McRae and Jex to discuss the evaluation comparisons. After this meeting, McDougal on August 30 emailed the Board representative Richard Davis to reiterate flaws McDougal perceived in the proposal evaluations. McDougal stated, “[W]e are weighing whether we will file a formal protest to the bid.” He added, “[W]e don't believe, among other things, that our network architecture, service nor pricing were evaluated correctly,”
Although the initial email was timely, this communication did not pass muster as a "protest", and was therefore rejected. The Board
disputed McDougal's characterization of the August 14 email as a protest because the subject line merely stated “[p]roposed meeting to discuss” and “nowhere in the email was there a statement indicating a protest was being made.” McRae pointed out that in a conversation with Davis on August 29, and in McDougal's August 30 email to Davis, McDougal mentioned that FirstDigital was still considering filing a protest, and therefore “your 8/14/13 email did not initiate the protest process.”

The authors of the article first cited above offer this salient take-away: "While contractors often prefer to express their dissatisfaction over a solicitation provision with a softer touch, as Bannum did here with its written objections, a decision not to file a pre-award protest can leave an unsuccessful offeror without an opportunity to be heard at the Court of Federal Claims." 

The culture on Guam, as is also practiced in much of the Pacific and indeed around the world, especially in non-Western societies, is to be non-confrontational, especially to authorities; a more deferential and circuitous approach is deemed respectful and proper.

Thus, when faced with a regulation expressing the requirement that, "Complainants should seek resolution of their complaints initially with the Procurement Officer or the office that issued the solicitation. Such complaints may be made verbally or in writing" (see, ABA MPC § R9-101.02; 2 GAR § 9101(b), persons with objections to a solicitation tend to do as told; that is, complain. They do so at their peril. 

This "softer touch" complaint process, demanded by regulation, is way too polite to constitute a protest, and without proof of diligently pressing the objection, the protest may fail on technical timing rules (see, decision statement above, "Bannum also has not asserted that there was good cause").

It should be first pointed out that the COMINT case cited in the decision above states: "To be sure, where bringing the challenge prior to the award is not practicable, it may be brought thereafter."

Further, if there is "good cause" justifying why a complainant or other objector did not timely formally protest, the doctrines of equitable tolling or estoppel may be relied on.  See, How Draconian are those time limits, really?

The U.S. Supreme Court, in Irwin v. Department of Veterans Affairs, 498 US 89 (1990), a case affording "an opportunity to adopt a more general rule to govern the applicability of equitable tolling in suits against the Government", noted,  "Time requirements in lawsuits between private litigants are customarily subject to "equitable tolling"."

The Court then alluded, unlike private affairs, the government, as a sovereign, is immune from suit, except where it waives sovereign immunity.   But:
"Once Congress has made such a waiver, we think that making the rule of equitable tolling applicable to suits against the Government, in the same way that it is applicable to private suits, amounts to little, if any, broadening of the congressional waiver. ... We therefore hold that the same rebuttable presumption of equitable tolling applicable to suits against private defendants should also apply to suits against the United States."
On Guam, the Guam Supreme Court has also recognized the application of equitable estoppel (in a private commercial context*, but one very analogous to the timing issues arising from the resolution of procurement disputes).  In GHURA v Dongbu, 2001 Guam 24, ¶ 1,the Court plainly said: “We adopt the doctrine of equitable tolling...."

In explaining the rationale for the doctrine, the Guam Supreme Court said (see, ¶¶ 11-13):
"The purpose of equitable tolling is to protect an insured’s claim during the time an insurer is conducting its investigation, thereby avoiding the premature filing of a suit before an insurer has even denied the claim. ... In order to prevent excess litigation, the time a claimant has to bring a claim is tolled. This practice encourages the settlement of claims by requiring an insurer to investigate claims diligently before denying liability and simultaneously securing an insured’s rights.

"Safeguarding the claim during this interim period also prevents an insurer from stalling the processing of a claim in order to invoke a technical forfeiture of the policy’s benefits. Without equitable tolling, an insurer may wait until the statute of limitations has expired before denying coverage. An insurer may also purposely conduct a lengthy investigation, hoping to lull the policy holder into thinking the claim will be settled, and then deny coverage after the twelve months have expired. The doctrine of equitable tolling protects the reasonable expectations of the insured by demanding good faith and fair dealing on behalf of the insurer.

"Finally, the doctrine of equitable tolling remains consistent with the policies underlying the imposition of a limitations period. A statute of limitations prevents unfair surprise and promotes justice by leaving stale claims in slumber. An insurer must receive prompt notice of a claim in order to properly adjust valid claims and guard against invalid ones. However, an insured is likewise entitled to the time necessary to initially prepare a claim and later pursue legal remedies."
Although the Guam Supreme Court has not expressly applied the doctrine of equitable estoppel to procurement cases, the Guam Superior Court has, on at least two separate occasions.

Furthermore, since the Guam procurement law (5 GCA § 5480), following the ABA Model Code (§ 9-401) expressly provides for waiver of sovereign immunity in procurement disputes, separate from the provision (5 GCA § 5425) dealing with the process, and time limits, for determining such disputes, it might reasonably be expected that the Guam Supreme Court would be guided by the Irwin decision, noted above:
"Once Congress has made such a waiver, we think that making the rule of equitable tolling applicable to suits against the Government, in the same way that it is applicable to private suits, amounts to little, if any, broadening of the congressional waiver."

* But note, the Guam Supreme Court has also adopted the doctrine of equitable estoppel against the government, in a civil service administrative remedy context: "we adopt with approval the Appellate Division's use of estoppel against the Government." See, Limtiaco v. Guam Fire Department, 2007 Guam 10, at paragraphs 57 et seq.