Having “standing” or the “right” to sue in a bid protest action is generally limited to those parties that (1) are actual or potential bidders and (2) have a direct economic interest in the contract.
The definition of direct economic interest is constantly evolving. Parties can be considered to have a direct economic interest in a contract even when they are not the traditional second place finisher. Recently, the Court of Federal Claims found that a party that had an offer excluded from consideration due to noncompliance with RFP requirements could still be considered to have a direct economic interest in the contract.
G4S Technology CW, LLC v. The United States
The case was G4S Technology CW, LLC v. the United States. In G4S, Washington Headquarters Service (“WHS”) issued an RFP for a firm-fixed price contract for security services. The RFP contained a minimum requirement that a proposal would only be evaluated if the offeror:
- Unconditionally accepts all the terms and conditions of the RFP, AND
- Submits all required information specified in the RFP
In addition, WHS reserved the right to conduct discussions if deemed to be in the best interests of the government.
G4S Technology CW, LLC (“G4S”) submitted a proposal in response to the RFP. The proposal contained several assumptions and did not unconditionally accept all terms and conditions. Upon evaluating, WHS found that the proposal attempted to change the nature of the contract from firm-fixed price to a future renegotiation of option years. Because of this, WHS excluded G4S’ proposal from future consideration as being inconsistent with the RFP and failing to meet the minimum requirements of the RFP.
M.C. Dean also submitted an offer. There were also questions raised by its terms. WHS, however, did not simply reject M.C. Dean’s offer. Instead, WHS asked for clarification through correspondence sent to M.C. Dean. M.C. Dean provided clarification and was ultimately awarded the contract.
G4S protested, arguing that WHS acted arbitrarily and capriciously when it concluded that G4S’ proposal did not meet the solicitation’s minimum requirements. The government challenged G4S’ suit on grounds that G4S did not have standing. Specifically, the government argued that G4S’ proposal was excluded due to noncompliance with the minimum requirements for a proposal, thus they could not have a direct economic interest in the contract.
The Court of Federal Claims Decision
The Court of Federal Claims found that G4S had standing to bring suit. The Court found that G4S was excluded due to a discretionary decision of the agency. When such a decision excludes a party from consideration, it can be challenged if the party would have had a substantial chance of receiving the contract had the agency acted lawfully.
Specifically the Court found that in evaluating the proposals, WHS reserved the right to hold discussions. WHS held discussions with one party (M.C. Dean) but not all parties in the competitive range. Had it held discussions with G4S, G4S could have cured its proposal deficiencies. Because WHS did not elect to enter into discussions with G4S, G4S has standing to challenge the merits of the decision not to conduct discussions.
What Government Contractors Need to Know
The decision is limited but still important because it is yet another extension of who can be considered to have a direct economic interest in a contract. Extending this definition provides further opportunities for unsuccessful offerors to seek redress for agency errors.
The G4S case extends the definition as follows:
- If you are excluded from consideration for a contract AND
- A major reason for the exclusion is based on an agency’s discretionary action THEN
- You have standing to challenge the decision if you would have had a substantial chance of receiving the contract had the discretion been properly exercised