A recent Court of Federal Claims (“COFC” or “Court”) decision denied a post-award bid protest applying the rarely successful equitable defense of laches. In addition to finding the protest failed on the merits, COFC found that the disappointed bidder unreasonably delayed in bringing the protest by waiting more than eight months after exhausting its agency appeals and that the awardee and the Government suffered prejudice as a result of the delay.
In National Telecommuting Institute, Inc. v. United States, 123 Fed. Cl. 595 (2015), COFC denied a post-award bid protest challenging the award of a U.S. Department of Agriculture help desk services contract to Peckham Vocational Industries, Inc. (“Peckham”).[1] The procurement was issued under the AbilityOne Program, a program established by the Javits-Wagner-O’Day Act (41 U.S.C. § 8501–8506), which aims to award certain federal contracts to entities that employ at least 75% of their direct labor with people who are blind or severely disabled. The program is administered by an independent commission, and aided by the non-profit, SourceAmerica, which functions as a technical evaluation panel and makes recommendations to the Commission on the qualifications and abilities of prospective agencies to perform the work.
As the Court outlined in detail, this particular protest has a lengthy procedural history. After issuing a Sources Sought Notice (“SSN”) for bid proposals from qualified non-profit agencies, and conducting an independent evaluation of the proposals, both SourceAmerica and the USDA recommended that Peckham be awarded a contract for help desk services support. A fellow bidder, National Telecommuting Institute, Inc. (“NTI”) filed two appeals with SourceAmerica protesting the recommendations, both of which were denied. NTI then appealed the denials to the AbilityOne Commission, who sustained the appeals on the basis that SourceAmerica failed to follow its “established policies and procedures” in evaluating the proposals. The Commission then remanded the SSN and instructed SourceAmerica to “re-do” the evaluation process, issuing an identical SSN and establishing a new evaluation committee. After re-issuing the SSN, and re-evaluating proposals received from three bidders, SourceAmerica again found that Peckham was the most qualified nonprofit agency to perform the contract and notified the bidders of the same on January 23, 2014. NTI immediately filed two, ultimately unsuccessful appeals with SourceAmerica, and a third appeal to the AbilityOne Commission on April 4, 2014. The Commission denied NTI’s appeal on May 29, 2014, at which time NTI had exhausted its agency appeals. The Commission published the USDA help desk services award in the Federal Register on August 15, 2014 noting the award to Peckham would occur on September 15, 2014. On March 20, 2015—more than eight months after NTI exhausted its last agency appeal and just days before Peckham was to assume full responsibilities for contract performance—NTI filed its bid protest with the Court.
On cross-motions for judgment on the administrative record, Peckham (as Defendant-Intervenor), asserted the equitable defense of laches. Noting that “laches may be invoked as an affirmative defense in the context of a bid protest,” the Court applied the two-part test of unreasonable delay and prejudice. With regard to the first element, the Court summarized the timing of the delay as follows:
NTI filed the present action on March 20, 2015, more than six months after the Commission finalized the award to Peckham, more than eight months after NTI exhausted its administrative appeals, and more than a year after SourceAmerica announced the outcome of the [second evaluation].
The Court went on to reject NTI’s explanation that it waited to file its protest because it was “attempting to seek relief through informal channels and by less expensive means.” The Court cited previous decisions in which it applied the doctrine of laches where a protester delayed only two months to file suit because he was weighing the costs of litigation. As the Court explained, NTI chose “put all [its] eggs in one basket…ultimately to [its] detriment” when it decided to wait more than eight months to file its protest and that such delay was unreasonable and inexcusable.
With regard to the second element, the Court found that both Peckham and the Government were prejudiced by NTI’s delay. Pending resolution of NTI’s protest, Peckham incurred millions of dollars in unreimbursed training and facility costs and the Government was forced to extend its contract with the incumbent help desk provider. As the Court aptly summarized, “NTI was attempting to avoid the cost of litigation, the USDA and Peckham were proceeding with the call-center contract at a significant cost to both parties.”
There are two lessons learned from the Court’s decision. First, a bid protestor, should not sit on its right to file a judicial bid protest. Be aware that the time spent exploring less burdensome, less expensive means may be fatal to your ability to challenge an award at COFC. Second, if you are awardee defending a bid protest, do not discount the viability of equitable defenses too quickly. If you have the facts and circumstances to support an equitable defense, such as laches or equitable estoppel, it is worth at least exploring the applicability of such doctrines in support of your defense.
[1] By way of disclosure, Oles Morrison represented the Defendant-Intervenor Peckham in this bid protest.