How can winners defend awards?

The following topic was raised by a company representative: What is the role of the apparently successful offeror when a procurement decision is challenged in federal court?

This is another seemingly straightforward question to which the answer is anything but straightforward. To pursue an action in federal district court, a plaintiff must comply with the many procedural requirements set forth in the Federal Rules of Civil Procedure (FRCP). One of the rules requires the plaintiff to include, or "join," certain people in the lawsuit. According to FRCP 19, a person should be joined, if feasible, when the person's absence might prevent the court from granting complete relief to those who already are parties or when the absence could impair the person's ability to protect any interest the person may have in the subject matter of the case.

However, because of jurisdictional and venue requirements, it is not always feasible to join a particular party. If a person who should be joined cannot be made a party to the case, the court must determine whether the action should proceed among those parties already before the court or whether the case should be dismissed because the absent person is indispensable.

In A&M Gregos Inc. v. Robertory [384 F.Supp. 187 (E.D. Pa. 1974)], a district court ruled that a disappointed offeror, if feasible, should join the apparently successful offeror on a government contract in an attempt to overturn the award. A similar ruling was entered by a different court in W.B. Fishburn Cleaners Inc. v. Army & Air Force Exchange Service [374 F.Supp. 162 (N.D. Tex. 1974)].

In both cases, the plaintiff was ordered to join the apparently successful offeror before proceeding with the action. Neither court reached the issue of whether the awardee was indispensable to the case.

However, in Freedom, N.Y., Inc. v. United States [5 Fed.R.Serv.3d 387 (S.D.N.Y. 1986)], another court determined that the awardee should be considered an indispensable party in a suit to overturn the award. Because it was clear that joinder would be infeasible in that case, the court dismissed the action without prejudice to its refiling in another court where jurisdiction over the awardee might be obtained.

On the other hand, in Samson Tug & Barge Co. v. United States [695 F.Supp. 25 (D.D.C. 1988)], the District Court for the District of Columbia found that the apparently successful offeror was not an indispensable party to an action challenging its contract award. According to that court, the awardee might be prejudiced by an injunction against performance of its contract, but any such prejudice was "diluted" because the merits of the case were so strongly against the government's award decision.

In Aero Corp. v. Department of the Navy [493 F.Supp. 558 (D.D.C. 1980)], the same court ruled that there was no need even to try to join the awardee unless it were to become necessary to fashion a complete remedy.

Indeed, in most bid protest cases the successful offeror will ask to intervene if it is not joined by the plaintiff in the first instance. Under FRCP 24, a person may intervene of right if the person has an interest in the subject matter of the action and that interest might be impaired by the disposition of the case. If the person's interest is less direct, permission to intervene is at the court's discretion.

Typically, intervention is granted without objection for an apparently successful offeror in an action challenging its selection. When there is an objection, intervention ordinarily is allowed. The courts generally leave unspecified whether such intervention is of right or permissive.

The rules in the Court of Federal Claims are similar to the FRCP, but there is a critical difference. The jurisdiction of the Court of Federal Claims is limited to disputes between private parties and the government. An apparently successful offeror does not have a dispute with the government. Therefore, the court has ruled on several occasions that the apparently successful offeror may not intervene in an action challenging the propriety of a contract award.

Under General Order No. 38, a prospective plaintiff in the Court of Federal Claims must provide notice to the government and to any apparently successful offeror at least 24 hours before initiating a bid protest in that court. However, as noted, the successful offeror may not be permitted to intervene.

In some cases, the awardee might be allowed to submit comments to a court as an amicus curiae, or "friend of the court." But an amicus has relatively few procedural rights. Generally, an awardee that, for whatever reason, does not participate as a full party in a case challenging the award of its contract will go furthest by helping the government behind the scenes to develop its case. Indeed, such informal cooperation is a good idea even when participating as a party.

--Peckinpaugh is a member of the government contracts section of the law firm Winston & Strawn, Washington, D.C.


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