Harmonia Holdings: Denied Pre-Award Protest Rises From The Dead Five Months Later As A Post-award Protest

• Published date: 16 December 2021
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Government Contracts, Procurement & PPP, Trials & Appeals & Compensation
• Law Firm: Morrison & Foerster LLP
• Author: Mr James Tucker

The U.S. Court of Appeals for the Federal Circuit has issued its long-awaited decision in Harmonia Holdings Group, LLC v. United States, vacating a bid protest decision the U.S. Court of Federal Claims rendered nearly two years ago. The new decision is an important new data point in the evolving timeliness rules for bid protests filed with the Court of Federal Claims.

Under Harmonia, a plaintiff does not waive the opportunity for post-award litigation of a pre-award challenge to the terms of a solicitation if the protester filed a timely pre-award protest of those terms with the procuring agency itself or the U.S. Government Accountability Office (GAO). Under this new decision, that is true even if the agency or GAO denies the pre-award protest and the protester does not resurrect its challenge until months after the denial, after the agency has completed its evaluation and source selection and awarded a contract under the allegedly defective solicitation. (This decision applies only to protests before the Court of Federal Claims; such protests remain untimely under the GAO's regulations.)

Although the facts of Harmonia are unusual, the decision opens the door to greater procurement delays, will require the Court of Federal Claims to consider the merits of pre-award protest grounds that otherwise might have been summarily dismissed, and may result in more agency-level protests to preserve solicitation challenges for potential use in post-award protests. It may be time for Congress to give the Court of Federal Claims clearer filing deadlines, along the lines of the GAO's bid protest regulations.

Factual Background

In 2018, U.S. Customs and Border Protection (CBP) issued a solicitation for "application development and operation and maintenance support services" and received initial proposals. This procurement was set aside for small business and conducted under the authority of Federal Acquisition Regulation (FAR) Part 8, for orders issued under the General Services Administration's Federal Supply Schedule program. After receipt of initial proposals, CBP amended the solicitation (principally with respect to staffing and pricing) and requested proposal revisions from offerors. CBP allowed offerors to revise their proposals only with respect to the Staffing Plan/Key Personnel subfactor and price, which CBP determined were the only proposal areas affected by the solicitation amendments.

Before the date set for submission of proposal revisions, Harmonia filed a timely agency-level protest, objecting to the limitation on permissible proposal revisions. Harmonia contended CBP was required to allow offerors to revise all aspects of their proposals, without limitation. Harmonia also objected to CBP's addition of the Limitations on Subcontracting clause-a clause that is generally mandatory for small business set-aside procurements.

On December 6, 2018, CBP issued a written decision denying Harmonia's protest. Harmonia chose not to refile its pre-award protest with the GAO during the 10 days in which it had to file a follow-on GAO protest. Nor did Harmonia promptly proceed to the Court of Federal Claims.

Over the next four and half months, CBP proceeded with the evaluation of proposals and source selection. By April 23, 2019, CBP had determined that Harmonia's proposal was the lowest rated of all proposals received and another offeror represented the best value to the Government. On April 25, 2019, CBP informed Harmonia of the award decision.

Court of Federal Claims Protest

On May 7, 2019, Harmonia filed a bid protest at the Court of Federal Claims. In addition to challenging the evaluation of proposals in its post-award protest, Harmonia dusted off its pre-award arguments, which had lain dormant since CBP denied them five months earlier. Harmonia argued, as it unsuccessfully argued more than five months before, that it and all offerors were entitled to submit completely revised proposals if they chose to do so, and CBP was required to make the award based upon these new proposals rather than the ones received in November 2018.

The Government and the awardee moved the court to dismiss Harmonia's pre-award protest grounds. They argued Harmonia waived its solicitation challenges by sitting on its hands for five months after receiving CBP's formal denial of the pre-award protest. If Harmonia wanted to preserve its argument that the scope of permissible proposal revisions was too narrow, they argued it should have diligently proceeded with a GAO or court protest. Instead, it waited to see whether it would win the order under the existing (and allegedly improper) solicitation terms.

The Court of Federal Claims agreed with the Government and awardee. Under Blue & Gold Fleet, L.P. v. United States, "a party who has the...