• Don't Waive Your Protest! Protesting Before Bid Opening and How to Avoid Problem Specifications
  • June 23, 2012
  • Law Firm: Stites & Harbison, PLLC - Louisville Office
  • A government agency just posted a solicitation that would be a great opportunity for your company. There is one specification, though, that may hurt your chances. Believing you can offer the best value, you submit a bid. Unfortunately, the agency awards the contract to a higher bidder that you know your company could outperform. But for that specification’s wording, you are confident that your company would have won. If, however, you want to file a bid protest, you may have already waived it ... and you might have been able to avoid the problem altogether.

    For many, it’s a surprise to learn that protests can be filed against bid specifications. The catch is, the protest must be filed before bid opening. If a disappointed bidder loses out on a contract award and wants to complain about a restrictive specification, the public agency likely will rule that the bidder waived that protest.

    The Federal System

    Federal regulations require that protests based on bid terms must be filed before bid opening. Furthermore, if a contractor submits a bid, then it has waived all objections to the bid terms. The decision in Parsons Precision Products, Inc., puts it this way: “a bidder who participates in a procurement through the point of bid opening without objection is deemed to have acquiesced in the agency’s statement of the terms and conditions.”

    The rationale for a seemingly harsh rule is a simple one: if a bidder knows of a problem with a bid term, it must make the agency aware in time for the agency to fix the problem. The bidder cannot instead cross his or her fingers, submit a bid, and then complain when a problem it knew about is actually held against it. By not raising concerns prior to bid opening and by submitting a bid, then, a contractor has both deprived the agency the opportunity to fix the problematic bid specification and waived its ability to later protest that bid specification.

    Member States’ Procurement Systems

    In several of Stites & Harbison’s member states, state agencies have similar rules and regulations, but with different levels of formality.

    In Kentucky, the bid protest statute states that:

    Any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or selection for award of a contract may file a protest[.]

    Many may miss that the statute [1] allows “prospective” bidders to protest, and [2] expressly allows protests of solicitations. Prospective bidders are included because restrictive bid terms otherwise may exclude them from submitting a bid. The solicitation could have a specification that limits potential suppliers due to the listed characteristics of the desired product, or the bid may have past performance requirements that are excessive as compared to the solicited project. Therefore, the statute allows bidders and prospective bidders to protest the solicitation, itself.

    The statute and its regulation require protests to be filed within fourteen (14) days of the protestor having reason to know the basis for its protest. When protesting a solicitation, the 14-day clock starts running on the day the solicitation is posted to Kentucky’s e-procurement website.

    In its protest determinations (available on-line), the Finance Cabinet has relied on the federal system’s authority. Many protests of solicitations have been denied for reasons of waiver because the protesting contractor submitted a bid for the contract.

    Indiana specifies that protests of solicitations are limited to the grounds that the bid specifications are inadequate, unduly restrictive, or ambiguous. Protests of solicitations must be received “not less than five (5) business days prior to the proposal or bid due date.” It is key to note that the timeline is business days, as defined by the State work calendar, and not simply calendar days. Georgia gives bidders three extra business days for filing their protest, requiring all protests of solicitations to be filed two (2) business days prior to the bid closing date.

    The authority in Tennessee is less specific about protests to solicitations filed with the Department of General Services. Instead, all protests must be filed “within seven calendar days after the bidder knows or should have known of the facts giving rise to the protest.” Therefore, once the bid is posted, the 7-day clock begins to run on filing a protest to a specification.

    Every rule has an exception, and protesting solicitations is no different. The Virginia bid protest statute plainly states that “[n]othing in this subsection shall be construed to permit a bidder to challenge the validity of the terms or conditions of the Invitation to Bid or Request for Proposal.” While this may appear to shut off an avenue for fixing a bid term, it also suggests what may be the best alternative to filing a protest of a solicitation.

    Avoiding solicitation protests

    Filing a protest typically is a decision fraught with ambiguity. While a contractor does not like losing out on the contract, it also does not want to risk damaging a relationship with the state buyer through a contentious protest. Further, deciding authorities deny protests more often than overturning agency decisions. So, the best alternative to filing a protest is not having to file a protest. Fortunately, most procurements provide a method that contractors can take advantage of to potentially fix a problematic bid specification: filing questions with the buyer.

    Solicitations typically list an agency point of contact and provide a procedure for filing questions. This procedure gives the agency an opportunity to clarify an ambiguous specification or consider a modification to a bid term that may be unduly restrictive in response to a contractor’s submitted question. Answers to these questions can become formal amendments to the solicitation.

    Of course, there is never a guarantee that the answer to the question is the one the contractor wants. However, by pursuing a change or clarification through the question process [1] it may avoid a protest and [2] it gives the agency the opportunity to fix the problem through the relatively informal question process than in response to a protest.

    Conclusion

    If you have a problem with a bid specification, there is federal and state authority that requires the filing of a protest before submitting a bid and prior to bid opening. Failure to do so can result in your protest being deemed waived and therefore denied. Protests, however, may be avoided through the relatively informal (and lower cost) process of submitting questions seeking modification or clarification to problem bid terms.