Protesting the Award of a Federal Healthcare Contract

(Reprinted from March 2, 2009 issue of HealthLeaders Media)

A large organization solicits bids from three major hospitals for creation of an exclusive provider network. After a period of time, two hospitals learn that they were not selected. Not only do they wonder how their proposals were evaluated, but they have heard rumors that the contract was “wired” all along. What recourse do they have to learn about the process or challenge the decision? If the organization that issued the bid is a private entity—probably not much. If the bid was issued by the federal government—a lot!

In contrast to the private sector, one of the redeeming aspects of federal contracting is that organizations have the right to challenge an award decision if they don’t believe the process has been handled properly. Like everything else in federal healthcare contracting, however, you need to understand a little bit about the rules in order to take full advantage of challenging an award.

Timing And Debriefing

You should know that there are several important deadlines for filing a protest. In general, the Federal Acquisition Regulation requires that a protest be filed within 10 calendar days of the time when the basis of a protest first becomes known. In most cases, the basis for protest is information obtained in a debriefing from the agency following the award, when the bidder learns more about the evaluation of its bid and that of the winning contractor. A debriefing is available to unsuccessful bidders, but must also be requested within a narrow window to ensure that it is granted. The debriefing can be in person, over the phone, or in writing, and generally occurs when organizations learn something that leads them to believe that either their proposal was not evaluated fairly or that something else about the procurement process was not handled properly. Organizations then have 10 days to submit their protest, if they elect to proceed.

To Protest Or Not To Protest

Our clients often worry that a protest will hurt their chances of working with an agency in the future. While concerns about alienating a client are always a consideration, virtually every major federal contractor has probably filed protests with a federal agency at some point. Even if it lost, the contractor probably continues to do business with the agency.

A decision about whether to protest or not should be made on a case-by-case basis after careful consideration of the merits of the case and the probability of success, as well as the time and costs involved.

GAO

Most protests are submitted to the Government Accountability Office, which serves as the primary venue for challenging federal contract award decisions and other procurement improprieties. In addition to administrative details (e.g., who, what, when, where, etc.), the most important elements of the protest at this point include:

Information to demonstrate the timeliness of the filing

The legal or factual basis of the protest.

GAO will perform an initial review to make sure all of the required information is presented and that preliminary screens have been passed (e.g., Is it timely? Has a proper legal basis been cited? etc.). If so, the next step generally will be directions for the agency to file the “Agency Report” with the GAO within 30 days. If the agency’s attorneys agree that there have been errors in the process, one possibility is that the agency agrees to “take corrective action.” Such action doesn’t necessarily result in immediately overturning an award decision, but may get a bidder back into consideration for what amounts to a second chance.

Outcomes

There are several possible outcomes to a protest. Three of the most common are for the GAO to:

1. Deny it, in whole or in part, recommending that the original award remain in place;
2. Recommend that the agency take some type of corrective action and re-evaluate proposals; or
3. Recommend that the government terminate the contract with the original winner and award to the protester.

The Bottom Line

No one wants to earn a reputation for challenging every unfavorable award decision. But neither do you want to walk away from a protest if it really appears justified. The best advice is probably akin to conventional wisdom about how to handle conflict with adolescents: Choose your battles carefully.