DATE: April 24, 2000

FROM: Barry McVay, CPCM

SUBJECT: General Accounting Office; Characteristics of Bid Protests Filed in Federal Courts

SOURCE: General Accounting Office (GAO) Report No. OGC-00-72, April 17, 2000

SYNOPSIS: Under the Administrative Dispute Resolution Act (ADRA) of 1996 (Public Law 104-320), the 94 U.S. district courts were granted the same jurisdiction to decide bid protest cases as the U.S. Court of Federal Appeals (COFC) until January 1, 2001. The GAO was asked to assess the perceived advantages and disadvantages of filing bid protest cases in the district courts and COFC, particularly for small businesses. It reviewed all protests filed with the district courts between January 1, 1997, and April 30, 1999, and all protests filed with COFC between January 1, 1997, and August 1, 1999, but could "draw no conclusions based on these data."

EDITOR'S NOTE: GAO Report No. GGD-00-72 is available on the Internet at http://www.gao.gov (CAUTION: This report is 22 MB!), by calling 202-512-6000, or by faxing to 202-512-6061.

FOR FURTHER INFORMATION CONTACT: Richard M. Stana or William Jenkins, 202-512-8777.

SUPPLEMENTAL INFORMATION: Currently, an eligible person or business may file a protest challenging a federal contract award and the procedure by which the contract offers were solicited in their choice of four forums: (1) the agency whose procurement procedures are being challenged, (2) the GAO, (3) U.S. district court, (4) or COFC.

Few bid protest cases were heard in federal district courts prior to 1970, principally because district court jurisdiction over such cases was not clearly established. In 1970 the U.S. Court of Appeals for the District of Columbia Circuit ruled that challenges to contract awards could be filed in district courts under the provisions of the Administrative Procedure Act (Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970). In 1982, Congress passed the Federal Courts Improvement Act of 1982 (Public Law 97-164), which authorized COFC to grant relief in protests filed prior to contract award. This statute also granted COFC "exclusive jurisdiction" to grant equitable relief in "any contract claim brought before the contract is awarded." However, COFC did not have authority to hear post-award protests. Then, the ADRA provided that U.S. district courts and COFC would have concurrent jurisdiction for federal bid protest cases, both pre-award and post-award, effective December 31, 1996. However, the district court jurisdiction would expire January 1, 2001, unless extended by Congress prior to that date.

Those who support the retention of district court jurisdiction for bid protest cases assert that: (1) requiring small businesses to file all their protests in COFC, rather than having the option of filing in their local district courts, could make it more expensive for businesses to file bid protest cases; (2) district courts provide an Article III forum (one in which judges have life tenure) for bid protest issues; (3) COFC judges may be unable to travel on short notice to conduct hearings in bid protest cases; and (4) jurisdictional problems that may arise if district court jurisdiction is permitted to sunset.

Those who support COFC as the sole judicial forum for bid protest cases assert that: (1) consolidating jurisdiction in COFC will foster the development of more uniform procurement case law than is possible among 94 district courts; (2) a single judicial forum for bid protests will eliminate forum shopping (litigants seeking the most favorable judicial forum in which to file their cases); (3) COFC has broad authority to hear issues related to bid protests; (4) COFC judges can travel as necessary.

GAO identified a total of 184 bid protest cases filed in the U.S. district courts and COFC since January 1, 1997 -- 66 district court cases in 31 separate districts (through April 30, 1999) and 118 COFC cases (through August 1, 1999). Of this total, 52 of the district court cases had been closed by August 1, 1999, and 111 of the COFC cases had been closed by January 18, 2000.

GAO found that more total bid protest cases, and more small business bid protest cases, were filed in COFC than were filed in district courts. About half of the total bid protest cases we reviewed in both COFC (61 of 118) and district courts (33 of 66) were filed by small businesses. About half of all district court bid protest cases (31 of 66) and about half of district court small business cases (15 of 33) were filed in just two districts -- the District of Columbia and Eastern Virginia (the DC and Eastern Virginia districts are adjoining; three of the four cases filed in the Eastern Virginia district were filed in Alexandria, VA, directly across the river from Washington, DC). Twenty-seven attorneys who represented clients in district court said that the reasons for choosing district court were cost considerations (eight), time (seven) and familiarity with the district court (six). Among other reasons mentioned were the proximity of the district court; the COFC's lack of jurisdiction over a case; the district court offered greater opportunity for discovery and injunctive relief; and fairness. The reasons provided by 70 attorneys who represented clients in COFC were too varied to be categorized. However, 45 of the attorneys said they favored retaining district court jurisdiction because they though that a choice of forum was useful and desirable.

Based on the limited data available, GAO could draw no conclusions about the advantages and disadvantages of retaining district court jurisdiction for bid protest cases. It sent a draft of the report for comment to the Public Contract Law Section of the American Bar Association, the Federal Bar Association, the Secretary of Defense, the Attorney General, and the Chief Judge of COFC, and the following are a summary of their responses:

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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