COVID-19 Can Influence Procurement Decisions and Bid Protest Outcomes

Since the outbreak of COVID-19 began in late 2019, the virus has impacted every

facet of the lives of people all over the world—in the United States it has taken nearly 430,000 lives, shuttered businesses, caused workforce reductions, closed schools and offices, and changed the way that people interact with one another in their personal and professional lives.[i]  Unsurprisingly, COVID-19 has also impacted government procurements and bid protests.

On at least three occasions in 2020, the Government Accountability Office (the “GAO”) and the United States Court of Federal Claims considered the impacts of COVID-19 on pending procurements.  These decisions illustrate that COVID-19 can be a factor in defining the requirements of a solicitation, in preparing proposals, and in agency decisions to “override” the Competition in Contracting Act (“CICA”) stay of performance triggered by a GAO protest.  COVID-19 will likely continue to have a significant influence on procurements for the foreseeable future.  Given this, contractors should be mindful of the way in which COVID-19 can influence procurement decisions and bid protest outcomes.

Agency’s Downgrade of a Proposal that Did Not Account For the Impact of COVID-19 Was Reasonable

In Glocoms v. United States, the protester, Glocoms, Inc., challenged the Army’s best value award of a food service workers’ contract to Dilligas Corp.[ii]  Among the matters at issue in the protest was the solicitation’s requirement that offers include “a mission-essential contractor services plan,” containing each offeror’s strategy, consistent with Defense Federal Acquisition Regulation Supplement (“DFARS”) 252.237-7024, for continuity of essential contractor services during an extended event.[iii]  According to that regulation, such plans must address:  the “challenges associated with maintaining essential contractor services during an extended event;” the lag between “initiation of the acquisition of essential personnel and resources and their actual availability on site;” the requirements “for the identification, training, and preparedness of personnel;” “alert and notification procedures for mobilizing identified ‘essential contractor service’ personnel;” and an “approach for communicating expectations to contractor employees regarding their roles and responsibilities during a crisis.”[iv]

Although Dilligas’ mission-essential contractor plan acknowledged the effect that the pandemic could have on staff availability, in its plan Glocoms’ did not discuss concerns related specifically to COVID-19 and stated that it “‘d[id] not foresee any challenges associated with maintaining essential contractor services during an extended event.’”[v]  The Army rated Dilligas’ plan “acceptable,” but rated Glocoms’ plan “unacceptable,” because Glocoms’ failure to address the potential mission challenges that the pandemic posed and to provide the detail necessary to show that it could provide employees at critical times raised concerns about its ability to “‘respond to extraordinary events.’”[vi]

The Court found the Army’s determination “that Glocoms’ plan could result in gaps in service,” and its decision to downgrade Glocoms’ rating as a result, to be reasonable.[vii]  Specifically, the Court determined that the Army’s concern that Glocoms did not acknowledge the challenges inherent in maintaining on-site workers during a pandemic was not irrational and that the Army’s decision to award it a decreased rating was appropriate.[viii]  Based on these grounds, among others, the Court denied Glocoms’ cross-motion for judgment upon the administrative record.

Glocoms illustrates that agencies may reasonably consider the impact of COVID-19 in the evaluation of proposals, even where the solicitation does not expressly indicate that offerors must address such an impact.  Given this, in responding to a solicitation, offerors should consider how the pandemic will impact their ability to meet the solicitation’s requirements.  Where appropriate, offerors should also consider explaining how they will address COVID-19 in their proposals to avoid a potential adverse evaluation rating.

A Solicitation Was Not Reasonable Where the Agency Did Not Consider Significant Changes Related to COVID-19 

In March of 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which, among other things, prohibited foreclosures and foreclosure-related evictions and mandated mortgage forbearance for specified periods of time. [ix]  Subsequently, HUD also announced its own mortgage payment relief options.[x]

In Chronos Sols., LLC, et al., the protesters challenged the terms of a request for proposals “issued by the Department of Housing and Urban Development (“HUD”) for asset management services in support of HUD’s real estate owned properties” (the “RFP”).[xi]  Specifically, the protesters argued that the RFP did “not accurately reflect the agency’s needs in light of the coronavirus 2019 (COVID-19) pandemic.”[xii]  In this regard, the protesters alleged that HUD had not taken into consideration the effect that the CARES Act’s forbearance and foreclosure provisions would have on the volume of foreclosures and, as result, on “the number of properties for which asset management services [would] be required.”[xiii]  According to the protesters, the CARES Act, and the changes in the economy caused by the pandemic, made the 2019 estimates of the number of foreclosures used by HUD inaccurate.[xiv]  Importantly, the RFP at issue provided, among other things, that past performance and price would be evaluated against foreclosure-related acquisition “estimates based on historical data up to late 2019,” but “did not acknowledge the COVID–19 pandemic, the forbearance mandated by the CARES Act, or the mortgage payment relief options implemented by HUD.”[xv]

The GAO sustained the protests.  In doing so, it concluded that the terms of a solicitation were not reasonable where HUD failed to consider changing circumstances that resulted from the pandemic that represented “a material departure from the assumptions set forth in the solicitation.”[xvi]  Chronos follows the well-established principle that where there is a material change in an agency’s expected requirements prior to award, the agency must revise the solicitation to reflect its current needs.  The circumstances resulting from COVID-19 can represent such a material departure from the assumptions set forth in a solicitation.  Given this, an agency’s failure to consider what modifications to a solicitation may be necessary in view of changed circumstances resulting from COVID-19, leaves such a solicitation open to challenge.  Where an agency so fails, to be timely any such challenge to the terms of the solicitation must be filed prior to the deadline set for receipt of proposals.

Protester Was Not Entitled to Injunctive Relief Where Agency Override of CICA Stay Allowed It to Continue to Administer COVID-19 Tests to First Responders and Other Employees

In Comprehensive Health Services, LLC v. United States, the Court of Federal Claims considered the narrow issue of whether it should enjoin the decision of the United States Department of Homeland Security, Federal Emergency Management Agency (“FEMA”) to override the automatic stay of a sole source contract under which FEMA sought rapid COVID-19 testing services for first responders and other individuals.[xvii]  Plaintiff, Comprehensive Health Services LLC (“CHS”), initially protested, as “restrictive,” the original competition underlying FEMA’s acquisition of the rapid COVID-19 testing services at the GAO, but subsequently withdrew this protest after learning that FEMA would take corrective action.  Id.  Ultimately, however, FEMA decided not to implement corrective action and to instead award a sole source contract to Wellness Coaches USA, LLC (“Wellness Coaches”).[xviii]

Thereafter, CHS again protested at the GAO.[xix]  After the protest was docketed, FEMA decided that “urgent and compelling circumstances” required that performance continue “under the sole source contract during the pendency of the GAO protest.”[xx]  CHS then challenged FEMA’s decision to override the automatic CICA stay of performance at the Court of Federal Claims and requested that the Court “enjoin FEMA from proceeding with contract performance pending the outcome of its underlying protest” at the GAO.[xxi]  After considering the protester’s challenge to the agency’s override of the CICA stay, the Court determined that the four injunctive relief factors—likelihood of success on the merits, the prospect of irreparable harm, the balance of hardships, and the public interest—favored the government.[xxii]  Given this, the Court denied CHS’s request for injunctive relief.[xxiii]

The Court found that the likelihood of success on the merits factor favored the government because FEMA’s justification for overriding the automatic CICA stay “adequately” considered the factors discussed in Reilly’s Wholesale Produce v. U.S., 73 Fed. Cl. 705 (2006).[xxiv]  The Court similarly found that the prospect of irreparable harm weighed in favor of the government, because CHS, as neither the incumbent nor the on-site contractor, would not lose its ability to perform a contract or its opportunity to compete for a later contract.[xxv]  The balance of hardships favored the government, the Court further found, because, were CHS’s request for injunctive relief granted, the potential delay in testing services would put FEMA’s responders, employees, and others at risk.  In this regard, injunctive relief would force FEMA to either “forego COVID testing services for an extended period” or to “seek to award a new testing contract for those services. [xxvi]  Both scenarios which “w[ould] deprive FEMA of rapid testing services for a period of time.”[xxvii]  Finally, the Court concluded that the public interest factor weighed in favor of the government, because overriding the CICA stay allowed FEMA “to continue to issue rapid testing for responders and other employees which serve[d] a separate and distinct public service—health and wellness.”[xxviii]

After weighing all four injunctive relief factors, the Court denied CHS’s request for injunctive relief, stating that “CHS [could not] meet its burden of showing that the extraordinary and drastic remedy—issuance of a temporary restraining order or a preliminary injunction—[was] necessary.”[xxix]  Comprehensive Health Services, LLC puts contractors on notice that COVID-19 can be a factor in agency decisions to override the CICA stay of performance triggered by a GAO protest.  Where an agency awards a contract to mitigate the public health consequences of the pandemic, it will likely be difficult for any offeror to challenge an agency’s decision to override the automatic stay—particularly if the agency will be deprived of required services during the pendency of the GAO protest.

Conclusion

In these three instances, the GAO and the Court of Federal Claims considered the impacts of COVID-19 on agency procurement decisions.  In view of the fact that COVID-19 will likely continue to have a significant influence on procurements for the foreseeable future, where appropriate going forward, contractors should be mindful of the way in which COVID-19 may inform its response to a solicitation, may change the assumptions underlying a solicitation, and may impact an agency’s decision to override a CICA stay of performance.

[i] See CDC, CDC COVID Data Tracker, available at https://covid.cdc.gov/covid-data-tracker/#cases_casesper100klast7days (last visited Jan. Feb 2, 2021).

[ii] 150 Fed. Cl. 258 at 260 (2020).

[iii] Id. at 267.

[iv] DFARS § 252.237-7024(b); see also Glocoms, 150 Fed. Cl. at 267.

[v] Glocoms, 150 Fed. Cl. at 268 (alteration existing).

[vi] Id.

[vii] Id.

[viii] Id.

[ix] Chronos Sols., LLC, et al., B-417870.2, et al., Oct. 1, 2020, 2020 CPD ¶ 306 at 4.

[x] Id.

[xi] Id. at 1.

[xii] Id.

[xiii] Id. at 6.

[xiv] Id.

[xv] Chronos Sols., B-417870.2, et al., 2020 CPD ¶ 306 at 3, 5, 8.

[xvi] Id. at 10-11.

[xvii] No. 20-1585C, 2020 WL 6881207, at *1 (Fed. Cl. Nov. 24, 2020).

[xviii] Id.

[xix] Id. at *2.

[xx] Id.

[xxi] Id. at *1.

[xxii] Id. at *6.

[xxiii] 2020 WL 6881207, at *6.

[xxiv] Id. at *4.  The Court acknowledged that, although application of the Reilly test was not required, the Reilly factors nonetheless provided “a useful analytical tool in reviewing [whether] the override was arbitrary and capricious.”  Id.

[xxv] Id. at *5.

[xxvi] Id.

[xxvii] Id.

[xxviii] Id. at *6.

[xxix] Id.