Acetris Health Case Demonstrates the Value of Strategy in Pre-Award Bid Protests

July 26, 2018

By Julia Di Vito

We recently wrote about the decision in Acetris Health, LLC v. United States, Case No. 18-433C (July 16, 2018), in which the U.S. Court of Federal Claims (“Court”) issued a decision about a challenge to the terms of a solicitation issued by the U.S. Department of Veterans Affairs (“VA”). Although that decision has interesting implications for procurements involving the Trade Agreements Act, the decision also illustrates how pre-award protests can be utilized to maximize the competitive process. Additionally, the decision also raises interesting questions related to considerations implicated in the filing of a pre-award protest of a solicitation’s terms.

In the Acetris case, Acetris Health, LLC (“Acetris”) filed a protest of the solicitation terms, arguing that the terms of the solicitation were unreasonable. The protest was filed before the date that proposals were due, and Acetris requested that the Court issue declarations that the terms of the solicitation were defective, arbitrary, and capricious. Along with the protest, Acetris filed a motion for a temporary restraining order and preliminary injunction to stop VA from proceeding with its procurement. Acetris also submitted a proposal before the proposal submission deadline. The Court denied Acetris’ motion for a temporary restraining order and preliminary injunction, and VA then evaluated offerors’ proposals and selected an offeror other than Acetris for award. VA found that Acetris’ proposal was unacceptable based on the solicitation terms that Acetris claimed were arbitrary and capricious.

After award had already been made, the Court issued a decision on Acetris’ motion for a permanent injunction and found that VA’s solicitation terms in fact were arbitrary and capricious. However, the solicitation at issue stated that award would be made to the lowest price technically acceptable offeror, and Acetris did not offer the lowest price. Accordingly, the Court found that the solicitation defects did not entitle Acetris to relief in this procurement because it would not have received the award even if VA had not found Acetris’ proposal to be unacceptable. Thus, while Acetris won its protest with respect to the solicitation terms, it still lost out on the contract at issue for reasons unrelated to the protest grounds.

This decision demonstrates the need to be strategic in pre-award protests. While it is important to challenge any solicitation terms you find problematic before proposals are due, it is also important to think through the impact of submitting a proposal for the solicitation you are challenging. Indeed, to file a protest challenging solicitation terms, you must demonstrate that you are a prospective offeror. One way to do that is to submit a proposal for the procurement. Another option is to argue in the protest that, but for the problematic solicitation provision at issue in the protest, you would have submitted a proposal. Each option has its pros and cons. In Acetris’ case, if it had not submitted a proposal, it may have been given the opportunity to submit a proposal after VA issued an amended solicitation, which could have resulted in it winning the contract. In other cases, not submitting a proposal runs the risk that either you would not be able to demonstrate you have standing to challenge the solicitation terms or you miss out on the procurement completely if your pre-award protest is denied. This decision should be made based on the specific circumstances of your pre-award protest, and you should make sure you understand the consequences and benefits of your decision as you make it.

About the Author: Julia Di Vito practices in the areas of government contracts, litigation, and labor and employment. She may be reached at jdivito@pilieromazza.com.
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