GAO’s recent decision in Marathon Medical Corporation provides a cautionary tale for government contractors seeking to protest the terms by which an agency conducts a procurement. Specifically, Marathon reinforces a little-known rule: the Government Accountability Office considers an agency’s receipt of proposals to be adverse agency action in response to an agency level protest challenging the terms of a solicitation, and the ten-day rule for filing a subsequent protest at GAO begins running from the date on which the agency received proposals. Contractors must be aware of this timeliness trap, which has significant implications for where and when a protester should challenge a solicitation. In this blog, PilieroMazza offers government contractors keys to avoiding GAO’s timeliness trap.
The Facts
On August 28, 2023, the VA issued a request for quotation (“RFQ”), seeking to establish multiple blanket purchase agreements under which contractors may supply commercial medical supplies and surgical items to VA healthcare facilities. The VA set-aside the competition for service disabled veteran owned small businesses (“SDVOSBs”) and sought to establish BPAs only with “Original Equipment Manufacturers (OEM), suppliers, and authorized resellers of medical/surgical supplies.” Pursuant to the RFQ, any vendor that was not the OEM for a particular item was required to prove that such vendor was an “Authorized Distributor” of the same.
Similarly, the RFQ incorporated FAR 52.219-33, the Nonmanufacturer Rule (NMR), which required SDVOSBs to:
- provide an end item that a small business manufactured, processed, or produced in the U.S.;
- follow employee caps for the North American Industry Classification (NAICS) code 541519;
- be primarily engaged in the retail or wholesale trade and normally sell the type of item being supplied; and
- take ownership of the item(s); for example, providing storage, transportation, or delivery.
The VA further explained that if no SDVOSBs met the NMR requirements, the set-aside designation would be withdrawn, and the VA would consider quotes from non-SDVOSB vendors.
On November 29, 2023, Marathon filed an agency-level protest, arguing the NMR as applied to SDVOSBs effectively eliminated small businesses from the competition. The due date for submission of quotes was just a few days later on December 1, 2023.
On January 17, 2024, the VA denied Marathon’s agency-level protest. Within ten days of that decision, Marathon filed its protest with GAO.
GAO’s Holding
GAO dismissed Marathon’s protest as untimely, notwithstanding that Marathon filed its challenges with GAO within ten days of the VA denying the agency-level protest on January 17, 2024. According to GAO, Marathon was required to file its protest with GAO within ten days of December 1, 2023, the date on which the agency accepted quotes, which GAO found to be adverse agency action in response to Marathon’s agency-level protest.
Specifically, GAO explained that its regulations require protesters to file challenges at GAO within ten days of “actual or constructive knowledge of initial adverse agency action.” Further, GAO noted that “adverse action” means any action or inaction on the part of the agency, including the “opening of bids or receipt of proposals.” According to GAO, where, as here, a protester files a timely agency-level protest prior to the closing date for receipt of quotations (or proposals) and the agency does not extend the closing date for receipt of the same, the protester is on notice that the agency does not intend to take corrective action. Thus, according to GAO, the timeliness of the GAO protest is measured by the closing date for receipt of quotations (or proposals).
In sum, GAO dismissed Marathon’s protest because Marathon did not file within ten days of initial adverse agency action with respect to its agency-level protest, i.e., the agency accepting quotes.
Takeaways
Often, contractors file agency-level protests to challenge the terms of a solicitation. When taking that approach, Marathon suggests that contractors should be aware of the following:
- If the contracting agency does not take corrective action prior to the closing date for receipt of proposals or quotations, the receipt of proposals or quotations constitutes adverse agency action and starts the ten-day timeline for filing a protest at the GAO. Contractors should not wait for a response from the agency prior to submitting their protest to the GAO.
- GAO’s ten-day timeliness rule is strict, and many agency actions can constitute initial adverse agency action that might serve as a basis for dismissing a later filed GAO protest. Contractors must abide by these timelines or risk a dismissal.
- Reminder: the ten-day requirement at the GAO is measured in calendar days to include weekends. However, if the tenth day falls on a weekend or a GAO-recognized holiday, the protest will be accepted the following business day.
PilieroMazza attorneys are well-versed in all matters relating to government protests. If you have questions, please contact Cy Alba, Eric Valle, or another member of the Firm’s Government Contracts Group.
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Looking for practical insights on gaining a competitive advantage through a deeper understanding of the government’s compliance requirements? Check out PilieroMazza’s podcasts “GovCon Live!” and “Clocking in with PilieroMazza.”
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