Opinion ID: 785931
Heading Depth: 3
Heading Rank: 1

Heading: Bid Protests Under the Administrative Dispute Resolution Act

Text: 19 The Court of Federal Claims has jurisdiction to review both pre-award and post-award bid protests pursuant to 28 U.S.C. § 1491(b), enacted as part of the Administrative Dispute Resolution Act of 1996 (ADRA), Pub.L. No. 104-320, 110 Stat. 3870. That provision allows an interested party to file an action in the Court of Federal Claims objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement. 28 U.S.C. § 1491(b)(1). When the ADRA first took effect, it provided the Court of Federal Claims and the district courts of the United States with concurrent jurisdiction over such actions. The jurisdiction of the district courts subsequently terminated on January 1, 2001, pursuant to a sunset provision in the ADRA. Pub.L. No. 104-320, § 12(d), 110 Stat. at 3876. This action was brought in the Court of Federal Claims in April 2003. 20 Under the ADRA, the Court of Federal Claims review[s] the agency's decision pursuant to the standards set forth in section 706 of title 5, i.e., the standards found in the Administrative Procedure Act (APA). 28 U.S.C. § 1491(b)(4). Among the various APA standards of review in section 706, the proper standard to be applied in bid protest cases is provided by 5 U.S.C. § 706(2)(A): a reviewing court shall set aside the agency action if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057-58 (Fed.Cir.2000) (noting that bid protests do not present an agency record derived from a hearing and thus the substantial evidence standard of § 706(2)(E) does not apply). In bid protest cases filed under the ADRA, the court implements this APA standard by applying the standard as previously interpreted by the district courts in the so-called Scanwell line of cases, referring to the 1970 case upholding district court APA review of Government procurement decisions. Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1331-32 (Fed.Cir.2001) (citing Scanwell Labs., Inc. v. Shaffer, 424 F.2d 859 (D.C.Cir.1970), and explaining the history of judicial review of Government procurement decisions). 21 Under the APA standard as applied in the Scanwell line of cases, and now in ADRA cases, a bid award may be set aside if either (1) the procurement official's decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure. Id. at 1332. When a challenge is brought on the first ground, the test is whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion, and the disappointed bidder bears a `heavy burden' of showing that the award decision had no rational basis. Id. at 1332-33 (citations omitted). When a challenge is brought on the second ground, the disappointed bidder must show a clear and prejudicial violation of applicable statutes or regulations. Id. at 1333. To establish prejudice under this second ground, a protester must show that there was a substantial chance it would have received the contract award absent the alleged error. Emery Worldwide Airlines, Inc. v. United States, 264 F.3d 1071, 1086 (Fed.Cir.2001); Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed.Cir.1999). 22 When the agency involved is the USPS, there is some question whether the above standard applies to its bid protests. This is because actions by the USPS are not normally subject to APA review. See 39 U.S.C. § 410(a); Emery, 264 F.3d at 1084. In Emery, we held that the Court of Federal Claims possesses jurisdiction over bid protest actions involving the USPS, id. at 1083-84, but we declined to decide whether 39 U.S.C. § 410(a) trumps the ADRA's mandate to apply the APA standard of review. Id. at 1085. Neither party in that case contested the application of the APA standard; if we held that the Court of Federal Claims had jurisdiction over the suit under 28 U.S.C. § 1491(b), the parties assumed APA review applied. Because the judicial review provisions of the APA are not jurisdictional, both parties were deemed to have waived any arguments concerning the effect of 39 U.S.C. § 410(a) on APA review. Accordingly, we decided that case by applying the APA standard of review as described above. Id. We shall do the same in the case before us because the parties do not contest the applicability of the APA standard. 23 The reference to the APA standard of review in § 1491(b)(4), quoted at the beginning of this discussion, has given rise to a related question — whether the ADRA also adopts the APA requirements for standing. 2 According to § 1491(b)(1), a bid protest suit may be brought by an interested party. The statute provides no definition of the term interested party, but the term appears in another statute that applies to Government contract disputes. Under the Competition in Contracting Act (CICA), which governs the bid protest jurisdiction of the General Accounting Office (GAO), a protest may be filed by an interested party. 31 U.S.C. § 3551(1). The CICA explicitly defines the term as an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract. 31 U.S.C. § 3551(2). 24 In American Federation of Government Employees, AFL-CIO v. United States, 258 F.3d 1294 (Fed.Cir.2001), this court addressed whether the APA standing requirement or the CICA standard should apply to ADRA bid protests. Under the more liberal APA standard, parties other than actual or prospective bidders might be able to bring suit. Id. at 1301. After reviewing the legislative history, we concluded that Congress intended standing under the ADRA to be limited to disappointed bidders. Id. at 1301-02. We further noted that Congress's decision to use the same term in the ADRA as it did in the CICA supports that interpretation. Id. at 1302. We therefore construed the term interested party in accordance with the CICA definition and held that standing under the ADRA is limited to actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract. 3 Id. 25