Don't close U.S. courthouse doors to protests

The Defense Department and Office of Federal Procurement Policy are seeking to finish
off a legislative agenda by getting rid of Scanwell suits. What's this all about?


In the government contracts arena, we have grown accustomed to specialized courts, such
as the General Services Administration Board of Contract Appeals. For the past few years,
the thrust of public policy has been to elevate efficiency at the expense of due process
and judicial checks on the decisional authority. For this reason, GSBCA's authority to
hear protests of information technology procurements governmentwide has been removed as of
Aug. 8, 1996.


Now there's a proposal to remove the jurisdiction of U.S. District Courts to hear
claims of unlawful contract awards. The U.S. District Court is one of the last bastions of
freedom. If the government's conduct is unlawful, a District Court someday will be called
upon to hear the matter.


The usual way to get a bid protest into District Court is to claim that award of a
contract to a competitor violates the Administrative Procedure Act, a 50-year-old law
forbidding the government to make decisions arbitrarily and capriciously.


The first case to establish such a violation came in 1970 in the U.S. District Court
for the District of Columbia, in Scanwell Laboratories Inc. vs. Shaeffer, which gave its
name to future APA contracts cases. Winning a Scanwell case generally requires that the
plaintiff get a temporary restraining order or injunction to prohibit expenditure by the
government with the contract winner.


There is a heavy burden of proof on the plaintiff. To stop the government from
proceeding with the contract, the plaintiff must show:


* Substantial likelihood of success on the merits


* Irreparable harm during the litigation if the government is allowed to proceed


* A balancing of public and private interests, which permits the government to plead
the importance of its prompt acquisition of the goods or services, and


* No adequate remedy for the plaintiff if performance of the contract goes ahead.


A Scanwell case also forces parties to pay a lawyer $25,000 to $50,000, and sometimes a
lot more, for drafting the briefs, doing the limited discovery the court may permit and
fighting out the two- to three-week battle. Obviously, bringing such a case also causes
severe damage to the plaintiff's relationship with the agency, and long memories of such a
suit may haunt a company for years to come.


The courts do not welcome these cases because they must be heard quickly. Nor are
District Court judges experienced in reviewing the Federal Acquisition Regulation, Federal
Information Resources Management Regulation and the other arcane elements of government
contracts law. District judges sometimes look as if they have gas pains when they are
forced to explore such minutia.


When I last checked, the number of Scanwell suits was so few that the federal courts'
administration office did not bother to keep count of them. It's safe to say the 1,200
district judges hear fewer than 50 Scanwell cases annually.


So why do proponents want to do away with this jurisdiction of the District Court? In
view of the paucity of such cases, this is obviously, in part, a symbolic fight. It
demonstrates the continued commitment to efficiency and discretion for government contract
officials, at the expense of due process.


It also recognizes that closing down GSBCA may push protest-inclined vendors into
court. The most salient objection is the possibility that a Scanwell case will be brought
in a town dominated by a single employer, such as the shipyard towns of Bath, Maine;
Pascagoula, Miss.; or Newport News, Va.; and that a "homer" judge will rule for
the hometown industry. Theoretically, this is possible. Of course, that's why U.S. Courts
of Appeals and a Supreme Court exist.


Proponents of the change also can argue that the General Accounting Office carries out
the oversight role, eliminating the need for District Court involvement in a procurement.


But I believe it would be a major mistake to preclude APA Scanwell cases. Shutting the
door to the courthouse would increase the chance that a major injustice could be
perpetuated using taxpayer money. The mere existence of the potential to go to court may
prevent such abuses.


This may sound like special pleading by a lawyer. I recognize that the Republic's
foundations will not crumble if Scanwell suits cannot be brought to District Court. But
shutting the courthouse doors to certain types of disputes is a significant diminishment
of due process and fairness.


It would seem that the burden of proof for removing the jurisdiction of the U.S.
District Court should be placed squarely on the proponents of the change. And any such
change should be based on facts, not theology.


Stephen M. Ryan is a partner in the Washington law firm of Brand, Lowell &
Ryan. He has long experience in federal information technology issues.


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