Without action soon, a protest forum will disappear

Joseph J. Petrillo

Congress giveth, and Congress taketh away. In 1996, it passed legislation clearing the way for the Court of Federal Claims to handle bid protest suits. Existing law had hobbled the court's jurisdiction over bid protests, including all cases filed after contract award.

The new law also carried a sunset provision, ending local district courts' jurisdiction over bid protests beginning Jan. 1. Unless Congress acts before this deadline, the district courts will be out of the bid protest business. A question remains whether the district courts would still be able to hear bid protest suits after this year under their general jurisdiction and the Administrative Procedure Act.

To help guide it, Congress commissioned a General Accounting Office study of bid protests filed with both the district courts and the Court of Federal Claims. GAO took this as a mandate to perform a statistical study, which it issued last month. The report, Bid Protests: Characteristics of Cases Filed in Federal Courts, provides an interesting glimpse into the seldom-studied area of bid protest litigation.

Many assumptions about bid protest suits have been based more on legend than on fact. The GAO study doesn't answer all the questions, but it does provide some hard'and rare'data.

GAO reviewed a snapshot of protest activity from Jan. 1, 1997, to April 30, 1999, for district courts and to Aug. 1, 1999, for the Court of Federal Claims.

During those periods, most of the cases were filed at the Court of Federal Claims. It heard 118 suits while the district courts heard 66. Even then, the role of district courts in protests appeared to be shrinking.

The quantitative nature of the study had inevitable limitations. As GAO conceded, 'Some of the arguments for and against retaining district court jurisdiction are policy arguments that cannot be addressed using data from the case files.' But the statistics did shed some light on other issues.

Myth No. 1

The first myth this study debunked is that bid protest suits are a major procurement headache. At the rate of about 74 per year, suits are rare compared with the hundreds of thousands of contract awards.

Congress had expressed interest in the impact of the sunset provision on small business. Some people think small businesses would prefer to file a bid protest suit in their local district courts and not the Court of Federal Claims in Washington.

GAO found that not only were half the protests filed by small businesses, but also this proportion applied to both the district courts and the Court of Federal Claims. Almost twice as many small businesses filed at the federal court than at the district courts, 61 vs. 33. GAO also found that 'half of all district court bid protest cases (31 of 66) and about half of district court small business cases (15 of 33) were filed in just two districts'D.C. and Eastern Virginia.'

Thus, 149 of 184 cases, or 80 percent, were filed inside the Beltway. The same percentage applies to suits filed by small businesses. So neither business size nor geography seem to be key factors after all.

Unfortunately, the GAO study didn't tell how many cases resulted in relief for the protester. Final decisions on the merits are generally in favor of the government, which won 21 out of 22 rulings in the district courts and 60 out of 79 at the federal level.

But there was also a large number of voluntary dismissals: 30 at the district courts and 29 at the Court of Federal Claims. Some of these were situations where the plaintiff obtained at least some relief, but GAO could not get the statistics.

Forty-five of 70 lawyers interviewed by GAO were in favor of keeping district courts as protest forums. The two bar associations which commented on the draft of the GAO report had a slightly different flavor to their conclusions. The American Bar Association was strongly in support of district court jurisdiction. The Federal Bar Association said that, although district court jurisdiction may be desirable, it wasn't absolutely needed. I was chairman of the FBA group commenting on the draft GAO report.

It's an election year, so Congress is distracted and will have a short session. Unless contractors bring significant pressure to bear, Congress is unlikely to extend district court jurisdiction over bid protests.

Joseph J. Petrillo is an attorney with the Washington law firm of Petrillo & Powell. E-mail him at jp@petrillopowell.com.

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