Don’t Waive Your Protest: Avoiding problem specifications may require one!

By: Mark W. Leach, Esq.

A state agency just posted a solicitation that would be a great opportunity for your company. There is one specification that may hurt your chances, but you go ahead and submit a bid. Unfortunately, the agency awards the contract to a higher bidder that you know your company could outperform. But for that specification’s wording, you are confident that your company would have won. If you want to file a bid protest, though, you may have already waived it … and you might have been able to avoid the problem altogether.

For many, it’s a surprise to learn that protests can be filed against bid specifications. The catch is, the protest must be filed before bid opening. If a disappointed bidder loses out on a contract award and wants to complain about a restrictive specification, the public agency likely will rule that the bidder waived that protest.

The Federal System

Federal regulations require that protests based on bid terms must be filed before bid opening. Furthermore, if a contractor submits a bid without filing a protest of any specifications, then it has waived all objections to the bid terms. The decision in Parsons Precision Products, Inc., puts it this way: “a bidder who participates in a procurement through the point of bid opening without objection is deemed to have acquiesced in the agency’s statement of the terms and conditions.” B-249940, Dec. 12, 1992, 92-2 CPD ¶ 431.

The rationale for a seemingly harsh rule is a simple one: if a bidder knows of a problem with a bid term, it must make the agency aware in time for the agency to fix the problem. The bidder cannot instead cross his or her fingers, submit a bid, and then complain when a problem it knew about is actually held against it. By not raising concerns prior to bid opening and by submitting a bid, then, a contractor has both deprived the agency the opportunity to fix the problematic bid specification and waived its ability to later protest that bid specification.

Kentucky State Procurements

In Kentucky, the bid protest statute states that:

Any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or selection for award of a contract may file a protest[.]

Many may miss that the statute [1] allows “prospective” bidders to protest, and [2] expressly allows protests of solicitations. Prospective bidders are included because restrictive bid terms otherwise may exclude them from submitting a bid. The solicitation could have a specification that limits potential suppliers due to the listed characteristics of the desired product, or the bid may have past performance requirements that are excessive as compared to the solicited project. Therefore, the statute allows bidders and prospective bidders to protest the solicitation, itself.

The statute and its regulation require protests to be filed within fourteen (14) days of the protestor having reason to know the basis for its protest. When protesting a solicitation, the 14-day clock starts running on the day the solicitation is posted to Kentucky’s e-procurement website.

In its protest determinations (available on-line), the Finance Cabinet has relied on the federal system’s authority. Many protests of solicitations have been denied for reasons of waiver because the protesting contractor submitted a bid for the contract.

Kentucky Local Procurements

If the solicitation is let by a county or other local public agency, there is no express protest process provided by state law. Local public agencies can opt-in to the Local Kentucky Model Procurement Code. Most cities and other public agencies have not opted-in. Even for those that have, however, the local version does not have a protest procedure, unlike the statewide Code. This lack of process can leave a company with little to no recourse. Most public agencies, though, will listen to the concerns of interested bidders. Therefore, while there may not be a formal protest procedure at the local level, voicing concerns about a solicitation can still result in a modification.

Avoiding solicitation protests

Filing a protest typically is a decision fraught with ambiguity. While a contractor does not like losing out on the contract, it also does not want to risk damaging a relationship with the public agency. Further, protests are denied more often than granted. So, the best alternative to filing a protest is not having to file a protest. Fortunately, most procurements provide a method that contractors can take advantage of to potentially fix a problematic bid specification: filing questions with the buyer.

Solicitations typically list an agency point of contact and provide a procedure for filing questions. This procedure gives the agency an opportunity to clarify an ambiguous specification or consider a modification to a bid term that may be unduly restrictive in response to a contractor’s submitted question. Answers to these questions can become formal amendments to the solicitation.

Of course, there is never a guarantee that the answer to the question is the one the contractor wants. However, by pursuing a change or clarification through the question process [1] it may avoid a protest and [2] it gives the agency the opportunity to fix the problem through the relatively informal question process than in response to a protest.

Conclusion

If you have a problem with a bid specification, there is federal and state authority that requires the filing of a protest before submitting a bid and prior to bid opening. Failure to do so can result in your protest being deemed waived and therefore denied. Protests, however, may be avoided through the relatively informal (and lower cost) process of submitting questions seeking modification or clarification to problem bid terms.

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