Though present in virtually every case, the doctrine of standing becomes especially pronounced in bid protest actions. Standing is the legal concept that a cause of action can only be brought by a party that has a stake in the outcome or has been harmed. For bid protests, the Tucker Act only grants the Court of Federal Claims jurisdiction “to render judgment on an action by an interested party.” 28 U.S.C. § 1491(b)(1). The requirement that a plaintiff be an “interested party” imposes a stricter standard than the general standing requirement. This stricter standard poses a significant hurdle for plaintiffs, who often have trouble marshalling the evidence necessary to show that they are “interested” within the meaning of the Act. A recent Court of Federal Claims case, Zeidman Technologies, Inc. v. United States, No. 17-1662, 2019 WL 3812354 (Aug. 14, 2019), provides some explanation of the evidence a plaintiff must present in order to meet this bar.
The Zeidman case involved a solicitation under the Small Business Innovation Research (SBIR) program. In the first phase of an SBIR award, the Government solicits research-related contract proposals and evaluates those proposals for scientific and technical merit, feasibility, and quality of performance. The solicitation at issue in Zeidman was in this first phase. Ten companies submitted proposals in response to that solicitation. Eight of these proposals received scores from 60 to 95. Two proposals, including the one submitted by Zeidman, received “NR,” which indicated that the proposals were considered nonresponsive and ineligible for award. The Government ultimately chose the two highest scorers (with scores of 94 and 95) for the award.
Zeidman initially protested this outcome with the Government Accountability Office (GAO). As a result of the protest, the Government reevaluated Zeidman’s proposal, but did not recommend that the proposal receive an award. Zeidman protested this outcome as well; this time to the Court of Federal Claims. Zeidman alleged a laundry-list of errors by the Government, including failing to properly evaluate the proposal and provide a rational basis for its decision, and using the corrective action as a pretext to avoid an award to Zeidman.
The Court began and ended its analysis with Zeidman’s standing. As noted above, in the bid-protest context the Court of Federal Claims only has jurisdiction over actions brought by “interested parties.” To establish that it is an interested party, a protestor must show (1) that it is an actual or prospective bidder, and (2) that it possesses a direct economic interest in the outcome of the bid. This second prong—the only one at issue in Zeidman—can be met by a plaintiff showing that there was a “substantial chance” it would have received the contract award but for the Government’s error. While this standard does not require a protestor to show that it was next in line for the award, the protester does need to show more than a “bare possibility” of receiving the award.
The Court held that Zeidman had failed to demonstrate that it was an interested party. While its list of alleged errors by the Government could potentially cause prejudice sufficient to establish standing, Zeidman had failed to provide any evidence that it had actually suffered such prejudice. The Court characterized Zeidman’s theory as “an assertion that had defendant not committed various errors, plaintiff’s chance of receiving the award—as a matter of logic, rather than as a matter of evidence—necessarily would have improved.” Yet the Court noted that, taking Zeidman’s highest re-evaluation score of 69, six offerors scored higher than Zeidman. The Court therefore could not assume that even a “generically improved score” would put Zeidman in contention for its award. Indeed, according to the Court, Zeidman had made “no significant or systematic effort to compare or distinguish its proposal from the others.” Without such an evidence-based argument, the Court held that Zeidman had established no more than a “bare possibility” of an award, insufficient to establish standing. It therefore dismissed Zeidman’s protest.
The Court of Federal Claims’ decision in Zeidman highlights the importance of providing an evidence-based argument for standing in a bid protest. Even where a protestor presents a colorable claim of Government error, it is not sufficient to rely on an inference that but-for the error the protestor would have had a substantial chance of obtaining the award. Instead, a protestor must provide some evidence that such a substantial chance existed. Zeidman suggests one way of doing this: comparing the protestor’s proposal to those ranked above it. But whatever their theories, it is vital that government contractors recognize and address the issues of standing that they will face in bid protests.View All Posts