10 Reasons to Intervene in Bid ProtestsAs we noted recently, the number of bid protest filings peaks in October as a result of increased government spending at the end of the government’s fiscal year, which ends September 30. Thus, our previous article provided a fiscal year-end refresher for government contractors on the process for intervening in bid protests at both the Government Accountability Office and the U.S. Court of Federal Claims. This follow-up article provides 10 reasons why government contractors should consider intervening in bid protests.

10 Reasons Why

    1. The contracting agency’s interests may not be the same as your company’s interests, and your company is in the best position to protect and advocate for its own interests. In fact, contracting agencies owe an equal duty to all offerors, and thus their interests are broader than, and potentially distinct from, your company’s interests.
    2. Some government attorneys have limited resources or are overworked. Other government attorneys are “green” when it comes to bid protests because their offices simply do not see very many of them.
    3. Intervening will help your company better protect its confidential and/or proprietary information if it becomes part of the record during the bid protest.
    4. Similarly, by intervening, your company will be in a better position to protect its business reputation.
    5. Your company knows its proposal better than anyone. As such, your company is best equipped to rebut challenges to your technical proposal, cost/price proposal and past performance. Likewise, intervenors often are in the best position to respond to allegations regarding key personnel and organizational conflict of interest (OCI) matters.
    6. An intervenor can make arguments that, for whatever reason, the government fails to address.
    7. If your company is the incumbent-contractor, then you may be more knowledgeable than the protester (and possibly the government) about the actual work under protest. As such, incumbent contractors may be uniquely able to rebut the protester’s assertions about the scope and nature of the work at issue.
    8. In a U.S. Court of Federal Claims bid protest, your company, as an intervenor, will be able to more persuasively and specifically articulate the harms that it will suffer if a temporary restraining order or an injunction is issued in connection with the protested contract.
    9. Most bid protests are covered by a protective order that prohibits the attorneys from disclosing protected information (i.e., confidential, proprietary and source selection sensitive information). By intervening, however, your company will have the ability to be better informed about the course of the protest and the status of the procurement (subject, of course, to the terms of any protective order that is issued in the protest).
    10. If the contracting agency decides to take corrective action in response to the protest, an intervenor will be in a much better position than a non-intervenor in terms of being able to influence the scope and nature of the corrective action.

If you have any questions about intervening in bid protests or any related issues, please feel free to contact Aron Beezley.

SBA’s New Paycheck Protection Program Appeal RuleAs part of Bradley’s continued reporting on issues arising from the CARES Act and the Paycheck Protection Program (PPP) that uniquely impact government contractors, we summarize here a new Small Business Administration (SBA) loan decision appeal rule.

Background on the New Rule

On March 27, 2020, the CARES Act became law. Section 1102 of that act established the PPP, which created a program administered by the SBA to extend emergency loans to small businesses to cover a variety of payroll and other business expenses that the businesses may have trouble paying because of COVID-19-related business disruptions. Subject to several exceptions, the act generally defined “small businesses” as businesses that would already be considered small under existing SBA rules or had 500 or fewer employees. Section 1106 of the act allowed for forgiveness of PPP loans for amounts expended on payroll, mortgage interest, rent, and utilities.

Over several months after the act became law, the SBA issued numerous rules and instructions on how the PPP would operate before it stopped accepting loan applications on August 8, 2020. On August 27, 2020, the SBA formally issued its interim final rule entitled Appeals of SBA Loan Review Decisions Under the Paycheck Protection Program.

Summary of the New Rule

The SBA’s new regulation gives disappointed borrowers a means to appeal official PPP loan decisions to the SBA’s Office of Hearings and Appeals (OHA) by adding a new subpart to the SBA’s OHA rules (13 C.F.R. Part 134). OHA is the forum to which companies now appeal various size-related protests.

There are certain limits on the scope of the PPP loan appeal rule. To start with, the OHA rules of practice for appeals of size determinations and NAICS code designations do not apply to PPP appeals. In addition, the borrower cannot appeal any decision made by a lender concerning a PPP loan nor any PPP loan determination by SBA’s Inspector General. Lastly, the new rule creates no appeal right on what the SBA calls its non-PPP “7(a) loans,” which provide financing for general business purposes for small businesses.

With those limits in mind, to appeal a PPP loan decision, there must first be an official, written decision by the SBA after the SBA completes a review of a PPP loan. For an appeal to be possible, the official SBA decision has to have found that a borrower (1) was ineligible for a PPP loan; (2) was ineligible for the PPP loan amount received or used the loan for an unauthorized purpose; (3) “is ineligible for PPP loan forgiveness in the amount determined by the lender in its full approval or partial approval decision issued to SBA;” and/or (4) “is ineligible for PPP loan forgiveness in any amount when the lender has issued a full denial decision to SBA.”

Only the borrower on a loan for which SBA has issued a final loan review decision has standing to appeal that loan review decision to OHA. Neither individual owners of a borrower nor lenders have standing to appeal. The borrower must file the appeal within 30 days of receiving the final SBA loan review decision or notice from the lender of the final SBA loan review decision, whichever is earlier.

In general, an appeal petition must include (1) a statement on jurisdiction; (2) a copy of the SBA loan decision being appealed (or a description of the decision if it is not available); (3) a full, specific statement explaining why the decision was factually or legally incorrect; (4) the relief sought; (5) signed copies of a variety of supporting federal and state payroll tax documents and similar filings; (6) copies of federal tax returns; and (7) contact information for the borrower or the borrower’s attorney. The appeal cannot exceed 20 pages in length, unless the OHA judge grants permission. The borrower must serve a copy of the appeal on the SBA’s litigation counsel at the time of filing. Either the borrower or the SBA may seek a protective order for confidential business or financial information or other sensitive information.

The appeal process is designed to be swift, with an ideal case taking approximately 90 days to resolve, although the OHA can extend that time period. Typically, the SBA will file the administrative record within 20 days after the judge issues a scheduling order. “The administrative record shall include relevant documents that SBA considered in making its final decision or that were before SBA at the time of the final decision,” but the record “need not… contain all documents pertaining to the appellant.” For that reason, the judge may allow the SBA to make discovery demands on the borrower upon showing good cause. For its part, the borrower may object to the absence of documents from the record or claims of privilege involving documents in the record.

The SBA may file a response to the appeal petition, but the borrower may not file a reply without permission. The judge typically will close the record 45 days after receipt of the appeal petition but may extend that period. If necessary, the judge may allow an oral hearing to resolve genuine issues of material fact. Once the record is closed, the judge will issue a decision within 45 days, as practicable.

The judge decides the appeal based solely on a review of the written record, the appeal petition, any response to the petition, any admitted evidence, and any oral hearing. “The standard of review is whether the SBA loan review decision was based on clear error of fact or law. The appellant has the burden of proof, by a preponderance of the evidence.”

The appeal rule allows the judge to stay a case in whole or in part for the parties to engage in alternative dispute resolution. In addition, any party may file an interlocutory appeal of a judge’s ruling to the SBA administrator or designee within 20 days of that ruling. The judge may stay the appeal in whole or in part pending the resolution of the interlocutory appeal.

The possible outcomes of the appeal are that “OHA may affirm, reverse, or remand an SBA loan review decision.” When OHA issues a decision, it is the SBA’s “initial decision.” Unless a party files a request for reconsideration by the judge or a request for review by the SBA Administrator, the initial decision becomes the SBA’s “final decision” after 30 days. Before a borrower can take a PPP loan appeal decision by OHA to federal court, the borrower must exhaust its administrative remedies by requesting that the SBA Administrator review either the disputed initial OHA decision or the reconsidered OHA decision.

Lastly, if successful, the new rule specifies that a prevailing PPP borrower may not recover attorneys’ fees under the Equal Access to Justice Act.

Takeaways

The promulgation of formal PPP forgiveness appeal rules shows that basic due process protections are now in place to take some of the rough edges off the implementation of what was an understandably hurried program rollout. In that way, the rules reflect a maturing administrative process.

The SBA figures available from early August reflect that the PPP approved more than 5.2 million loans totaling over $525 billion. To the extent that even a small percentage of those loans are adjudicated as ineligible for loan forgiveness, there is a potential for a wave of PPP appeal litigation from disappointed and/or financially destitute borrowers, which may severely stress the OHA.

Bradley will continue to monitor developments involving PPP appeals. If you have any questions about these noteworthy developments or any related issues, please do not hesitate to contact Patrick Quigley or Aron Beezley.

Intervention in Bid Protests: A Fiscal Year-End RefresherAs a result of increased government spending at the end of the government’s fiscal year — which is the 12-month period beginning on October 1 and ending on September 30 — the number of bid protest filings peaks in October. Accordingly, government contractors should be particularly mindful this time of year of their rights with respect to intervening in bid protests both at the Government Accountability Office (GAO) and the U.S. Court of Federal Claims (COFC).

Who May Intervene in Bid Protests?


GAO Bid Protests

The GAO’s Bid Protest Regulations provide the following definition of “intervenor,” in relevant part: “Intervenor means an awardee if the award has been made or, if no award has been made, all bidders or offerors who appear to have a substantial prospect of receiving an award if the protest is denied” (4 C.F.R. § 21.0(b)(1)).

U.S. Court of Federal Claims Bid Protests

The rules of the COFC allow for two types of intervention: (1) intervention as of right and (2) permissive intervention. With respect to intervention as a matter of right, COFC Rule 24(a)(2) requires a would-be intervenor to demonstrate, via a “timely motion,” that (1) its interests relate to a property or transaction that is the subject of the proceedings, and (2) its interests are so situated that disposition of the action may impair or even impede its ability to protect that interest.

Pursuant to Rule 24(b) — which governs permissive intervention — the COFC may allow anyone to intervene who (1) files a timely motion; (2) is given an unconditional right to intervene by a federal statute or has a claim or defense that shares with the main action a common question of law or fact; and (3) whose intervention will not delay or prejudice the adjudication of the original parties’ rights.

When determining whether a potential intervenor’s motion is timely, the COFC considers (1) the length of delay in making the application for intervention; (2) whether the prejudice to the existing parties by allowing intervention outweighs the prejudice to the would-be intervenor by denying intervention; and (3) the existence of “unusual circumstances” weighing either for or against intervention (see Belton Indus., Inc. v. United States).

Notably, the U.S. Court of Appeals for the Federal Circuit has held that the requirements for intervention are to be “construed in favor of intervention” (see Am. Mar. Trans., Inc. v. United States).

How Do You Intervene in a Bid Protest?


GAO Bid Protests

The GAO’s Bid Protest Regulations require the contracting agency to “immediately” provide a potential intervenor with notice of the protest. Specifically, the regulations state, in pertinent part:

GAO shall notify the agency by telephone within 1 day after the filing of a protest, and, unless the protest is dismissed under this part, shall promptly send a written confirmation to the agency and an acknowledgment to the protester. The agency shall immediately give notice of the protest to the contractor if award has been made or, if no award has been made, to all bidders or offerors who appear to have a substantial prospect of receiving an award. The agency shall furnish copies of the protest submissions to those parties, except where disclosure of the information is prohibited by law, with instructions to communicate further directly with GAO… (4 C.F.R. § 21.3(a))

The next step in the process is for the potential intervenor to promptly file with the GAO a “notice of intervention.” The notice typically is a brief letter that includes the name, address, and telephone and fax numbers of the intervenor or its representative, if any, and advises the GAO and all other parties of the intervenor’s status.

U.S. Court of Federal Claims Bid Protests

A party seeking to intervene in a COFC bid protest must file with the COFC — and serve on all parties — a motion to intervene (see RCFC 24(c)). The motion must “state the grounds for the intervention and be accompanied by a pleading that sets out the claim or defense for which intervention is sought.” Before filing the motion to intervene, it is generally prudent to ask the other parties to the protest whether they oppose the motion and then to state in the motion whether the parties oppose the motion.

Wait, I Have More Questions!

If you have any questions about intervening in bid protests, please do not hesitate to contact Aron Beezley.