Link: GAO Opinion
Agency: Department of the Army
Disposition: Request granted.
1. Protester is entitled to reimbursement of costs of filing and pursuing protest where agency did not take corrective action in response to a protest until after submission of agency report, and does not dispute that the protest grounds were clearly meritorious.
2. For a procurement conducted under the Foreign Military Sales program, neither the Competition in Contracting Act, nor the Arms Export Control Act, bars GAO from recommending that the agency reimburse a successful protester’s costs of filing and pursuing a protest, or bars the agency from making such reimbursement.
General Counsel P.C. Highlight:
Alsalam Aircraft Company requests that GAO recommend that the company be reimbursed the costs of filing and pursuing its protest challenging the award of a contract by the Department of the Army, U.S. Army Materiel Command, under a request for proposals (RFP) for support services for the Royal Saudi Land Forces Aviation Command.
Alsalam argued in its protest that the Army’s technical and cost evaluations were flawed, and the agency subsequently took corrective action in response to the protest. GAO states that when a procuring agency takes corrective action in response to a protest, GAO may recommend reimbursement of protest costs, including reasonable attorneys’ fees, if, based on the circumstances of the case, we determine that the agency unduly delayed taking corrective action in the face of a clearly meritorious protest, thereby causing the protester to expend unnecessary time and resources to make further use of the protest process in order to obtain relief. A protest is clearly meritorious where a reasonable agency inquiry into the protest allegations would have shown facts disclosing the absence of a defensible legal position. While GAO considers corrective action to be prompt if it is taken before the due date for the agency report responding to the protest, we generally do not consider it to be prompt where it is taken after that date.
Here, the Army does not dispute that it took corrective action after the submission of its report on the protest, nor does the agency dispute that the protest was clearly meritorious. Instead, the Army argues that the request should be dismissed because a Foreign Military Sales (FMS) procurement does not involve appropriated funds, and because the agency is barred under the Arms Export Control Act (AECA) from using appropriated funds for costs associated with an FMS procurement, such as protest costs.
GAO begins its analysis by stating that, under CICA and our Bid Protest Regulations, GAO reviews protests concerning alleged violations of procurement statutes or regulations by federal agencies in the issuance of solicitations and the award or proposed award of contracts for procurement of goods and services. GAO has held that its authority to decide bid protests is based on whether the procurement was conducted by a federal agency; GAO’s jurisdiction is not dependent upon whether appropriated funds were involved in a procurement. CICA also does not condition GAO’s authority to make recommendations concerning reimbursement of protest costs on the availability of appropriated funds. In this regard, CICA states that when GAO recommends that an agency reimburse a protester’s costs, the agency –shall–(A) pay the costs promptly; or (B) if the Federal agency does not make such payment, promptly report to the Comptroller General the reasons for the failure to follow the Comptroller General’s recommendation. Moreover, nothing in the AECA states that a procuring agency is exempt from the provisions of CICA concerning reimbursement of protest costs.
GAO has viewed funds provided by customer countries and held by the U.S. government for FMS procurements as having the character of appropriated funds. In this pre-CICA protest, GAO concluded that it had jurisdiction over a challenge to an FMS procurement because funds deposited by customer countries into the FMS trust fund are under the control of the Department of the Treasury, and thus have the character of appropriated funds. In addition, the DOD Financial Management Regulation (FMR) now expressly recognizes that GAO’s decisions consider FMS funds to be appropriated. To the extent that fiscal law guidance states that agencies shall reimburse protest costs from procurement appropriations, GAO sees no basis to conclude that the identity of these funds as FMS funds bars their use for the reimbursement of protest costs. While FMS funds are not appropriated by Congress, they have the character of appropriated funds and are clearly intended to be used to cover the costs of an FMS procurement. GAO finds that the statutory and regulatory provisions show that an advance payment of costs–such as those the Army says it has received from the government of Saudi Arabia for this procurement–is not a one-time event that precludes the U.S. government from seeking funds needed for costs associated with the procurement.
GAO finds that the Army unreasonably delayed taking corrective action in response to Alsalam’s clearly meritorious protest, and notes that the Army has elected not to dispute this conclusion. In addition, GAO sees no basis to conclude that the Army is not required to reimburse the protester its costs under CICA.
The request is granted.