The U.S. Court of Federal Claims (COFC) orders an agency to reinstate a contract award, finding the Government Accountability Office’s (GAO) corrective action recommendation to be without a rational basis.

TAKEAWAYS

• COFC found that a flawed GAO outcome prediction voided the agency’s corrective action.
• COFC determined that GAO improperly found quoted GSA FSS labor categories must “exactly match” the solicitation’s key personnel requirements where the solicitation did not require such an exact match.
• COFC reinstated the award to the original awardee after finding the corrective action to be without a rational basis.

On May 16, 2024, COFC issued its opinion in Kearney & Company, P.C. v. United States, Nos. 24-162 and 24-201, holding that the corrective action taken by the National Geo-Spatial Intelligence Agency after a post-award protest at GAO was arbitrary and capricious. In the protest, Kearney & Company, P.C. challenged the corrective action taken by the agency on the Audit Remediation and Sustainment Operations task order procurement under the General Service Administration (GSA) Federal Supply Schedule (FSS) multiple-award contract. The initial award to Kearney was terminated by the agency after a GAO protest. Before issuing a decision, GAO held an unrecorded outcome prediction conference where the GAO attorney stated that it would likely sustain one of the protest grounds—that Kearney’s quoted GSA FSS labor category did not match one of the key labor categories required by the solicitation.

At GAO, the protester argued that Kearney’s quoted FSS labor category for the solicitation’s key personnel requirement at issue, the “Senior Statistician,” included none of the experience or expertise required by the solicitation, and, thus, Kearney should not be eligible for award. The agency and Kearney disagreed with the protester, stating that the solicitation allowed offerors to map FSS labor categories that would sufficiently demonstrate relevant work experience overlapping with the solicitation’s key personnel requirements. In an outcome prediction conference conducted over a telephone call, the GAO attorney informed the parties that it would likely sustain this protest ground. There was no recording of the conference, and the parties disagreed over what the GAO attorney stated during the conference. After the phone conference, the agency proposed to take corrective action terminating the award to Kearney and amending the solicitation to clarify that the agency cannot or will not permit vendors to map labor categories required by the solicitation onto FSS labor categories that do not require the same experience and qualifications required by the solicitation.

In sustaining the protest challenging the agency’s corrective action, the court found that although GAO’s precise reasoning in the outcome prediction was not clear, the rationale provided for the corrective action in the agency’s court filings illustrated that GAO misunderstood the solicitation. GAO apparently understood the solicitation to require the quoted FSS labor categories to match the key personnel requirements exactly, when the parties all agreed the language stated otherwise. Thus, the court found the basis for the outcome prediction to be arbitrary and capricious. Because the agency’s corrective action was taken as a result of an erroneous outcome prediction, the court found that the corrective action lacked a rational basis, making the termination of the award to Kearney void.

The court’s decision in Kearney & Company marks the first time in eight years that COFC has sustained a corrective action protest—since the Macaulay-Brown, Inc. decision in 2016. Although the Court of Appeals for the Federal Circuit has held that agencies must provide only a rational basis for initiating corrective action, COFC’s Kearney & Company decision confirms that an awardee may challenge the agency’s decision to take corrective action in response to a GAO decision that lacks a rational basis. The decision also reminds contractors and agencies that the court can order the agency to reinstate a terminated contract if it determines that the corrective action was unlawful.

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