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Vern Edwards

COFC Disagrees with GAO on VA SDVOSB Program

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Must the VA set aside a procurement for Service Disabled Veteran Owned Small Business concerns in lieu of making the buy under the GSA's Federal Supply Schedule program, or is it free to use the FSS whenever it likes? In the past couple of years the GAO has sustained several protests against the GSA's decision to use the FSS instead of setting procurements aside.

The Court of Federal Claims has finally weighed in on the matter and has sided with the VA.

Kingdomware Technologies, Inc. v. U. S. No. 12-173C, November 27, 2012.

Now what? The COFC's decisions are not binding on the GAO. The decision of one judge on the COFC is not binding on the other judges.

The legislative and protest systems are messes. Why can't Congress enact an unambiguous law? Why do we have two protest forums?

Let's hope the issue goes to the Federal Circuit soon, so we can see an end to this circus.

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The good news is that within days of publication of the COFC opinion, GAO began citing it as authority to dismiss protests where the sole allegation was that VA had not conducted market research to determine whether two or more SDVOSB's could perform the work before deciding to order from the FSS.

So it appears that GAO has adopted the COFC decision.

I drafted the agency report in the Aldevra case that started this ruckus, and while I'm glad COFC adopted some of the rationale in that report, I have to admit that the statute appeared pretty clear on its face, and I'm not so sure that GAO obviously erred in its decision. However, there is always a back-story, and my understanding is that there was a lot of language compromise going on in several committees in order to get 38 USC 8128 passed, which states in part:

(a) Contracting Priority.—In procuring goods and services pursuant to a contracting preference under this title or any other provision of law, the Secretary shall give priority to a small business concern owned and controlled by veterans, if such business concern also meets the requirements of that contracting preference.

Apparenlty the small business community lobby had strong feelings against such set-asides for veterans, and veterans groups obviously had similarly strong feelings. After the details were worked out--and apparenlty it was very contentious and took forever--the language above was passed, which doesn't accurately reflect what had been agreed to in principle.

the reality of the situation is that an agency the size of VA could not function if it was restricted from unfettered use of the FSS. GAO took a strictly narrow approach to interpreting the statute--not unreasonably so--but the resulting decision created a monster that didn't stand a chance of being fixed by Congress anytime soon.

OMB is sitting on a VA rulemaking that may make the COFC decision more palatable to those strict constructionists that may have an issue with the COFC analysis. Hoping that we see it soon.

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I don't think that the GAO adopted the COFC decision. In fact, I don't think that the GAO's view changed at all. They knew that the VA wasn't going to follow their recommendation, so they dismissed the case. From Kingdomware Technologies--Reconsideration, B-407232.2, Dec 13, 2012:

While this Office has set forth its view of the 2006 VA Act in Aldevra and its progeny, as well as in testimony before the Congress,[3] the VA has elected not to follow our recommendations. In addition, the court has reached a different conclusion about the meaning of the 2006 VA Act. Although our Office is not bound by the court’s decisions, its decision in Kingdomware, together with the VA’s position on the meaning of this statute, effectively means that protesters who continue to pursue these arguments will be unable to obtain meaningful relief. Consequently, under these circumstances, we will no longer consider protests based only on the argument that the VA must consider setting aside procurements for SDVOSBs (or VOSBs) before conducting an unrestricted procurement under the FSS.

I like how the GAO handled this. It would be nice if they adopted a practice where they would dismiss a case if their decision would have contradicted a COFC decision.

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Acquisition Don sez:

"It would be nice if [GAO] adopted a practice where they would dismiss a case if their decision would have contradicted a COFC decision."

Don,

I've read in these pages (WIFCON Discussions) where Vern has disparged COFC Decisions as the whims of a single Article I Judge. Here, he even cries out for an appeal to an Article III bench. I assume that Vern has a history there, and I don't know the details.

The Procurement Law Control Group at the GAO evidently sees themselves as the defenders of the

caprice discretion of federal contracting officials. Maybe the site owner could weigh in on this.

The COFC has a completely different purpose.

Vern knows better than anyone else here how the COFC came to have the jurisdiction it now has. It's purview is different than the jurisdiction of the Comp Gen in important ways. E.g., GAO's current charter flows from CICA, and is strictly to maximize competition.

COFC has a broader view, acting to protect the integrity of the system.

Vern,

as you call for an end to one of these fora,

perhaps you could explain which one you want extinguished, and why.

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Vern, as you call for an end to one of these fora, perhaps you could explain which one you want extinguished, and why.

First, for those who may not know, "Article I" and "Article III" refer to the U.S. Constitutution. An Article I court is a federal court created by Congress under its legislative authority. The Court of Federal Claims is an Article I court. An Article III court is a federal court created pursuant to Article III of the U.S. Constitution. The Supreme Court, the Circuit Courts of Appeals, and the District Courts are Article III courts. See Freytag et al. v. Commissioner of Internal Revenue, 501 U.S. 838 (S.Ct. 1991).

I addressed Brian’s question at length in the July 2011 issue of The Nash & Cibinic Report, in "Pathologies of the Protest System: Recommendations For A Cure," 25 N&CR para. 32, which I shall quote in part:

I think that we need a protest system, but I think that the reason for having such a system is what I would call: keeping the lid on while letting off steam. The system “keeps the lid” on by shining a light on what would otherwise be anything but a transparent process. It thereby deters corruption, exposes the grossest of rule violations and procedural glitches, and puts gross incompetence on display for all to see, as it did in the GAO's 2008 decision in the air tanker competition protest. See Boeing Co., Comp. Gen. Dec. B-311344, 2008 CPD ¶ 114, 50 GC ¶ 230. The protest process should be inexpensive, simple, and expeditious and should prescribe appropriate remedies when officials have violated the rules or made unreasonable decisions that would be injurious to the taxpayers. The intended beneficiary is the taxpayer. However, giving protest jurisdiction to both the GAO and the COFC has proven to be anything but inexpensive, simple, expeditious, or beneficial to the taxpayer, and it is going to drive COs crazy.

* * *

The acquisition system does not need more doubt and confusion. Why not give the GAO exclusive jurisdiction over all protests? It can do the job, including the big ones, as it proved by its handling of the air tanker protest and many other protests of large procurements. (This does not mean that we think the GAO is perfect.) I part company with Ralph and John when it comes to the CICA stay provisions. I would retain them, because I fear that if stays were eliminated, too many agencies would choose to pay costs and anticipated profits rather than to take appropriate corrective action that would be in the taxpayers' best interests.

If the COFC is to be kept in the game, then I propose that Congress impose reasonable timeliness deadlines for filing with the court, as proposed by Saunders and Butler in 39 Pub. Cont. L.J. 539, cited above, and prohibit protesters from going from the GAO to the court or questioning an agency's decision to comply with a GAO recommendation. If a firm wants to challenge the outcome after an agency follows a GAO recommendation, it should be required to go back to the GAO. Protesters should be required to choose a forum and then live with the outcome.

We are not criticizing the way that the court has handled protests. The court has not made everybody happy--see, e.g., Claybrook, Please Check Your Crystal Ball at the Courtroom Door--A Call for the Judiciary in Bid Protest Actions to Let Agencies Do Their Job, 38 Pub. Cont. L.J. 375 (Winter 2009), and various things that we have written over the years--but it has been reasonably expeditious and has done a creditable job, by and large. We simply do not think that it is in the taxpayers' best interests to have two protest forums using different procedures and standards of review. For a different view, see George M. Coburn's guest article, The Importance of De Novo Review to an Adequate Bid Protest Remedy, 9 N&CR ¶ 26.

We urge the Administrator of the Office of Federal Procurement Policy to take a leadership role in curing the GAO-to-COFC protest pathology. The first task is to decide whether we really need two protest forums and, if we do, to decide how to keep them from gumming up the works. At the very least, the Administrator should seek out experienced acquisition practitioners and ask their views about the objectives of the protest system and the best way to achieve them.

In short, I would deprive the federal courts of protest jurisdiction and give exclusive jurisdiction to the GAO.

P.S. I think that GAO would say that its goal is to protect the integrity of the competitive contracting process by ensuring compliance with law and regulation, not just to maximize competition.

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In short, I would deprive the federal courts of protest jurisdiction and give exclusive jurisdiction to the GAO.

Vern,

Would an interested party have any appeal rights, or would the GAO become the Supreme Court when it comes to bid protests?

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No appeals. GAO decisions would be recommendations, as they are now and always have been. Agencies could reject them, as they can now and always have been able to do.

There is no right to a government contract. The ultimate remedy would be Congress's power to legislate.

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No appeals. GAO decisions would be recommendations, as they are now and always have been. Agencies could reject them, as they can now and always have been able to do.

Where would an interested party challenge an agency's override of a CICA stay?

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Several possibilities:

First, no challenge of an override permitted, but GAO would report every override to the cognizant Congressional committees with an opinion on the propriety of the override. Possible variation: Challenge at COFC permitted only for actions in excess of $10 million.

Second, challenge at the COFC, which could rule on the propriety of the override, but not on the merits of the protest.

Third, override decision by the agency head on a nondelegable basis, with no challenge permitted.

Fourth, no override permitted, except for the national defense, and then only by the agency head on a nondelegable basis. No challenge permitted.

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Vern,

I think that your proposal certainly solves the problem caused by conflicting GAO and COFC decisions. It would also make the protest process much more efficient. My only problem with it is the amount of power the GAO would have. While agencies can reject GAO recommendations, the reality is that most agencies lack the will to do so. Also, my impression of the GAO is that they are too inconsistent on certain issues and have a tendency to engage in ad hoc rulemaking through their decisions. Despite the case I cited to begin this thread, I don't have the same impression of the COFC. If it weren't for these issues, I think your proposal would work.

For what it's worth, I would propose a protest system modeled after the disputes process, as follows:

1. Interested party must first submit a timely protest to the contracting officer. Automatic stay of performance unless overridden (same rule as now). Agency override decision may be challenged at COFC.

2. After receiving contracting officer's decision on protest, interested party may appeal decision to either BCA or COFC (must choose one). Decisions of the BCA and COFC would be binding on the agency.

3. Agency or interested party may appeal decision of BCA or COFC to CAFC. CAFC decisions would be binding precedent.

4. Agency or interested party may request rehearing en banc at CAFC or petition for writ of certiorari to SCOTUS.

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If agencies are afraid of the GAO, then they should do what GAO recommends. It's their business and their call. If there was any leadership at OFPP, which there isn't and has not been, it might be able to work out differences with GAO on certain issues. Or OFPP could require changes to FAR to fix problems like the late proposal rule. OFPP should make it clear to GAO that it will not stand by while they engage in ad hoc and unofficial rule-making through the protest process.

I don't like your proposal for the following reasons:

1. I would not require a protester to first submit a protest to the CO, because most COs are not capable enough or independent enough to adjudicate them. It would be a waste of time (and money for the protester). The CO can read a protest filed with the GAO, and if he or she (or the agency's lawyer) thinks the protest is solid, the CO can take corrective action.

2. The GAO is occasionally inconsistent, but so is the COFC. The decisions of the judges are not binding precedent, so we have a number of cases in which the judges disagree with one another. The late proposal rule is an example.

3. There is no constitutional right to a government contract. No appeal to the Federal Circuit or SCOTUS, because they don't know enough about procurement and their are no constitutional issues in the contract award process. The main purpose of the protest system is to maintain the integrity of the contracting system by subjecting it to scrutiny. The purpose of the system is not to ensure fairness (whatever that might be) to particular competitors. It's to protect the interests of the taxpayer. We should keep the protest process strictly administrative and out of the federal court system.

4. I would not let the BCAs anywhere near the protest process. They would only make a hash of it. Don't you remember when GSBCA was making protest decisions in IT procurements? What a mess. Never again.

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If agencies are afraid of the GAO, then they should do what GAO recommends. It's their business and their call. If there was any leadership at OFPP, which there isn't and has not been, it might be able to work out differences with GAO on certain issues. Or OFPP could require changes to FAR to fix problems like the late proposal rule. OFPP should make it clear to GAO that it will not stand by while they engage in ad hoc and unofficial rule-making through the protest process.

It would be great to have that kind of leadership at OFPP.

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Excellent discussion.

If anyone is interested in reading the full text of the Saunders and Butler article on this topic, it can be found here: http://www.pubklaw.com/papers/clause/clause092010.pdf (starting on page 7).

It was originally published in the ABA's Public Contract Law Journal and then republished (with permission) in the Board of Contract Appeals Bar Association's (BCABA) publication entitled "The Clause." It was selected as for BCABA's 2010 Writing Award.

The legislation proposed in the article later became a DOD legislative proposal for the FY13 NDAA that was quickly shot down by industry.

See http://www.mckennalong.com/news-listing-3309.html

See PSC's poorly-reasoned objections here: http://www.pscouncil.org/News2/NewsReleases/2012/PSC__DoD_Bid_Protest_Proposal_Denies_Due_Process.aspx

The odd thing is that the current system that allows for two bites at the protest apple is not good for "industry" either. Isn't there another contractor on the receiving end of this needless and zany system of duplicative protest jurisdiction? In other words, why is industry against this? (I know, it is good for the lawyers in the system ... maybe that's the real "industry" fighting this proposal).

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The COFC is the main problem. I know a couple of the judges on that court and I respect them all, but their forum is ill-suited to the needs of the acquisition system and process. The GAO, while a nuisance, is more efficient and effective and I'd be willing to live with its occasional wrong-headedness. Formal protests to agencies should be eliminated. Protesters should be required to go to the GAO and agencies should be allowed to take corrective action instead of fighting the protest, perhaps in consultation and with the advice of GAO. Formal protests to agencies waste time and money. Nothing is lost if the protester must go to the GAO, as long as the agency is allowed to take corrective action in lieu of fighting the protest.

Of course, none of that will happen. The legal profession would oppose successfully.

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Just to add to my previous comment, the text of the DOD proposal can be found here: http://www.dod.mil/dodgc/olc/docs/25April2012Proposals.pdf

(You have to click on the PDF entitled, "Timeliness Rules For Filing Bid Protests.pdf," on the left side of the screen.)

It is virtually verbatim from the proposed legislation set out in the Saunders and Butler article.

The morale of the story (at least at this point) appears to be that regardless of the merit of any proposed legislation it will not move forward without industry support.

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Vern: I agree with you. The COFC is an unwieldy protest forum that adds nothing of value to the protest system. I, like you, have the utmost respect for the COFC and the COFC judges. Its nothing against them personally or their decisions - its just not well suited as a protest forum.

Sadly, as noted in my comments above, if DOD cannot even get Congress to pass the sensible and rather modest legislative proposal referenced above, it is highly unlikely that Congress will take the more drastic step of eliminating the COFC as a protest forum.

I always appreciate your comments Vern.

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The COFC is indeed unwieldy. And sadly, GAO does not always defer to their decisions. Case in pont is a current problem with how to characterize the provision of home oxygen and its accomplanying respiratory services. Is it a service or a supply? The answer makes a big difference to small businesses impacted by the non-manufacturer rule (and NAICS code assignment). GAO and COFC have taken diametrically opposed positions on it, so regardless of how an agency characterizies it, if a protester knows which forum to protest in, it will win. We have been waiting, as of today, 605 days for a COFC decision on this relatively simple issue. At this point we don't care which way it goes--we just need clarity. 605 days and counting....

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BrianR - Good example. I think we need to re-visit the wisdom of the 1940's Supreme Court on this topic. As the article cited above points out, it was once inconceivable that the Government's purchasing decisions would be subject to judicial review. That is, the 1940 Supreme Court case - Perkins v. Lukens Steel (310 U.S. 113, 1940) - (one of the earlies bid protest-type of cases) - warned that such a system would result in "confusion and disorder." Further they explained that: "The bare suggestion of [judicial review of Government purchasing decisions], with its attendant inconveniences, goes far to sustain the conclusion which we have reached, that a suit of this character cannot be maintained.”

Although that is no longer good law, I think they were wise to warn of this confusion and disorder - which is apparently affecting your business or contracting activity.

Again, along with Vern, having the GAO as the sole protest forum makes the most sense - one forum/one decision/swift 100 day process - period!

Its clearly time for reform - but that will require consensus building among the business community. I don't think there is anyone in Government that thinks the current system makes a lot of sense as evidenced by the DOD legislative proposal. I think small businesses especially should contact lobbying groups such as the PSC and ask them to think through this issue a little more intelligently.

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Some of the thinking here is just hard for me to comprehend --

unless I try to see things from a Government point of view.

Then things become more clear.

The idea that industry would voluntarily concede yet more unfettered discretion to CO's because walling off COFC means contractors have fewer avenues for recourse .... exactly HOW is that supposed to appeal to industry ?

I've been on both sides. I worked directly for the CO responsible for the TECOM decision (USCOFC No. 00-475C, 27 June 2005.)

He told the Contractor he didn't care WHAT the Contract said, that they better do as he said or they would get terminated for default. Maybe I've seen more corruption (abuse of discretion) by CO's that the rest of you. Maybe you've seen just as much but didn't recognize it. whatever.

The GAO Bid Protest forum exists to maximize competition. It's authority comes from CICA. Try reading a protest decision from that forum where the protestor argues that the Agency improperly failed to restrict competition as allowed, such as in not making a SBSA when the FAR says to.

GAO bounces it, saying that CICA isn't meant to restrict competition.

In fact, COFC is better able to handle protests than GAO.

GAO believes their duty is to back up CO's and Agencies unless that is completely impossible. Look at the standard to show bad faith, e.g.

Vern is just wrong about fairness. He knows better than me why a society needs courts. Maybe he forgot. He is older than me, after all. By the time I became an All American (that's a genre of soldier,) he had already figured out that USAF aircraft weren't all that unsafe, and landing in one COULD be lived down.

Look at the COFC Docket:

dozens of federal inmates suing for $ millions for violations of their civil rights, a smattering of takings cases, some tax cases, and the vaccine cases. Occasionally Military pay, Civilian pay, Wrongful imprisonment, Patents, copyrights, Native American and oil spills. Japanese Internment.

If folks are thinking that the COFC Judges don't see things the way a CO does, and the way GAO does, and aren't loyal to the federal agency "home team," yer darn right. As it should be.

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@ Brian R --

605 days for COFC to decide a simple question ?

Hard for me to believe.

Give me the Docket Number, and I bet I'll find that Agency attorneys have been raising Motions and Objections and contributing plenty to the length of time.

My cursory review suggests to me that the Court can publish a decision 60 to 120 days after an appropriately filed Motion for Summart Judgment. I haven't done any analysis for cases that went to trial.

Note: if you want to check your own darn self, because you don't trust me to admit if I 'm wrong, then get yourself a PACER account and you can check. Or ask your attorney.

@ Vern --

I don't always agree with what you write, but I always read it, and always find it interesting.

Thanks for the detailed response to my questions above.

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GAO believes their duty is to back up CO's and Agencies unless that is completely impossible... If folks are thinking that the COFC Judges don't see things the way a CO does, and the way GAO does, and aren't loyal to the federal agency "home team," yer darn right.

Bull.

No one has proposed protest reform because the COFC does not see things the CO's way and the GAO does. Ask the CO who handled the Air Force tanker procurement whether the GAO sees things the CO's way. In that case, the GAO threw out a decision by an assistant secretary of the Air Force! So much for favoring the government. And the Tecom decision you cited, which is Tecom, Inc. v. U.S., 66 Fed. Cl. 736 (2005), was a contract dispute, not a bid protest. It has no bearing on this discussion. GAO does not handle contract disputes.

I propose protest reform because the current protest regime needlessly increases the uncertainty, costliness, and length of the contracting process. Uncertainty, cost, and delay are not good for business. Remember, "industry" includes not only the protester, but also the firm or firms that win competitions. Does it appeal to industry to spend money on a proposal and to participate in a competition, win, then go through one protest, win, then have to go through another in another forum?

Both forums exist to ensure that competition is conducted in compliance with the law. Both forums defer to the judgements of agencies. See the discussions of the GAO and COFC standards of review in Formation of Government Contracts, 4th ed. pp. 1732 - 1734 and 1784 - 1787. The problem is not that one forum favors the government more than another, but that allowing a protester to go to the GAO and then to the COFC gives the protester two bites at the apple and adds to the uncertainty, cost, and time of procurements without adding any real value for the taxpayer. One forum is enough. If we must have two, then protesters should have to elect one and be satisfied with the result that they get.

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I mentioned TECOM only as an example of corruption in Air Force contracting.

I scanned the THE CLAUSE article, and if I understood it correctly, the authors agree that in every case the COFC reversed the GAO, the GAO had decided the case wrongly.

Don't get me wrong:

I can see how eliminating the ability to get a GAO Decision reviewed at a higher level benefits Agencies and successful contractors, which is good for the "expeditious" prong.

But not eliminating it is even more gooder for the "accountability" prong.

And "uncertainty" over possibly having bad decisions overturned isn't even a prong.

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I scanned the THE CLAUSE article, and if I understood it correctly, the authors agree that in every case the COFC reversed the GAO, the GAO had decided the case wrongly.

Please provide the page numbers of that publication on which you found the authors' agreement with that proposition.

Don't get me wrong:

I can see how eliminating the ability to get a GAO Decision reviewed at a higher level benefits Agencies and successful contractors, which is good for the "expeditious" prong.

But not eliminating it is even more gooder for the "accountability" prong.

How so? There is an implicit assertion in those statements that the GAO does not hold agencies accountable. Prove it. And why are you being cute with the "gooder" type language? Why don't you write precisely and in plain English? Be serious with me, or I will not take you seriously. You asked for my views, remember?

Your comments are based on the underlying proposition that the GAO routinely makes bad decisions. Prove it. Do you think a GAO decision is "bad" simply because the court disagrees with it? Do you think that the court never makes bad decisions? Really? Well, take a look at Axiom Resource Management, Inc. v. U.S. and Lockheed Martin, 564 F.3d 1374 (Fed. Cir., 2009). In that case the protester filed three protests with the GAO on the same issue. The GAO dismissed and denied the protests. The protester then took his case to the COFC. The COFC held for the protester and enjoined the government from exercising options to extend performance. The Government and Lockheed appealed to the Federal Circuit. The Federal Circuit reversed the COFC's decision, saying:

While we doubt that it would ever be appropriate for the court to interfere with the performance of a contract based solely on its belief or suspicion that the CO cannot be trusted, court interference is certainly inappropriate in this case because the CO did not act arbitrarily or capriciously in evaluating the mitigation efforts. The Supreme Court has warned against undue judicial interference with the lawful discretion given to agencies. See Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 67, 124 S.Ct. 2373, 159 L.Ed.2d 137 (2004) (“The prospect of pervasive oversight by federal courts over the manner and pace of agency compliance with such congressional directives is not contemplated by the APA.”). Moreover, “[g]overnment officials are presumed to do their duty, and one who contends they have not done so must establish that defect by clear evidence.” Carolina Tobacco Co. v. Bureau of Customs & Border Prot., 402 F.3d 1345, 1350 (Fed.Cir.2005) (quotation marks omitted). Accordingly, we conclude that the Court of Federal Claims erred by finding that the “unenforceability” of Lockheed's mitigation plan was grounds for setting aside the contract.

(APA stands for Administrative Procedures Act, which sets the standard for the COFC's judicial review in protest cases.)

That case dragged out from September 25, 2006, when the protester first filed with the GAO, until May 4, 2009, when the Federal Circuit put an end to it. The system does not need that kind of litigation over contractor selection decisions. The protest system is designed to protect the taxpayers. Letting protesters go to the GAO and then to the court is not in the best interests of the taxpayers. In fact, as the Federal Circuit suggested, we don't need the involvement of the courts in contractor selection decisions. The GAO has been good enough for decades, and it's good enough now. Not perfect, I don't like everything they have done, but they are good enough. It is a trustworthy organization.

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