Postal Service Contractor? Would-be Contractor? A Look inside the U.S. Postal Service Bid Protest Process
Construction and Procurement Law News, Q2 2017
Most sophisticated government contractors know that the Government Accountability Office (GAO) does not have jurisdiction over bid protests challenging procurements or proposed procure-ments by the U.S. Postal Service (USPS). However, few government contractors are aware that the USPS has its own bid protest (or “disagreement”) process, and even fewer govern-ment contractors know the details of the USPS’s protest process. This article provides a user-friendly overview of the USPS’s bid protest process.
The GAO’s Bid Protest Regulations state, in relevant part: “Protests of procurements or proposed procurements by agencies such as the U.S. Postal Service . . . are beyond GAO’s bid protest jurisdiction as established in 31 U.S.C 3551-3556” (see 4 C.F.R. § 21.5(g)). The U.S. Court of Appeals articulated the reason that the GAO does not have jurisdiction over protests challenging USPS procurements in a 2001 decision in Emery Worldwide Airlines, Inc. v. United States:
The GAO’s protest jurisdiction is defined by the Competition in Contracting Act (“CICA”) of 1984, 31 U.S.C. § 3551 et seq. The USPS is exempted from all federal procurement laws not specifically enumerated in 39 U.S.C. § 410(a).  Because the [CICA] is not specifically enumerated in 39 U.S.C. § 410(a), the CICA does not apply to the USPS and therefore the USPS is not subject to GAO review.
Despite the fact that the GAO cannot decide protests involving USPS procurements, the USPS has its own unique bid protest process, and the U.S. Court of Federal Claims (COFC) has consistently held that it has jurisdiction over protests involving USPS procurements. The USPS’s disagreement resolution procedures are set out in 39 C.F.R. Part 601. These regulations establish a process by which a contractor can file a protest concerning the USPS’s acquisition of services or property. The USPS “disagreement” process is essentially a two-step process that usually should be exhausted before a contractor files a bid protest action at the COFC.
Step One: Lodging the Disagreement with the Contracting Officer
The first step in the USPS process is to “lodge” (i.e., file) the disagreement with the contracting officer. The protester must lodge its disagreement within 10 days from when it first became aware of the grounds for disagreement. If, on the other hand, a protester is challenging the terms of a solicitation, then it must lodge – and “the contracting officer must receive” – the disagreement before offers are due. The USPS’s regulations do not provide for an automatic stay of the contract award upon the receipt of a timely filed protest. However, the USPS’s current Supplying Principles and Practices state that “[w]hile a disagreement is pending an award will not be made unless compelling circumstances so require” (see SP&Ps, § 7-4.4). Once a protester lodges its disagreement, the contracting officer has up to 10 days to review the challenge and issue a response. In addition, an alternative dispute resolution mechanism may be used if the parties so desire. If the protester is satisfied with the resolution of the matter, then the process ends. If, however, the contractor is not satisfied with the contracting officer’s resolution of the disagree-ment, or if the contracting officer has not respond-ed within 10 days after the disagreement was lodged, then the contractor may proceed to the second step of the process.
Step Two: Lodging the Disagreement with the SDRO
Next, the protester lodges the disagreement with the Supplier Disagreement Resolution Official (SDRO) at USPS Headquarters in Washington, D.C. Contractors must lodge the disagreement with the SDRO within 10 days after the contracting officer issues a decision on the protest, or within 10 days of when the contracting officer should have issued a decision. The SDRO may grant an extension of time to lodge a disagreement, but any request for an extension must set forth the reasons for the request, be made in writing, and be delivered to the SDRO on or before the time for lodging a disagreement lapses.
Upon receipt of a disagreement, the SDRO will provide a copy of the disagreement to the contracting officer, who, in turn, will notify other interested parties. The SDRO will then review the disagreement and, if necessary, obtain further information from the protester and the contracting officer. Notably, the USPS’s regulations state that the SDRO “may also meet individually or jointly with the person or organization lodging the disagreement, other interested parties, and/or Postal Service officials, and may undertake other activities in order to obtain materials, information, or advice that may help to resolve the disagreement” (see 39 C.F.R. § 601.108(e)). Next, the SDRO will issue a written decision – which typically happens within 30 days after the SDRO’s receipt of the disagreement.
The SDRO may grant various remedies, such as: (a) directing the USPS to terminate the contract award; (b) directing the USPS to issue a new solicitation; (c) directing the USPS to conduct a re-competition of the USPS’s requirements; and (d) directing the USPS to conduct a reevaluation of proposals.
If a protester is not satisfied with the SDRO’s decision, the decision “may be appealed to a Federal court with jurisdiction based only upon an alleged violation of the regulations contained in [39 C.F.R. Part 601] or an applicable public law enacted by Congress” (see 39 C.F.R. § 601.108(h)). Although this particular regulatory provision seems to limit the issues that may be “appealed” to a federal court, the COFC takes jurisdiction over issues that do not fall neatly under this provision. The COFC reasons that it, not the USPS, decides the extent of its jurisdiction over bid protest actions.
Furthermore, the regulations governing the USPS disagreement process seek to require contractors to “exhaust” their administrative remedies before bringing a challenge in federal court. While some commentators have suggested that this regulatory provision is, in effect, unenforceable since the COFC determines the extent of its bid protest jurisdiction, many practitioners opt to exhaust the USPS disagreement process out of an abundance of caution and because they potentially can save their clients money if they achieve a satisfactory result at the less-expensive USPS level.
Although the USPS disagreement process generally is a cheaper route than pursuing a protest at the COFC, there are drawbacks to the USPS process. For example, as mentioned above, the USPS’s regulations do not provide for an automatic stay of the contract award upon the receipt of a timely filed protest. Additionally, protesters oftentimes have little access to the procurement record during the USPS disagreement process.
The FAR Does Not Apply to the USPS
In prosecuting a disagreement before the USPS, remember that the Federal Acquisition Regulation (FAR) – which is the government-wide regulation that governs the federal contracting process for most agencies – does not apply to the USPS. Instead, the USPS’s Supplying Principles and Practices govern most of the contracting process.
The USPS has taken the position that because the Supplying Principles and Practices have not been formally issued as regulations, they are not binding on the USPS. The fact that the USPS’s Supplying Principles and Practices may be viewed as non-binding can present some difficulty for protesters challenging the USPS’s conduct at the COFC, because the USPS can argue that any violation of the Supplying Principles and Practices is not “arbitrary and capricious” conduct. Nevertheless, protesters can argue that actions by the USPS that are contrary to the USPS’s Supplying Principles and Practices are evidence of “arbitrary and capricious” conduct.
If you are a contractor for, or want to be a contractor for, the USPS, you need to be aware of how to protect yourself from a defective solicitation or from an unreasonable evaluation and award. You and your lawyer must know the USPS protest process and the time limitations to protect yourself against what you may perceive is unreasonable procurement conduct by the USPS.