Thinking of protesting an adverse decision on a federal contract award? Well, a recent decision by the United States Court of Federal Claims illustrates just how rocky your path has become. This one will leave you scratching your head:
The case is Gemini Tech Services, LLC v. United States, 177 Fed. Cl. 227 (July 24, 2025). The government issued a Request for Proposals to perform certain support services for a military installation in Fort Knox, Kentucky, and announced that it would initiate a “strict compliance review” starting with the lowest priced proposal and continuing to higher priced proposals until at least five compliant proposals were received, while reserving the right to waive strict compliance review if the government deemed it to be in its best interest. In selecting among the compliant bidders, it would then employ “a best value source selection process using three evaluation factors: technical, past performance, and cost/price.”
When three of the five proposals were found to be noncompliant, the government decided to waive strict compliance review in order to expand the candidate pool, and proceed to the three evaluation factors. And even though the Plaintiff, Gemini Tech Services, got a satisfactory grade on the first two criteria and had the lowest price, it was nevertheless disqualified because its proposal was interpreted as containing a cap on certain indirect expense rates, in violation of the government’s newly announced rule prohibiting such caps (a rule intended to benefit smaller bidders). The contract was eventually awarded to a competitor who, unlike Gemini, had failed the strict compliance review that the government later decided to waive.
Note that the point of disqualification was that Gemini’s ultimate price might end up being lower, not higher, than competitors! (That’s what caps on rates do.) But this didn’t matter under the test that the Court applied in upholding the Contracting Officer’s decision:
“When called upon to review a federal agency’s procurement decision, this Court employs the Administrative Procedure Act (APA) standard, and must determine whether the challenged action was arbitrary, capricious, an abuse of discretion, or otherwise contrary to law. ‘The arbitrary and capricious standard is highly deferential and requires this Court to sustain an agency action evincing rational reasoning and consideration of relevant factors.’ An agency’s procurement decision is arbitrary and capricious ‘if either: (1) the procurement official’s decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure.’ With respect to challenges brought under the first ground, the Court must ‘determine whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion, and the disappointed bidder bears a heavy burden of showing that the award decision had no rational basis.’ As for the second ground, ‘the disappointed bidder must show a clear and prejudicial violation of applicable statutes or regulations.’” [citations removed]
If any explanation given by a Contracting Officer, no matter how questionable its underlying theory, can satisfy the “rational basis” test and prevent the action from being “arbitrary and capricious,” it is hard to imagine how any bid protest can ever overcome a Contracting Officer’s decision. The upshot of this approach is that courts will not question the wisdom of a decision, and will examine little more than whether consideration was given to all relevant factors. In other words, the courts only conduct a procedural review, not a substantive one. As long as the Contracting Officer has checked all of the boxes for the relevant factors, whether those factors were weighed properly, or even rationally, will escape judicial review completely.
And as the Gemini case demonstrates, this is true even if the relevant factors are internally inconsistent. To say that adopting a constraint on bids that rewards the inefficient, higher cost bidder is within the awarding authority’s discretion is one thing. To approve that discretion when it is contradicted by the RFP’s announced evaluation factors – particularly the cost/price factor – is quite another.
We’ve now hit the high water mark for agency discretion.
The case is Gemini Tech Services, LLC v. United States, 177 Fed. Cl. 227 (July 24, 2025). The government issued a Request for Proposals to perform certain support services for a military installation in Fort Knox, Kentucky, and announced that it would initiate a “strict compliance review” starting with the lowest priced proposal and continuing to higher priced proposals until at least five compliant proposals were received, while reserving the right to waive strict compliance review if the government deemed it to be in its best interest. In selecting among the compliant bidders, it would then employ “a best value source selection process using three evaluation factors: technical, past performance, and cost/price.”
When three of the five proposals were found to be noncompliant, the government decided to waive strict compliance review in order to expand the candidate pool, and proceed to the three evaluation factors. And even though the Plaintiff, Gemini Tech Services, got a satisfactory grade on the first two criteria and had the lowest price, it was nevertheless disqualified because its proposal was interpreted as containing a cap on certain indirect expense rates, in violation of the government’s newly announced rule prohibiting such caps (a rule intended to benefit smaller bidders). The contract was eventually awarded to a competitor who, unlike Gemini, had failed the strict compliance review that the government later decided to waive.
Note that the point of disqualification was that Gemini’s ultimate price might end up being lower, not higher, than competitors! (That’s what caps on rates do.) But this didn’t matter under the test that the Court applied in upholding the Contracting Officer’s decision:
“When called upon to review a federal agency’s procurement decision, this Court employs the Administrative Procedure Act (APA) standard, and must determine whether the challenged action was arbitrary, capricious, an abuse of discretion, or otherwise contrary to law. ‘The arbitrary and capricious standard is highly deferential and requires this Court to sustain an agency action evincing rational reasoning and consideration of relevant factors.’ An agency’s procurement decision is arbitrary and capricious ‘if either: (1) the procurement official’s decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure.’ With respect to challenges brought under the first ground, the Court must ‘determine whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion, and the disappointed bidder bears a heavy burden of showing that the award decision had no rational basis.’ As for the second ground, ‘the disappointed bidder must show a clear and prejudicial violation of applicable statutes or regulations.’” [citations removed]
If any explanation given by a Contracting Officer, no matter how questionable its underlying theory, can satisfy the “rational basis” test and prevent the action from being “arbitrary and capricious,” it is hard to imagine how any bid protest can ever overcome a Contracting Officer’s decision. The upshot of this approach is that courts will not question the wisdom of a decision, and will examine little more than whether consideration was given to all relevant factors. In other words, the courts only conduct a procedural review, not a substantive one. As long as the Contracting Officer has checked all of the boxes for the relevant factors, whether those factors were weighed properly, or even rationally, will escape judicial review completely.
And as the Gemini case demonstrates, this is true even if the relevant factors are internally inconsistent. To say that adopting a constraint on bids that rewards the inefficient, higher cost bidder is within the awarding authority’s discretion is one thing. To approve that discretion when it is contradicted by the RFP’s announced evaluation factors – particularly the cost/price factor – is quite another.
We’ve now hit the high water mark for agency discretion.
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