A recent decision by the Court of Appeals for the Federal Circuit provides clear guidance for contract awardees: violations of redaction requirements by protesters or other parties will not save a non-intervening awardee from its failure to protect its contract award. An awardee that chooses not to intervene in a bid protest needs to carefully monitor the docket and take prompt action to obtain information and seek relief when necessary to protect its contract award and other rights.
In early February, the Court of Appeals for the Federal Circuit heard oral argument in a bid protest case called Global K9 Protection Group LLC v. U.S. (Global K9). Shortly after the argument, this blog discussed some of the interesting issues raised by the appeal. The Federal Circuit has now decided Global K9.
As expected, the appeals court grappled with the failures of the parties and the Court of Federal Claims (COFC) to comply with and enforce COFC’s redaction rules. The Federal Circuit also considered whether K2 Solutions, Inc. (K2), the non-intervening awardee, raised problems with the bid protest proceeding in a timely manner. K2 lost its attempt to appeal the COFC decision for the reasons explained below.
Beyond the outcome for K2, the Federal Circuit’s decision provides important guidance for contractors regarding participation in COFC bid protests. Among other things, the Federal Circuit explains:
- What an awardee that chooses not to intervene must do, at minimum, to monitor the public docket and protect its rights, reputation, and other government contracts.
- How the COFC’s redaction rules are lacking and how redaction requirements should be enforced.
Recap of Protest Background
The Global K9 protest involves a 2023 U.S. Postal Service (USPS) “Third-Party Canine-Mail Screening with Real-Time X-ray Analysis” contract award. K2 and another contractor were each awarded several “clusters” in which they would perform services. Global K9 protested the USPS evaluation and award decision. Although Global K9’s initial protest (and redacted protest) did not attack K2’s award, Global K9 filed an amended complaint after production of the administrative record. In its amended complaint, Global K9 took aim at K2’s proposal and alleged that K2 made misrepresentations regarding its past performance.
Contrary to the COFC’s protective order requirements, Global K9 did not file a redacted copy of its amended complaint on the public docket. K2 later explained it was monitoring the docket (which would have listed but not provided access to the sealed amended complaint) but did not object to Global K9’s failure to comply with the protective order’s redaction rules. In K2’s absence, the government and other parties briefed and argued Global K9’s attacks on K2, and the COFC found that K2 made intentional material misrepresentations on which the agency relied in its award decision. Based on these findings, the COFC “issued a permanent injunction disqualifying K2 from the instant solicitation” after determining that an in absentia disqualification was permissible because, before any attack on K2 was made, K2 had “freely opted not to participate” in the protest. The USPS also initiated termination proceedings on another K2 contract, which later resulted in a termination for default.
When the COFC’s redacted decision was issued, K2 first learned of Global K9’s attacks and of the COFC’s determinations that K2 had made material misrepresentations. K2 sought to intervene, and the court ordered the parties to comply with the protective order and “file redacted versions” of their briefing and sealed materials. The trial court then considered K2’s intervention motion but denied it as moot and untimely.
The Federal Circuit’s Analysis
The Federal Circuit affirmed the COFC’s decisions, but its opinion had important things to say about the parties’ conduct and the trial court’s rulings. The appellate court focused primarily on the timeliness of K2’s motion to intervene.[1] As part of the timeliness inquiry, the court must consider three factors: (1) the length of time during which the potential intervenor knew or should have known its rights were in jeopardy and failed to act, (2) the potential prejudice to the existing parties from allowing belated intervention, and (3) any unusual circumstances supporting or undermining intervention.[2]
The court’s decision focused on the length of time during which K2 knew or should have known its rights were in jeopardy and discussed problems related to when K2 learned of the risk it faced from the misrepresentation allegations. Global K9’s misrepresentation allegations were first made in its amended complaint, filed after K2 decided not to intervene. When K2 learned of the perilous allegations, and upon the COFC’s order, the parties prepared redacted materials providing K2 information about the misrepresentation allegations that had been adjudicated and resulted in an injunction against K2. The Federal Circuit found fault with (i) Global K9’s unjustified redactions, and (ii) Global K9’s failure to comply with COFC’s rules regarding promptly preparing and filing redacted documents.
First, as it has done before, the appeals court emphasized that appropriate redactions are judged against the “highly significant” and longstanding public right of access to judicial records. Although the court recognized that government contractors have some compelling circumstances in which proprietary information may be withheld, it explained that redactions are appropriate when disclosure of an offeror’s information “would cause substantial competitive injury, interfere with the confidentiality of the bidding process, or impair national security.” The court explained that neither the COFC’s protective order nor the trial court’s rules “adequately define materials entitled to such confidential treatment,” and it opined that Global K9’s redactions were unjustified. For instance, the Federal Circuit found fault with Global K9’s amended complaint redacting parts of K2’s proposal because the COFC opinion had already quoted the same proposal language in its public decision.[3]
Second, the Federal Circuit explained that Global K9 violated the COFC’s rules by failing to propose a redacted version of filings to other parties promptly—i.e., “within two business days”—and by failing to file publicly available redacted copies as required. As a result of Global K9’s non-compliance and COFC’s non-enforcement, K2 “did not have actual notice of the misrepresentation allegations against it until after the [COFC’s] December 2023 opinion disqualifying it from performing its awarded contract.”
Notwithstanding these issues, the Federal Circuit determined that K2 failed to adequately protect its rights and therefore the COFC’s denial of K2’s belated intervention motion was not an abuse of discretion. In the protest record, K2 admitted that after it decided not to intervene at the beginning of the protest, it was “tracking the docket.” Because the COFC’s docket showed that an amended complaint had been filed under seal, the Federal Circuit held that (i) K2 “would have known” the original complaint had been superseded, (ii) Global K9 was supposed to file a redacted version of the amended complaint, and (iii) K2 could (and should) have moved to compel submission of a redacted amended complaint. Because K2 did not take action in July 2023 when the amended complaint was filed, K2 was at fault for not learning about Global K9’s misrepresentation allegations, which appeared in the redacted document Global K9 filed nine months later (after the decision).
With respect to the remaining Belton factors—the “balance of prejudices” and the potential “existence of unusual circumstances” (see note 2 above)—the Federal Circuit ruled that they did not weigh in K2’s favor. And finally, the court rejected K2’s argument that the COFC should have joined K2 as a necessary and indispensable party.
Key Takeaways
- Always consider intervention at the outset. Awardees should carefully consider the risks of not intervening to protect their contract awards and business reputations. Losing a contract award in a bid protest in which the awardee chose not to participate would be an unpleasant result. But adding a terminations for default based on findings made in the awardee’s absence—because the court determines the awardee failed to sufficiently monitor and respond to information on the public docket—would be a devastatingly tough pill to swallow.
- Continually monitor the public docket. Parties that choose not to intervene should consider consulting counsel to understand, at a minimum, the types of filings that may appear in a “sealed” form on the public docket and may affect their rights—and what to do if a redacted version is not filed within several days of the sealed filing.
- Be prepared for litigation costs to increase. The Federal Circuit’s decision will likely increase the cost of litigating bid protests at COFC. Although the appellate court’s strict reading of the COFC protective order requirements is correct, there is frequently a substantial desire to forgo the expense of preparing redacted documents (which can be significant). This is particularly true when other parties’ demands for redactions are onerous and will result in difficult-to-read or unhelpful documents.
- Expect more intense disputes about redactions. COFC may also experience additional burdens from disputes regarding the propriety of redactions during bid protest litigation (when GAO and COFC generally expect counsel to “work things out” among themselves). Notably, if COFC and the Federal Circuit strictly enforce the rule that the parties must timely agree to and file redacted versions documents during a protest, counsel will often feel compelled to agree to over-redacted filings to avoid protracted disputes. Unfortunately, such concessions may result in after-the-fact findings by either COFC or the Federal Circuit that agreed redactions were unjustifiable.
Conclusion
The Federal Circuit’s Global K9 decision makes clear that choosing not to intervene in a bid protest does not relieve an awardee of the obligation to actively monitor the docket and promptly assert its rights when new filings appear. Contractors and their counsel should heed this warning and develop concrete protocols for tracking sealed filings and enforcing redaction compliance to avoid the negative consequences of inaction.
[1] The Federal Circuit disagreed with the COFC’s ruling that K2’s motion to intervene was moot because the contract awarded to K2 had been terminated for default. The appeals court explained that K2’s continued efforts to contest the agency’s termination for default—and K2’s arguments that the default should be converted to a termination for convenience—result in the alleged K2 misrepresentation “continu[ing] to be a live issue.” Because a potential vacatur of the misrepresentation finding would benefit K2’s ongoing effort to convert the termination, the appeals court found that the issue is not moot under Federal Circuit precedent.
[2] See Belton Indus, Inc., v. U.S., 6 F.3d 756, 762 (Fed. Cir. 1993).
[3] Ordinarily, the parts of an amended complaint containing quotations from the awardee’s proposal would be heavily redacted because intervenor’s counsel would argue for substantial protection of their client’s proposal. In the Global K9 case, the trial court issued its public decision on December 27, 2023, and Global K9 prepared and filed its redacted amended complaint on March 15, 2024, and obscured what the trial court had previously published.