Maryland State Board of Contract Appeals Rules That Offeror That Did Not Submit Proposal Lacked Standing

The Maryland State Board of Contract Appeals recently addressed a prospective offeror’s standing to prosecute a protest and subsequent appeal to the Board. 

In that case, which can be found here, the claimant was excluded from participating in a 2018 RFP because it had communicated with the State concerning the issuance of the RFP in violation of Maryland procurement law.  The State ended up not awarding the 2018 RFP and cancelled it.

In 2020, the State issued another RFP based, in large part, on the 2018 RFP. Because the two RFPs were nearly identical, the procurement officer advised the claimant that it was excluded from competing for the re-issued 2020 RFP. The claimant filed a protest with the procurement officer but, importantly, never submitted its proposal.  The PO denied the protest and the claimant appealed to the Board. While the board ultimately upheld the PO’s decision, it's ruling examined the claimant’s standing to bring the protest.

Before addressing standing, the Board noted an important concept that is often overlooked in procurement, as well as other dealings with the State. That is the doctrine that “those who contract with the State are presumed to know when the State has overstepped its authority and bear the risk of loss arising therefrom.” This is important because businesses often deal with the State (and the federal government, i.e. tax negotiations) but do not understand the procurement process or the State’s authority to do what it proposes to do.  The business then expends money in reliance on the State’s improper actions and, when the State disputes its authority, claims the State misled it. The business’s estoppel argument usually fails in court.  Federal and state courts have made clear that when dealing with the State, a party must know the limit of the State's authority.

Turning to standing, the Board look to the definition of an interested party under SF&P §15-217(a)(1), which states that “a prospective bidder or offeror, a bidder, or an offeror may submit a protest to the procurement officer.” Regulations further limit an interested party to “an actual or prospective bidder, offeror, or contractor that may be aggrieved by the solicitation or award of the contract, or by the protest.” COMAR 21.10.02.01B(1). Accordingly, a claimant must also be “aggrieved” by the decision.  The Board went on to note that “our cases have historically and generally concluded that if there is no reasonable possibility of being awarded the contract if successful on its protest, the party is not aggrieved, and thus does not have standing.” Likewise, “a protester that failed to submit a bid did not have standing to protest since there is no reasonable possibility of getting an award absent a bid/proposal.” However, a claimant does not need to be next in line for the award (or even have a reasonable possibility of an award), but can show that it is “aggrieved” if it has been “affected competitively” by the State. 

Here, the claimant never submitted a proposal for the 2020 RFP and, therefore, there was no reasonable possibility of it being awarded the contract if it prevailed on its protest. Accordingly, the Board reasoned that it was not aggrieved under COMAR regulations and therefore lacked standing.

While the Board acknowledged that “it seems counterintuitive to require a prospective offeror to submit a responsive proposal once they have been informed in writing that they are being excluded from competition” and offered no opinion on this, it seems that it would be good practice to submit the proposal/bid even if there is very little chance of an award in order to preserve and strengthen any standing argument. 

The case is In the Appeal of MGT Consulting Group, LLC, docket number MSBCA 3148.