LegiStorm

Summary:

Bid protests on federal government contracts filed with the Government Accountability Office (GAO) have received congressional scrutiny due to protests of high-profile awards and reports that the number of protests is increasing. Concerns over delays in contract award or performance triggered by a GAO protest, coupled with the increasing number of GAO protests, have prompted concerns about the potential impact of protests upon government agency operations, especially in the Department of Defense (DOD). Both the House- and Senate- passed versions of the FY2016 National Defense Authorization Act call for a report on the bid protest process. There has been a significant shift in bid protest trends over the last six years. When compared to the rate of government spending, bid protests decreased from FY2001-FY2008, and increased from FY2008-FY2014. From FY2008-FY2014, total government spending, adjusted for inflation, decreased 25% while total protests increased 45%. The rate at which GAO sustains protests has also seen a significant shift in recent years. From FY2001-FY2008 GAO sustained protests in 22% of their opinions; from FY2009-FY2014 that number dropped to 17%. These numbers suggest that while companies are more likely to file a bid protest, they are somewhat less likely to win a bid protest. In addition to GAO sustaining a protest, contracting agencies may voluntarily act to correct the allegation charged in the protest. The percentage of protesters obtaining relief—either through a protest being sustained or voluntary action taken by an agency—is called the effectiveness rate. Over the last five fiscal years the effectiveness rate has remained relatively stable, averaging 42%. Some observers believe that the increase in the effectiveness rate is a result of the predictable nature of GAO opinions. When agencies can determine how GAO will rule in a given situation, they are more likely to voluntarily take corrective action. Under this theory, the effectiveness rate is a rough measure of the number of protests that have merit. Others believe that voluntary action by agencies is often a result of a risk-averse culture that seeks to avoid even the potential of a protest being sustained. These observers could argue that the high likelihood of protests being resolved through voluntary agency action encourages companies to file protests. Analysts believe that protests are sometimes the result of poor communication between government and industry, poorly written requirements, and agencies not adequately debriefing losing bidders after an award. When agencies do not adequately debrief bidders, companies may file a protest to determine why they lost a competition. If poor communication results in bid protests, improving agency communication, clarity, and debriefs could result in fewer protests. The specter of a company filing a protest can influence agency behavior—sometimes positively and sometimes negatively. Fear of a protest may motivate agency officials to conduct more rigorous market research, hold a competition instead of using sole-source awards, or conduct a more thorough and fair competition. Fear of a protest could also prompt officials to try to structure a contract in a manner they deem less likely to be protested, such as using lowest price technically acceptable as an award criteria instead of a best-value competition (when best value may be more appropriate). DOD contracts are less likely to be protested, and when protested, less likely to be sustained than civilian agency contracts. Protests against civilian agencies are also growing at a faster rate than protests against DOD.