By now, most government contractors and government contracts attorneys are aware that both the House Armed Services Committee (HASC) and the Senate Armed Services Committee (SASC) have proposed, as part of the Fiscal Year 2017 National Defense Authorization Act, drastic changes to and important measures pertaining to the bid protest process. While the HASC’s and the SASC’s proposals may be well intended, as discussed below, the proposals are based on misperceptions and overblown concerns about the prevalence of “frivolous” protests and prolonged procurement delays. Moreover, as discussed below, the HASC’s and the SASC’s proposals strongly suggest that the essential benefits of the bid protest process still are not fully appreciated.
Brief Overview of Proposed Measures and Changes
As part of the FY 2017 NDAA, the HASC recently introduced a section that “would require the Secretary of Defense to enter into a contract with an independent entity with appropriate expertise to conduct a review of the bid protest process related to major defense acquisition programs.”1 This “review would include an assessment of the incidence and duration of bid protests, whether bid protests have delayed procurement actions, and whether bid protests are frequent by, or provide financial benefits to, incumbent contractors.”2
Meanwhile, the SASC has proposed to impose costs on certain losing protesters at the U.S. Government Accountability Office, and has proposed to “impose a withhold on payments above incurred costs on any bridge or temporary contract to an incumbent contractor who submits a protest and that protest results in the issuance of a bridge or temporary contract.”3 Further, the SASC has proposed to eliminate the GAO’s jurisdiction over protests challenging U.S. Department of Defense task and delivery orders.4
Misperceptions and Overblown Concerns About the Bid Protest Process
While the HASC’s and the SASC’s proposed changes and measures may be well intended, it is readily apparent that these proposals are based on misperceptions and overblown concerns about the pervasiveness of “frivolous” protests and lengthy procurement delays. To set the record straight, a few basic points are worth noting.
First, bid protests are very rare. Indeed, one highly respected commentator recently took a snapshot look at GAO bid protests in FY 2008 and FY 2011 and found that, for those years, “between approximately 99.3% and 99.5% of procurements were not protested.”5 Given that bid protest statistics have remained relatively steady in recent years, it is safe to assume that these figures continue to roughly approximate the percentage of procurements in years since that have not been protested. Moreover, although there are no reliable statistics on the prevalence of “frivolous” bid protests, it stands to reason that, since bid protests in general are very rare, “frivolous” protests are extremely rare.6
Second, the GAO’s bid protest process already provides a mechanism for promptly disposing of “frivolous” protests. Specifically, the GAO’s bid protest regulations provide that an “agency or intervenor which believes that the protest or specific protest allegations should be dismissed before submission of an agency report should file a request for dismissal as soon as practicable.”7And, as the GAO has reported to Congress, it “promptly dismisses protests that do not state a valid legal basis or are otherwise procedurally defective.”8 “Thus, GAO dismisses protests, where appropriate, without the need to resolve whether the protest was frivolous.”9
Third, while the Competition in Contracting Act (CICA) provides for an automatic stay of the contract award upon the timely filing of a GAO bid protest, CICA also provides a mechanism for agencies to “override” the stay and move forward with the procurement while a protest is pending.10 Additionally, although the maximum length of time for a CICA stay is 100 days, most bid protests are resolved well before the 100th day.11
Benefits of the Bid Protest Process
In addition to being based on misperceptions and overblown concerns, the HASC’s and the SASC’s proposals strongly suggest that the indispensable benefits of the bid protest process still are not fully appreciated. As such, it is worth noting some of these essential benefits:
- Bid protests ensure transparency in the federal procurement process. And, as one leading commentator has noted, “crippling” “an effective protest system will lead to a loss of transparency, and the shared experience of many procurement systems is that, when transparency is decreased, corruption and related problems increase.”12
- Bid protests also ensure accountability in the federal procurement process — which is particularly important, given that taxpayer money is at stake.
- Similarly, the existence of the bid protest process “empowers those in contracting agencies who face pressure to act improperly.”13
- Bid protests additionally “can increase potential bidders’ confidence in the integrity of the procurement process, and thereby lead more players to participate, thus increasing competition.”14
- Increased competition, in turn, generally means lower prices.15
- Likewise, bid protests increase the public’s confidence in the integrity of the federal procurement process.16
- Bid protests also provide a “due process” mechanism for aggrieved bidders to air their complaints and to obtain relief.17
- Bid protests often result in published decisions, which provide essential guidance to contractors, attorneys and agency procurement officials. In addition, although GAO decisions are not binding on the U.S. Court of Federal Claims, the court regularly looks to GAO decisions for guidance.18 Further, published protest decisions are “important to those concerned about good government, including the press.”19
Although the HASC’s and the SASC’s proposals may be well intended, it nonetheless is clear that they are based on misperceptions and overblown concerns about the prevalence of “frivolous” protests and prolonged procurement delays. Furthermore, the HASC’s and the SASC’s proposals suggest that the crucial benefits of the bid protest process still are not fully appreciated. As one esteemed commentator put it: “Whatever costs protests impose on the procurement system are outweighed ... by the benefits that protests bring, in terms of transparency, accountability, education, and protection of the integrity of the U.S. federal procurement system.”20 Accordingly, the Senate and the House should think twice before adopting the proposed changes to the bid protest process.
Republished with permission. This article first appeared in Law360 on June 10, 2016.