Bid Protests Rise, Still ‘Exceedingly Uncommon,’ Report Finds

By Sam Skolnik

Bid protests stemming from defense and nondefense acquisitions roughly doubled from fiscal 2008 to fiscal 2016, according to a long-awaited Defense Department-commissioned RAND Corp. study obtained by Bloomberg Government.

Yet the overall proportion of Defense Department contracts that are protested, less than 0.3 percent, “implies that bid protests are exceedingly uncommon for DoD procurements,” concluded the RAND report, which was mandated by the 2017 National Defense Authorization Act.

RAND based its conclusions on a quantitative analysis of data on protests filed with the Government Accountability Office and the U.S. Court of Federal Claims, according to the report, which was delivered Dec. 21 to congressional leaders and Defense Secretary James Mattis.

Neither RAND nor the recipients have released it, though RAND is expected to post it on its website this month.

‘Lack of Trust’

The Pentagon and the contracting industry see the protest system differently—so much so that there is “a lack of trust on each side,” the 122-page report found.

Defense Department personnel expressed a “general dissatisfaction” with the current system, the report found in interviews with bid protest experts inside the military services, elsewhere in the Pentagon and in other agencies, as well as with government contracts attorneys, trade group officials, and individual contractor executives.

The rules allow protesters to make “excessive numbers of ‘weak’ allegations, by permitting contractors too much time to protest, and by virtue of the amount of time it takes to resolve cases,” Pentagon purchasers said, according to the report.

At the same time, “the private sector views bid protests as a healthy component of a transparent acquisition process, because these protests hold the government accountable and provide information on how the contract award or source selection was made,” the report found.

Protest Trends

Lawmakers considered a number of significant changes to the bid protest system in the 2017 NDAA, including attempts to limit the number of protests contractors could file. Too many protests are filed, including many with only slim chances of success, some said.

Congress settled on a provision requiring the Defense Department to enlist a nonprofit or federally funded research entity to conduct a study to determine the long-term viability of the protest system.

The provision mandated that the study examine 14 elements of the protest process. However, because of a lack of available data, Santa Monica-Calif.-based RAND—the Defense Department’s choice to conduct the study—wasn’t able to address four of the elements: the effects of protests on procurements; the time and cost for the government to handle protests; the frequency with which protesters are awarded the contracts in dispute; and agency-level protest trends.

The report also did not include the GAO’s most recent numbers, including a 7 percent drop in filed bid protests to 2,596 in fiscal 2017 from 2,789 in fiscal 2016.

‘Adversarial and Evasive’

The report made a half-dozen recommendations, including:

•  Enhancing the quality of post-award debriefings. The report was adamant on this topic, which also was addressed in the recently passed 2018 NDAA. “The worst debriefings were characterized as being skimpy, adversarial, and evasive or as failing to provide required reasonable responses to relevant questions,” the report found. Such failed debriefings often led to unnecessary protests, the report found.
•  Taking care in considering restrictions on task-order protests at the GAO. This is important because such protests are more likely than other protest types to be sustained or result in corrective action.
•  Considering using an expedited process for protests in procurements valued at $100,000 or less. These cases make up 8 percent of GAO protest actions, and 4 percent at the U.S. Court of Federal Claims.

The report also found that small businesses accounted for more than half of the protest actions at GAO and the federal claims court. “The implication is that any changes or improvements to the bid protest system need to account for small business,” the report found.

Looking Forward

The report could serve as grist for the debate over the 2019 NDAA, Alan Chvotkin, executive vice president and counsel of the Professional Services Council, told Bloomberg Government.

Chvotkin said he’s pleased that the report highlighted several issues important to the PSC, including the need for enhanced debriefings to add transparency to the process. “Overall, I think this is a valuable report,” he said.

Paul Khoury, a partner with Wiley Rein and co-chair of the firm’s government contracts practice group, told Bloomberg Government in a written statement that the report appears to be “thorough and balanced.”

“The key take-aways make sense and are consistent with our experience,” he wrote.

Khoury cited the report’s emphasis on enhanced debriefings, and its observation that the stability of the bid protest effectiveness rate over time suggests that contractors “are not likely to protest without merit.”

The National Defense Industrial Association’s policy staff found “it appears that many of industry’s concerns with the bid protest system are supported, most notably that firms are not likely to protest without merit,” NDIA spokeswoman Evamarie Socha told Bloomberg Government in a written statement.

Mattis has emphasized reforming the way the Pentagon does business, Defense Department spokesman Patrick Evans told Bloomberg Government in a written statement. Therefore, “we appreciate any effort that could help move us closer to reforming the department and its business processes in order to gain full value from every taxpayer dollar spent on defense,” he said.

To contact the reporter on this story: Sam Skolnik in Washington at sskolnik@bgov.com

To contact the editor responsible for this story: Daniel Ennis at dennis@bgov.com

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