While Government Spending is Down, Bid Protests are Up

September 18, 2015

In a recently released report, the U.S. Government Accountability Office (GAO) provided a revealing look at significant shifts in bid protest trends that have taken place over the last six years. These trends show that even as the rate of government spending has decreased significantly during this time, the number of GAO protests have substantially increased. Specifically, in the last six years, the number of bid protests at the GAO has risen 45 percent even as overall government spending has decreased by 25 percent.

At first glance, this significant increase appears to be correlated with a decrease in the level of protests sustained by the GAO. In FY2014, for instance, the GAO sustained only 2.9 percent of all protests filed with its office, which translates to a total of 13 percent of all its issued protest decisions. This 13 percent rate was down from 22 percent from FY2001-FY2008, and was below the average rate from the last six years of 17 percent.

However, looks can be deceiving. While the GAO has sustained less protests, its overall “effectiveness rate,” i.e., the percentage of cases which resolve in the protester’s favor, has stayed the same. The effectiveness rate looks at not only those protests sustained by the GAO, but also those protests dismissed due to the agency deciding to take corrective action in response to the protest.

Agencies decide to take corrective action for numerous reasons, including to correct an evaluation error, to better document a procurement decision, or because the agency’s needs have changed. Over the last five fiscal years the effectiveness rate has remained relatively stable, averaging at 42 percent.

Thus, the increasing number of protests has not resulted in a decline in the percentage of successful protests. This suggests that the increasing number of protests are not spurred by an increase in frivolous cases, but is instead spurred by either an increase in the number of mistakes made by agency procurement officials or by an increasing awareness on the part of contractors of their protest rights and willingness to employ those rights.

There is anecdotal evidence to support both of these rationales. As the federal acquisition workforce becomes smaller and loses talent due to budget pressures, many commenters and contractors have seen the number of mistakes committed by inexperienced procurement officials dramatically rise. At the same time, as budgets get smaller, the incentive on the part of government contractors to fight to retain individual contracts increases since such contracts can represent a significant portion of a small government contractor’s overall revenue.

Filing a protest at the GAO brings with it not only the possibility of winning the work back via a successful protest, but also the imposition of an automatic stay of the contract award. That automatic stay can be worthwhile in its own right, buying the incumbent a few more months of contract work via a bridge contract put in place until the end of the GAO protest process.?

About the author: Alex Levine is an associate with PilieroMazza in the Government Contracts Group.  He may be reached at alevine@pilieromazza.com.

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