On July 17, 2026, the U.S. General Services Administration (GSA) submitted legislative proposals to Congress—two of which have important implications for government contractors and the bid protest system. First, GSA is requesting Congress enact a “loser pays” bid protest rule for civilian agencies that is similar to the “loser pays” rule established for Department of Defense (DoD) bid protests to GAO in the Fiscal Year 2026 National Defense Authorization Act (FY26 NDAA). Second, GSA is seeking to raise the minimum threshold to protest the issuance of a civilian agency task or delivery order at GAO from $10 million to $35 million while also asking Congress to apply this threshold to orders issued under GSA’s Multiple Award Schedule (MAS) program. In this blog, we explain why GSA’s proposed legislation could have significant impacts on the bid protest landscape and government contractors’ ability to file a bid protest.
The Department of Defense Bid Protest Rules
On December 23, 2024, President Biden signed into law the FY25 NDAA, which increased the protest threshold from $25 million to $35 million for task and delivery orders issued under DoD IDIQ contracts (unless the order increases the scope, period, or maximum value of the IDIQ contract under which the order is being placed). To protest the issuance of a task or delivery order issued under a DoD IDIQ contract at GAO, the challenged order must be valued at more than $35 million. As a practical note, the current threshold for protesting a task order under an IDIQ contract issued by a civilian agency sits at $10 million (unless the order increases the scope, period, or maximum value of the IDIQ contract under which the order is being placed).
On December 18, 2025, President Trump signed into law the FY26 NDAA, which required DoD to “establish procedures for a contracting officer of the Department of Defense to withhold payment of covered amounts to an incumbent contractor during the period of pendency resulting from a bid protest by such incumbent contractor.” The FY26 NDAA authorizes DoD to withhold up to 5 percent of certain payments to an incumbent contractor who files a bid protest that is dismissed by GAO for failing to state a valid basis of protest, but it does not mandate that DoD withholds a certain percentage, nor does it mandate that DoD withhold a percentage at all. The only mandatory language is that, to the extent any payment amounts are withheld, that amount shall be forfeited by the incumbent contractor if GAO dismisses the protest for failing to state legal or factual grounds of protest. The FY26 NDAA states that DoD must revise the Defense Federal Acquisition Regulation Supplement (DFARS) to establish the withholding procedures mandated by the FY26 NDAA within 180 days of the date of enactment of the FY26 NDAA. That 180-day deadline passed on June 29, 2026, but DoD has yet to issue a proposed DFARS rule implementing Section 875 of the FY26 NDAA. The questions regarding the “loser pays” rule that remain to be answered by the DFARS implementing procedures are:
- Will DoD give contracting officers discretion as to what protested procurements require withholding and what percentage up to 5 percent to withhold, or will the decision to withhold, as well as the associated amount, be mandated by a standard DFARS clause?
- Will DoD clarify that certain dismissal grounds, such as untimeliness, do not trigger forfeiture?
In sum, DoD retains a significant amount of discretion in how it will implement Section 875.
The Extension to Civilian Agencies
On July 17, 2026, GSA submitted legislative proposals to Congress that effectively request Congress to match recent bid protest changes enacted in the FY25 and FY26 NDAAs, hoping to “align[] defense and civilian agencies on the handling of protests by incumbents by providing to civilian agencies the same mechanism to discourage the strategic use of protests solely to extend existing incumbent contracts, while maintaining the integrity of the bid protest system for contractors with valid legal and factual challenges to agency procurement decisions.” GSA also seeks to “standardize the task and delivery order protest dollar threshold for defense and civilian agencies by raising the civilian agency threshold from $10 million to equal the defense agency threshold at $35 million.” GSA’s proposed legislation would also apply the $35 million task order threshold to orders issued under GSA MAS contracts, which would be a significant departure from well-established precedent that GSA MAS orders are not subject to a dollar threshold or the task order protest restrictions at all.
Why This Matters for Government Contractors
The automatic stay provisions in the Competition in Contracting Act (CICA) are one of the primary benefits of filing a protest at GAO, especially for an incumbent contractor. It is unclear how DoD plans to implement the forfeiture language in the FY26 NDDA, but GSA has raised the stakes. If Congress adopts GSA’s “loser pays” proposed legislation, government contractors must now consider that the upside to the incumbent filing a protest and performing on both DoD and civilian agency contracts through a CICA stay may be tempered by the potential for forfeiture of up to five percent of certain payments. Government contractors must also consider that Congress may raise the threshold for protests of task and delivery orders under civilian IDIQ contracts to $35 million and also apply that threshold to GSA MAS orders. These changes would significantly limit government contractors’ ability to file bid protests—both at GAO, where the current million threshold is $10 million for task or delivery orders under civilian IDIQs and which does not have any threshold with respect to GSA MAS orders, and at the COFC, which can hear protests regarding GSA MAS orders.
If your company is considering a potential protest, understanding the distinction between the regulations as applicable to civilian and defense agencies is imperative. We are tracking the potential upcoming changes and are well positioned to help you make the best decision for your business. If you have questions regarding how the regulations and potential upcoming changes may impact your cost/benefit analysis in pursuing a protest, please contact Katie Burrows, Eric Valle, Abby Finan, or another member of PilieroMazza’s Bid Protests Group.
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