Highlights:

• Research study refutes concerns that bid protests delay DoD procurements and debunks other common myths.
• Congress enacts legislation requiring better debriefings and providing for “loser pays” pilot program.

Over the past few years, critics of the bid protest system have claimed that too many frivolous protests inflict unnecessary and costly delays upon acquisitions by the Department of Defense (DoD). As one consequence of these criticisms, the National Defense Authorization Act (NDAA) for Fiscal Year 2017 commissioned a study of the bid protest system. The resulting report, issued in January 2018 by the RAND Corp., found that, contrary to critics of bid protests, only a small fraction of DoD procurements were protested, and rebuts concerns that many firms file frivolous protests.

The RAND report highlights include that:
 

• Even though protests at the Government Accountability Office (GAO) and the Court of Federal Claims, roughly doubled between 2008 and 2016, filings remained well below record levels of the late 1980’s to early 1990’s;
• Overall, contrary to perceptions that protests are excessive, only about 0.3% of DoD contracts are protested;
• The effectiveness rate at GAO (the percentage of protests sustained or resulting in corrective action by the agency) has remained steady at about 40%, and has even increased slightly over time;
• Remarkably, the effectiveness rate for incumbents protesting task order awards is 70%, rebutting concerns that incumbents file frivolous protests solely to extend time for performance by a few extra months;
• Small businesses file about 53% of protests, but account for only around 15% of DoD procurement dollars; and
• Better post-award debriefings might avoid protests, some of which are motivated by questionable agency explanations about why offerors lost an award.

In general, the RAND report does not support concerns, voiced by DoD officials and supported by some members of Congress, that excessive numbers of meritless protests unduly delay DoD procurements -- particularly protests by incumbents, thought to be interposed chiefly for delay  

To the contrary, the findings support the views of contractors and bid protest attorneys, who say that contractors refrain from filing protests, unless seriously aggrieved, and that the bid protest system imposes valuable discipline upon procurement awards.

But as another consequence of bid protest criticisms, without waiting for the RAND report, in the NDAA for Fiscal Year 2018, Congress authorized a three-year pilot program, instituting a “loser pays” system whenever incumbents having $250 million or more in federal revenues lose bid protests of DoD procurements, beginning in fiscal year 2020. The RAND report cautioned against additional attempts to fix a bid protest system that is not fundamentally broken. Indeed, the RAND report actually finds that protests filed by the largest government contractors are less frequent and more effective than protests filed by small businesses.

Similarly, the 2018 NDAA requires “enhanced” debriefings for DoD awards of more than $100 million ($10 million for small business awards, and for all task orders), including disclosing the written source selection decision document, and permitting offerors to submit written follow-up questions within two business days after debriefing. DoD must furnish written responses to the follow-up questions within five business days. The debriefing is not concluded until DoD responds, potentially giving contractors, and their counsel, valuable additional time to decide whether to protest, and to prepare more focused, better-quality protests. DoD must implement the new debriefing procedures by regulation no later than June 10, 2018.

The RAND report should also give pause to efforts to eliminate protests of task order awards. The 2017 NDAA, and companion legislation, provided that only GAO -- and not the Court of Federal Claims -- may hear protests of task order awards, and only for civilian awards valued in excess of $10 million, and DoD awards valued in excess of $25 million.

The RAND report and the 2018 NDAA can therefore give contractors two reasons for optimism:
 

• Agencies should finally give better debriefings, whether because required by the 2018 NDAA, or because they finally understand that doing so may reduce the need for protests; and
• Task order protests may become a more accepted part of the bid protest system, based upon the higher effectiveness rate for those protests by DoD incumbents.

To read our previous Miles Alert, Congress Re-Writes The Rules (Again) for Task Order/Delivery Order (TO/DO) Protests, click here.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.