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GAO on Bid Protests in Defense Procurement

The U.S. Governmental Accountability Office (GAO) recently issued a report on recent trends in bid protests related to Department of Defense procurements. A 2008 defense bill directed GAO to report on the extent to which bid protests may be increasing, the extent to which "frivolous and improper" protests may be increasing, and potential actions to disincentivize "frivolous and improper" bid protests. Here's a summary of the findings:

This report reaches the following conclusions about the GAO bid protest process in general, and about the committee's mandate to assess the increase in protests and the extent to which frivolous protests may be increasing:

Twenty-five years ago, the Competition in Contracting Act of 1984 (CICA), Pub. L. No. 98-369, 98 Stat. 1175 (1984), codified and significantly enhanced GAO's bid protest forum. The existing process provides a balanced approach to adjudicate and resolve challenges to U.S. government procurements.

Despite an increase in bid protest filings in fiscal year (FY) 2008--driven in part by statutory expansions of GAO's bid protest jurisdiction--the number of protests challenging DOD contract awards in the last 5 years is relatively low when viewed historically.

The GAO bid protest process significantly reduces potential disruptions to DOD procurements as a result of three factors:

 o GAO consistently closes more than 50 percent of all protests involving DOD procurements within 30 days of filing;
 o The remaining DOD protests must be, and are, resolved within 100 days of filing; and
 o CICA permits agencies to proceed with contract performance even before a protest is resolved when the goods or services are urgently needed, or when proceeding is in the best interests of the United States.

GAO's regulations and procedures currently provide GAO the ability to promptly close protests that do not merit further development. GAO does not need to determine that a protest is "frivolous" to promptly close it, and, in our view, making such a determination could add substantial costs to the protest process and have the unintended consequence of discouraging participation in federal contracting and, in turn, limiting competition.

I'd say the last thing we need right now is something else that will limit competition in federal procurement.

Hat tip to Elise Castelli at the Federal Times' FedLine blog.

Leonard Gilroy is Director of Government Reform


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Comments to "GAO on Bid Protests in Defense Procurement":

John Thacker | April 16, 2009, 10:05am | #

One problem is that bid protests themselves are often used to limit competition in federal procurement. Bid protests are often filed by the incumbent firm when they lose a contract to an upstart. Bid protests are also filed when contracting officers fail to spread the work around to everyone who bid, or the winning bidder doesn't subcontract out the work to the losing bidders. Losing bidders also can use bid protests to "punish" companies that defect by bidding "too low," lower than the historical norm. Even if a bid protest is dismissed, the added time and expense to the government, and the added time and expense to the winning bidder (who, especially if a small company, may be forced to charge overhead instead of making a profit while the protest is resolved) discourages competitive behavior.

Used in this manner, bid protests are a way of maintaining oligarchic status quo. Sadly, though, I'm not sure that there's a way to prevent it.



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