Bid Protests in the Defense Department: An Analysis of Recent Trends

Abstract

Abstract : The Government Accountability Office (GAO) provides an objective, independent, and impartial forum for the resolution of disputes concerning the awards of federal contracts. Today, filing a bid protest is easy, inexpensive, and does not require the services of an attorney. In general, the bid protest process takes significantly less time than the alternative of court litigation. Recently there has been a perceived increase in the number of protests and, more disconcertingly, that firms may be protesting government contracts as a strategy to either negotiate their way into contracts or derail an award process already in place. Are these perceptions accurate? Our study examined and evaluated some 5,763 bid protests. Based on our analysis, we conclude although there has been an increase in the number of bid protests, when examined relative to the increase in DoD spending on contracts, bid protests overall have increased at a rate significantly lower than the total increase in DoD contract dollars. We also used the data collected to examine the reasons for bid protests. From our analysis of sustained bid protests, we found a significantly increased risk of large programs having a sustained bid protest. To illustrate the significance of sustained bid protests on particular programs we examined three large sustained cases. We concluded that serious abuse of the bid protest process can occur and that even when protests are denied the impact can be significant, particularly in light of the fact that no penalty currently exists for frivolous bid protests. In order to improve the bid protest process, minimize the potential for abuse, and ensure programs are not needlessly delayed, we recommend: DoD and the Services work to eliminate the reasons for sustained bid protests; ensure a balance is struck between maintaining programmatic stability and gaining the benefits of competition in procurements; and explore and implement disincentives for frivolous bid protests.