Protests: Rare and worth it

You will gain more by reading the linked articles than accepting this rendition at face value.

Steven Maser Authors Study on the Federal Bidding Process

Steven Maser, Professor of Public Management and Public Policy, recently authored a study funded by the Acquisition Research Program at the Naval Postgraduate School and distributed for practitioners through the IBM Center for the Business of Government. It evaluated the way government agencies manage the bidding process when they purchase products or services.

What Maser found was eye-opening. In the past few years the number of bid protests, where a rejected bidder complains to the Government Accountability Office, has been on the rise although the total number is small. Maser found that in most cases bid protests were not sustained.

However, bid protests aren’t necessarily bad. Maser argues that they provide an important benchmark. "In general, the system serves a very good purpose of helping the government actually police itself," he said during an interview with Federal News Radio. The study notes that the more transparency and disclosure that’s built into the process, the less likely a bid protest will occur. It recommends that agencies should simplify the requirements they create for the products and services they need and adequately train staff members who will evaluate proposals.

Bid Protests Are Worth Their Costs, Ex-Procurement Chief Says>

Contractors on the losing side of a competitive bidding who protest to the Government Accountability Office do not hurt or game the procurement system as some critics allege, says a forthcoming study.

The percentage of contracts that spark protests is also comparatively small, while the overall impact of the protest procedure is healthy, according to Dan Gordon, the former Obama administration head of the Office of Federal Procurement Policy and now associate dean for government procurement law studies at George Washington University Law School.

In an article set for publication this spring in the Public Contract Law Journal, a copy of which was provided to Government Executive, Gordon wrote that “there exist a number of misperceptions concerning bid protest statistics that deserve attention, because these misperceptions can taint judgments about the benefits and costs of protests. In particular, even people quite familiar with the federal acquisition system often believe that protests are more common than they really are, and they believe, inaccurately, that protesters use the protest process as a business tactic to obtain contracts from the government.”

Because of the difficulty of knowing precisely how many contracts the federal government awards each year, the reports of protest to GAO -- which reported 2,353 in fiscal 2011 -- are actually overstated, Gordon says. “Between approximately 99.3 percent and 99.5 percent of procurements were not protested,” even though the trend since the 1990s has been upward. That’s because of increases in procurement spending, the article says.

“It is, of course, true that very high-dollar procurements are much more likely to be protested: the higher the dollar value, the greater the likelihood of a protest,” he said. “For a company that loses the competition for a $100 million contract, with all the bid and proposal costs that competing entails, the additional cost of filing a protest may seem minimal, so that filing a protest can be very tempting.”

Of protests making it through the full GAO process in fiscal 2010, only a handful succeeded in winning the contract, according to Gordon’s calculations.

Overall, Gordon finds the bid protest process to be positive for the procurement system, citing several advantages:

>Protests introduce a relatively low-cost form of accountability into acquisition systems by providing disgruntled participants a forum for airing their complaints;
>They can increase potential bidders’ confidence in the integrity of the procurement process if the GAO is directly responsive to participants’ complaints, leading more players to participate;
>Protests can increase the public’s confidence in the integrity of the public procurement process; --The known availability of the protest avenue empowers those in contracting agencies who face pressure to act improperly;
>Protest decisions made public provide a high level of transparency into what is happening in the federal procurement system; and
>Protests provide guidance.

Bid protesting system helps agencies police themselves

It's nothing personal, but bid protests are one way of keeping the federal procurement system honest. Congress and the Government Accountability Office have been encouraging greater transparency in contracting. One way of doing that is giving the unsuccessful bidder the opportunity for a debriefing, in which the contracting agency describes how the bidder failed to secure the contract and how they could be more successful in the future.

"What the agencies have some fear of is the more they disclose, the more a company or an attorney for that company will find a basis for a bid protest."

According to Maser, if agencies were more open at the beginning of the bidding process, the likelihood of a bid protest could be reduced. "But again, there's some risk that's inherent in this that they'll never be completely eliminated," he said.