Bid Protests in Government Contracts: 17.5 Billion Reasons Why They Continue to Rise

August 10, 2016

One of the reasons for the increase in protests no doubt is agency corrective action. Looking at GAO protest sustain rates is misleading, because it excludes instances where an agency decides on its own to fix a perceived problem raised by a protest. When taking into account corrective action, protests last year prompted some kind of relief for the protester 45 percent of the time — a number that has risen slowly but steadily over the past decade.

Yet even corrective action and sustained protests often result in an award to the same contractor after the agency fixes the problem identified in the protest. This leaves the protester in the same position as before — deciding whether to protest for a second time, facing even longer odds that the award will change hands.

The simple truth is that most contractors deciding whether to protest are looking at numbers other than protest sustain rates and effective rates. Instead, contractors look at dollars and cents — how much they stand to lose if they aren’t awarded a contract, and how much they might gain if the agency evaluation process favors their proposal. 

A GAO protest decision anticipated to be made public this week illustrates why contractors protest in increasing numbers despite seemingly low likelihood of success. The subject of the protest, DoD’s Encore III IT services program, could be worth as much as $17.5 billion over 10 years. Before proposals were due in response to the Encore III solicitation, two contractors filed protests. Among other claims, the protesters alleged that DoD’s decision to award based on a “Lowest Price Technically Acceptable” evaluation criteria was improper and was not correctly implemented.

The Encore III program contemplated approximately 20 awards for which protesters would be eligible. The GAO’s rare decision to sustain the protests still doesn’t ensure that the protesters will find themselves among the 20 awardees. But the protesters clearly believe that the expected changes to DoD’s solicitation will increase their chances at securing an award. With a contract on the line that could be worth as much as $17.5 billion, the long-shot gamble paid off — even though a win didn’t guarantee an award.

The bottom line is that government agencies make mistakes in their solicitation and award decisions. If a contractor thinks those mistakes may mean the difference between winning and losing a lucrative government contract, then a protest may be worthwhile despite statistical long odds. 

Chris Nagel is a member of the McGuireWoods Defense and Government Contracting Industry Team, offering multidisciplinary capabilities to our clients operating in the defense, national security, and federal contracting sectors. For more information, please click here.

*The figures in this article are based on GAO Bid Protest Annual Reports to Congress for Fiscal Years 2008 and 2015.