Bid protests have been a feature of the U.S. defense acquisition environment for decades. If an interested party believes that the U.S. Department of Defense (DoD) has made an error in issuing a solicitation for a bid, canceling a contract, or choosing a winning bid, it has the right to file a protest questioning the outcome.
A company may file a protest with the contracting DoD agency, the U.S. Government Accountability Office, or the U.S. Court of Federal Claims. In recent years, the process has come under increased scrutiny. For example, it is unclear what level of resources DoD must dedicate to bid protests or to what extent they lead to higher costs or scheduling delays.
There has also been concern that the current process may encourage frivolous protests. In response, the National Defense Authorization Act for Fiscal Year 2017 called for a "comprehensive study on the prevalence and impact of bid protests on DoD acquisitions," including the systematic collection and analysis of information on the characteristics of bid protests and their associated contracting outcomes.
The resulting study found tension between DoD's need to move forward with procurements and companies' need for information about how a contract award decision was made. However, the overall share of contracts protested was very small, and the outcome of protests depended greatly on the characteristics of the contracts.
-- Despite a Steady Increase in Bid Protests Filed, Their Numbers Remain Small
* Bid protest activity for both DoD and non-DoD agencies roughly doubled between fiscal years 2008 and 2016 at the U.S. Government Accountability Office (GAO) and the U.S. Court of Federal Claims (COFC). DoD agencies accounted for around 60 percent of this activity, with small businesses making up half of these cases.
* The share of contracts protested remains very small — less than 0.3 percent. A significant number of these protests concerned smaller-value contracts ($0.1 million or less).
Trends in Bid Protest Outcomes Differed Between GAO and COFC
* Effectiveness rates at GAO — the share of protest cases sustained or in which the contracting agency took corrective action — held steady over time. This suggests that firms are generally not filing protests without merit.
* At GAO, DoD agencies had slightly lower effectiveness rates than non-DoD agencies. Protests of task orders, awards for specific tasks or deliveries under a contract, had slightly higher effectiveness rates than other types of protests.
* The sustained rate at COFC has declined over time, suggesting that firms may be more willing to file protests with the court going forward.
DoD Agencies and the Private Sector Had Differing Views on the Bid Protest Process
* DoD personnel were concerned that the process incentivized protests, potentially preventing the timely award of contracts.
* The private sector viewed bid protests as a way to hold the government accountable for providing information about how a decision was made.
* Enhance the quality of post-award debriefings. Improved debriefings will give disappointed bidders a better understanding of the evaluation and award process and help them better analyze potential protest grounds before filing a protest.
* Be careful in considering reductions to the timeline for resolving bid protests filed with the U.S. Government Accountability Office (GAO) from 100 to 65 days. Seventy percent of protest cases are resolved within 60 days, but complex decisions typically take close to the 100-day limit.
* Be careful in considering restrictions on task-order protests. These protests are more likely to be sustained or involve corrective action, so they may fill an important role in improving the fairness of DoD procurements.
* Consider implementing an expedited process for adjudicating protests involving contracts valued under $0.1 million. The costs to adjudicate these protests under the current system may exceed the value of the procurements.
* Consider approaches to reduce protests by small businesses and improve how they are handled. Changes to the debriefing process should support this effort.
* Consider collecting additional data and making other changes to recordkeeping to facilitate future research and decision-making.
Click here for the full report (114 PDF pages) on the Rand corp. website.