Bid protest dilemma continues

I always have mixed feelings when the Government Accountability Office releases its annual bid protest report.

It lists the number of cases filed and closed as well as the number of cases that had merit and were sustained and denied.

My feelings are mixed because I believe there are too many bid protests. I’ve heard plenty of comments from industry people who say bid protests are a common tactic by losing incumbents to extend their work on a contract because the transition to the winner is delayed while the protest winds its way through the process.

There also is a sense that companies have little to lose by filing a protest, so why not protest?

But at the same time, I also believe that many companies simple don’t have a choice but to file a protest. For some it is a desperate attempt to learn why they lost because debriefs have become uninformative. For others, they truly believe the wrong decision was made. And sometimes they are right.

The dilemma is how do you separate the protests that are simply a business tactic from those who feel they should have won the contract and that the government made the wrong decision?

There is no easy answer.

One thing that is undeniable is that the number of protests has grown over the last decade with 1,352 cases filed with GAO in fiscal 2003, compared to 2,475 in fiscal 2012. The number of protests with merit has gone from 290 in 2003 to 570 in 2012.

The sustain rate has been all over the place – 17 percent in 2003 and 18.6 percent in 2012, but in between it has been as high as 29 percent in 2006, and a low of 16 percent in 2011.

GAO said the effectiveness rate – where a protestor gets some form of relief in the final decision – was at 42 percent in 2012, compared to 33 percent in 2003.

But I wish GAO reported the number of bid protests that are withdrawn before any decision is reached.

Withdrawn protests usually happen for two reasons.

One is when the winning bidder and the losing bidder work out an agreement where the loser joins the winner’s team. This happened in 2011 when Northrop Grumman withdrew its protest of the $2.5 billion State Department Vanguard contract when the winning bidder, Science Applications International Corp., found room on its team for Northrop.

The second and probably more common scenario is when an agency realizes it made mistakes in an award and pulls it back to reevaluate or restart the competition. This is what happened with the Air Force’s $6.9 billion NetCents 2 hardware contract. The Air Force withdrew its awards to nine companies after 11 companies filed protests. Six months later there is still no new awards.

The number of withdrawn protests would be insightful because I think it plays a role in the decision by companies to file a protest. It also points to problems with the process because agencies are making decisions that can’t stand up to scrutiny.

So what is the answer? Perhaps losing bidders who then lose their protest should be charged a fee. This might mitigate the tactic of filing protests just for the sake of hanging onto the work a little longer.

But beyond that, I lay most of the problems on poor decisions and processes by the government. The answer here is to go back to the basics: write better requirements, explain the evaluation criteria, don’t be sloppy.

For contractors, the big question on whether to protest has to be how to balance the needs of their customers against the needs of the bottom line. And I don’t know where that balance is.

Unfortunately, about the only thing contractors can do is build the time for protests into their planning and resource management process. That’s today’s sad reality.