Contractors Face Changes To Bid Protest Strategies.

• Author: Arnholt, Richard
• Position: Viewpoint

The National Defense Authorization Act for fiscal year 2018 includes some significant changes affecting contractors, particularly with regard to challenges to requests for proposals and contract awards, otherwise known as "bid protests."

The key bid protest changes in the new NDAA are: the introduction of a new pilot program under which large defense contractors will be required to pay the Defense Department's costs where a protest is denied; and the enhancement of post-award debriefing rights.

While Congress passed the former with the intent of reducing frivolous protests, it is likely the latter--which will give contractors greater insight into the rationale behind procurement decisions--that will have a greater impact on the number of protests filed.

Section 827 of the act requires that the department establish and implement a three-year pilot program under which "large" defense contractors will be required to reimburse the department for "costs incurred in processing covered protests" for protests "denied in an opinion" by the Government Accountability Office.

A large contractor is defined as one with revenues in excess of $250 million, and the pilot program will apply to protests filed at the GAO between Oct. 1, 2019, and Sept. 30, 2022.

By limiting the scope of this loser-pays provision to those protests that are "denied in an opinion" by the GAO, this reimbursement provision will potentially only apply to a small number of protests. A recent study by the RAND Corp. examined defense protests at the GAO from fiscal years 2008 through 2016. This study found that less than 0.3 percent of such procurements are protested at the GAO, and that small business protests make up more than half of those.

While a protest sustain rate of 2.6 percent for fiscal years 2008 through 2016, or approximately 300 out of 11,459 protests, appears to suggest there is a great number of frivolous protests, deeper analysis of GAO's statistics shows that is simply not the case. Approximately 21 percent of the bid protests filed were resolved by a decision on the merits. Of those 2,429 defense protests that reached the merits, nearly 300 were sustained. In other words, only 2,133, or approximately 20 percent of all the protests filed over eight years, were denied in an opinion.

With regard to the 79 percent of protests resolved without an opinion, a significant number--approximately 40 percent--were dismissed as a result of the government voluntarily correcting procurement errors noted in a bid protest. In addition, a number of protests were...