DoD Bid Protests Are “Exceedingly Uncommon,” New Study Finds

Only a very small percentage of DoD contracts–0.3 percent, to be precise–are protested, according to a comprehensive and fascinating new report on bid protests issued by the RAND Corporation.

The detailed report, which was prepared at the behest of Congress, concludes that DoD bid protests are “exceedingly uncommon,” and typically aren’t frivolous.  RAND’s analysts urge policymakers to carefully consider the data when evaluating whether reforms to the bid protest process are necessary–and to “avoid drawing overall conclusions or assumptions about trends from one case when it comes to the efficacy of the bid protest system.”

Amen to that.

Bid protest “reform” has been a subject of much recent discussion in the government contracting community.  In 2016 and again in 2017, the Senate introduced deeply flawed measures aimed at curtailing bid protests.  Although most of these proposals didn’t become law, Congress dramatically scaled back the GAO’s jurisdiction over DoD task and delivery order protests, raising the threshold from $10 million to a whopping $25 million.

As I wrote late last year, the push to curtail bid protests seems driven by the complaints of some agency officials, who suggest that bid protests are prevalent and frequently frivolous.  Sometimes, the media has contributed to these perceptions by writing articles with titles like “Drowning in Protests: Can Agencies Stem the Rising Tide?”

But I’ve urged caution, arguing that protests don’t appear to be either prevalent or frequently frivolous. On the prevalence side, according to former OFPP director Dan Gordon, protests occur on less than one percent of acquisitions. And as far as frivolity goes, if protests are typically frivolous, why do protesters succeed nearly half the time?

In negotiations over the 2017 National Defense Authorization Act, the conferees elected to remove most of the Senate’s major protest “reform” language.  Instead, Congress commissioned a study to determine whether bid protests are having a significant adverse effect on DoD acquisitions.  This was a wise approach: before developing a major protest solution, it’s a good idea to determine whether there’s a protest problem in need of solving.

Ordinarily, the GAO would conduct a study like the one commissioned by the 2017 NDAA.  But the GAO is the forum for most bid protests.  Perhaps unfairly (the GAO, after all, is a very professional organization), any bid protest study originating at the GAO could face questions about conflicts of interest–and ultimately, the credibility of the study itself.  Enter the RAND Corporation, which was retained to prepare an independent report.

That independent report is now here, and it’s comprehensive–clocking in at 114 pages.  The study offers a great deal of data and analysis about bid protests, some of which my colleagues and I will discuss in detail in future posts.  But for now, let’s cut to the chase.  What are RAND’s big-picture findings?

First, RAND finds that government and industry have very different perceptions of the bid protest system.

DoD personnel “expressed a general dissatisfaction” with the system, believing that protests are filed too frequently, often include “an excessive number of ‘weak’ allegations,” and unduly delay awards.  DoD personnel were especially concerned that losing incumbents are motivated to protest by the possibility of obtaining bridge contracts.

Industry, on the other hand “views bid protests as a healthy component of a transparent acquisition process, because these protests hold the government accountable and provide information on how the contract award or source selection was made.”  If protests were disallowed or curtailed, “companies would likely make fewer bids.”

Additionally, industry is concerned with the quality of post-award debriefings.  “The worst debriefings were characterized as skimpy, adversarial, evasive, or failing to provide required responses to relevant questions,” RAND reports.  RAND concludes,” [i]t became clear over the course of our study that too little information or debriefings that are evasive or adversarial may lead to a bid protest.”

Unfortunately, “there is a lack of trust on each side” (government and industry) when it comes to bid protests.

Next, RAND turns to the prevalence question.  Are DoD bid protests common, as some acquisition personnel and media have suggested?

RAND notes that bid protests did, in fact, increase significantly between Fiscal Years 2008 and 2016.  (The study didn’t include Fiscal Year 2017, in which GAO bid protests declined 7%).  But these increases were little more than drops in the DoD acquisition bucket: “the overall percentage of contracts protested is very small–less than 0.3 percent.”  RAND concludes: “[t]hese small protest rates per contract imply that bid protests are exceeding uncommon for DoD procurements.”

RAND then makes several recommendations for policymakers.  Perhaps most importantly, “policymakers should avoid drawing overall conclusions or assumptions about trends from one case when it comes to the efficacy of the bid protest system.”  It’s a very good point.  Sure, if you’re the contracting officer on the receiving end of a “weak” protest, it will feel like every acquisition is being frivolously protested.  But public policy should be made on the basis of facts, not anecdotes.

RAND also, unsurprisingly, recommends that the government improve the quality of post-award debriefings.  RAND points to certain Army and Air Force initiatives, as well as the “enhanced debriefings” portion of the 2018 NDAA, as potential models.

RAND cautions policymakers against reducing GAO’s bid protest timeline (currently at 100 days), noting that “protests are more frequently filed at the end of the fiscal year” and that “complex cases that go to decision usually take 90-100 days.”

RAND also urges caution when it comes to further reducing protest options for task and delivery order protests.  “Task-order protests have a slightly higher effectiveness rate than the rest of the protest population,” RAND notes.  “The higher rate suggests that there may be more challenges with these awards and that task-order protests fill an important role in improving the fairness of DoD procurements.”

Look, this is our firm’s blog, so I’m occasionally entitled to an “I told you so.”  The RAND study essentially says what I’ve been up on my soapbox saying for the last few years: that contrary to common misconception, bid protests aren’t common, nor are they typically frivolous.  And, as RAND concludes, better communication between government and industry (particularly in debriefings), is likely to reduce protests, not increase them.

Of course, the RAND study includes some things my little soapbox rants have omitted, like statistical analysis, interviews with key officials and decision-makers, colorful graphs, and the imprimatur of Congress.  (Then again, RAND somehow failed to include my references to Chicken Little and Nathaniel Hawthorne).

Congress commissioned a comprehensive study on DoD bid protests, and now that study is here.  Let’s hope that policymakers take RAND’s analysis and recommendations to heart.