Diving into the National Defense Authorization Act (“NDAA”) has become something of an annual tradition in federal contracting. There seem to always be some sections that impact federal contracting, pushing for changes in processes or procurements. Part of 2025’s NDAA suggests fee shifting when there is a GAO protest of a Department of Defense (“DoD”) procurement. Basically, the 2025 NDAA suggested that if a bid protest of a DoD procurement is unsuccessful, the protester would be required to pay certain costs. Unsurprisingly, the GAO emphatically objected to this proposed change to its bid protest process.
The most recent version of the NDAA, the “Servicemember Quality of Life Improvement and National Defense Authorization Act for Fiscal Year 2025, Pub. L. No. 118-159 (Dec. 23, 2024) (“FY2025 NDAA”) partially takes aim at the GAO bid protest process. Consequently, GAO in mid July this year has released a “response” to section 885 of the FY2025 NDAA, working in coordination with the Secretary of Defense. It is worth a read to see the full picture of how GAO responded, but what is likely most interest to those reading this blog would be the portion of GAO’s response to the FY2025 NDAA suggesting losing protesters pay costs on a DoD bid protest.
GAO wisely first points out that bid protests at GAO have dropped 32% over the last decade, and over that same time, DoD bid protests at GAO (in particular) have dropped 48% (see the post we have on last year’s GAO bid protest stats here for more information on GAO bid protest numbers). According to GAO, only 1.5% of DoD procurements are actually protested at GAO. GAO also notes that DoD itself said tracking such protest cost data would cost more than its potential benefits.
GAO makes it clear that at this time, DoD does not collect the data necessary to allow unsuccessful offerors to pay costs. And GAO raises the following logical concerns as potential negative consequences of such a fee-shifting requirement:
- It creates a chilling effect on the participation of firms in government contracting;
- It stifles transparence and accountability in the federal procurement system;
- It reduces competition, which in turn drives up prices;
- Any fee-shifting may result in an inequitable distribution of fees;
- Any fee-shifting and allocating process will add additional time, complexity and cost to the bid protest process; and
- Fee-shifting would inevitably push away small business which “represent the majority of protesters” at GAO.
GAO also provides a plethora of charts, graphs, and other data showing just how rare a DoD GAO bid protest already is–further explaining these GAO bid protest trends. Because of this, GAO concluded, “we do not endorse creating a fee shifting process for bid protests because existing statutory authorities and bid protest procedures are sufficient to efficiently resolve and limit the adverse impacts of protests filed without a substantial legal or factual basis.” GAO instead suggested two alternatives (if Congress is just determined to have some form of fee-shifting).
Option one would be to consider including terms in all DoD contracts reserving the right for “DOD to recoup–or otherwise withhold–profit or fee where the incumbent contractor files a protest that is subsequently dismissed as legally or factually insufficient or for otherwise being procedurally infirm.” This option would take aim squarely at facially frivolous bid protests only–discouraging (and hopefully reducing) such protests to make more room for more meritorious protests.
Option two would be having Congress consider authorizing GAO to require a protester whose protest is “dismissed as legally or factually insufficient or for otherwise being procedurally infirm” to reimburse DoD for protest costs as well as any lost profits incurred by the awardee whose contract was stayed. Once again, GAO is trying to point any sort of punishing fees or costs at the bid protest which, on their face, are just wholly insufficient.
Both of these options present a limited situation in which potential fees or costs may be placed on a protester, as sort of a middle ground. Of course, option one or two would require congressional changes to statutes, and changes to GAO’s bid protest processes and regulations. But is not as stark as the fee-shifting proposed by the FY2025 NDAA. At the end of the day, GAO wants to really limit any sort of fee-shifting, as seen by their lengthy response and data rebutting the FY2025 NDAA’s suggestions.
Rather, it is apparent GAO has taken a stance supporting its current processes. Indeed, GAO feels the current processes and regulations for bid protests efficiently resolve protests and discourage so-called “frivolous as filed” protests. GAO sees such fee-shifting as basically just a penalty for protesting. And as GAO points out, the very process of determining such fees would eat up additional (unnecessary) time and resources. Simply put, GAO does not agree with the FY2025 NDAA fee shifting proposal. GAO instead views it as quite the threat to taxpayer funds, small business contractors, and bid protests as whole–all of which are necessary parts of government contracting and crucial to promoting agency accountability and procurement transparency.
As of now, GAO’s bid protest processes remain unchanged on this front. And it seems like any proposed change will face some stout pushback from GAO. Of course, if you are considering a bid protest at GAO, make sure to reach out to your federal government contracting firm–like ours–to discuss your options, GAO’s bid protest process, and the costs and benefits of the same.
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