Back in 2017, in the 2018 National Defense Authorization Act (NDAA), Congress passed a limited program for GAO protests of Department of Defense contracts where certain large contractors would have to reimburse the DoD for the cost of processing unsuccessful GAO protests. We reviewed that rule here. Congress repealed that provision with the 2021 NDAA. Now, the “losing protester pays” system is back with a vengeance. The 2025 NDAA creates a similar provision, but now the language appears to apply to all businesses that bring an unsuccessful GAO protest on a DoD contract. Coupled with enhanced pleading standards and an increase to the task order value jurisdiction requirement, this will make GAO protests of DoD contracts more burdensome on federal contractors. With that said, it is important to note: The 2025 NDAA only orders that the GAO and DoD produce a proposal that addresses the above for review by Congress. It does not absolutely mandate that the government then adopt said proposal. We look at these changes in this post.
Section 885
The 2025 NDAA came into effect on December 23, 2024. This bill, as it is each year, is massive, but we are going to focus on Section 885, “Proposal for Payment of Costs for Certain Government Accountability Office Bid Protests.” This provision notes that, within six months of the passing of the 2025 NDAA, the head of GAO and the Secretary of Defense must prepare a proposal for some new rules for GAO protests of DoD contracts. Note that the use of term proposal leaves some room for the committee to consider, alter, or reject said proposal prior to enactment.
First, the elephant in the room: the proposal must include a process for an unsuccessful protester to pay the government and the awardee’s costs in a GAO bid protest of a DoD contract. The provision explains that GAO and DoD must prepare a chart of the average costs that the government incurs for a protest of a DoD contract relative to the value of that contract. In other words, the government has to figure out how much it loses on average from a protest for larger contracts as opposed to smaller contracts and basically create a sliding scale. Then the GAO and DoD have to determine the lost profit rate that results from a protest for DoD contract awardees that are protested, during the period of stay for the protest. Finally, GAO and DoD must come up with a system for how an unsuccessful protester will need to pay these costs to the government and awardee, based on the charts they produce. What’s notable here is that, unlike the old system that was repealed, it does not matter what size the protester is: This applies to small businesses as it does large businesses.
Second, this proposal must include “enhanced pleading standards.” The language in the 2025 NDAA on this matter is quite vague:
The process for enhanced pleading standards described in this subsection is a process under which the Comptroller General shall apply enhanced pleading standards, as developed by the Comptroller General in coordination with the Secretary of Defense, to an interested party with respect to a covered protest submitted by such interested party for which such interested party is seeking access to administrative records of the Department of Defense, prior to making a determination with respect to such access.
There is no description as to what these enhanced pleading standards will entail, just that, apparently, it increases the burden for protesters seeking access to administrative records of the DoD. It is safe to say it will be more difficult to get DoD records in GAO protests once these standards are prepared, but, how much more difficult is not clear at this time unfortunately. Given that in some cases it was already difficult to get records at GAO, this might not change the average protester’s experience in a GAO protest.
Finally, the task order jurisdiction bar for GAO protests of DoD task orders is increasing from $25,000,000 to $35,000,000. This amends 13 U.S.C. § 3406. Under that statute, you can only bring a protest of a DoD task order to GAO (and cannot bring such a protest at COFC) if A) the task order is valued over the figure in the statute or B) if the protest is that the order goes beyond the scope, period of performance, or maximum value of the underlying main contract. What this means is that if the task order in question has a value of less than $35,000,000, GAO will not hear any protests of that award unless the protest is that the order essentially goes beyond the underlying contract. We have explored how this rule works, both for DoD awards and for civilian awards (which have a threshold of $10,000,000 and fall under 41 U.S.C. § 4106) in some previous posts.
Observations
One important thing to note first: This all only applies to DoD contracts. If the contract in question isn’t from DoD or the military, these changes will not affect such contracts. So, if and when these rules are finalized, do not panic if the contract you’re looking at protesting is from, say, the Department of Agriculture or the Department of the Interior.
With that observation out of the way, we must respectfully question the plan to have protesters pay the costs of unsuccessful GAO protests of DoD contracts. First, the fact it applies to all businesses regardless of size means this system will be far more burdensome on small businesses than large businesses, as the latter can much more easily afford such costs. This will disproportionately discourage small businesses from protesting. Similarly, we note that this cost rule does not discriminate based on how valid the protest is. When it comes to recovering costs for a successful protest, GAO only awards those to a protester when the protest is “clearly meritorious.” This is a high standard that basically means that if the government’s position was nonetheless reasonable despite losing, no costs will be awarded to the protester. But, with this new rule, even protests that raise serious arguments on previously undecided issues will be treated the same as frivolous protests when it comes to forcing the protester to pay if the protest is unsuccessful. Coupled with the unclear “enhanced pleading standards” and higher task order jurisdiction bar, this feels like the use of a sledgehammer to crush an ant.
Again, one final reminder: The 2025 NDAA only orders that the GAO and DoD produce a proposal that addresses the above for review by Congress. It does not absolutely mandate that the government then adopt said proposal. As such, there is a possibility that Congress reviews said proposals and rejects or alters the same. When this proposal is submitted, we advise contractors to get their thoughts to Congress as soon as possible to get a say on the same.
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