The Rand Corporation, an American nonprofit global policy think tank, was recently commissioned to do a study on the GAO bid protest system as it impacts Department of Defense procurements (you can see the report here). The results of the study yielded some expected findings but also some surprising findings. As expected, the Rand report confirmed the effectiveness of bid protests in producing some relief requested in the protest. Around 40% of the protests filed with GAO were either sustained or yielded a voluntary corrective action by the agency to re-evaluate, reconsider, or modify the original evaluation and award under protest. This has been relatively consistent over the past 10 years. Based on our experience this is more of an advantage to incumbent contractors, whose contracts get extended during the period where the Agency corrects the basis of a sustained protest or where the agency must take time to resolve problems that it has found in its own evaluation, which led to a voluntary corrective action.

Surprising to some, the Rand report harshly criticized the agencies for providing inadequate or incomplete debriefings following awards. This comes as no surprise to competitors and their legal counsel, who often must interpret incomplete debriefings and act to protect their competitive positions if there is a suspicion of an undisclosed error or an attempt to cover-up a problematic evaluation. The Rand report rightly noted that in this circumstance a disappointed bidder will often file a protective protest just to give their outside legal counsel an opportunity to review the written record of the evaluation. A fuller and more transparent debriefing, says the Rand report, should diminish the number of protective protests filed.

Another finding that is more surprising to potential protesters is the infrequent use of stay of performance overrides. The Competition in Contracting Act requires an agency to stop performance of a contract upon the filing of a protest within the timeframe defined in the act. This stay of contract performance can be overridden by the head of the Agency activity with a specific Determination and Findings (D&F) of urgent and compelling reasons. Potential protesters will frequently say that the automatic stay of performance is useless if the agency can issue a stay override. But according to the Rand report and according to our protest experience, the agency’s override of the automatic stay of contract performance is rarely used: only about 1.4% of the protests filed.

Maybe just as interesting, an agency may voluntarily stay contract performance pending the outcome of the GAO protest as a matter of concern over the procurement. As Rand reports, “Agencies rarely proceed with contracts when there is an active bid protest.” One reason noted is the difficult position an agency can find itself in where the GAO identifies a significant error in the procurement.

Finally, another surprising finding of the Rand report was the frequent use of the GAO and the U.S. Court of Federal Claims protest system by small businesses. “More than half of the protests at GAO and [Court of Federal Claims] are from self-identified small businesses. While small businesses are awarded more than half of DoD contracts, such contracts represent only 15–20 percent of total contract dollars.” Just as importantly, the way the small business handles a bid protest can be critical to an effective bid protest. As the Rand study reports, “Protests (by both large and small businesses) have a higher effectiveness rate at GAO when under a protective order” which requires the use of outside legal counsel. Rand notes further that “Small businesses are also more likely to have their cases dismissed for lack of jurisdiction or for being legally insufficient. These differences suggest that small businesses might benefit from better legal representation in filing protests at GAO. One option would be to require all protests at GAO to be filed through legal counsel.”

We often tell our clients that using knowledgeable bid protest legal counsel can be critical to avoiding mistakes in understanding the complicated timing requirements and procedures at GAO, not to mention legal counsel’s experience in reviewing the agency evaluations and award decisions. Although it is not required at the GAO, legal representation is required at the Court of Federal Claims where the data shows that small businesses are generally more successful and avoid procedural problems.

For more information, contact MWL Partner Bill Welch.