The bid protest process is a critical feature of the Federal government’s procurement system that ensures government purchases are conducted fairly. Moreover, the process acts as a necessary check on potential government corruption. It boosts public confidence in the procurement system while providing useful guidance to the public and government agencies to better apply procurement regulations. Nevertheless, the process is not without its associated costs. Three commonsense reforms could ensure the mechanism maintains its role as an important accountability tool while saving the government from bearing unnecessary costs: 

1. Withhold incumbent contractor profits until the protest is adjudicated and make their remittance contingent on a successful protest,
2. Expand the role of the efficient agency-level protests and
3. Eliminate the concurrent jurisdiction of the U.S. Government Accountability Office (GAO) and the Court of Federal Claims (COFC).  

The Government Accountability Office

The GAO was formally established in 1921.¹ While GAO had long considered disputes involving contract awards, issuing its first bid protest decision in 1926,² its authority to do so was originally unclear. In 1984, Congress clarified GAO’s ability to adjudicate protests, making it a key component in the Government’s bid protest infrastructure, when it enacted the Competition in Contracting Act (CICA). CICA expressly authorized GAO to consider “protest[s] concerning an alleged violation of a procurement statute or regulation.” CICA also provided a mechanism for protestors to stay the award (and therefore performance) of a contract until the dispute is resolved. 

Once a contract is awarded, protestors have 10 days to file a protest with GAO. Once GAO receives a protest, it immediately notifies the agency and awardee which starts the 30-day clock on an agency requirement to submit a report explaining how it made its award decision. The protestor is then provided 10 days to submit comments on the report. While additional filings or hearings may follow, GAO must issue its decision within 100 days from when the protest was first filed. After considering the facts, GAO will either sustain, deny, or dismiss the protest. If the protest is sustained, GAO will recommend the agency take corrective action.

Benefits

GAO’s bid protest function is a critical aspect of the public procurement system. First, the mechanism ensures governmental compliance with its regulations in a relatively cost-effective way. The protest process creates “private attorney[s] general”³ allowing actions to be brought to vindicate the public interest. It does so in a cost-efficient manner, as only unsuccessful bidders, who believe their procurement was conducted unfairly, have standing to sue. 

The mechanism also allows the procurement system to operate more effectively as GAO decisions provide stakeholders with guidance to better engage with the system and agencies with instructions as to how they can better apply the procurement regulations. In addition, the process discourages governmental corruption by bringing transparency to what could otherwise be a popular vector for corruption.

The Costs

In addition to the above-mentioned benefits, the costs of the bid protest process are well established as the process can incentivize litigation and impart high administrative costs on both the contractor and agency. 

First, the process can encourage frivolous litigation from unsuccessful incumbent contractors as the CICA stay incentivizes incumbent contractors to file protests for all unsuccessful recompetes. Using the statute to stay the award, the incumbent contractor continues to perform (and be paid) until the proceedings are complete. To stay an award for 100 days, a contractor must only outline a potential ground for protest. Career procurement lawyers and contractors routinely use the stay to “game” the system. Given that the sustain rate for bid protests in 2022 was only 13%, a large majority of appropriately awarded contracts are unnecessarily delayed due, in part, to frivolous incumbent filed protests. 

Second, the process imposes high litigation costs on both the contractor and government. Filing a protest usually requires hiring an attorney with a specialized understanding of the process. Furthermore, not only is employing people to administer the protest process expensive, but successful protestors can be awarded the costs of filing and pursuing their protests.

Potential Policy Fixes

As previously discussed, GAO’s bid protest mechanism is a crucial tool to ensure an effective, transparent public procurement process. However, changes can be made to dissuade frivolous protests, lower litigation costs, and ultimately better allow the government to achieve its mission—all in service of the taxpayer. 

Withhold Incumbent Contractor Profits

First, Congress should amend CICA to withhold profits from incumbent contractors until the protest is adjudicated and make the remittance of funds contingent on a successful protest. As was discussed above, the CICA stay creates an economic incentive for unsuccessful incumbent offerors to file protests. This change would dissuade reflexive protests meant to squeeze more time and money out of a contract. The Senate proposed a similar solution in the FY 2018 NDAA which would have withheld “all payments above incurred costs . . . on any bridge contracts or temporary contract extensions awarded to the contractors as a result of a delay in award resulting from the filing of such protest.” While the amendment has not been enacted, an updated version could help lower governmental costs. 

Expand the Role of Agency-Level Protests

Another change that would lead to a more streamlined, cost-efficient protest process is expanding the role of agency-level protests–another option for contractors to use when filing a protest. Normally resolved within 35 calendar days or sooner, agency-level protests reduce associated administrative costs. Additionally, the agency-level protest process lacks the inherent adversarial nature of GAO protests where time and expense are spent withholding important information to gain a competitive advantage. Indeed, FAR 33.103(b) encourages “open and frank” discussions between the parties. In addition, the agency-level protest process is more informal than the GAO process, allowing the contractor and Contracting Officer to meet one-on-one and freely exchange information in order to come to a solution.

Unfortunately, the use of agency-level protests has declined in recent years. To expand their usage, agencies should designate a primary point of contact within the agency to receive and administer the protest process. Currently, there is confusion as to which agency official is responsible for receiving protests which can dissuade contractors from using the mechanism. In addition, current regulations do not provide instructions to potential protestors as to what is required of an agency-level protest and what goes into a decision. By amending the FAR to provide those instructions, protestors would not only save time and expense preparing a protest, but they would be more likely to file with the agency. 

Lastly, agencies should be directed to track the number and success rate of agency-level protests. These numbers would allow practitioners to more responsibly recommend filing agency-level protests to clients thereby increasing overall filings. 

Eliminate GAO and COFC Concurrent Jurisdiction 

Finally, Congress should eliminate the concurrent jurisdiction between GAO and COFC—the third and final forum for protests. Currently, a disappointed protestor who lost at GAO can file a new protest at COFC due to different timeliness requirements. While the GAO requires a protest be filed within 10 days of the date on which the protest ground is known, or should have been known, COFC uses the doctrine of laches. This allows unsuccessful protestors another chance to litigate a properly awarded contract, imposing additional expenses on all parties, and can be another tool used by incumbents to “game” the system to prolong performance and profits. 

Congress should amend the timeliness requirements of both GAO and COFC to mirror one another. This leaves the option for protestors to choose their preferred adjudicatory body but prohibits a disappointed GAO bidder from getting another bite at the apple with a subsequent COFC challenge. This would reduce unnecessary costs and ensure the Government can procure essential goods and services in a timely manner. 

Conclusion

The bid protest process plays an indispensable role in ensuring procurements are conducted fairly. The process also reduces potential corruption, boosts public confidence in the system, and improves the efficiency and effectiveness of the system through the production of helpful guidance. Nonetheless, the process imparts substantial costs. 

Fortunately, the aforementioned changes can be made to create a more cost-efficient and productive overall bid protest process. First, the profits of incumbent contractors should be withheld until a protest is adjudicated and release of the funds contingent on the incumbent’s protest being successful. Second, agencies should take steps to expand the role of agency-level protests. Third, Congress should eliminate the concurrent jurisdiction between GAO and the COFC to eliminate the incentive to forum shop and prolong procurement processes. With these three changes, the bid protest system can become more efficient, streamlined, and effective. 

1. Budget and Acct. Act of 1921, Pub. L. No. 86-87, 42 Stat. 20, 23 (1921). ↩︎
2. U.S Gov’t Accountability Off., GAO-18-510SP, Bid Protests at GAO: A Descriptive Guide 2 (May 2018). ↩︎
3.  Scanwell Labs., Inc. v. Shaffer, 424 F.2d 859, 864 (D.C. Cir. 1970) (quoting Associated Industries of New York State, Inc. v. Ickes, 134 F.2d 694, 704 (2d Cir. 1943)). ↩︎