Government Contracts Monitor

GAO Bid Protests – FY17 Protest Statistics (Overall Effectiveness at 47%; Sustains at 17%) and a Look Ahead

November 16, 2017

The Government Accountability Office (GAO) this week issued its Annual Report to Congress on bid protests during Fiscal Year 2017 (FY17; 10/1/16-9/30/17). The total number of bid protests filed (including supplemental protests, cost claims & reconsideration requests) declined (for the first time in three years) by 7% (2,596 vs. 2,789 protests in FY16). GAO closed 2,672 protests during the year, of which 581 involved merits (sustain or deny) decisions. Of these, 99 protests, or 17%, were sustained – down from 22.56% in FY16, but still above GAO’s historical 10-12% sustain rate. More importantly, perhaps, is that the overall “effectiveness rate” – i.e., cases in which the protestor received some form of relief, either as a result of agency corrective action or GAO sustaining the protest – rose to 47% (up from 46% in FY16 and 43-45% in FY13-15). Interestingly, hearings were held in only 17 cases (down from 27-42 in each of the prior four years), representing just 1.7% of all fully-developed cases during FY17.

GAO’s high 47% protest “effectiveness rate” is particularly impressive when one considers and discounts the significant number of meritless protests filed each year that are either outside GAO’s jurisdiction, untimely, or otherwise defective. This high rate also explains, in part, the nominally low “sustain” percentage – i.e., agencies voluntarily took corrective action early on in many cases in which they identified problems that might have led to sustains.

GAO identifies the most prevalent grounds for sustaining protests in FY17 as (1) unreasonable technical evaluation, (2) unreasonable past performance evaluation, (3) unreasonable cost or price evaluation, (4) inadequate documentation of the record, and (5) flawed source selection decision. This ranking is essentially the same as the prior year, except that inadequate documentation moved up to #4, displacing flawed source selection decision. Obviously, these grounds may vary from year-to-year, but these lists provide some insight as to the areas in which GAO is finding the most problems.

GAO states that there were no instances during FY17 where an agency did not fully implement a GAO recommendation, and no instances where GAO failed to issue a decision within 100 days of GAO’s receipt of a protest.

GAO does not provide any explanation for the decline in overall protests filed. However, this is likely the result of changes that we discussed here last year, including the increased $25M jurisdictional floor for DOD task order protests (previously $10M), as well as GAO’s ban on new protests by one company that had filed more than 100 protests during the prior year.

Looking ahead, one can expect a modest rise in total protests, although likely at a slower rate than the prior few years due to the above-discussed change in GAO’s DOD task order protest jurisdiction and continuing pressures on agencies to improve the quality of their debriefings. One also can expect a continuing high protest “effectiveness rate,” although not necessarily as high as last year’s 47%. However, 2018 will bring number of significant GAO bid protest changes, including:

1. GAO anticipates introducing its new Electronic Protest Docketing System (EPDS) during FY18; GAO published draft details on the proposed EPDS in April 2016 (see our 4/27/16 blog article), including a proposed initial $350 protest filing fee; GAO presently is considering comments and preparing final bid protest regulations for publication in the Federal Register, as well as EPDS User Guides for Protesters/Intervenors & Agency Representatives, which will be posted on GAO’s website;

2. A detailed new study of GAO protests that Congress directed in the NDAA-16 is underway, and may play an important role in future Congressional decisionmaking on bid protests, and will bear watching;

3. On November 8, 2017, the House and Senate Armed Services Committees announced Conference Committee agreement on the NDAA-18, subject to full Senate & House approval, including proposed Section 818, directing major changes designed to enhance DOD post-award debriefings, which, when implemented in new DFARS regulations, may reduce future bid protests through more fulsome disclosure, and Section 827, authorizing a DOD pilot program beginning in late 2019 and continuing into 2022, to determine the effectiveness of requiring large contractors (defined as companies with $250M+ annual revenues) on certain large procurements to reimburse the costs in processing a GAO protest that is denied in its entirety. Notably, both of these requirements will apply (at least for now) only to DOD procurements. These initiatives, if they become final, will warrant watchful attention in 2018 as they progress through the regulatory rulemaking process; and.

4. On the plus side, the Committees rejected certain broader Senate-proposed bid protest changes that would have negatively impacted bid protests.

In short, GAO’s Report evidences that GAO continues to provide a valuable, cost-effective, forum in which contractors can obtain review of many procurement actions, on an expedited basis that minimizes procurement delays. GAO’s high “effectiveness rates” shows the important role that protests play in encouraging agency corrective action in appropriate cases, and evidences the value of well-based protests to both protestors and agencies, in ensuring a fair, competitive, procurement process.

Attorneys

Hopewell Darneille