Government Contracts Monitor

Time Is On My Side: Protests Extend Incumbency

August 19, 2013

By: Lindsay Simmons

The federal budget is shrinking.  As a result, there are fewer federal contracting opportunities and, of critical concern, competition for the opportunities that remain is increasing. How?  Not only in the number of concerns competing for each opportunity, but in the number of protests filed by disappointed bidders. Indeed, many companies feel they simply cannot afford not to protest. This is particularly true for incumbent contractors who lose competitions for follow-on awards.

As of August 13, 2013, the number of protests filed with the Government Accountability Office (GAO) for the past 365 days is 2,786 – continuing the steady increase in protests since 2008 (when there were 1,652) and signaling more than an 11% increase in protests from last year (when there were 2,475).  See GAO's Bid Protest Docket. Many of these protests were filed by unsuccessful incumbents. Why?

GAO’s bid-protest process includes a unique feature, the automatic stay of contract award or performance during the pendency of the protest.  Not surprisingly, this makes GAO a highly desirable place for disappointed incumbents.  While GAO sustains only about 21% of the protests it decides, the stay of the new contract award is an independent business reason for disappointed incumbents to pursue protests.  If an incumbent protests, it typically means the incumbent will receive three or more months of additional revenue by reason of its current contract being extended during GAO’s 100-day protest period.  This does not mean these protests are frivolous.  It does mean, however, that an incumbent is in the best position to take on the significant cost risk associated with protest litigation.

It is important to note that delays in the procurement often occur even when a protest does not run its full course at GAO.  The most common delay results from corrective action voluntarily taken by an agency, after the protest is filed, typically based upon missteps discovered when the procurement documentation is reviewed.  Corrective action routinely takes the form of re-evaluation of proposals or even re-competition.  Over and over again we see significant delays in the process agencies follow to re-evaluate proposals or amend/reissue a request for proposal.  These delays are often caused by agency personnel who are understandably uneasy about how to implement corrective action in a manner that avoids future, repetitive protests.

Protest litigation is costly.  It should not be untaken lightly.  But disappointed incumbents clearly have the advantage in pursuing this avenue at GAO – in the form of the automatic stay which extends their performance.

 

Lindsay Simmons is the attorney responsible for the content of this article.